WTI breaches the $44 support

The escalating concerns in regards to the deceleration in China have resulted in Asian equities venturing into red territory in Tuesday’s trading session. Despite the aggressive use of monetary policy by the PBoC to jumpstart the ailing Chinese economy, fears over growth have only mounted and this risk-off environment may continue to punish Asian equities further. As of writing, the Shanghai Composite Index meanders between gains and losses lacking any real direction, but the trajectory still points down. The losses experienced in the Asian equity arena may trickle back to the European and American equity division. With economic weakness in China likely to drag into Q4, sentiment remains bearish for the China markets as market participants come to terms with the fact that growth targets in China’s next five year plan may be played down.

WTI bears have broken through the $44.00 support as upside momentum in this commodity has slackened considerably. The persistent concerns about an oversupply of oil have enforced continual downwards pressure on the price of WTI. The recently renewed anxieties about China growth, complimented with mounting fears of an economic slowdown in the States have sparked worries about the global demand for oil. This commodity has hit the $44.00 target we discussed last week and remains technically bearish on the daily timeframe. Prices may remain depressed as the dominant theme of a reduction in demand for oil may drag WTI to the next relevant support at $40.00.

Following the abrupt interest rate cut by the PBoC, European equities had a mixed reaction with the FTSE100 noticeably inclining to new weekly highs at 6486. The FTSE100 remains technically bullish on the daily timeframe, but the reinforced concerns about the slowdown in China combined with the punishment that mining stocks have received will ricochet back to the FTSE100 in the near future. A technical breakdown below 6300 may suggest the start of a sharp decline within this index.

USDJPY
The USDJPY remains in a wide range with support based at 118.50 and resistance at 121.70. Prices reside above the 20 daily SMA but below the 200 daily SMA. A breakout above the 121.70 resistance may open a path to the next relevant resistance at 124.50.

USDCAD
The USDCAD is technically bullish on the daily timeframe. Prices are trading above the daily 20 SMA and the MACD is in the process of crossing to the upside. A breakout above the 1.3200 resistance may open a path to the next relevant resistance at 1.3350.

EURAUD
The EURAUD is technically bearish on the daily timeframe. Prices are below the daily 20 SMA and the MACD trades to the downside. As long as prices can keep below the 1.5400 resistance, there may be a decline to the next relevant support at 1.5000.

GBPAUD
The GBPAUD remains technically bearish on the daily timeframe as long as prices can keep below the 2.1450 resistance. The next relevant support is based at 2.0800. Technical leading indicators such as the 20 SMA and MACD point to the downside.