EU Session Bullet Report – China Stock collapse, UK GDP key

The driving force behind the moves yesterday was firstly the collapse of Chinese stock markets again (-8.48% worst performance since February 2007) as well as improved German confidence numbers. These sharp moves in China are also felt across global stock markets. With FOMC tomorrow and corporate earnings taking place in the US now, a loss of confidence in China has not helped matters, sending the S&P 500 and other stocks down to significant support levels. Today the index had another weak opening, but managed to bounce and is now down only 1 % on the day.

In the US, durable goods orders jumped to 3.4% versus 3.1% expected. Gold is still struggling slightly below 1100 handle. Crude oil’s decline continued as it broke the $47 level. Back to the currency markets, USD remains the weakest major currency as markets await FOMC statement.

Today, UK Q2 GDP is the major focus. Recently, markets are expecting BoE to hike rate mid next year while Fed is expected to hike in September. But there is a minority view that BoE could hike in November while Fed would hike in December.

Trading quote of the day:

“The markets are the same now as they were five or ten years ago because they keep changing-just like they did then.” – Ed Seykota

Green lines are resistance, Red lines are support

EURUSD
Pivot: 1.104
Likely scenario: Long positions above 1.104 with targets @ 1.113 & 1.116 in extension.
Alternative scenario: Below 1.104 look for further downside with 1.0995 & 1.096 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.

GBPUSD
Pivot: 1.5535
Likely scenario: Long positions above 1.5535 with targets @ 1.5595 & 1.5625 in extension.
Alternative scenario: Below 1.5535 look for further downside with 1.5495 & 1.5465 as targets.
Comment: The RSI is mixed to bullish.

AUDUSD
Pivot: 0.734
Likely scenario: Short positions below 0.734 with targets @ 0.7255 & 0.723 in extension.
Alternative scenario: Above 0.734 look for further upside with 0.738 & 0.7415 as targets.
Comment: Even though a continuation of the technical rebound cannot be ruled out, its extent should be limited.

USDJPY
Pivot: 123.65
Likely scenario: Short positions below 123.65 with targets @ 123 & 122.7 in extension.
Alternative scenario: Above 123.65 look for further upside with 123.85 & 124.15 as targets.
Comment: As long as 123.65 is resistance, look for choppy price action with a bearish bias.

USDCAD
Pivot: 1.305
Likely scenario: Short positions below 1.305 with targets @ 1.298 & 1.295 in extension.
Alternative scenario: Above 1.305 look for further upside with 1.3095 & 1.3125 as targets.
Comment: The upward potential is likely to be limited by the resistance at 1.305.

USDCHF
Pivot: 0.9585
Likely scenario: Long positions above 0.9585 with targets @ 0.9635 & 0.965 in extension.
Alternative scenario: Below 0.9585 look for further downside with 0.9545 & 0.9525 as targets.
Comment: The RSI lacks downward momentum.

GOLD
Pivot: 1106
Likely scenario: Short positions below 1106 with targets @ 1086.5 & 1077 in extension.
Alternative scenario: Above 1106 look for further upside with 1119 & 1129.4 as targets.
Comment: As long as 1106 is resistance, likely decline to 1086.5.

OIL
Pivot: 47.9
Likely scenario: Short positions below 47.9 with targets @ 46.4 & 45.95 in extension.
Alternative scenario: Above 47.9 look for further upside with 48.5 & 49 as targets.
Comment: As long as 47.9 is resistance, likely decline to 46.4.

DAX
Pivot: 10950
Likely scenario: Long positions above 10950 with targets @ 11305 & 11435 in extension.
Alternative scenario: Below 10950 look for further downside with 10800 & 10660 as targets.
Comment: The RSI calls for a rebound.

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Report prepared by the easy-forex VIP desk at 06:30 GMT.

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