EM LATAM CREDIT: Ecuador: Referendum – Neutral
(ECUA; Caa3/B-/CCC+)
• There are four questions that will be asked for the referendum this Sunday, some of which are very controversial, so the market is vulnerable to correction if the referendum fails to pass. Will the people want foreign military bases in their country? Will they want opposition parties to be defunded by the govt.? Will they want their environment threatened by less obstacles to mining and other natural resource projects?
• ECUA 35s were last quoted 80.79, up nearly 8 points since June 30th and 23 points YTD. If the referendum is successful there will be a vote to elect a constituent assembly to draft a new constitution. The whole reform process is expected to take 12-15 months. The referendum is also a vote on the likelihood and timing of reforms in the country so the market will vote accordingly.
• Citizens will vote on the establishment of foreign military bases in Ecuador, elimination of the obligation to provide financial resources to political parties and a change in the number of Assembly members in the National Assembly according to elciudadano.com.
• We would imagine the powerful indigenous parties as well as other opposition parties that need govt. financial support to run their campaigns will object but if successful it will increase the probability of President Noboa staying in power longer to implement market friendly reforms.
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SILVER TECHS: Off Its Intraday High
- RES 4: $53.546 - Today’s intraday high
- RES 3: $52.821 - 76.4% retracement of the Oct 14 high-low range
- RES 2: $52.010 - 50.0% retracement of the Oct 14 high-low range
- RES 1: $51.199 - 23.6% retracement of the Oct 14 high-low range
- PRICE: $50.978 @ 14:48 BST Oct 14
- SUP 1: $49.677/46.791 - Low Oct 10 / 20-day EMA
- SUP 2: $43.308 - 50-day EMA
- SUP 3: $41.135 - Low Sep 17
- SUP 4: $40.404 - Low Sep 4
Trend signals in Silver remain bullish. The metal has traded to a fresh cycle high today, however, price action is volatile and silver is off its intraday high. Recent gains have resulted in a move above a major resistance area around the $49.00-$50.00 region. This marks a high point from Jan ‘80 and Apr ‘11 and $50.00 represents a key psychological level. A clear break of this zone strengthens a bull theme. Support to watch is $46.791, the 20-day EMA.
EQUITY TECHS: E-MINI S&P: (Z5) Pullback Appears Corrective
- RES 4: 6850.87 1.618 proj of the Aug 1 - 15 - 20 price swing
- RES 3: 6831.38 2.500 proj of the Aug 20 - 28 - Sep 2 price swing
- RES 2: 6819.25 1.500 proj of the Aug 1 - 15 - 20 price swing
- RES 1: 6718.50/6812.25 Intraday high / High Sep 9
- PRICE: 6634.25 @ 14:29 BST Oct 14
- SUP 1: 6602.32 50-day EMA
- SUP 2: 6540.25 Low Sep 10 and a key short-term support
- SUP 3: 6506.50 Low Sep 5
- SUP 4: 6427.00 Low Sep 2
A sharp sell-off in S&P E-Minis on Friday appears corrective - for now. The contract has found support below the 50-day EMA, currently at 6602.32, and last Friday’s low of 6940.25 has been defined as a key short-term support. Note that moving average studies are in a bull-mode position, highlighting a dominant uptrend. The bull trigger is 6812.25, the Sep 9 high. A breach of this hurdle would confirm a resumption of the uptrend.
USDCAD TECHS: Bullish Trend Structure
- RES 4: 1.4200 Round number resistance
- RES 3: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
- RES 2: 1.4111 High Apr 10
- RES 1: 1.4080 Intraday high
- PRICE: 1.4053 @ 14:37 BST Oct 14
- SUP 1: 1.3928/3863 20- and 50-day EMA values
- SUP 2: 1.3799 Bull channel base drawn from the Jul 23 low
- SUP 3: 1.3727 Low Aug 29 and a bear trigger
- SUP 4: 1.3689 Low Jul 28
A bull cycle in USDCAD remains intact and this week’s firm start reinforces current conditions. Last Thursday’s rally confirmed a recent bull flag on the daily chart and a resumption of the current uptrend. MA studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4111 next, the Apr 10 high, and further out scope is seen for an extension towards 1.4167, a Fibonacci retracement. First key support is 1.3863, 50-day EMA.
