Market Overview

US Market Recap: Equities Retreat Sharply, Breaking Away From Consolidation.

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USD Basket 1M

http://forexblog.oanda.com/mserve/USD_241012.PNG

USD strengthened again, holding above 0.92 comfortably. The latest USD rally pushed Aussie below 1.03 (which has since recovered post HSBC China Flash PMI), Fiber below 1.30 and Cable below 1.60. If USD maintain above 0.92, Cable and Fiber may be capped by the previous support turned resistance.

Gold/USD H4

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Price has broken below 1,725. Using recent chart patterns as reference, a repeat of the “bounce” would be a rally from current level seeking 1,720, near the lows of 13 Sep 2012 (at the onset of QE3 announcement) and also the lows yesterday before the recovery rally which was capped below 1,730.

S&P500 Futures Daily

http://forexblog.oanda.com/mserve/SP500_241012.PNG

The benchmark index dropped significantly due to earning woes, breaking the previous support. Bears were pushed back following the sharp decline, but we are still a distant away from the support turned resistance. How price react at the support/resistance will determine the technical bias/outlook for the benchmark index here on out, if it ever reach there that is.

Dow Jones Industrial Average Daily

http://forexblog.oanda.com/mserve/DJI30_241012.PNG

Perhaps a little bit more bearish than S&P500 considering that current price is halfway in the consolidation zone found in August while price in S&P500 is nearer to the top of the previous consolidation area.  We could still see yet another recovery back to the upward trendline. Similar to S&P500, how price react at the level will set the tone for the next week if not month's sentiment.

Bottomline:

Potential triple tops are forming on the 2 equity indices. Confirmation for the bearish breakout should be sought in case of false breakouts that could bring price back to the previous trading ranges. 

 

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