Trading plan for August 25
On Monday, all the stock markets collapsed starting from China. Shanghai Composite fell by 8.5% in the Asian trade, pulling all the indices lower. As a result, market appetite turned negative and the commodity rout extended. Investors rushed into the safe-haven assets, such as EUR, JPY, GBP and CHF. As for the metals, the only asset that survived for now is Gold. It stays in demand as a refuge.
We expect the current risk-off trend to continue until we see a significant rebound in China. Watch the Bank of China’s actions as at a certain point they will have to intervene to save the economy. We advise joining the trend and selling the commodity and risky assets until that happens. AUD and NZD are an attractive SELL these days.
EUR/USD is being bought as the carry trade operations became senseless in the current conditions. We expect the euro to stay supported as the crisis goes on. Buy the pair on dips to 1.1470. GBP/USD is also an attractive pair to go long after it closed above the 1.5700 resistance. Target 1.5800 and 1.5870 this week.