Europe Open: Normal service resumed after China rumor proven false.

Rumors of China cutting its Reserve Requirement Ratios for banks during European session caused prices to jump higher. Shortly after the rumors turned out to be fake and prices went back lower again.

EUR/USD H1

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EUR/USD traded above consolidation area formed from Yesterday’s US and Today’s Asian Session, entering into yet another consolidation area identified on 7th – 8th October. Today’s H4 which is also around the lows of 4th Oct may act as strong resistance for bulls, while consolidation area between 1.292 – 1.295 will act as support, with a break below exposing L3 of 1.289.

GBP/USD H1

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Bank of England’s Tucker announced that many banks have signed up for the Funding for Lending Scheme, pushing Cable higher. However, price was not able to push higher against the Channel Top and is currently trading below the H3 level, exposing Channel Bottom/L3 today. Yesterday’s High could still act as a significant support which would allow Cable to continue higher along the rising Channel line.

DAX Futures M30

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Despite strong showing by the bulls yesterday, we are currently still at the Pre-Breakout levels of 9th October. A new consolidating channel might be form around current levels between 7,250 – 7,300, with both highs and lows of consolidation area potentially acting as resistance/support respectively.

FTSE 100 Futures M30

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Currently trading between H3 and L3. H3 of 5,833 and Yesterday’s High may provide some resistance for bulls while bears will face support around L3 and consolidation zone found on 10 Oct.

Brent Crude Oil H1

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We’ve just seen the longest red candle this week (with another strong red candle forming as this commentary is being typed). This would bring us to the strongest sell off in 1 hour and 2 hours respectively this week. Is the bull trend of Brent finally showing some weakness? The fact that we’re now trading below the rising trendline is an indication, but Yesterday’s Low and consolidation area between 114 – 114.8 could still provide support.

Bottomline:

Brent Rally hinting to turn soon, while the rest of the currencies/equities are not out of the bear trend they’re currently in. Spanish Finance Minister has also announced that Spain will not be seeking IMF help and is still currently assessing its options – Translation: No request for bailout anytime soon. All these factors put a strong negative backdrop in the Euro-Zone and its risk-correlated assets.

 

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