The calm before the storm?

During the weekend, Russia’s Ministry of Defence announced that it had fired warning shots at a cargo ship that was in the black sea in order to conduct an inspection on the vessel’s contents. According to Bloomberg the ship was travelling to Ukraine’s port of Izmail when the Russia’s naval warship intercepted the cargo ship and conducted its inspection. The following incident appears to have re-ignited worries in the commodities markets, particularly Wheat, as concerns about the supply chain continue to mount. China’s continued economic woes appear to be worsening, following one of the country’s largest property developer Country Garden announcing according to FT that it was suspending trading in at-least 10 of its mainland bonds and has according to Bloomberg, less than 30 days before it defaults on its bonds. The current situation of the property developer appears to be highlighting the growing concerns surrounding China’s Housing market, spurring an apparent sell-off in Chinese markets, as concerns about China’s economic recovery are re-ignited.

Tesla (#TSLA) cuts prices of some Model Y variants in China, potentially hinting at a growing concern of the EV makers ability to entice customers to purchase their automobiles, during a time of high competition and apparent attempt to spur demand. Furthermore, Tesla’s move could be perceived as an attempt to sacrifice some of its profit margins in an attempt to increase sales, thus potentially gaining a greater market share over its competitors in the long run.  Furthermore, Japan’s Preliminary GDP rates are due out tomorrow which are anticipated by market analysts to provide support for the Japanese Yuan, as the rates are expected to indicate continued economic growth in the country.

Wheat appears to be moving in a downwards fashion, with the commodity now aiming for the 626 (S1) support level, yet the recent tensions in the black sea could potentially cause the commodity to reverse its trajectory. Nonetheless, we maintain a bearish outlook for Wheat and supporting our case is the downwards moving trendline formed on the 7^th of August, in addition to the commodity breaking below support turned resistance at the 662 (R1) resistance level. For our bearish outlook to continue, we would like to see a clear break below the 626 (S1) support level and the 575 (S2) support base, with the next possible target for the bears being the 530 (S3) support level. On the other hand, for a bullish outlook we would like to see a clear break above the 662 (R1) resistance level, which would coincide with a break above the aforementioned downwards moving trendline, with the next possible target for the bulls being the 704 (R2) resistance ceiling.

Tesla (#TSLA) appears to be moving in a downwards fashion, with the stock aiming for the 240.55 (S1) support level. We maintain a bearish outlook  for the stock and supporting our case is the downwards moving trendline formed on the 31^st of July, in addition to the RSI indicator below our 4Hour Chart currently  nearing the figure of 30, implying a strong bearish market sentiment. For our bearish outlook to continue, we would like to see a clear break below the 240.55 (S1) and 223.45 (S2) support levels, with the next possible target for the bears potentially being the 198.75 (S3) support base. On the other hand, for a bullish outlook, we would like to see a clear break above the 250.90 (R1) resistance level, which would coincide with a clear break above the aforementioned downwards trendline, with the next potential target for the bulls being the 275.15 (R2) resistance ceiling.

Other highlights for the day:

In today’s trading session we note no major financial releases. In tomorrow’s Asian session we note Japan’s Preliminary GDP rate for Q2, Australia’s Wage price index rate for Q2, Australia’s RBA August meeting minutes, China’s Urban Investment, Industrial Output and Retail sales rates all for the month of July and lasty Japan’s Chain store sales rate for July.

#Wheat H4 Chart

Support: 626 (S1), 575 (S2), 530 (S3)

Resistance: 662 (R1), 704 (R2), 743 (R)

#TSLA H4 Chart

Support: 240.55 (S1), 223.45 (S2), 198.75 (S3)

Resistance: 250.90 (R1), 267.15 (R2) 285.85 (R3)

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com

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