A sharp positioning squeeze has driven EUR/USD back to the previous range lows at 1.3840, and AUD/USD is also approaching a confluence of resistance at its 200-day average and three-month channel high. Furthermore, the S&P 500 is in striking distance of targets at its late-August-September peaks, as are US 10y yields; with these levels in close proximity, the risk is that upside is limited as the medium-term bearish trend remains in place.
However, impressive price action in the Shanghai Composite (a Bullish Reversal Day) against its 2010 lows is an encouraging sign, and a close above 5170/80 in the NIFTY would complete a basing pattern; such a signal would likely imply that price stays buoyant into next month.
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