• It’s been a red letter day
  • Not under control; Another day and sell-off as reverse thrust activated

We are not off to the best start this year, as downshift in global growth and Trade war pressures. 

Flash crash, Apple’s plunge, and Weak ISM manufacturing data were the key factors propelled the volatility. In times of risk on mood, traders tend to flee to safety, Japanese Yen and Gold price were the beneficiaries.

The currency market already witnessed the first flash crash in 2019. The USDJPY fell as low as 103.85 its lowest level since Nov 2016. The Japanese Yen had skyrocketed against the most traded currencies especially AUDJPY dropped to the lowest level in nine years. Besides EUR, GBP and NZD fell between 1.00-1.30%.

The second trading day in 2019 (Thursday) started with violet sell-off across the asset classes. First, it was Apple hinted a profit warning.
“New debt king” Gundlach commented on Apple’s profit warning: This is what happens in the bear market. (CNBC)
Overnight Apple stock fell 10.00%, Dow Jones fell more than 2.5%, and Nasdaq fell 3.00%.

Turning to the macroeconomic data releases, the US ISM Manufacturing PMI printed at 54.1 vs. 59.3. It was a decrease of 5.2% compared to November reading. We learned growth in the US appears to have stopped.

In forex, EURUSD manages to hold the support zone 1.1300-1.1260. We believe the price is going to consolidate within the current range between 1.1500-1.1200 for the next few days.

We spotted a small ascending triangle pattern on the daily chart (below). Is this a reversal pattern at the end of a downtrend is the key question? In case of a bullish trendline breakout, we could see 1.1560 and 1.1590 in the coming days.

In yesterday’s flash crash the kiwi dollar held early October low 0.6420 and traced out a double bottom, so far. Range: 0.6725-0.6420.

Turning to commodities Silver sits on the top with 14% from Nov 2018 lows followed by Gold 8.00%.

Silver price strengthened since laws week as protracted buying triggered a break of resistance at 15.00$, confirming upside sentiment. At the time of writing Silver is trading at 15.75$ and immediate resistance seems at 16.00$.
Readers can remind that we entered long Silver trade on mid-December targeting 15.60$. We continue to forecast Silver to head higher in the coming weeks. So we look for another opportunity to return to enter long.

The dollar index again fell back to the 100MAs, seems capped at 96.60. We believe the downside prevails as long as 96.60 is resistance. To strengthen this view, we need a close below Wednesday’s low. Besides US 10yr Treasury Yield closed at 2.44 down from Thursday’s closing 2.66.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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