Spot natural gas prices (CFDS ON NATURAL GAS) stabilized at a decline in recent trading at intraday levels, to achieve slight daily gains until the moment of writing this report, by 0.96%. It settled at the price of $9.372 per million British thermal units, after sharply declining during trading. Yesterday, the rate was -5.24%.

Natural gas prices retreated from 14-year highs after Freeport LNG said on Tuesday it plans to restart its liquefaction facility in early to mid-November, later than previously expected, and that will lead to further delays. in US LNG exports.

Higher natural gas prices in Europe helped keep prices higher around the world, prices in Europe rose on Monday after Russia announced that natural gas giant Gazprom would again halt supplies to Europe via the Nord Stream 1 pipeline for three days. It starts on August 31.

However, natural gas storage facilities in Germany are now more than 80% full before winter, showing steady progress despite a significant drop in deliveries from Russia amid the war in Ukraine.

Natural Gas Technical Outlook

• Natural gas declined following the stability of the pivotal resistance level 9.600, as the price failed to confirm its breach with another close above.
• It reaped the profits of its recent rises, and to try to gain positive momentum that might help it recover and breach that resistance in the future.
• It is trying at the same time to drain some of its saturation of clear buying of the relative strength indicators, especially with the start of the influx of negative signals from them.

All of this comes in light of the dominance of the main bullish trend over the medium and short term along a slope line, as shown in the attached chart for a (daily) period, with the continuation of positive support for its trading above its simple moving average for the previous 50 days.

Therefore, our expectations suggest a return to the rise of natural gas during its upcoming trading, but on condition that it first breach the pivotal resistance level 9.600, then target the resistance level 10.70. In the event that this resistance continues to remain stable in front of its upcoming trading, this would lead to more negative pressure to target the support level. 8.60.

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I think the only thing you can count on is seeing a lot of fake-outs in both directions.

• The AUD/USD currency pair has dropped rather heavily to kick off the week on Monday, slamming into the 0.70 level.
• This is an area that I will be watching very closely because it is a large, round, psychologically significant figure, and an area that I think a lot of people will be paying close attention to.
• We have seen a lot of support in that area in the past, right along with resistance.
• “Market memory” comes into play rather drastically in this general vicinity.

Risk Appetite May Cause Bullishness

The size of the candlestick is somewhat impressive, and therefore you need to take that into account. However, this is also a lot of noise underneath here so you also would have to assume that there will be people willing to get involved and try to pick up value in the Aussie if they are truly bullish on risk appetite. One of the main things that kicked this off during the Monday session was the fact that Chinese numbers came in rather lackluster. Retail sales missing by almost 3% does not bring in a lot of confidence when it comes to the Chinese economy. Remember, Australia is highly dependent on the Chinese economy, so if the Chinese economy does poorly, so will the Australian economy.

Underneath, we have the 50-day EMA, and that of course comes into the picture as well, as the market pays close attention to that quite often. The 0.6939 level is where it currently is, so breaking down below that will open up an attack on the 0.69 level, and then possibly breaking down below there to reach the lows again. I don’t know that it will happen easily, but it’s obvious that there is still plenty of volatility in the market, so you have to be very cautious on the whole.

If we were to break above the 200-day EMA, it opens up the possibility of a move above the 0.72 level, an area that has a certain amount of historical importance and of course psychology attached to it as well. Either way, I think the only thing you can count on is seeing a lot of fake-outs in both directions, and a lot of accounts destroyed in this pair as it has bucked the trend when it comes to how it behaves against the US dollar.

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Pay attention to the 10-year note, because if the yields in that market continue to go parabolic, that will eventually wear on gold, as well as just about anything else out there.

Gold markets fell rather hard on Friday to reach the 50-day EMA. The 50-day EMA is an indicator that a lot of people pay close attention to, and it is interesting to see how we react to it. If we break down below the 50-day EMA, then the market could go looking to reach the $1900 level. The $1900 level is a major round figure and an area where we have seen buyers previously.

On the other hand, if we turn around and rally, we probably need to break above the $1950 level to suggest that it is time to start thinking about buying again. Longer term, gold should do fairly well as long as the interest rates in America do not spike quite drastically. Ultimately, the market is trying to figure out what we have ahead of us, because right now the market is having to wrestle with the idea of the Federal Reserve tightening monetary policy, and what that is going to do for the markets overall.

As inflation continues to rip higher, people will start to look at the possibility of gold rallying as a bit of a buffer for it. That being said, the market needs to stay above that $1900 level to remain bullish as far as I can see. If we were to break down below there, then the market more likely than not will go looking to the 200-day EMA. The 200-day EMA currently sits at the $1850 area, so it is worth paying close attention to.

On the upside, the $2000 level is where we had pulled back from, and you can see there is a perfect shooting star in that area, so it certainly makes sense that we would see that as a potential target if we can continue to see upward pressure. However, we have just broken through the bottom of a couple of hammers, and that is not a good look. While we are not necessarily getting a sell signal quite yet, it certainly is not a good sign. Pay attention to the 10-year note, because if the yields in that market continue to go parabolic, that will eventually wear on gold, as well as just about anything else out there.

Ultimately, the candlestick on Thursday does suggest that we have further to fall.

The German index tried to rally during the trading session on Thursday but gave up the gains rather rapidly. By doing so, the market has been broken down significantly to slice through the 50 Day EMA. This is a very negative turn of events, and it now looks as if we are trying to test the €14,250 support level. If we were to break down below that level, it is likely that the DAX will drop significantly. In fact, one has to wonder whether or not this has been a “throw-over”, which is also sometimes called a “false breakout.”

The German index will suffer at the hands of the fact that the German government has recently had to acknowledge that GDP numbers are coming in at much lower than anticipated levels. By doing so, this suggests that the market is going to continue to see negativity, as the downward pressure will certainly have been a bit of a “shot across the bow.”

A breakdown below the €14,250 level could open up a move down to the €14,000 level rather quickly, followed by the €13,500 level, and then possibly the €13,000 level. This has been a massive bounce, but now it looks as if the bullishness may be running out of momentum.

On the other hand, if we were to break above the €14,900 level decisively, then we could take on the 200 Day EMA, and then maybe even the €15,500 level. This would be a bullish sign obviously but would also take a significant amount of momentum to come into the picture in order for the DAX to rally like that. Because of this, I think it is much easier to break down than it is to bounce, but there is also 1/3 possibility.

The third possibility would be that the market goes back and forth in this general vicinity, with the €14,900 level being resistance, while the €14,250 level offers support. Keep in mind that it is the jobs number on Friday, and that has a significant amount of influence on the volatility and the risk appetite overall. If the risk appetite starts to wane, then it is likely that we will see the DAX fall right along with it, and of course vice versa. Ultimately, the candlestick on Thursday does suggest that we have further to fall.

 

On Wednesday, the  Australian Bureau of Statistics reported the preliminary retail sales figure, which showed that retail sales dropped by 4.2 percent (month-to-month) in September, after climbing by 3.2 percent on the previous month.

Last week, the Australian Dollar went down by 3.59 percent against the US dollar, breaking a two-week gaining streak.

The Reserve Bank of Australia deputy governor Guy Debelle expressed his concerns about the value of the Australian dollar on Tuesday, going against the analysts’ expectations, who thought that he wasn’t going to comment on the issue given the belief that the Australian Dollar late performance has been mainly linked with the US dollar weakness. Last week the US dollar recovered against a bundle of its main competitors, gaining 1.85 percent and recovering from the previous week’s losses.

Debelle highlighted that a lower exchange rate would benefit the economy, which the markets interpreted as opening up the possibility of intervening in the foreign exchange market to lower the Australian Dollar value, something similar to what the Swiss National Bank has been doing to stop the appreciation of the Franc.

The Deputy Governor also left the doors open for further interest rate cuts, which implies that the RBA eventually may consider imposing negative cash rates, though he pointed out that there is still room to bring down the cash rates without entering into the negative territory. About this alternative Debelle commented that the evidence is mixed concerning its effects on the exchange rate.

“The empirical evidence on negative rates is mixed. In the short-term, they can contribute to a lower exchange rate. In the medium term, the effectiveness can wane including through the effect on the financial system,” he said, adding that it can encourage households to save more, especially in an environment where they’re inclined to do so.

The Reserve Bank of Australia’s monetary policy committee is expected to meet next week and announce its monetary policy decision afterward. Until then, it may not be clear whether they’re willing to consider this alternative or not.

Last week the markets got important information about the state of the Australian economy. On Tuesday, the Commonwealth Bank of Australia together with market economics released the preliminary Commonwealth Bank Services PMI for September, which stood at 50, showing an expansion of the services sector. In August the indicator stood at 49, signaling a contraction in the sector, while the analysts foresaw it to be at 48.4. The Manufacturing PMI, which stood at 55.5, showed a faster expansion of the manufacturing sector, given the 53.6 of the previous month. Analysts foresaw a contraction, as they expected it to be at 48.3.

The composite PMI stood at 50.5, showing an expansion of the business sector. The previous month’s figure signaled a contraction, as it stood at 49.4. On Wednesday, the  Australian Bureau of Statistics reported the preliminary retail sales figure, which showed that retail sales dropped by 4.2 percent (month-to-month) in September, after climbing by 3.2 percent on the previous month.

On Friday, the Australian Bureau of Statistics published that the preliminary trade balance for August registered a surplus at $4,294 million, after being at $4607 million in the previous month. Imports fell by 7 percent after climbing 7 percent in July, while exports dropped by 2 percent after falling by 4 percent in the previous month.