EU Session Bullet Report | Market slump continues despite positive NFP

Last week, U.S stocks saw their biggest weekly decline since the crash of 2008. It seems that concerns over China, the continued global slowdown, along with sliding oil prices is just too big to ignore. The poor start to 2016 sparked the biggest weekly outflow of cash from equity mutual funds since September last year.

Risk aversion is most definitely the order of the day as safe haven Gold hit a 2 month high on Friday reaching 1113 at one stage. With it being a bank holiday in Japan today, liquidity is on the thin side although this did not stop Asian stocks being sold off with China the worst hit as the Shanghai composite is set to close down more than 4%.

Oil has also started the week in negative territory, currently trading at $32.31 at time of writing. It’s fair to say that confusion surrounds markets at the moment as in the U.S, the economy is strong with jobs and growth at sufficient levels deemed necessary to rate interest rates, but elsewhere things look bleak.

With the world’s economy being so reliant on each other, policy makers face tough decisions if they are to prevent the world from slipping back in to recession.

Today we have a light economic calendar, although later this week we have UK interest rate decision as the highlight on Thursday, with manufacturing and industrial output data from UK & Eurozone on Tuesday & Wednesday respectively. On Friday we have PPI and retail sales.

Trading quoted 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.

EUR/USD

Pivot: 1.0875

Likely scenario: long positions above 1.0875 with targets @ 1.099 & 1.1035 in extension.

Alternative scenario: below 1.0875 look for further downside with 1.0825 & 1.077 as targets.

Comment: technically the RSI is above its neutrality area at 50.

GBP/USD

Pivot: 1.4565

Likely scenario: short positions below 1.4565 with targets @ 1.449 & 1.445 in extension.

Alternative scenario: above 1.4565 look for further upside with 1.46 & 1.4645 as targets.

Comment: as long as the resistance at 1.4565 is not surpassed, the risk of the break below 1.449 remains high.

AUD/USD

Pivot: 0.7

Likely scenario: short positions below 0.7 with targets @ 0.69 & 0.686 in extension.

Alternative scenario: above 0.7 look for further upside with 0.704 & 0.7085 as targets.

Comment: the RSI is mixed to bearish.

USD/JPY

Pivot: 117.95

Likely scenario: short positions below 117.95 with targets @ 116.7 & 116.1 in extension.

Alternative scenario: above 117.95 look for further upside with 118.8 & 119.3 as targets.

Comment: as long as 117.95 is resistance, expect a return to 116.7.

USD/CAD

Pivot: 1.41

Likely scenario: long positions above 1.41 with targets @ 1.4245 & 1.43 in extension.

Alternative scenario: below 1.41 look for further downside with 1.4045 & 1.397 as targets.

Comment: technically the RSI is above its neutrality area at 50.

GOLD

Pivot: 1096

Likely scenario: long positions above 1096 with targets @ 1110 & 1114 in extension.

Alternative scenario: below 1096 look for further downside with 1091 & 1086 as targets.

Comment: the RSI is mixed to bullish.

OIL

Pivot: 34.35

Likely scenario: short positions below 34.35 with targets @ 32.08 & 31 in extension.

Alternative scenario: above 34.35 look for further upside with 35.15 & 35.7 as targets.

Comment: the RSI lacks upward momentum.

DAX

Pivot: 10125

Likely scenario: short positions below 10125 with targets @ 9570 & 9400 in extension.

Alternative scenario: above 10125 look for further upside with 10290 & 10425 as targets.

Comment: the RSI is bearish and calls for further downside.

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TIME IS IN GMT(+2)

Report prepared by the easy-forex VIP desk 07:40 GMT.

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