China’s $83 Billion Gold Discovery: Fuels Bullish MomentumChina Discovers $83 Billion Gold Reserves in Hunan
China has uncovered gold reserves valued at approximately $82.9 billion (600 billion yuan) in Hunan province, according to state media Xinhua. This discovery solidifies China’s position as the world’s largest gold producer, contributing roughly 10% to global output in 2023.
The reserves, located in Pingjiang County, feature over 40 gold ore veins at a depth of 2,000 meters, with a core resource of 300.2 tons and grades reaching up to 138 grams per ton. Experts forecast more than 1,000 tons of reserves at greater depths.
Despite its significant production capacity, China remains a net importer of gold to meet domestic demand, with consumption far exceeding output in the first three quarters of 2023.
Gold prices have seen a surge this year, driven by geopolitical uncertainties, further highlighting the strategic importance of this discovery.
Gold Technical Analysis
Gold is currently exhibiting a strong bullish trend, supported by the stabilization of the weekly candle in bullish territory. Here’s the refined analysis:
Bullish Scenario:
As long as the price stays above 2644 and 2625, we anticipate a push towards 2678, 2706, and 2739. A breakout above 2739 could lead to new all-time highs at 2787 and 2838.
Bearish Scenario:
For a bearish outlook to materialize, the price must break 2625 on a daily candle, potentially targeting 2585 and 2558. However, this scenario remains less likely under current conditions.
Outlook:
The bullish scenario is favored due to the ongoing geopolitical tensions and China's significant gold provisions, including the recently announced reserves of 1,100 tons.
Key Levels:
Pivot Point: 2644
Resistance Levels: 2678, 2706, 2739, 2787, 2838
Support Levels: 2625, 2612, 2585
Trend Outlook: Uptrend
This analysis highlights the robust upward momentum in gold, underpinned by global uncertainties and China's strategic reserve accumulation.
China
CHINA50 price action forming a bottom?CHN50 - 24h expiry
Price action looks to be forming a bottom.
Further upside is expected.
Risk/Reward would be poor to call a buy from current levels.
A move through 13300 will confirm the bullish momentum.
The measured move target is 13550.
We look to Buy at 13175 (stop at 13025)
Our profit targets will be 13575 and 13640
Resistance: 13300 / 13525 / 13600
Support: 13175 / 13100 / 13050
Risk Disclaimer
The trade ideas beyond this page are for informational purposes only and do not constitute investment advice or a solicitation to trade. This information is provided by Signal Centre, a third-party unaffiliated with OANDA, and is intended for general circulation only. OANDA does not guarantee the accuracy of this information and assumes no responsibilities for the information provided by the third party. The information does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
You accept that you assume all risks in independently viewing the contents and selecting a chosen strategy.
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SHOCKING! 40% tariffs on Chinese imports!According to a survey of economists by Reuters, the U.S. is considering imposing nearly 40% tariffs on Chinese imports early next year. Such measures could slow the growth of the world’s second-largest economy by 1%. Economists polled by the publication, both Democrats and Republicans, believe these changes will trigger massive disruptions in the U.S. and global economies, surpassing the impact of the trade wars during Trump’s first term. They warn this could ignite a “global trade war.”
During his presidential campaign, Donald Trump promised significant tariffs on Chinese goods as part of his “America First” trade policy. These potential tariffs, much higher than the 7.5%-25% rates of his first term, come at a vulnerable time for China’s economy, which is grappling with a prolonged real estate slump, debt risks, and weak domestic demand. Most economists predict Trump will impose the tariffs in early 2025, with an average estimate of 38% and projections ranging from 15% to 60%. These tariffs are expected to reduce China’s economic growth in 2025 by about 0.5-1.0 percentage points.
What could Trump’s policy lead to?
Chinese indexes: Chinese stock indexes like #ChinaA50 and the Hang Seng Index (#HSI) are expected to face downward pressure.
Chinese corporations: Key sectors such as electronics, automotive, and textiles—heavily reliant on exports to the U.S.—are likely to suffer the most. Major Chinese corporations, including #Alibaba and other leading players, could see their stock values decline. U.S. Indexes: American indexes like #SP500 and Dow Jones (#DJI30) might experience short-term volatility. Tariffs will raise costs for U.S. companies dependent on Chinese supplies, such as those in tech, automotive, and consumer goods sectors—companies like #Apple, #Tesla, and #Nike may face increased production costs. This could reduce profitability and potentially lead to stock corrections.
In the long term, however, the U.S. might benefit from the trade war, as it could boost domestic production, positively impacting American manufacturing stocks. FreshForex analysts predict a growth phase to begin in late Q1 2025 . At the same time, on November 14, investors sharply increased short positions in Asian currencies following Trump’s tariff announcements.
CRYPTO OWNERSHIP LEGAL IN CHINA = $NEO BULLISHA judge in a Singaporean court has ruled cryptocurrency ownership is now legal in China. What does this mean?
NEO is China's top cryptocurrency, also referred to as "Chinese Ethereum" with large stimulus recently been given to Chinese, and the fact the Crypto is now legal is China, we are about to see NEO wake up. I'm predicting an early classic cup and handle set up will come, and who knows where NEO will rise to.. $100? $250? $500? Who knows, but with China now legalizing crypto NASDAQ:NEO is about to go up to a whole different level, and I'm prepared... Are you?
Alibaba - Trump Won't Beat This Stock!Alibaba ( NYSE:BABA ) is bullish despite Trump's presidency:
Click chart above to see the detailed analysis👆🏻
Two months ago, Alibaba pumped 30% within a couple of days, perfectly following the resistance trendline breakout. So far we saw a rejection of the upper resistance level and it is quite likely that Alibaba will retest the breakout area. However, the underlying price action is still bullish.
Levels to watch: $80, $115
Keep your long term vision,
Philip (BasicTrading)
Navigating the Gold Market: Tips for Investors
Gold, often hailed as a safe-haven asset, is increasingly finding itself at the mercy of two powerful forces: China and the U.S. dollar. As these two economic giants influence global markets, their actions have a direct impact on the price of gold.
China's Growing Appetite for Gold
China's insatiable demand for gold has been a significant driver of the yellow metal's price. The country's burgeoning middle class, coupled with its cultural affinity for gold, has fueled a surge in gold consumption. This demand is not limited to jewelry; it extends to investment purposes as well.
China's central bank, the People's Bank of China (PBOC), has also been a major buyer of gold. By diversifying its foreign exchange reserves, the PBOC aims to reduce its reliance on the U.S. dollar and mitigate risks associated with geopolitical tensions. As China continues to accumulate gold, it exerts significant influence over the global gold market.
The Dominance of the U.S. Dollar
The U.S. dollar, as the world's primary reserve currency, holds immense sway over the global economy. Its value relative to other currencies, often referred to as the "dollar index," has a significant impact on the price of gold.
When the dollar strengthens, it typically leads to a decline in the price of gold. This is because gold is priced in U.S. dollars. As the dollar appreciates, it becomes more expensive for foreign investors to purchase gold, which can dampen demand and put downward pressure on prices.
Conversely, when the dollar weakens, gold often appreciates. A weaker dollar makes gold more affordable for foreign buyers, stimulating demand and driving up prices.
The Interplay Between China and the U.S. Dollar
The interplay between China's growing demand for gold and the strength of the U.S. dollar creates a complex dynamic that can impact the price of gold.
• Competing Forces: China's demand for gold can support prices, while a strong U.S. dollar can exert downward pressure.
• Geopolitical Tensions: Geopolitical tensions between the U.S. and China can exacerbate market volatility and impact the price of gold.
• Global Economic Conditions: Global economic conditions, such as inflation, interest rates, and economic growth, can also influence the demand for gold.
The Future of Gold
The future of gold remains uncertain, but China and the U.S. dollar will continue to play a significant role in shaping its price. As China's economy grows and its influence on the global stage increases, its demand for gold is likely to remain strong.
However, the strength of the U.S. dollar will also be a key factor. If the dollar strengthens significantly, it could put downward pressure on gold prices. Conversely, a weakening dollar could support gold prices.
In conclusion, gold's future is intertwined with the economic and geopolitical landscape. While it remains a valuable asset, investors should carefully consider the impact of China and the U.S. dollar on its price. Diversification and a long-term investment horizon may be prudent strategies for those seeking exposure to gold.
Additional Factors Affecting Gold Prices
• Inflation: Gold is often seen as a hedge against inflation. As inflation rises, the purchasing power of fiat currencies declines, making gold an attractive investment.
• Interest Rates: Higher interest rates can reduce the appeal of gold, as investors may prefer to invest in interest-bearing assets.
• Market Sentiment: Investor sentiment and market psychology can significantly impact gold prices, especially during periods of economic uncertainty.
• Supply and Demand Dynamics: Global gold production and demand can influence prices. Changes in mining production or shifts in consumer demand can affect supply and demand dynamics.
By understanding the interplay of these factors, investors can make more informed decisions about investing in gold.
LONG HANGSENG"Don't fear the noise from analysts.
Trump's win and Hang Seng's current valuation are likely already priced in. Many analysts won't clarify this because narratives can drive market behavior.
Stay informed, but think critically. 🧠📉"
Risk Reward is clearly visible in CHART.
Just follow charts rather than Narratives and Analysts.
BABA | A trillion dollar criticismChinese tech titan Jack Ma had been having it rough ever since his criticism of Beijing triggered a backlash on his companies and wealth but a recent development may change the tide.
On Friday, China's central bank announced a fine of 7.12 billion yuan, or $985 million, for Ant Group the fintech giant co-founded by Ma that operates the Alipay payments app signaling that its years-long regulatory crackdown is ending.
But the years-long crackdown has taken a heavy toll on Ma's wealth and the market valuations of the companies he holds stakes in. Alibaba the flagship company he cofounded saw a 45%, or $620 billion, drop in market value since shares hit their peak in 2020, per Bloomberg's calculations on Sunday.
Ant Group is now valued at around $78.5 billion marking a steep 75% discount to its valuation of $315 billion in a scuttled IPO before Beijing's regulatory crackdown in 2020.
The collective $850 billion wipe out in Alibaba and Ant's valuations has sent Ma's net worth plunging from about $61 billion in October 2020 to $34.1 billion as of Monday
On a personal level, Ma has also been lying low for more than two years.Ma angered Chinese authorities after giving a speech in October 2020 in which he criticized China's financial regulatory system and claimed Chinese banks were operating with a "pawnshop" mentality. His words prompted intense regulatory scrutiny of his businesses including Alibaba and Ant and a wider crackdown on tech firms in China.
In January, he was spotted in Bangkok, where he visited a Michelin-starred street-food restaurant and watched a Muay Thai fight. He also popped up in Hong Kong in the same month.
In March, Ma returned to a school he founded in his hometown of Hangzhou in eastern China.
In April, he was appointed an honorary professor at the University of Hong Kong. In May, Ma took up a teaching position in Japan, one of the first public roles he has assumed since disappearing from the spotlight in 2020.
Last month, Ma attended the Alibaba Global Mathematics Competition finals in Hangzhou, where Alibaba is based.
Alibaba shares in Hong Kong were up 3% at 86.90 Hong Kong dollars apiece at midday, buoyed by news of the fine. The company's shares in New York closed 8.1% higher at $90.55 apiece on Friday.
China's economic concerns drove oil prices lower
Concerns regarding China's oil demand and the dollar's strength have decisively impacted oil prices, driving USOIL down to its lowest since October 29th. China's inflation data reveals significant weakness, intensifying fears of deflation. Additionally, the Trump administration's pressure on China is expected to exacerbate economic challenges for the nation, raising serious concerns about a potential downturn.
After breaking the 70.00 threshold, USOIL retreated to 68.00. Both EMAs widen the gap, indicating a continuous bearish momentum. If USOIL breaks the trendline, which has extended since mid-Sep, the price may fall further to this year's low of 64.50. Conversely, if USOIL breaches the resistance at 70.00, where EMA21 coincides, the price could gain upward momentum toward 73.50.
FXI - Wave 5 can push price to 40+A Wave 4 50% indicated price would drop to 31.10. Filled at 31.05. Wave 5 should push prices above Wave 3. While I will take some profits around the $40 level, as I did when price hit $33, my initial target, China will be a force going forward so I will maintain a long-term stock position. Thus far, this has been an exceptional trade after initially highlighting the double bottom at the 22 level.
JD Options Ahead of EarningsIf you haven`t bought JD before the major breakout:
Now analyzing the options chain and the chart patterns of JD prior to the earnings report this week,
I would consider purchasing the 40usd strike price Calls with
an expiration date of 2025-1-17,
for a premium of approximately $2.81.
If these options prove to be profitable prior to the earnings release, I would sell at least half of them.
USDCNY | Market outlook
The USD/CNY strengthened on Tuesday as a stronger U.S. dollar and concerns over a weak Chinese economy put pressure on the Yuan.
Recent data from China revealed that manufacturing activity fell to a six-month low in August, while growth in new home prices also slowed during the same period.
Additionally, the property sector has yet to respond positively to Beijing's series of stimulus measures, continuing to drag down the overall economy.
Hedging Price Risk in Silver in a Pivotal Week This is a big week for financial markets, a long-anticipated election in the US is likely to have widely varying impacts across major asset classes. Safe haven assets such as silver stand to benefit from the uncertainty.
There is also an FOMC meeting scheduled on 7/Nov (Thu) where the Fed is widely expected to cut rates by 25 basis points. A lower rate environment also serves as tailwind for silver.
Finally, the Chinese parliament is expected to announce details of fiscal stimulus on 8/Nov (Fri). Fiscal stimulus in China also stands to benefit silver through higher investment demand as well as industrial demand.
In what should fundamentally be a strong week for silver, prices have entered the week on a bearish note following a 3.4% decline last week. While fundamental outlook for Silver remains bullish, this eventful week may drive unwanted volatility. Indeed markets are expecting large moves in silver prices with silver options IV near a 1-year high.
Source: CME Group CVOL
Investors can strategically deploy CME silver weekly options along with a long position in silver to capitalize on the fundamental increase while remaining protected against volatility.
BULLISH FUNDAMENTAL OUTLOOK FOR SILVER
Mint Finance covered some of silver’s bullish fundamental drivers in a previous paper .
In brief, robust growth from the photovoltaic (PV) sector is driving high demand. PV installations are surging, with global solar installations up 29% year-over-year, driven by aggressive climate policies and energy transition goals. This increase has directly boosted silver consumption, essential for PV production.
At the same time, silver markets have stayed in a supply deficit for the past four years. Silver miners have struggled to keep pace with the rapidly increasing industrial demand.
China’s massive stimulus package—its largest since the pandemic—also plays a crucial role, freeing up liquidity to revitalize its struggling economy. This stimulus supports sectors like PV and electronics, key industries for silver usage, while bolstering consumer confidence, which translates into heightened demand for silver in electronics and jewellery.
Investment demand for silver has started to pick up pace. Since July, U.S.-listed silver ETFs have seen over $942 million in inflows, particularly after the Fed’s rate cuts, which makes non-yielding assets like silver more attractive.
HIGHER SILVER JEWELLERY DEMAND IN INDIA
The recent festival season in India saw high demand for silver as buyers opted for it over gold. Silver sales by volume are expected to have increased 30-35% YoY while gold sales fell by 15% according to data from the Indian Bullion & Jewellers Association.
Rising investor interest in silver is partly due to its relative affordability compared to gold, which is trading at an all-time high. While high gold prices are dampening demand, especially for physical gold and jewellery, silver remains more accessible, supporting increased investment.
Rising investment demand, particularly for jewellery, risks pushing silver further into deficit. While jewellery demand for silver had been modest in recent years, 2022 saw a significant increase. According to the Silver Institute, jewellery demand is projected to grow by 4% in 2024 (but below 2022 levels), with actual demand potentially exceeding this due to the strong seasonal trend. Increased demand would further tighten silver supplies, likely driving prices higher over the next year.
UPCOMING FOMC MEETING AND CHINA STIMULUS TO DRIVE SENTIMENT
China’s parliament has started it five-day meeting on 4/Nov (Mon) and is expected to announce the details of the fiscal support on 8/Nov (Fri). Analysts suggest the fiscal plan could reach 10 trillion yuan ($1.4 trillion), with most funds likely allocated to refinancing local government debt. A substantial fiscal stimulus plan is likely to support silver prices.
Recent economic data from China has also shown a recovering industrial sector as China’s manufacturing PMI rose from 49.8 to 50.1 in Oct as the manufacturing sector shifted into expansion after 5 months of contraction. In case the trend continues, stronger industrial demand also stands to push silver prices higher.
SILVER IN THE MIDST OF CORRECTION DURING UPTREND
Silver continued its bullish momentum from September into October but has corrected sharply over the past week. During the rally earlier this year, when silver prices corrected, they were able to find support at the 38.2% and 61.8% Fibonacci levels. With Silver presently just above the 38.2% level, it may find support here.
Silver’s performance in the past two months has closely aligned with monthly pivot points. In both September and October, prices tested these pivot levels before moving higher. However, recent tests have shown smaller deviations from the pivot compared to prior months, suggesting that volatility could push prices slightly lower during this month’s test.
There is strong reason to believe that the general bullish trend is likely to continue into next year. According to a poll at the LBMA precious metal conference, delegates expect silver prices to rise to USD 45/oz over 2025, reflecting a 37% increase from present levels. Precious metal analysts were highly optimistic about silver, stating that higher industrial demand combined with continued supply deficit was likely to drive strong gains.
SEASONALITY SUGGESTS POTENTIAL FOR LARGE GAINS IN NOVEMBER
Silver prices closed out October with a 4.6% increase but are currently nearly flat for November. Historically, November has been a mixed month for silver, with an average price increase of 1.88% since 2000, though with high standard deviation. Notably, only 42% of Novembers have shown positive gains.
Despite this variability, past performance shows periods where silver either consistently declined or consistently rallied over multiple Novembers. Over the last two years, November has seen significant growth in silver prices; if this recent trend persists, silver could experience strong gains this month.
SILVER’S PERFORMANCE AROUND ELECTIONS
Certain safe haven and risk assets (gold, silver, BTC) stand to benefit from a Trump presidency. Historically, elections have impacted silver prices in varying ways. Following the Trump victory, silver stands to benefit.
Looking at silver’s historical performance in the two weeks following elections since 1980, prices increased by an average of 0.7% when a Republican replaced a Democrat president.
The Democrat-to-Republican shift has led to price rallies in two-thirds of cases.
SILVER’S PERFORMANCE AROUND FOMC MEETINGS
As mentioned, lower rates have a positive impact on non-yielding investment assets such as silver while also boosting industrial demand during periods with loose monetary policy. During the Fed easing cycles in 2001, 2007, and 2019, silver reacted positively to Fed rate cuts in 68% of cases (performance measured 1 week after FOMC meeting with monetary easing) with an average of 0.9% appreciation on the CME Silver front month contract.
Source: CME FedWatch
CME FedWatch tool is suggesting that a 25-basis point rate cut is most likely at the upcoming meeting on 7/Nov with a probability of 98%. As the outcome is largely anticipated, the impact of the meeting on silver prices may be minimal.
HYPOTHETICAL TRADE SETUP
Silver remains bullish with strong fundamental drivers including the rapid growth in the PV industry and strong investment demand.
This week, several major events are expected to drive significant volatility in the silver market. While these events are generally anticipated to boost silver demand, prices may remain unstable and could see short-term declines.
Silver is currently trading near its support levels, but increased event-driven volatility this week could lead to significant price swings. In late October, for example, silver briefly surged nearly 4% above usual resistance levels during short bursts of volatility. Although trading volume remained concentrated near the support level, the risk of sudden, sharp moves remains. This could result in a long silver position being prematurely closed out.
With a long position in silver futures at risk from near-term event risks, investors can deploy CME weekly options to hedge a long position from near-term volatility which increases tail risk.
In the following hypothetical trade setup, investors can combine a long position in CME micro silver futures expiring in December (SILZ4) at an entry of 32 with a protective put using CME silver weekly options expiring on 8/Nov (Fri) (SO2X4) at a strike level of 31 (delta 20, premium of 0.087/oz or USD 435) offers a compelling trade setup while remaining hedged against near-term volatility.
Using a delta-20 put option keeps the position fully delta-hedged for the week, as the delta of the long micro silver position aligns with the option’s delta at 20. Since each micro silver contract is one-fifth the size of a full contract, this setup effectively maintains the hedge.
In case prices dip below 30.64 by Friday due to volatility from the election, FOMC meeting, and China parliamentary meeting, the put option would offset any losses from the futures leg.
In the later part of the month, the outlook for silver is likely to be bullish given the fundamental factors highlighted above, in case prices rise, the position would become profitable above 32.44, offsetting the premium paid for the short-term option.
The scenarios in which the position loses:
1) In case prices remain between 30.64 and 32.44
2) In case prices fall below 30.64 following the put option expiry on 8/Nov
The scenarios in which the position profits:
1) In case prices fall below 30.64 before the put option expiry on 8/Nov
2) In case prices rise above 32.44 at any point
It should be noted that it would be prudent to set a stop loss on the long futures position following options expiry at 31 to minimize losses in case of a decline after options expiry.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme .
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
IO Weekly Technicals Review [2024/44]: Set For Large Move SGX TSI Iron Ore CFR China (62% Fe Fines) Index Futures (“SGX IO Futures”) expiring in December rose last week, up by USD 0.54/ton on Friday, though prices gave up some gains by the end of the week.
SGX IO Futures opened at USD 101.60/ton on 28/Oct (Mon) and closed at USD 102.14/ton on 01/Nov (Fri).
Prices briefly touched a weekly high of USD 104.60/ton on 29/Oct (Tue) and a low of USD 101.30/ton on 28/Oct (Mon). It traded in a range of USD 3.30/ton during the week, which was smaller than the prior week.
Prices traded just above the pivot point of USD 103.70/ton for most of the week before falling below it on Friday.
Volumes were noticeably lower in the later part of the week. Highest volume was observed on 30/Oct (Wed).
SGX Iron Ore Futures Fundamentals in Summary
China’s parliament has started its five-day meeting on 4/Nov (Mon) and is expected to announce the details of the fiscal support on 8/Nov (Fri). Analysts suggest the fiscal plan could reach 10 trillion yuan (USD 1.4 trillion), with most funds likely allocated to refinancing local government debt. The outcome is likely to drive significant volatility during the week.
China’s manufacturing PMI rose from 49.8 to 50.1 in Oct as the manufacturing sector shifted into expansion after 5 months of contraction. Non-manufacturing PMI also rose to 50.2 from 50.0.
Steel industry PMI rose to 54.6 from 49 in prior month. The PMI reading was the highest since July 2018. The output index rose to 63.6 suggesting the stimulus helped boost steel production.
Caxin’s China manufacturing PMI rose from 49.3 to 50.3 in October recovering from the dip in September.
IO China Portside inventories rose by 770k tons to 150.1 million tons last week. The pickup volume declined further by 13k tons. Accumulating inventories pose a risk to IO demand.
Based on seasonality, SGX IO Futures Dec contract trades 3.6% higher than its last 5-year average (USD 99.31/ton).
Short-Term Moving Averages Signal Bearish Trend
Prices recovered following the bearish MA crossover on 22/Oct but failed to rise above the 21-day moving average. The 21-day moving average served as a resistance level throughout last week.
Long-Term Averages Provide Support
Prices shot above the 100-day moving average on 28/Oct (Mon) and managed to hold above this level for the rest of the week. Price re-tested this support level on 4/Nov (Mon) but seems to be holding above it for now.
MACD Points to Fading Decline
The MACD suggests a weakening bearish trend, with the short-term MA positioned just below the long-term MA. However, both MAs are trending downward, making a bullish crossover unlikely without a sharp rally. The long-term MA may serve as support. The RSI is near a neutral level at 51.02.
Fibonacci 38.2% Tested Last Week
Following the retracement of the bearish trend since the start of October, prices rallied to the 38.2% Fib level but failed to surpass it. This could indicate a continuation of the bearish trend. Though, the USD 100/ton level may provide psychological support.
Price Trading Just Below Volume Point of Control
Sellers continued to dominate trading despite an uptick in buyers early last week. Price faced resistance at the volume point of control for October (USD 103.55/ton). There is another area of volume concentration at (USD 101.15/ton) which could provide near-term support.
Bollinger Bands Narrowing with Low Volatility
Bollinger Bands for IO futures are narrowing and their width is near the lowest contraction since August, increasing the likelihood of a sharp breakout. Price is currently at the mid-point of the Bollinger Bands. Historical Volatility also continued to decline last week and reached its lowest level since August.
Iron Ore Options Favor Calls
SGX IO options expiring in December have an OI put/call ratio of 0.86 as of 1/Nov which favors calls. Over the past week, trading in this contract was heavily skewed towards call with a volume put/call ratio of 0.38. Additionally, last week, near-term options expiring in November saw a large buildup of call options around the USD 105 strike suggesting bullish sentiment in the near-term. The delta-25 options skew for December options also shows a sharp increase in call IV alongside a narrowing skew suggesting high demand for calls.
Hypothetical Trade Setup
Iron Ore volatility has reached its lowest level since August. The rally last week failed to continue past the short-term moving average and the volume profile point of control and IO gave up substantial gains in the later part of the week despite the encouraging data from PMI releases. The results of the ongoing parliamentary meeting are expected on 9/Nov (Fri) and are likely to drive substantial moves in prices. Options activity over the last week showed a high concentration of activity for call options, especially at the strike level of USD 105/ton. The IV for IO options has also been rising unlike the historical volatility. A sharp upside move is likely, though, if the fiscal stimulus disappoints, prices may also decline sharply.
Expressing the bullish view through a long futures exposes the position to higher risk if stimulus disappoints. Investors can instead express the bullish view using SGX IO options. A bullish call spread benefits from an increase in prices and offers a fixed upside and fixed downside along with a smaller premium cost than a long call position. Bullish call spread consists of long call at a lower strike and short call at a higher strike. A hypothetical trade setup consisting of USD 105/ton for the long call leg and USD 109/ton for the short call leg on the options contract expiring on 31/Dec offers a reward to risk ratio of 3x. The USD 109/ton level coincides with the peak during the last rally in mid-October and is close to the 200-day moving average, prices could face resistance above this level. This position offers a max profit of USD 299/lot and a max loss of USD 101/lot and breaks even when prices rise above USD 106.1/ton.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
News Failure and Favorable Winds for Chinese StocksFundamentals & Sentiment
CN50A:
- PBOC has officially ramped up support for the stock market, relending facility launched
- Couldn't hold lower after bad Industrial profits release
USD:
- De-escalation sentiment after the attack on Iran
Technical & Other
Setup: S(RTF)
Setup timeframe: 4h
Trigger: 1h
Medium-term: Sideways
Long-term: Up
Min target: Local high
Stop loss: 0.9%
Position size: 0.5 of the normal Risk Unit
Buy Limit
Copper - The impact of China's support packagesCopper is below the EMA200 and EMA50 in the 4H timeframe and is moving in its descending channel. As long as copper is in the range, selling at the ceiling and buying at the bottom of the range will be recommended.
If copper falls due to the release of today's economic data, we can see demand zone and buy within that zone with a suitable risk reward. If the upward trend starts and the ceiling of the range is broken, it is possible to sell copper in the specified supply zone.
Chinese banks have recently reduced interest rates on existing mortgage loans, which amount to a total of 25.2 trillion yuan. This move aims to support the real estate market and bolster China’s economy.
Meanwhile, the CEO of Maersk stated that they do not expect to navigate the Red Sea efficiently until 2025. Additionally, they see no signs of a decline in global demand or transaction volumes in the coming months.
Maersk, one of the largest shipping companies in the world, was founded in Denmark in 1904 and is known for its extensive operations in maritime shipping, logistical services, transport, and financial services.
On Tuesday, the World Bank reported that global commodity prices are projected to drop to their lowest in five years by 2025. In its latest Commodity Markets Outlook (CMO), the bank noted that despite this decline, overall commodity prices will remain 30% higher than five years before the COVID-19 pandemic. Although forecasts vary by commodity, improved supply conditions are cited as a key factor in the overall price reduction.
A Reuters survey predicts that the global economy will grow by 3.1% in 2024 and 3.0% in 2025. These figures mark a change compared to the July survey, which projected 3.1% growth for both years.
According to a recent analytical note from Bank of America, U.S. non-farm payrolls (NFP) for this month are expected to increase by around 100,000 jobs, a significant decrease from the 254,000 jobs added in September. This decline is primarily attributed to disruptions caused by Hurricane Milton and the Boeing workers’ strike, which likely reduced job opportunities and working hours.
IO Weekly Technicals Review [2024/43]: Term Structure Divergence
SGX TSI Iron Ore CFR China (62% Fe Fines) Index Futures (“SGX IO Futures”) closed nearly flat last week, down by just USD 0.10/ton on Friday after recovering from a mid-week decline.
SGX IO Futures opened at USD 101.65/ton on 21/Oct (Mon) and closed at USD 101.55/ton on 25/Oct (Fri).
Prices briefly touched a weekly high of USD 103.45/ton on 21/Oct (Mon) and a low of USD 98.10/ton on 24/Oct (Thu). It traded in a range of USD 5.35/ton during the week, which was smaller than the prior week.
Prices traded below the pivot point of USD 103.35/ton for the entire week but managed to hold support above the S1 pivot point at 97.65.
Volume peaked on 25/Oct (Fri) as Iron Ore prices rallied from near their low following the announcement of a parliamentary meeting to discuss the stimulus package between 4/Nov and 8/Nov.
SGX Iron Ore Futures Fundamentals in Summary
Iron Ore received support in the later part of the week from the announcement of a parliamentary meeting to discuss the stimulus package in China which will take place between 4/Nov and 8/Nov.
The People's Bank of China also said in a statement it had activated the open market outright reverse repo operations facility to "maintain a reasonable abundance of liquidity in the banking system and further enrich the central bank's policy toolbox“ ahead of a significant loan expiry at the end of the year.
IO China Portside inventories declined by 400k tons to 149.33 million tons last week. The decline was driven by slower arrivals as pickup volume declined week on week and steel mill’s restocking pace was below analyst expectations.
Based on seasonality, SGX IO Futures Nov contract trades 2.6% below its last 5-year average (USD 105.58/ton).
Seasonal Trend also suggests a price low is expected in the next few weeks.
Short-Term Moving Averages Signal Reversal of Bullish Trend
Prices began the week on a downward trend, marked by a bearish moving average (MA) crossover on 22/Oct (Tue). After the crossover, prices declined 3%, briefly dipping just above the S1 Pivot Point before recovering sharply on 25/Oct (Fri). On 28/Oct (Mon), prices are trading slightly below the 21-day moving average and the R1 Pivot Point for the week.
Long-Term Averages Signal Bearish Trend
Last week, the price traded below the 100-day moving average, closing just under this level. On 28/Oct (Mon), it rose sharply above the 100-day moving average but remains about 5% below the 200-day moving average.
MACD Points to Fading Decline, RSI Trending Higher
MACD indicates that the bearish trend is weakening, with the short-term MA beginning to curve upward toward the long-term MA. This suggests a potential consolidation around the long-term MA or a bullish crossover if momentum strengthens. Meanwhile, the RSI recently crossed above its 14-day average but remains near the midpoint at 53.84.
Fibonacci 61.8% Maintained Support Last Week
Volatility increased throughout the week but remains below early October levels. Last week, the price tested and held support at the 61.8% Fibonacci level from the prior uptrend. Fib levels from the recent downtrend suggest that the price may next retest the 38.2% level. The 61.8% level remains noteworthy, as it has previously acted as a key area of interest.
Low-Volume Node May Drive Sharp Upward Move
Despite ongoing selling pressure, buyers rebounded sharply in the latter part of the week. The price is currently at a low-volume node and could rise quickly toward the point of control, which aligns with the 50% Fibonacci level.
Calendar Spread Shows Deviation from Backwardation
The recent price movement has created a premium on the April 2025 contract compared to the second-month contract (Nov 2024). A return to the usual backwardation structure is expected. Additionally, speculation over the next two weeks, driven by the upcoming parliamentary meeting, will likely focus on the more liquid Nov 2024 contract, which should further support the spread.
Hypothetical Trade Setup
Iron Ore prices received some support from the announcement of further monetary easing and hopes of further stimulus at the parliamentary meeting next week. The rally has reversed the consistent decline in IO over the past 3 weeks but outlook remains bearish as the impact of stimulus on prices has weakened since early October. In the near-term, stimulus expectations may drive a rally clouding the outlook for a straightforward short position.
We propose a hypothetical trade set up of buying SGX IO November Futures Contract at USD 102.90/ton and selling the SGX IO April 2025 Futures contract at USD 103.60/ton to capitalize on the normalization of the backwardated term structure.
Presently the Nov/April ratio is at 0.99324. An increase to 1.025 presents a 3.25% increase in the spread which results in a gain of USD 321 to USD 330. A stop loss at the ratio of 0.975 protects in case of further decline with a potential loss of USD 189 to USD 194. This calculation excludes transaction costs comprising of clearing broker fees and exchange clearing fees. The SGX requires a minimum initial margin of USD 320/lot and a maintenance margin of USD 352/lot for this intra-commodity spread.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
China A50, riding the PBOC stimulus IF the monetary stimulus keep pushing Chinese stocks, we could be building a new impulse to retest the 16,500 area. If broken, it could speed up to 20,500 points.
What I find positive: lots of shorts still pressing the price to the downside, that could be gone if the price squeezed to the upside.
What I find negative: movement has been too fast, no rise-consolidation-rise patterns.
For confirmation, breakout above 14,500 (upper Mogalef band)
Shanghai Composite Index (SSE) To Hit 6,124 First, Then 8,660SSE had a rally from 2005 to 2007 establishing the all-time high of CNY 6,124.
After that, the price had built a weird corrective structure with ups and downs fading in magnitude over a very long period of time.
It took 17 years to complete the giant contracting triangle (white ABCDE marks).
The pattern was broken to the upside this summer.
This is the first harbinger of possible reversal and potential rally.
The confirmation we wait is the breakup of the peak of wave D beyond CNY 3,724
The conservative target for the upcoming rally is located at the all-time high of CNY 6,124
The ultimate target is set at the equal distance of blue wave (A) in blue wave (C) at CNY 8,660
IO Weekly Technicals Review [2024/42]: IO Reversal Deepens
SGX TSI Iron Ore CFR China (62% Fe Fines) Index Futures (“SGX IO Futures”) fell last week for a second week in a row, closing USD 4.15/ton lower by Friday.
SGX IO Futures opened at USD 105.85/ton on 14/Oct (Mon) and closed at USD 101.70/ton on 18/Oct (Fri).
Prices briefly touched a weekly high of USD 109.05/ton on 14/Oct (Mon) and a low of USD 99.30/ton on 17/Oct (Thu). It traded in a range of USD 9.75/ton during the week, which was smaller than the prior week.
Prices traded below the pivot point of USD 108.10/ton for the entire week but managed to hold support above the S1 pivot point at 101.15.
Volume peaked on 17/Oct (Thu) as Iron Ore prices declined despite the announcement of expanded housing stimulus measures.
SGX Iron Ore Futures Fundamentals in Summary
Further measures to support the housing industry in China were announced on 17/Oct (Thu). The measures included widened support under the “white list” program to 4 trillion Yuan.
PBoC started the week with a 25 bps cut to the 5-year loan prime rate and a 25 basis point cut to the 1-year loan prime rate offering additional easing measures. Despite an early rally, IO pared gains by the end of the day.
China's GDP growth in Q3 was 0.9%, falling short of analyst expectations but exceeding the 0.5% growth recorded in Q2, which was revised downward. Annual GDP growth reached 4.6%, significantly below the 5% target.
IO China Portside inventories rose by 1.89M tons to 149.73 million tons last week. The increase was driven by significantly higher arrivals and low pace of pickup due to slower restocking.
Based on seasonality, SGX IO Futures Nov contract trades 3.5% below its last 5-year average (USD 105.58/ton). Seasonal performance also suggests there could be a price dip with a low in the next couple of weeks.
Short-Term Moving Averages Signal Reversal of Bullish Trend
The 9-day moving average is continuing its downward trend and marked a bearish crossover on 21/Oct (Mon). Last week, the price held support above the S1 pivot point but faced rejection at the P pivot point on 21/Oct (Mon).
Long-Term Averages Signal Bearish Trend
Price fell below the 100-day moving average on 17/Oct (Thu). Despite reaching highs above this level, price has failed to close above the MA.
MACD Points to Downturn, RSI Flat
MACD signals an ongoing bearish trend since 16/Oct (Wed) with the distance between long and short-term MA continuing to expand as of 21/Oct (Mon). RSI is at the mid-point level of 49.5 signaling neutral trend.
Volatility Eases, Fibonacci 50% Maintained Support Last Week
Volatility briefly edged up in the middle of last week but now continues to decline and has reached the lowest level in October. The 50% Fibonacci level was tested last week but managed to maintain support. With a continued downward trend, the 61.8% Fibonacci level at 97.55 is the next major support level to watch if price declined below 50%.
Selling Pressure Dominates, Price Gap Likely to be Tested This Week
Heavy selling pressure dominates IO trading according to the Accumulation/Distribution indicator (A/D). Price trades at a high volume node which was dominated by sell volume and below a low volume valley which could be tested during the week. The bullish flag failed to maintain last week as prices fell further instead of consolidating.
Hypothetical Trade Setup
Iron Ore prices continued to decline last week as the expanded stimulus measures disappointed market expectations once again. Bearish trend in IO continues as fundamentals signal more pain in store and short-term MA signaled a bearish crossover.
We propose a hypothetical trade set up of selling SGX IO November Futures Contract at USD 101.2/ton with a stop at USD 104.05/ton and target at USD 97.5/ton resulting in reward-to-risk ratio of 1.30x.
Entry: USD 101.2/ton
Target: USD 104.05/ton
Stop Loss: USD 97.5/ton
Profit at Target: USD 370/lot ((101.2-97.5) x 100)
Loss at Stop: USD 285/lot ((101.2-104.05) x 100)
Reward to Risk: 1.30x
This calculation excludes transaction costs comprising of clearing broker fees and exchange clearing fees. The SGX requires a minimum initial margin of USD 1,232/lot and a maintenance margin of USD 1,120/lot.
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
$CNGDPYY - China's GDP (Q3/2024)ECONOMICS:CNGDPYY Q3/2024
source: National Bureau of Statistics of China
-The Chinese economy expanded 4.6% YoY in Q3 of 2024,
compared with market forecasts of 4.5% and a 4.7% rise in Q2.
It marked the slowest annual growth rate since Q1 2023, amid persistent property weakness, shaky domestic demand, deflation risks, and trade frictions with the West.
The latest figures came as Beijing had intensified stimulus measures to boost economic recovery and rebuild confidence.
In September alone, there were some positive signs:
industrial output and retail sales both saw their largest increases in four months, and the urban jobless rate fell to a three-month low of 5.1%.
On the trade front, however, exports rose the least in five months while imports were sluggish. In the first three quarters of the year, the economy grew by 4.8%, compared with China’s full-year target of around 5%.
During the period, fixed investment rose by 3.4% yoy, topping consensus of 3.3%.
XAUUSD | Market outlookGold Reserve Diversification: At the LBMA conference, central bank representatives shared that gold purchases are driven by financial and strategic goals.
US Election Impact:
Uncertainty over the upcoming presidential elections, with Trump and Harris closely tied in polls, is prompting banks to hedge risks.
Geopolitical Risks: Tensions in the Middle East are also boosting gold, with Israel expressing readiness to target Iran's military infrastructure.
Price Trends:
Long-term trend: Upward, aiming to break the historical high of 2685.00 . Potential targets: 2750.00 and 2810.00 if consolidation succeeds.
Support and Correction: If the price drops to 2602.00 , long positions toward 2685.00 are favourable. A breakout below 2602.00 could trigger a correction targeting 2546.00 and 2471.00 .
Medium-term trend:
Correction: Last week’s correction did not reach key support at 2575.61–2564.61 . If a reversal occurs, the price could rise to 2685.61 and potentially 2712.70–2701.70 .
Correction Scenario: If another correction develops, the price may revisit 2575.61–2564.61 , followed by growth toward 2625.00 and 2685.00 .
$CNIRYY -China's CPI (September/2024)ECONOMICS:CNIRYY
Inflation Data (September/2024)
source: National Bureau of Statistics of China
-China’s annual inflation rate stood at 0.4% in September 2024,
below market forecasts and August’s figure of 0.6%.
This was the 8th month of consumer inflation but was the lowest print since June,
highlighting the need for more policy support from Beijing to address growing deflation risks.
Non-food prices declined by 0.2%, following a 0.2% rise in August as the cost of transport shrank further (-4.1% vs -2.7%) due to lower crude oil prices.
Also, housing prices edged down (-0.1% vs flat reading) amid government efforts to further regulate the property market. Meanwhile, cost slowed for health (1.2% vs 1.3%) and education (0.6% vs 1.3%).
On the food side, prices rose for the second month, with the rate of increase the fastest in 20 months (3.3% vs 2.8%).
Core consumer prices, excluding food and energy costs, increased 0.1% yoy, the smallest rise since February 2021, after a 0.3% gain in August. Monthly, the CPI was unchanged, compared with consensus and August’s print of a 0.4% rise.