Stocks Slightly Off Lows in Thin Holiday Trading

Trading volumes are generally low today across asset classes, and most of the key markets trade in narrow ranges thanks to the US Independence Day. Yesterday, markets reversed yet another rally attempt, and Asian markets remained weak, especially China, despite the fact that in the aftermath of yesterday’s PBOC intervention the Yuan kept on appreciating against the USD.

USD/Chinese Yuan, 4-Hour Chart Analysis

The key topics that have been dominating news flow in recent weeks are still hot, with emerging market currencies struggling to gain ground, Chinese equities being in deep trouble, and US markets still positively diverging compared to almost all markets around the globe.

Shanghai Composite, 4-Hour Chart Analysis

The Shanghai Composite failed to bounce meaningfully of its recent lows despite the Yuan’s rally, and the benchmark remains firmly in bear market territory. The Nikkei is also among the weakest major indices globally, and the short-term outlook is still clearly negative for the region.

DAX, 4-Hour Chart Analysis

European equities have been drifting higher today in the quiet environment, but the charts still look wounded with the major benchmarks in clear short-term downtrends even after the recent German deal on immigration and the subsequent relief rally.

EUR/GBP, 4-Hour Chart Analysis

Although the economic calendar is virtually empty today, the British Service PMI provided a positive surprise, coming in above the consensus estimate, adding to the week’s bullish tone with regards tot eh the UK economy. The Great British Pound continued its meager rally on the news against the USD, but

Gold Extends Rally as Oil Turns Volatile

Gold Futures, 4-Hour Chart Analysis

The oversold rally in gold continued in Asian trading, and the precious metal is now trading near $1260 after dropping below $1250 and testing key support near $1240 in recent days. Gold could be in for a significant rally, should the global risk-off shift prove durable, as the metal is strongly oversold form a longer-term perspective.

Crude oil, especially the WTI contract got smacked lower yesterday after a huge rally in the end of June, and although the commodity recovered from the lows volatility remains high today, and trading activity is relatively high in the crucial market.

The spike lower came on the heels of a statement from Saudi Arabia that reassured the Kingdom’s commitment to raise crude output. We remain negative on the outlook for oil, although traders should be aware that the short-term supply constraints in the US could still drive the shorter dated contracts in the WTI higher.

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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.