Earlier optimism amid growing US confidence faded with further news about renewed Greek political worries. The USDX has ticked back up and the EURX down.
Gold looks likely to close below the daily chart triangle trend line which will have implications for the Aussie pairs.
More later after a beach walk and school soccer.
There has been some optimistic chatter about a possible Coalition Govt in Greece that seems to be favouring a 'risk on' approach to trading. The USDX has pulled back a bit and the EURX is having a little rally.
There is red flag data due out of the US later which may impact on this sentiment. Add to this the US market interpretation of the latest JP Morgan debt woes plus other Euro zone issues and you have a mine field of 'fundamentals' that will no doubt impact on any efforts to trade from a technical perspective.
Friday 11/5 (5.30 pm)
I had a signal to SHORT the A/U BUT I suspect this is due to the current fall in Gold. Gold and the A/U are highly correlated. I don't have other 'risk off' signals on the other pairs just yet, but they may well evolve. This makes me more suspect about this A/U signal. I would really rather wait to see if Gold closes below the trend line on the daily chart. That will not be until tomorrow morning here. I have taken the A/U short signal in demo though just for the point of testing the system.
The USDX has traded up a bit today but the the EURX has essentially gone sideways.
I have partial signals on some of the pairs which is frustrating but I think it reflects the indecision in the market. The mood was one of a bit of cautious optimism through the last US session and there seems, yet again, a reluctance to dive back into 'risk off' trading.
The current daily candle of Gold has pierced through the bottom triangle trend line but this has some way to go before it closes. A break, close and hold below this trend line might mean a big fall for the metal which would probably take the Aussie pairs down with it. We would need to see where it closes though because if it holds within the triangle it could well bounce back up from this low level. Gold's price is all tied in to the movement on the USD though. It's a bit like dominoes really!...USD...GOLD....AUD......
A bit of cautious optimism was seen across the broader markets in Europe and the US with most indices making gains for the day. The USDX and EURX are basically treading water and trading sideways.
I've noticed that the main Yen pairs are trading up so I suspect that the BoJ have been doing some easing again.
The A/U might be about to form another TS short so I'm keeping an eye on that. There is chatter of a solution to the current Greek political problem though and any positive news, no matter how small, could shift the markets back to 'risk off'. There is important Chinese CPI data out later (11.30am here) so it would be wise to wait for that before trading. I'm out for the whole day unfortunately at a school function.
Indices landscape little changed, thus far, since my earlier chart post. GBP data due out in 30 min might shift things; we'll see! If not, maybe US data in 2 hrs will!
FYI: I have updated my Stocks: May 12 page.
Thursday 10/5 (5.30 pm)
Woo hoo! We are getting a bit of a pull back. The USDX is re-testing the break out trend line from the symmetrical triangle. It might reverse totally or it might simply re-test the trend line break before continuing on upwards.
I'm not sure which way it will head but it has meant that we are getting some pull backs in the currency pairs. This means an opportunity to pick up new TS signals. For example; the A/U4 hr has pulled back and I will be on the look out for a new TS signal here.
The USDX has held above the 80 level but there hasn't been a rush to trade 'risk off' today.
There has been surprisingly good news out of Australia and China though which just might turn the outlook back to optimism and 'risk on':
China April exports +4.9% YoY, imports +0.3% YoY
Written by Sean Lee
May 10, 2012 at 03:03 GMT
May 10, 2012 at 03:03 GMT
April trade surplus $18.4 billion (forecast $8.8bln). The headline surplus is very strong but the AUD has fallen on the big reduction in imports
Is this Heaven? No, it’s Australia!
Written by Sean Lee
May 10, 2012 at 01:55 GMT
May 10, 2012 at 01:55 GMT
Falling unemployment, falling inflation, increased retail sales, increased exports (with only increased imports to blight the picture); with recent economic data like this surely the AUD must be screaming higher on the back of solid fundamentals! Hard to explain to a beginner why the AUD is 4% lower over the last 2 weeks!
That’s why we use market news and technical analysis for short and medium term views and use fundamentals for the longer term stuff.
Gold is currently trying to decide whether to fall off a massive cliff or take a bounce back up though and is clearly wanting some direction from the USD. It's broken below the key $1,600 level. A fall in Gold could drag the Aussie pairs down too as, historically, they are quite highly correlated. It is currently perched right on top of the bottom trend line of a symmetrical triangle of significant proportions! See charts below:
The dollar did eventually move up from the 8o level with some 'risk off' trading but has stalled now on some renewed optimism with talk of a further Greek bailout. So, the dollar is now parked just above the 80 level at 80.09 until it decides what to do next.
As a result of this, much action on the pairs last night has ended up choppy. The E/U has not wandered too far below 1.3:
Gold and Silver look like they will close inside their triangle patterns on the daily charts:
The USD/SGD did have a triangle break out BUT I did not take this as there was no new TS signal to go along with this break.
This has been some of the frustration of late. Good trend signals just aren't around on the 4 hr charts, they're quite diffuse and spread out over a range of too many candles. I read this though as further evidence of indecision in the market. I'm observing that trend trading off shorter time frames is working better, so long as you are there to catch the trends!
There were some fairly good risk : reward trend trades possible on the USD/SGD 15 min charts yesterday:
The trick is though, it's a bit like golf. You need to know which club to pull out for each particular golf shot. Similarly, the success to trend trading is to know when to trade from longer time frames and when to trade from shorter time frames. I have worked out that the shorter time frames are better of late BUT I'm not in that groove properly AND often, not always, these moves are not in my time zone.
Even the much maligned Loonie would have been a trade for yesterday. Unfortunately, I have not been watching it closely enough. It yielded up to 65 pips on a TS LONG on the 4 hr chart yesterday until it hit the upper triangle trend line. It also could have given pips on the 15 min chart. It looks like it will close within the symmetrical triangle for today though.
Wednesday 9/5 (9 pm)
The USDX is still at 80! I'm off for the night now.
I've just had a 4 hr candle close on my pairs but nothing is jumping out. The USDX is still stuck on the 80 fence. It will take a shift of this index from that position to cause movement on the pairs. This will probably happen whilst I am asleep!
I've been waiting for something to happen today and, nothing has. I was cautious about a stalling in 'risk off' sentiment due to the formation of possible double bottom patterns on the EURX and E/U 4hr. They look like they could still evolve at this stage. The USDX is struggling to hold its break above the 80 level; like it did last time back in mid April. It might just pause before heading further north or it could continue to retrace down. At the moment though it is not clear which way it will head. One would expect it to keep moving up given the weight of dire news out of Europe though.
I've been keeping an eye on the USD/SGD for a break out but it, too, has paused.
Both Gold and the A/U are giving some reversal candle patterns on the 4hr charts so we might be in for a bit of a re-trace.
I don't like the Loonie but it is looking normal on the daily and 4 hr charts and, also, approaching a significant triangle trend line. It has also closed above the daily 200 EMA.
So, I'm watching the USDX at the 80 area to try and get a clue on the overall next market trend.
I waited for the daily candle close on the E/U at 8 am. It did close below the key 1.3 level BUT I still don't have a trend signal on this pair, or any of them, at the time being.I don't even have signals on the 30 min charts. There seems to be a lot of resistance to going with the flow and trading 'risk off'. The E/U is currently forming a pin bar reversal candle on my 4hr chart but still has some time until it closes. I am still open to the idea of that double bottom discussed earlier this am (see below).
I did note on the Gold 4 hr chart that there was a reversal pin bar candle. Thus, Gold might try to have a bounce back up from down near this bottom triangle trend line. A bounce back up in Gold would most likely see a bounce up in the A/U as well given the high correlation between the pairs.
Well, I'm glad I slept through that mayhem last night. There was choppy action all over the place. The USDX is still having a battle on the triangle trend line fence and the EURX looks like it's trying to decide whether to make this a double bottom or to have another attempt at falling through support.
The S&P500 was choppy too. The broader markets were all down with the DOW closing below the key 13,000 level. It seems they are all worried about the political situation in Greece.
The E/U, like the EURX, looks like it's trying for a double bottom or breakthrough attempt too.
Even with all this doom and gloom around, I don't have any trend signals on the 4 hr charts just yet. The ones on the Aussie pairs didn't develop. Now, I find this interesting. Either everyone is just ultra cautious but, to me, it seems like further confirmation of the lack of willingness to trade 'risk off'. I think it's like a "Pollyanna Effect": 'Yeh....Life is hard at the moment but.... you just have to see the good around you and go for it'! I'd like to add this phenomenon into the mix with the current discussion when commentators talk about the Presidential Election Effect on summer markets!
The metals are getting to an interesting place on the daily charts. They will be worth watching over the coming sessions! A rising dollar will likely see these keep falling. A falling dollar and 'risk on' sentiment could have the same impact too though if traders prefer to move into stocks rather than metals. Thus, it could be a kind of a 'damned if you do and damned if you don't' scenario.
The E/U is making another attempt at piercing 1.3 as I write. I'm cautious though.
Tuesday 8/5 (8 pm)
The USDX is still struggling to break up and out of the triangle that has constrained it for many weeks.
The E/U is trying to hold above 1.3 and doing so at the moment.
I don't have any new 4 hr trend signals. Shorts look to be almost formed on the Aussie pairs but with the Budget just out I wouldn't trade these pairs short just now. I'd need another candle close to confirm the signal and that won't be until midnight!
Tuesday 8/5 (5 pm)
I'm watching as the E/U heads back to the 1.3 area. I was stopped out of my short trade by about 10 pips so, this sight, is making me cranky.
Anyway, I've got something else to distract me from this for a bit. My broker, Go Markets, now offer the DOW, S&P500, DAX, FTSE and SPI200 on their MT4 platform.
There was a beautiful trend last night on the S&P500 that started during the European session, right when I was at soccer pick up and, then, getting dinner, washing up, helping with science exam homework blah blah blah!
I've got this chart sitting right next to my E/U chart!
BTW For those of you who like to trade bounces. I got this in my e-mail from Compass FX and Dean Malone : http://www.compassfx.com/video/ip/50312/50312.html
Tuesday 8/5 (4 pm)
The USDX looks like it is trying to make another attempt at breaking out and up from the triangle trend line.
I don't have any trend signals on the 4 hr charts and, I'd be loathe to take them until the USD makes up its mind whether it's heading north or south. Until that is determined, you may as well play '2 up' as try to trade FX from 4 hr charts.
I'm going to watch the 30 min charts as much as I can can tonight to see if anything can be grabbed there but, I don't hold out much hope for my time zone. Movement on the 30 min charts usually kicks in later on.
The indices have stalled and are just bouncing sideways again. I am finding, more and more, during these markets that trying to trade from the longer 4hr time frame is just too unpredictable. Some trend signals develop and follow through but others stall, and, most of these technical signals are interrupted by significant fundamental news announcements. I have observed though, by looking back through the charts, that trading from the shorter time frame charts on either 15 or 30 minutes through the European and US session is the more reliable and successful trading route. The following 30 min charts showing the last 24 hours of trade illustrate this point very clearly. The Asian session (first blue box) was rather choppy whereas a good trend started on each chart during the European session (second blue box) and continued into the US session (no colour):
E/U 50 pips
This is pretty logical but doesn't make it any easier for me, down here in the Asian zone!
The G/U signal did not develop. I don't have any signals on the 4 hr charts.
Tuesday 8/5 (6am)
The indices continued their re-trace after the initial big moves following the market open. The USDX bounced back down after hitting the psychological 80 level.
The broader markets are said to have 'shrugged off Euro zone worries' and have traded fairly flat today and closed off their lows to have the S&P500 finish up but the DOW down yet still above 13,000. I have been noting for weeks about this tendency for trade bias to be one of optimism over fear, or 'risk on' rather than 'risk off', and we saw this again today. I keep saying that these levels on the broader markets are hugely significant and contributing to this choppy and volatile behaviour of late. We also have the opposing forces of 'Sell in May and Go Away" versus the Presidential Effect which usually sees a strong summer market before elections. If I add in my conspiracy theory about the USD being kept low then, in a way, trying to trade TECHNICALLY in the face of all these FUNDAMENTAL effects is prone to be fraught. You know, the longer the DOW stays above 13,000 I think this song might just sum up stock direction...http://www.youtube.com/watch?v=0Lwlr5ZAoQ4.
I have been stopped out of my E/U short. I am not too annoyed as I had my trade plan and I followed this. Did I learn something though? Yes. And that is to be more circumspect over trend signals that form after a MASSIVE price move. I am annoyed by Murphy's Law though which recently seems to state I miss the good trend signals and take the weaker ones. I'm working on that behind the scenes though too!
The 'about face' on the indices has meant that I don't have any trend signals on the 4 hr charts but there is a long signal looming on the G/U.
The pull back is still in play and the USDX is struggling to hold above the triangle trend line that it broke through this morning.
I am still in the E/U short. I am not sure it was wise to follow this TS trend signal given the large market gap we had though but, time will tell. I'm still learning. I'm ok with that. The current candle on the EU daily chart is forming a pin bar reversal candle. That may well happen too.
We are seeing a bit of a pull back which is not surprising after such big moves. It remains to be seen whether this 'risk off' sentiment will remain though.
Monday 7/5 (2pm)
There have been huge gaps across the currencies this morning in the wake of the French election results. The USDX has broken way out of the symmetrical triangle. At the moment it is poised though, most likely thinking "what the heck do I do now?" The EURX has also gapped to be much lower but it is similarly treading water, probably until the big boys come out later today. Although it is a holiday in the UK.
Moves like this invariably produce trend signals but I am always cautious after such big price moves. Also, more often than not, market gaps tend to reverse to be filled. I have had a few signals and missed the boat on some too. I do anticipate some pull back as well which often happens after massive moves like we have seen today.
E/U: I have had a TS SHORT signal now on this pair and it has also closed below a major support trend line of 1.3. I have taken this short trade with my stop on the other side of the 1.3.
E/J: I had mentioned I could be tempted to trade this yen pair short but I have missed the better entry point and won't chase this now. The signal and trend line break came through on my Friday night, very late.
G/U: I have had a signal to short this pair but I'm not taking it as this pair has been slow to travel in 'risk off' flight mode. So, I'm passing on it. I may regret it but we'll see.
USD/SGD: I'm watching this pair for a TS signal and a trend line break.
Swissie: I'm too late to this big party but it was a classic TS signal and trend line break.
U/J: Another bounce trade looming here? This pair is struggling to gain momentum as it's clearly a competition to see who can appreciate the most...the USD or the YEN. Anyway, last time I suggested this as a candidate for a bounce trade off the daily 200 EMA it moved up over 80 pips. It's back there again and looking like it could be forming a double bottom. So, any takers?
Loonie: I don't like this pair but I could be tempted on a TS signal and if it breaks above the daily 200 EMA. I'll watch it.
Aussie pairs: I'm leaving them alone for the time being. We had some good data out today and there is the Federal budget out tomorrow so it is possible that we may get some unusual moves in these pairs.
Stocks and Options: I did update my stocks and options outlook as well over the weekend and it is under the tab heading 'Stock: May12'. I'm not sure whether I'll get a chance to buy any options though as I need to be up through my night to do this given the price movement we've had. Forward orders won't cut it today I'm afraid.
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