US on the Edge:
US stocks took a tumble overnight with both the SP500 index and the Dow falling to their lowest levels since February last year.
Click on chart to see a larger view.
While still technically respecting its bullish trend, the fact that price has broken out of the horizontal range that has supported price for most of the year has the bulls on edge.
Most of the SP500 technical traders that I speak to have actually drawn their major trend line a little differently, meaning that price has already broken support and they are looking for more downside. But I like to draw trend lines more conservatively and have the level actually still in tact.
All this does is highlight the subjective nature of trend lines with looking for a confirmation trigger if trading breakouts definitely a good idea. Each to their own from here.
Click on chart to see a larger view.
Moving to the US Dollar index, price confirmed the break of its major bullish trend overnight by again closing below the level.
The most important factor driving these moves is simply the fact that the market has gotten cold feet heading into the Fed’s September meeting. The market was very long USD and this is all an unwind as the previously confident positions start to square up.
Anyway, this is the chart that will have major implications on the majors! Keep an eye on the Vantage FX social media pages as we go through some charts to end the week.
North Korean Army to Enter State of War:
So what else happened overnight?
“North and South Korea exchanged fire over their heavily fortified border Thursday.”
South Korean soldiers were injured by landmines in the demilitarised zone earlier in August and have retaliated by blaring propaganda messages over the border from giant loudspeakers. Naturally the North responded by trying to shoot them down with a small rocket, sparking the latest skirmish.
This is something that happens quite a bit, but it’s worth keeping an eye on when headlines like the following flash up on your news terminal:
“DPRK TOP LEADER KIM JONG UN ORDERS FRONTLINE ARMY TO ENTER STATE OF WAR FROM 5PM FRIDAY.”
Tsipras Resigns and Calls Snap Election:
We finish with a small snippet on the Greek Crisis because honestly, that’s all it deserves.
With yet another bailout barely enough to pay only the interest on their previous loans being passed through the Greek parliament, the ruling Syriza party has been cut apart. Prime Minister Alexis Tsipras has stepped down from his post and called for new elections on September 20.
This is all but a formality now and with EUR/USD preoccupied with the Fed and the USDX chart above, that’s all that you should be focused on for the time being.
On the Calendar Friday:
CNY Caixin Flash Manufacturing PMI
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
CAD Core CPI m/m
CAD Core Retail Sales m/m
What are your thoughts on today’s trading? Mention @VantageFX on Twitter, leave a comment on our Facebook Page or simply reply below.
Dane Williams – @VantageFX
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