Home sales was way off expectation but market shrugged it off with further boost by the University of Michigan October consumer sentiment which is better than expected. Equities had an impressive week despite a higher yield and stronger United States Dollar. This creates a divergence in the market as the rise in equities is not in line with other markets. The FOMC will be the main highlight this upcoming week as the market expects just a 50 basis point increase but will the FEDs meet the market's expectation?
Upcoming Economic Release:
S&P500 Intraday Time Frame
As mentioned on our previous post, we mentioned that a breakout of the resistance region at 3800 could spell more upside and that is exactly what happened on last Friday. The S&P500 broke out of the range and fell back to three support levels:
Horizontal support (previously resistance) at 3775 region.
50 exponential moving average (EMA) - in blue
Ascending trend line
This is the intra-day confirmation of the monthly analysis that we have done previously and is shown again below.
S&P500 Monthly Time Frame
We have mentioned on our previous post that if the October candlestick of the S&P500 were to close at least 50% of the previous month candlestick, we are likely to see a reversal movement of the equities market. We are left with the final day of October and it seem likely that the S&P500 will close the monthly calendar with at least a piercing line candlestick pattern. The monthly 50-exponential moving average is also in line with the weekly 200 simple moving average.
With confirmation, the long target of S&P500 would tentatively be around the 4150 region (strongly dependent on momentum).
However despite the confirmation, there is divergence with other assets currently as currencies (Dollar) is holding up, bond yield is not far away from its previous high, and there are no fundamental confirmation that the FEDs is pivoting yet with both inflation and oil prices remaining.
Dollar Index (DXY)
The bearish movement of the United States Dollar Index was extended last week and was poised for a reversal. Supported by the 110.1 level key support region, the Dollar retraced some of its loss but was unable to push higher from the minor resistance at 111.0 region. If price managed to push pass 111.0, we are likely to see the Dollar push towards 111.28 region while if price breakout of the 110.1 support region, we could have a potential reversal (bearish confirmation) of the Dollar.
Spot Gold (XAU/USD)
Earlier the week, Gold pushes above the 1660 resistance region but got rejected and fell back to the minor support at 1644 region, reenacting as per what we have analysed last week. Gold closed the week at the 1644 minor support region and any breakout confirmation of this support level could potential push price towards the recent low at 1621.
WTI Futures - Front Month (Analysis 42-1)
Recap (Week 43 - Last Week) Take Profit - 2
Long position reached Take Profit - 2 level where we announced to close / partial with Take Profit - 3 level as indicated.
Trade Analysis / Setups
NZD/CAD (Analysis 44-1)
Analysis: Price is trading in consolidation, now we await for breakout and retest confirmation before entering position in the direction of the breakout.
Long opportunity: Breakout and retest confirmation at 0.79475 resistance region towards 0.79970 as Take Profit - 1 level.
Short opportunity: Breakout and retest confirmation at 0.78887 support region towards 0.78454 as Take Profit - 1 level.
Sugar #11 Futures - Front Month (Analysis 44-2)
Analysis: Sugar has been trading in a range for an extended period of time. The recent bearish movement is extended with potential of reversal, thus we can take a HIGH RISK long position towards the resistance of the consolidation.
Long opportunity: Long at market as HIGH RISK trade upon re-opening towards 18.56 as Take Profit - 1 level.
Cheers to all our member who managed to pack some profits this trading week.
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