Europe Open: Market Recovering from Asian Session Lows

European Market recovering strongly, shrugging off initial concerns of Spanish Stress test results which showed banks are in deficit of $59.6B EUR after the stress test scenarios. However, market appears to be focusing more on the fact that $100Billion Euros have already been pledged by the ECB is more than enough to cover the deficit (if needed).

EUR/USD H1

After trading below Friday’s low during most part of Asian session, EUR/USD has bounced back up from L3 and above the Channel top that was drawn from Mid September. Prices could potentially halt at H3, though based on current price action, there is no evidence that the uptrend is slowing down.

GBP/USD H1

Cable showing less bullish intent compared to EUR/USD. However it could potentially provide greater upside should prices break above 1.6160 which brings 1.621 (H3) back into focus. Friday’s low and L3 acting as important support intraday.

FTSE100 Futures H1

Friday’s High and H5 (and incidentally last Monday’s low acting as a band of resistance for upward efforts, which has seen considerable gains following the gap lower this morning. Failing to even test Yesterday’s high will encourage bears to sell into this rally as a potential bull trap/temporary pullback.

DAX Futures H1

Very similar to FTSE100, where Friday’s High and H5 act as a strong band of resistance. If we break above H5 (and also Last Monday’s Low), we could see DAX trading in the post 7,400 range this week.

Brent Crude Oil H4

Less buoyant compared to the currencies/equities counterparts. 50.0% Fib retracement @113.0 level will be the lines bulls hope to break. Once broken, $115.0 and $117.0 will come into focus.

Bottomline:

Market appears to be relatively bullish compared to before. With all the rates decision coming from different Central Banks this week, will the hope of additional dovish announcement spur market further? From a technical point of view, it is still too early to call this a full bullish reversal. From a sentiment point of view, market viewing Spanish Stress Tests results favorably, with risk appetite gradually increasing early week without any positive news does raise some concerns for bears.

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