US Market Overnight: Dow post largest gain since QE3

USD Basket 1M

Price approaching 0.95 significant support after a strong risk rally last night, bringing USD lower. Cable, Fiber and Aussie are currently now trading above previous significant resistance around 1.31, 1.61 and 1.02 respectively. A break of USD below 0.95 will help to consolidate prices above previous mentioned levels.

Dow Jones Industrial Index Futures M30

After a strong showing in the Dow, price has retraced a little and rested around 13,500 just before closing of US session. Asian traders were unable to push price to Yesterday’s High and we are looking at price breaking 13,500 heading towards L3. L3 may find significant support during Asian Trade with small consolidation around 13,460 – 13,475.

S&P 500 Futures M30

Buying continued late into US session which spilled over when the Asian traders took over. Current price level could see some support around the “Hammer” candlestick found at 3.00pm with Yesterday’s High and H3 potential topside targets. As the saying “Easy Come, Easy Go” goes, L3/L4 may not provide strong support intraday should there be any strong selling pressure today. Instead, Yesterday’s Low that was forged during Asian Session and L5 may provide better support intraday in the face of strong bearish sentiments.

Gold/USD H4

We are now at crossroads for Gold, with prices now climbing back to the previous support/resistance around 1,750 after forming a lower low compared to 26th Sep. A move above will bring post QE3 trading range back into focus, while bearish momentum may accelerate should a bearish reversal candlestick pattern form around current levels. Even if bulls manage to maintain 1,750, we could still see some overhead resistance around 1,760-1,780 consolidation and also the upward trending line which was drawn from early Sept.

Bottomline:

Good times for the bulls as better than expected earnings push US equities up, bringing optimism which spilled over to Risk related currencies as well. Across the Atlantic, rumors about Spain requesting bailout are rife once again which contributed to positive Risk Appetite. How long could this rally last? We’ve pushed the bar low with regards to earnings expectations, hence it is no surprise that companies are “outperforming”. With regards to Spain, this is not the first time we’ve heard these rumors and certainly this will not be the last (assuming that the rumors aren’t true this time round). Nonetheless, that does not mean prices will not rally. Looking back in Q2 and also Q1, we’ve seen US market rallied strongly on the back of QE3 rumors despite many signs that pointed to the contrary. Hence it’ll be foolish to simply disregard all that has transpired and assume price will fall back immediately. Keep your reins tight, as any market that is running on rumors is going to face strong volatility.  

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