European markets extended losses on Friday, as a renewed fall in the price of oil and weaker trade in Asia weighed on sentiment.
With Mainland China on holidays and not many calendar positions markets in Asia focused on incoming global "risk" events like the Brexit vote and the Fed meeting which led to a deterioration of moods and helped the greenback regain some momentum.
Even though the Mainland bourses were closed Hong Kong equities provided a clear sign declining 1,5%, paving the way for declines in Australia (-1%) and Japan (-0,7%). With no fresh positive news markets were under influence of some bearish statements from legendary investors, with the latest coming from George Soros. Markets also have been very dovish heading into the FOMC meeting next week and with economists still eyeing a hike in July, the greenback was able to come back more than a little bit with the EURUSD down to less than 1.13 from above 1.14 yesterday in the morning.
Data on new loans in China has been tracked by investors trying to figure out how Beijing is navigating the economy. Following a record Q1 we saw new loans tumbling in April but now the data from the top 4 banks is showing a possible pick-up.
Following a weak session in Asia, equities in Europe started the Friday’s session with a major leg down, extending yesterday’s losses. Looking at the H1 chart of the DE30 (DAX30 futures) we can see that after a 10080 pts. support has been eventually broken, things turned very quickly with the futures tumbling sharply today. The next major support is at 9780 pts., which offers 2% of additional downside potential.
Following days of weakening dollar, rallying equities and surging oil, Thursday brought an interesting turnaround to many markets. Turnarounds are interesting because engulfing patterns on D1 charts may encourage further selling, helping drive those markets more.
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