Market Report Tuesday 5th of July

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Daily Market Report for Tuesday 5th of July 2011
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Very quiet day yesterday with the US markets closed in observance of Independence Day. It seems like the “risk on” theme continues this morning and we are heading back up in the metals and crude. Both gold and crude have broken above key resistance levels, 1502 and 96.00 respectively. It is key now that these gains hold and not get any kind of sell off into the close, because that would really invite for sellers to take over. Euro is not doing too much to the upside yet, but given that we are in the upper end of the recent range I think we need to get some fresh news to extend above the 1.4564 resistance level. We have ECB and US NFP report later this week, which are the next major events on the economic calendar.
My thinking is that the European debt crisis will not go away quickly and probably come back to hit us sooner rather than later. We have had a nice rally in the S&P 500 over the last 2 weeks, but from here it will be more difficult to go higher in my opinion. With the QE2 over as well, the support for the equity markets could be thin during the summer months. Technically the 1340 resistance is an important level to get above to continue to the upside. I suspect a lot of traders looking to short up around the 1330 to 1340 and stops above 1361.75, the yearly high. It would be healthy for the rally to get some kind of pullback before going higher, if not I am afraid the selling pressure will get too big on any break higher. Friday’s break out level of 1317 is now support.
CHF out performing this morning as the recent losses corrects a bit. I reckon the next level to look long is around in the 1.2050 in EURCHF.
I am still looking to add some type of position in Corn following the huge sell off week, but I have not made up my mind what the position will be yet. I will come back on that during the next few sessions.
Looking at a few interesting points in the markets trading wise:
- 76,4% Fibonacci retracement of the 1361.75 – 1252.25 move comes in at 1336, which was right around the Friday’s high (1336.50). The high from 31st of May at 1340.25 is the next key target. Break out level of 1317 is now key support.
- Crude punching through the 96.00 resistance today, next key level is 98.00.
- Silver bouncing off the lower end of the last month’s range of 32.75 to 38.76. Can we head back up towards the upper end of the range?
- Gold have broken above 1502 key resistance, next upside target is 1520.
- Key resistance in Euro up at 1.4564, which I expect to hold for the next 2 sessions.




Technical’s and comments

Euro: The break above 1.45 Friday opens for an extension higher as I think we will see the risk on theme continue going into the NFP report Friday. The resistance levels today are the low from 7th of June at 1.4564 and the high from the same day at 1.4695. We have support at the 3 days’ low of 1.4436.
Cable: Looks like a better choice to short GBP than Euro at the moment as we have broken above the key resistance level at 0.90 in EURGBP. First upside level to get short I figures is around the 1.61 level and stop above 1.6150 or so.
USDJPY: Very tight range over the last sessions. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. However the risk off over the last days has taken us below 80 again. Not sure if we see any intervention unless the move picks up in speed and magnitude. Buy on dips for the brave.
Swissy: Have resistance at 0.85 at the moment, which is the pivot level in this pair for now I think. Bearish below this level and bullish above.
AUDUSD: We have strong resistance around the 1.0750 level, so would not chase the price action above that level. The buy in level of 1.0550 or so is the place I would look to try long again.
USDCAD: Rapid move lower and I think it makes sense to wait for a rally back up towards 0.9730 or to get short again.
S&P Future (ES): We have key resistance up at 1340.25 and minor resistance at 1336. Looks overbought and selling rallies below 1340 looks the most attractive today. If we break 1340, I would reverse to look long. Key support is not Friday’s break out level of 1317.
Gold: Falling resistance of 1502 was taken out this morning, this opens for a run towards 1520 resistance next.
Crude oil: Took out the 96 key resistance this morning and it is key that we hold the gains today into the close to open for higher levels. The next key resistance is 98. Key support is still down at 92.90.



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