Europe Open: Rajoy comments bring optimism despite rainy blues.

EUR/USD H1

We have a few good news coming via the wires today: German retail sales enjoyed the largest growth within 1 year, and French Consumer Spending and Producer Prices rising unexpectedly. However EUR/USD was still relatively flat, until Rajoy comments came in, saying Spain requires EU’s help to balance their books, and agrees that Direct Bank Recapitalization will help their ailing economy. EUR/USD broke the previous swing high of 1.2983 and is heading towards 1.30, without any sign of slowing down. H4 could still act as resistance against further upside, but with strong bullish momentum behind their sails, Bulls may be able to push further up.

GBP/USD H1

Another benefactor from Rajoy comments. Cable broke 1.61 round number, ignoring Yesterday’s High and today’s H3 in the process, and is currently trading just above H4, which could also act as support against any eventual pullbacks. Interestingly, today’s H5 level meets the High of 26th Oct, adding into the strength of resistance against today’s rally.

DAX Futures M30

Strong movement in the past 30 mins following the comments, but price wasn’t able to push beyond H4 and closed within the H3/H4 resistance.  H4 is also around the lows of 19th Oct, with a break bringing the range of 7,225 – 7,445 back into focus (from 16tj-19th Oct). A break below H3 may find support around Yesterday’s consolidation range.

FTSE 100 Futures M30

Looking similar to DAX chart, with the exception of H5 acting as resistance and H3/Yesterday’s High providing support from the immediate pullback. Break below H3 will open up yesterday’s range as support, and also opening up L5 as further support should L4/Yesterday’s Low is broken.

Brent Crude Oil H1

Still trading in a range between 109 – 111, with the recent rally confirming the strength of the support around 109 levels. H4 also acting as strong resistance, in the same manner found on the Equities charts. H5 and Yesterday’s High act as resistance, with a break potentially invalidating the horizontal trend and forming a new trend.

Bottomline:

Rajoy comments bring fresh joy to the mix, as traders have been rather downbeat for the past 2 days due to Hurricane Sandy. With this bullish optimism, we could potentially see US bullish traders taking over and push risk sentiment higher. The Dow closed at 13,107.21 on Friday, while Futures are trading above  13,140 currently – not far away, but definitely a sizable distance from the lows of yesterday which saw futures breaking below 13,000 for a short while.

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