Pre-Market Analysis And Chartbook: Brexit Chaos Sparks Turmoil Across Markets

Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,685 -0.63%
DAX 30 11,360 -0.47%
WTI Crude Oil 56.40 0.71%
GOLD 1,215 0.31%
Bitcoin 5,389 -3.72%
EUR/USD 1.1302 -0.04%

The Brexit process continues to be the main driver in financial markets across asset classes, and the situation in the UK could be best described as chaotic at the moment. While yesterday the British Cabinet’s approval of the draft Brexit plan sparked a brief risk rally, with the Euro the Pound and equities rising hand-in-hand, today, the plan is in serious jeopardy. Several ministers, including the Brexit-Secretary resigned, and the outcome of vote in the Parliament seems doubtful, at best.

GBP/USD, 4-Hour Chart Analysis

The Pound lost significant ground against all of its peers, with the currency’s losses also being exaggerated by the much worse than expected British Retail Sales data. The GBP/USD pair hit its lowest level this month, touching the 1.2750, while the Euro is relatively strong today, the Dollar’s broad rally still seems intact, and a no-deal Brexit could push the Cable back towards its historic low near 1.20 from late 2016.

Dow 30 Futures, 4-Hour Chart Analysis

While equities are little changed so far today, the charts still look wounded globally and even the relatively strong US benchmarks are likely headed for, at least, a test of their lows from October. Economic numbers were mixed today in the US, with the Retail Sales report beating the consensus estimates across the board, but with the Philly Fed Index showing an unexpected slowdown in the manufacturing sector.

The Dow, which has been the strongest benchmark recently is hovering near the 25,000 level, after underperforming the broader market yesterday, and with the other indices being in even worse technical shape, the coming days could see another surge in volatility, despite the pullback in Treasury yields across the curve.

Heavy Trading Continues in Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Oil finally found support following two months of steep losses and Tuesday’s liquidation event, with the WTI contract rising above the $57 per barrel level yesterday, before a late-day pullback. Today the crucial commodity is performing relatively well in the nervous environment, and although bulls are still not out of the woods, we still expect a bounce above $60 in the coming week.

We will still have the weekly US crude inventory data coming out during the morning session on Wall Street, and volatile trading will likely continue in the throughout the day, with the $54.50 short-term support level and the $57.50 resistance level being in the center of attention.

Gold Futures, 4-Hour Chart Analysis

Gold is also having an interesting session so far, as it is testing the short-term resistance zone near $1215 due to the Brexit uncertainty and the pullback in yields. The precious metal is still well below the consolidation pattern that developed in October, and it would need to rise above $1220 to trigger a short-term trend change, but should risk assets continue their downtrend, gold could quickly rally as high as $1250.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Nasdaq 100 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

EUR/USD, 4-Hour Chart Analysis

USD/JPY, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

Copper 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.