European Open: Vol Subsides Ahead of BOE, Rising Wedge on FTSE

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Asian Indices:

Australia’s ASX 200 index rose by 13.4 points (0.18%) and currently trades at 7,516.60

Japan’s Nikkei 225 index has risen by 123.1 points (0.45%) and currently trades at 27,707.17

Hong Kong’s Hang Seng index has fallen by -51.99 points (-0.2%) and currently trades at 26,374.56

UK and Europe:

UK’s FTSE 100 futures are currently up 2.5 points (0.04%), the cash market is currently estimated to open at 7,126.36

Euro STOXX 50 futures are currently up 3.5 points (0.08%), the cash market is currently estimated to open at 4,148.40

Germany’s DAX futures are currently up 10 points (0.06%), the cash market is currently estimated to open at 15,702.13

US Futures:

DJI futures are currently down -323.73 points (-0.92%)

S&P 500 futures are currently up 17.75 points (0.12%)

Nasdaq 100 futures are currently up 7.25 points (0.16%)

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Asian indices hold onto gains

Asian equities held onto gains despite hawkish comments from Fed members yesterday. Positive earnings supported Japan’s equity markets which were the strongest of the session. The Nikkei is up 0.35% and the TOPIX is trading 0.3% higher. The Hang Seng is up just 0.15% but holding steady around 26,400 after its volatile ride last week and the ASX 200 touched a new record high during a low-volatility session. Futures markets are currently pointing to a slightly higher open for Europe.

The FTSE is grinding higher in its usual fashion. Although with each cycle higher seen with lower momentum, and prices now reaching resistance around 7150, we have our eyes on a potential bearish wedge pattern.

However, a word of caution with such patterns; wedges do have the ability to extend in the direction of the underlying trend and squeezing out ‘one more high’ before finally breaking counter to the trend. So, it could in fact rise towards the 7170 high and still put in upper spikes before reversing (assuming it does at all). Therefore, waiting for a break of a swing low and / or trendline can help reduce false breaks.

Also keep on mind the BOE meeting today at 12:00 BST which leaves the FTSE vulnerable to spikes of volatility. But, for now, a break below 7100 may be enough to confirm a near-term bearish reversal.

FTSE 350: Market Internals

FTSE 350: 4101.64 (0.26%) 04 August 2021

219 (62.39%) stocks advanced and 126 (35.90%) declined

48 stocks rose to a new 52-week high, 2 fell to new lows

77.49% of stocks closed above their 200-day average

70.94% of stocks closed above their 50-day average

24.5% of stocks closed above their 20-day average

Outperformers:

Underperformers:

-9.33% - Ferrexpo PLC (FXPO.L)

-6.56% - Morgan Sindall Group PLC (MGNS.L)

-4.35% - Dr Martens PLC (DOCS.L)

Forex pairs remain in tight ranges:

It was minor ranges for currencies with a slight air of risk-on, with AUD and NZD currently the strongest majors and JPY and CHF the weakest. So far this week, NZD and AUD are the strongest (thanks RBNZ) and CAD is the weakest as it remains pressured from lower oil prices.

EUR/GBP is holding above key support the key support zone around 0.8500. A bullish pinbar formed a slightly higher low above it yesterday, although prices are coiling up on the four-hour chart and its breakout direction is a flip of the BOE coin at this stage. 0.8500 remains a pivotal level.

GBP/USD broke out of a bullish channel on the four-hour chart last week and has been meandering around 1.3900 since. However, a strong bearish candle formed yesterday and prices and now trying to hold above the weekly pivot point at 1.3873 which is clearly the pivotal level for today.

A bearish outside candle formed on EUR/USD yesterday and prices have been anchored to its lows overnight. Whilst it is vulnerable to some intraday bullish spikes out bias remains bearish below 1.1900.

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Commodities basked falls for fourth day:

The Thomson Reuters CRB commodity basket fell for a fourth day and closed beneath its (now invalidated) bullish hammer, although found support at the 50% retracement level. The daily trend remains bullish above 204.93 (which leaves plenty of downside) but we appear no closer to a trough as of yet. And that paints a potentially bearish picture for energy markets.

Up Next (Times in BST)

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AUD/USD Price Analysis: Defends 200-HMA breakout inside rising wedge

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Given the quote’s sustained trading above 200-HMA and bullish MACD signals, AUD/USD prices are likely to defy the bearish chart pattern, with an upside break of the immediate resistance line near 0.7505.

AUD/USD holds onto the day-start gains around 0.7500, up 0.26% intraday, as European traders brace for Tuesday’s work. In doing so, the Aussie pair stays above 200-HMA while staying inside the bearish chart pattern, rising wedge, on the hourly play.

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Top cryptocurrency prices today: Bitcoin, Dogecoin, Cardano shed up to 3%

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New Delhi: Traders continued to book profit in major cryptocurrencies on Tuesday, following a sharp run-up in the last couple of weeks. All the top 10 cryptocurrencies were trading in red at 9.30 hours IST on Tuesday. Bitcoin and Cardano led the losers, giving up 3 per cent each.The global crypto market cap declined to $157 trillion, about 2 per cent higher compared to the last day. Also, the total crypto market volume decreased to $74.98 billion.Currently, there is a lack of convincing evidence that the rally will sustain due to the unknown nature of the risks presented by the London hard fork and the uncertainty caused by unsatisfied miners.Ethereum seems to have embarked upon its path to recovery, crossing the $2,600 mark yesterday. ETH has rallied close to 40% from its $1,750 low. A part of the recent recovery can be attributed to the much awaited London hard fork. Traders and investors see the EIP-1559 launch as a bullish driver for Ether as it is likely to reduce gas fees, said ZebPay Trade Desk “Miners will be affected the most by the EIP-1159 upgrade as it will burn a portion of the fees generated on the blockchain, in turn reducing their revenues. Potentially, as miners face a loss of revenue, it could be a matter of time before another network benefits and some migration is seen,” it added.China’s central bank vowed to maintain heavy regulatory pressure on cryptocurrency trading after escalating its clampdown in the market earlier this year.A few years ago, much of the corporate world shunned the crypto industry. They had written off cryptocurrencies and dismissed the revolutionary blockchain technology. Now they are lapping up the digital tokens swiftly. Dash (DASH) coin has been a popular cryptocurrency since its inception in 2014. It was launched as ‘Xcoin’ and was built as a faster and more private alternative to Bitcoin. At its peak, it was among the top 12 cryptocurrencies by market cap.Dash, an open-source project, aims to become a medium for daily transactions as a digital currency that includes a decentralized payment network. The developers of Dash are an active community, working on the project to improve its functioning and introduce superior technology, adding a vital push to its market sentiment. Today, Dash is among the top 60 cryptocurrencies by market cap.Recently, Dash introduced a payment app that helped its coin to rally. The retail-focused Dash Direct app is set to increase in adoption with over 125 websites and 155,000 vendors who accept Dash as a mode of payment. With that context, Dash is bullish for the long term.Technically, Dash is making a rising wedge that may take it to the low $200s. However, a rising wedge is fundamentally a bearish pattern with the possibility of a decline post breakout. Dash is also likely to encounter resistance on its way at $167 and $179. Day traders may be well positioned to grab some Dash for cheap soon. Dash is trading just above its support level of $156 today so its price may hold in the upcoming week.$156, $136, $125$167, $179, $201(Views and recommendations given in this section are the analysts' own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the asset/s mentioned.)