Forex Analysis and Chartbook: Risk Assets Remain Under Pressure on Black Friday

Friday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,645 0.47%
DAX 30 11,192 0.49%
WTI Crude Oil 51.18 -4.98%
GOLD 1,223 -0.33%
Bitcoin 4,246 -0.67%
EUR/USD 1.1335 -0.57%

While global stock markets are relatively stable today, the key indices are trading near their recent lows, with the broad risk-off shift still being clearly dominant. The main European markets extended yesterday’s losses, and the Euro also continued to slip lower, amid the worse-than-expected economic releases, and the continued Brexit worries. Asian markets also ticked lower, with pronounced weakness in China, as a US-Chinese trade agreement seems more distant again.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The Chinese Shanghai Composite turned lower off a key resistance level despite its recent relative strength, and the leading market of the possible global bear market drifted towards its multi-year lows again.

The Chinese Yuan is also just above its recent lows, and all in all, the bounce that has been sparked by trade optimism seems to be fading, in the face of the positive seasonality in risk assets. Should China enter another bearish swing, global risk assets could remain under pressure, in line with the broader negative trend especially if the Dollar remains strong.

S&P 500 Futures, 4-Hour Chart Analysis

The major US benchmarks opened today’s shortened session lower, with the relatively strong Nasdaq being pulling back to unchanged just after the bell. Despite the short-term strength, the tech benchmark is still weak from a broader perspective, and even the stronger Dow and the S&P 500 are on the verge of violating their October lows.

While we are still bearish towards equities globally, and all rallies should be considered as selling opportunities, the highly negative sentiment together with the positive seasonality could lead to a strong short-covering rally in the coming weeks. From a technical perspective, all eye are on the 2700 level in the S&P 500, as below that, the short-term trend remains bearish, while strong support is found below the October lows between 2500 and 2550.

Dollar Gains Across the Board as Commodities Suffer

EUR/USD, 4-Hour Chart Analysis

The EUR/USD pair turned lower off the key 1.1440 level that the market has been focused on in recent weeks, leaving the pattern of lower highs and lower lows intact. The worse-than-expected Eurozone PMIs put pressure on the common currency today, and despite the recent dovish shift in the Fed’s rhetoric, odds favor a test of the lows near 1.12, even as the long-term momentum readings are oversold in the most traded forex pair.

Copper Futures, 4-Hour Chart Analysis

The US Flash Manufacturing and Services PMI also missed expectations today, and that added to the bearish momentum of oil and copper, with the latter once again following Chinese assets lower today. The steep short-term trend crude oil remained intact, and the WTI contract is now close to the $50 level, with no material bounce in the crucial commodity.

Copper continues to consolidate in a bearish fashion, and since Chinese assets are weak again, and risk assets remain under pressure, the industrial metal could test the support zone near $2.70 again. The broader downtrend is still clearly intact, and although the consolidation could continue in the coming weeks, any rally attempts could be good short-entry opportunities.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

DAX 30 Index CFD, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.