AUD/USD Forms Bullish Candlestick Pattern After Rebound From Parity
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The regular Financial Markets Update from Simon Denham of Financial Spreads.
For today's update >> Financial Markets.
Spread Betting 1 September 2011
September is under way and seems to be commencing placidly.
Historically, September has been a mixed month for the FTSE with the bias to the downside. The number of months showing a loss is just ahead of the number posting a gain and when there have been declines they've been pretty spectacular on average.
Another interesting fact about this month is that it is the second most volatile, after October, when measured by size of trading range.
So if history is anything to go by, this month is unlikely to see a let up in the volatility, something that our spread betting account holders are probably praying will actually fall.
August was a brutal month in terms of trading conditions and it would be an understatement to say clients found it a hard environment to trade in.
At least this week the FTSE just seems to have found a firmer footing, taking it back towards the 5400 level only days after it looked like sub 5000 levels would be on the cards for some time.
A close above 5400 will be good for the bulls from a technical analysis standpoint, as this is where the market failed and dipped a last time, so this resistance level should become support going forward.
This morning the FTSE is at 5380 at the time of writing and the highlight of the day for the UK market will be the PMI manufacturing data.
Last month this dipped below the important 50 level which suggests retraction and the number is expected to remain below there today. This is because the manufacturing sector, which was one of the major areas that dragged us out of the last recession, continues to struggle in the light of fading global growth.
Expectations are for an uptick at least, but don't be surprised with all that's going on if today's number comes in worse.
Already this morning we've had the final reading of German GDP data for Q2 released which has shown a major decline from the booming first quarter of 1.3%.
Growth for Q2 has been confirmed at 0.1% and shows that even the powerhouse of Europe is suffering from the same problems as everyone else; a rapidly slowing global economy.
FX spread betting markets had a relatively quiet day in the grand scheme of things with the Dollar just about holding its own.
This morning things look better still for the US currency with EUR/USD and GBP/USD at $1.4310 and $1.6230 respectively.
For the Euro $1.4275/50/20 are support levels with $1.4385 and $1.4420 being resistance targets. In Cable's case, $1.6200 and then $1.6135 are seen as support with $1.6330/65 expected to give resistance.
Currency markets really have been rather boring in the past couple of weeks with few pairs making any considerable ground. AUD/USD stands out though, having recovered from hitting parity at one stage early on in August. It has formed a massive hammer candlestick on the daily chart and since then it's made its way back to $1.0700.
This morning the pair is at $1.0695 and support and resistance levels are seen at $1.0610 and $1.0750 respectively.
Gold had a mild profit take yesterday and this morning is at $1823. The long term uptrend remains very much intact for the yellow metal but trading it has become very difficult, rather like the equity markets.
The more investors believe there's going to be further QE from the US, the more gold prices will be supported. Over the near term $1840/55 are seen as resistance with $1810 and $1770 being support.
Brent crude oil has also oscillated around current levels and is at $114.00 this morning.
Rather like gold, the black stuff has yet to break down its long term uptrend. In the broader picture it looks to be forming an upward flag, which for crude oil technical analysis followers is a signal for further advance ahead.
Upside targets for Brent are $115.40, $116.40 and $118.00 with $112.50 and $111.20 to the downside over the near term.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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'AUD/USD Forms Bullish Candlestick Pattern After Rebound From Parity' edited by SD, updated 01-Sep-11
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