A sense of calm has come back into global Equity markets today, with the PBOC (People’s Bank of China) announcing that there was no basis will for further Yuan devaluation after a near 5% depreciation in the world’s second strongest economy’s currency over the last two days – see article here
As mentioned in yesterday’s article , the Daily 200 moving average (green line in the chart) was a key level to watch as to whether price would close below this level yesterday. As you will see from the chart, price failed to close under this level as long-term Bulls stepped into the market.
(click to enlarge)
Looking at the Hourly chart below, one can see my price target of 10892 was hit to the pip in trading yesterday, before Bulls stepped into the market at this key zone (10892/10856) and pushed price higher. As aforementioned, price managed to hold above the Daily 200 MA, however traders have taken profits this morning causing price to roll back over. A level of note intraday will be 10984. This level is the 61.8% retracement of yesterday’s bounce higher and is also the bottom end of the key zone 11018/10987.
(click to enlarge)
CONCLUSION – NEUTRAL
My bias would lean towards the Bullish side until there is a close below the Daily 200 MA, however Bulls still remain under pressure with price well below its Hourly 200 MA (green line in the chart above).
For Bulls, price needs to hold onto the 10984 level in trading today, with price ideally taking out the 111194/111174 zone. Although if price does manage to reach that key zone then expect profit taking, as well as Bears seeking to enter/add into short positions.
For Bears,price needs to get back below the 11018/10987 zone and ideally take out yesterday’s low of 10892. If price climbs higher, opportunities to short reside against today’s high of 11133 and into the 11194/11174 zone. Risk can be easily defined and limited against these areas. However, the 11194 level will be the line in the sand for Bears today, as a move above this area will signify a shift in market sentiment.
Bearish targets :-
- 10984 (61.8% Fib level + bottom end of key zone 11018/10987)
- 10937 (Extension of Daily range – 22 day avg. 195 pips)
- 10892 (Yesterday’s low)
Bullish targets :-
- 11135 (Today’s high)
- 11194 (Extension of Daily range + 11194/11174 zone)
- 11261 (Tuesday’s low + Daily R1 Pivot 11289 + Weekly S1 Pivot 11283)