Europe Open: Bullish momentum from Asia Session fizzling out

EUR/USD H1

1.29 still remains a significant Support/Resistance level for both bulls and bears especially with H3 coming into play. For a full on bullish reversal, EUR/USD should ideally break above H4 which coincides with Yesterday’s High. Failing which, bearish bias will remain.

GBP/USD H1

Same interpretation as EUR/USD, Cablewill need to push above Yesterday’s high and perhaps more to show its bullish intent. H3 can potentially act as a strong support considering that this is the level we’ve seen bouncing up from on Monday and again on 25th Sep. On 26th Sep it’s acting as a strong resistance with a shooting star formed before prices went to Wednesday’s Low.

DAX Futures H1

Prices gapped higher due to optimism from China’s record reverse repo operation during Asian hours. However rally was abruptly cut short at H4 and it’s been downhill since, showing that Europe market may not have shaken its bearish sentiment brought about by Spanish woes. A break below H3 will demonstrate the strength of bears which may continue during US hours.

FTSE100 Futures H1

The failed rally demonstrates the strength of bears as rally was similarly stopped at H4 not to mention unable to hit the low of 23rd Sep, which can be interpreted as the low of the trading range on Monday and Tuesday. The chart is showing the same bias as its Germany counterpart; a break of H3 will open up L3 as a potential downside target, while upside resistance may be faced around Yesterday’s High and also Monday and Tuesday’s lows.

Brent Crude Futures H1

Brent recovered much more compared to the 2 equity indices. However we are still not seeing a strong bullish reversal until price can convincely break about Yesterday’s High and preferably H3.

Bottomline:

China’s actions has brought about slight optimism in the markets, however this optimism does not seem to be able to last long. Reaction of market to this bullish news could be similar to how quickly market discounted Bank of Japan’s announcement last week. It seems that at the core of the bearish issue is still Spanish bailout. The day that this does not happen, expect any other bullish news to fizzle out and the market may use these short-term rallies to sell at better prices.

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