Forex Analysis And Chartbook: Tech Selloff Resumes, Dollar Dips Again, as Yields Hit 2-Month Low

Monday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,697 -1.62%
DAX 30 11,244 -0.85%
WTI Crude Oil 56.76 -0.12%
GOLD 1,224 0.21%
Bitcoin 4,989 -10.26%
EUR/USD 1.1452 0.32%

While all eyes were on the cryptocurrency segment today, as the major coins continue to fall sharply, traditional financial markets have also been very active before Thanksgiving. The last days have been dominated by the strong rally in US Treasuries (a dip in yields, in other words) which carried the yield curve to a 2-month low today, due to Jerome Powell’s dovish words, global growth worries, and European worries regarding the Brexit process and Italy.

EUR/USD, 4-Hour Chart Analysis

The Dollar has also been feeling the effects of the falling Treasury yields, and after hitting a more than one-year high against the Euro this month, the Greenback fell to its lowest level in almost two weeks.  The long-term uptrend is not in danger in the pair and in the broader Dollar index, and with no higher swing high in the EUR/USD even the short-term downtrend is intact. That said, should the pair remain above the 1.1440 level, a short-term trend change could be ahead.

Nasdaq 100 Futures, 4-Hour Chart Analysis

US stocks had an ugly day despite a quiet overnight session which was helped by the continued optimism in China, in the face of the diplomatic disaster on the APEC summit. The meeting ended without a formal communiqué for the first time ever, due to the US-Chinese spat that took another turn when US Vice President Mike Pence attacked China on several issues, dampening hopes of a quick resolution to the dispute before the looming Trump-Xi meeting.

The major indices finished sharply lower after a steep morning selloff on Wall Street and the Nasdaq got very close to its October lows due to the weakness in some of the largest tech names such as Apple (AAPL) and Facebook (FB).

While both stocks fell on bearish news, with the report on a significant iPhone production- cut being the most worrying one, the selloff in the key momentum names is a more structural problem, which is likely the sign of the broader bearish shift that we have been following in recent months.

While the year-end cold still holds a stronger bounce, thanks to seasonality and a possible positive turn in the US-Chinese relations, we will still view all rallies as selling opportunities in equities.

Gold and Copper Edge Higher Amid Dollar-Dip

Gold Futures, 4-Hour Chart Analysis

Commodities had a bullish session thanks in part to the Greenback’s weakness, but gold, copper, and oil were also helped by very different reasons too. While gold benefited from the bearish intraday shift in risk assets, crude oil continued its oversold bounce after a brief spike towards last week’s low, while copper was boosted by the stability in Chinese assets.

The precious metal is holding above the key short-term $1215 level, and although bulls are still not out of the woods following this year’s selloff, a move above the October highs would be a very positive sign for the commodity, which we still view as one of the top picks for the coming years.

Copper Futures, 4-Hour Chart Analysis

Copper is still trading in a broad consolidation pattern, despite the rally of the past days, which was sparked by trade optimism. The long-term fundamentals remain hostile for the industrial metal, given the global slowdown, and especially the state of the Chinese economy, so even in the case of a move above the formation long positions should only be considered for trading.

That said, the short-term outlook is rather neutral, as the year-end could see feel-good risk rally (with copper possibly bouncing as high as $3), even as we expect the commodity to continue its broader downtrend.

ChartBook

Major Stock Indices

S&P 500 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

Shanghai Composite Index CFD, 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

Featured image from Shutterstock

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.

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