It has been a choppy night for stocks and currencies with good economic data tempered by some poor earnings. So, have a guess where the USDX is sitting just now. 80!
The EURX whilst trending down is still conforming to some sort of wedge pattern:
Stocks are trying to put in a bounce off the bottom of their respective daily Clouds. A lot of people are shorting stocks and the indices here but I wouldn't be that confident just yet. I do have a TS signals to short the daily S&P500 BUT I would want to see a break, close and hold below the daily Cloud AND the 1,400 level first. Also, those string of indecision Doji candles make me nervous as does the knowledge that there is 'QE Eternity' ever present in the background:
I am away this w/e so might post my updates a little later than usual. I have re-assessed all of the currency pairs and updated trend lines etc.
Friday 26/10 (9 pm)
The USDX is still choppy but holding above the 80 level for now:
No decent signals to talk about for now. The pairs are fairly quiet and seem to be waiting for guidance from the US session.
Correction: there was a TS long on the Swissie after the 4pm candle. I'm not taking this though as the 4hr 200 EMA is in the way and there is a lot of divergence on the Cloud charts.
The USDX has bounced around during the Asian session and is back above the 80 level:
I have divergence now on both Indices and their Cloud charts. This spells a huge 'WARNING' for me. I don't have any signals at the moment and I won't be taking any even if they do evolve as there is just way too much mixed news and indecision at the moment. Market sentiment could swing either way from this point onwards but may continue to simply bounce around until after the US elections.
Reflection on the week: There was Cloud divergence on the indices to start the week and so I expected choppy markets and, that's what we got. My TS system is proving to be an extremely reliable predictor of decent and trade worthy trends. It is becoming increasingly apparent to me when I should, and shouldn't be, looking for 4 hr TS trend signals.
The USDX has rallied in the wake of missed earnings on Apple and Amazon.
The stock market reacted to this miss with a spike down and, albeit only briefly, was below the 1400 support level:
I closed my A/J trade and the NZD/USD was stopped out earlier; I suspect on the dollar surge after the Amazon earnings miss. The A/J is still above the key 83 level for now and I might re-enter but I'm not keen just at the moment.
The E/U has closed below the daily bull trend line with all this fear and boost in the USD BUT I don't have a TS signal here.
Now, I'm not surprised by all this choppiness and the fact that some pairs are trading 'risk on' with others trading 'risk off'. I actually expected this given the divergence on the USDX Ichimoku charts. News and data release items are driving these current markets in choppy traded on very short term cycles.
Some mixed data and rumours about further US downgrades by Fitch have resulted in increased jitters across the markets. The USDX has bounced back and has even just had another close above the all important 80 level:
The DOW and S&P500 are still trading down at the bottom edges of their respective daily Ichimok Clouds. A better than expected result from Apple may lift these. Apple reports after markets close though:
My TS signals from yesterday are still hanging on for the time being:
A/U: still up but only just.
A/J: still up and, significantly, holding above the key 83 level, for the time being at least.
NZD/USD : choppy but up
E/J: down from the signal
G/U: up but, like I said last night, I'd have waited for a close and hold above the trend line here anyway. It is looking a bit weak I see now though:
USD/SGD : was up but now back to entry
INTERESTING: I didn't get a 'risk on', or LONG signal, on the E/U yesterday BUT note how it is now back down testing the daily bull trend line. The point of interest for me is that I don't have a 'risk off' or SHORT signal here yet either:
I'd have stops to entry on ANY trades at the moment. Bad news from Apple Earnings, after the markets close, could send everything tumbling.
The metals look to be a bit bullish still. Might be up on the perceived need for further stimulus after some soft data????
I am still long the Kiwi, with stop at entry, and long the A/J, with a small stop just the other side of the 83. I'm keen to stay in the A/J, if at all possible, in case it gets a boost from any BOJ announcements. The USD rally isn't looking like it will help my cause though.
The USDX is still under a bit of pressure:
Whilst there is no divergence on the EURX I still have divergence on the USDX Cloud charts. So, these markets can still be choppy and one needs to trade carefully.
Current TS signals: A/U: up 50. A/J: up 50 +. Kiwi: up 35 + (charts below)
A/U
I have just had a 4 hr candle close here at 8pm. I have new TS signals on the E/J (long), G/U (long) and the USD/SGD (short). The G/U has had a massive spike though on some good GDP data and is way outside the Bollinger bands. I would rather wait and see a close out and up from the wedge pattern myself:
The USDX could turn back up in a heartbeat so I'd manage trades carefully.
The USDX is pulling back a bit. This is helping my current signals: A/U, A/J and NZD/USD. A continued fall in the USDX should see more signals received at the next candle close 8pm.
I'm keeping an eye on Gold and Silver too. They are both trading under a bear trend line on their 4hr charts and a break up above these levels would help the Aussie pairs:
The USDX is making another attempt at the 80 level:
There are a lot of pin bar reversal candles around. I took the NZD/USD long this am. It was up 40 but is now only up about 20 or so. I've moved my stop to entry
The A/U currently has a pin bar too:
I'm still waiting on a close above the trend line on the A/J:
Lots of Earnings out tonight! This could shake things up!
BTW: I have updated my Stocks:Oct page with some trades I am on the look out for.
The USDX is struggling to break up through the 80 level:
This seems to be encouraging some 'risk on' momentum. The earlier 8am TS signals on the A/U and NZD/USD are trading up:
NZD/USD: this pair is trading 'risk on' and in sync on the Ichimoku charts for the 4hr and daily time frames
I also have a new, albeit weak, signal on the A/J and it is trading above the Cloud on both the daily and 4hr time frame. I'd wait for a close above the wedge trend line though:
I'm still very wary that the USDX could spike up quickly over the 80 level though so, if trading, I'd be moving stops to entry ASAP!
BTW: I have updated my Stocks:Oct page with some trades I am on the look out for.
Thurs 25/10 (8.30 am)
AUD/USD: The A/U TS signal evolved but I'm loathe to take it given:
- the recent pin bar candle,
- divergence on the A/U Ichimoku charts and
- with the USDX still lurking near the 80 level.
NZD/USD: The NZD/USD is trading up after earlier news. It has triggered a TS 'LONG' signal. It has also broken above a daily bear trend line and a monthly pivot. It is also above the Cloud on the 4hr and emerging from the Cloud on the daily chart. Tempting!:
The A/J and G/U have not evolved as yet.
Markets chopped around overnight on some very mixed data and news. The USDX has held above the 4hr 200 EMA and 75% fib retrace level from the last swing high but hasn't manage to stay above the 80 level for too long. That is its next challenge:
The USDX will be critical for stocks. The S&P500 and Dow are looking rather vulnerable at the moment. Both are trading at the bottom edge of their respective daily Ichimoku Cloud charts. A close and hold below these Clouds would suggest that a lot more selling will be in store. The USDX will need to fall from current levels to boost stocks:
The EURX is still bouncing around in a flag like pattern:
The E/U has reflected this choppiness and note how it has managed to stay above the bull daily trend line:
The choppiness on the USDX would have kept me out of any S&P500 trade but there wasn't a TS signal anyway:
I do have some 'risk on' signals TRYING to form up on the A/U, A/J and G/U but with my Cloud divergence I'd be loathe to take them.
Reflection: I see periods like these as kind of like surfing. I live near a beach so this is rather appropriate for me. Surfboard riders will sit out in the surf and wait for the best waves to catch. They won't paddle for every single wave. They will often sit tight, letting the smaller choppy waves pass and will simply wait for the better wave to come through before investing the energy needed to catch the wave. My trading system is much like this. In a similar way I've got my trading system (board) and I then sit and wait and assess the market moves (waves). I won't take every trend (wave). I will wait for the better trend (wave) to come through before taking the trade. By 'better trend' I mean the trend on the pair that has the maximum alignment of all key factors in my trading system. There are also times when riders won't even bother going into the surf because of the poor or choppy conditions. In the same way there are times when I won't go into the markets due to the excess choppiness. Whilst riders might check their weather and surf reports, I check a slightly different weather map, the Ichimoku Cloud!
Poor Euro news has resulted in the USDX spiking upwards. These markets are very jittery and overly sensitive to news items at the moment:
I am seeing divergence on my Cloud charts and that makes me wary still. The E/U short signal came back to life and the Swissie is still going. The Kiwi hasn't moved much and the Loonie petered out finally. I expect choppiness on the 4hr charts to continue.
The USDX hasn't done too much today and it is probably resting before another attack on the 80 level:
The earlier signal today for the E/U has faded and the Kiwi and Swissie have simply stalled. I want a clear direction before I'd be taking any TS 4hr signal and we don't have those conditions just now. It may end up staying this choppy until the uncertainty of the US elections is resolved. Groan!
I can't day trade the SPY but I've had a look at the S&P and there isn't a TS 30 min signal just yet anyway. Good data out of Australia and China earlier today might prove to be a slight 'fly in the ointment' for continued 'risk off' movement.
The USDX is still under the 80 level:
Seemed like my TS system read the 'tea leaves' correctly with the Aussie pairs. They have shot up today on some good Aussie data:
This just shows how the markets will jump onto 'risk on' at any opportunity. There is divergence on the Ichimoku charts and I expect the choppiness to continue. There is red flag Chinese data out in a little while and a lot of Euro data out later today and I'd be waiting until all of that is out until trading.
BTW: I made an error in my 6.30 am post. The Swissie signal is actually one still going from last week too, not a new one from today.
Wednesday 24/10 (6.30 am) 100% Return on a SPY trade possible overnight!BTW: I made an error in my 6.30 am post. The Swissie signal is actually one still going from last week too, not a new one from today.
Groan...as usual..the moves happen during my overnight! The USDX has broken a lot of resistance in the 61.8% fib and the weekly 200 EMA. It now is having a bit of a stand off with the 80 level:
The EURX has fallen but not as far as I would have thought. I've redrawn trend lines here for recent S/R levels:
I'm seeing a pattern repeat here...one I'm becoming quite familiar with. I'm seeing divergence on the Ichimoku Cloud charts, choppiness and indecision amongst the pairs on the 4hr charts and great trades on the 30 min charts during London /Us sessions. Heard all this before heh!
I did get a 4 hr TS signal on the E/U, Swissie and Kiwi. I don't have signals yet on the E/J, A/U, A/J or G/U. ( Signals from last week on the USD/SGD and Loonie are still in tact).
There were great 30 min TS trend trades overnight though on the A/U, E/U, G/U and S&P500:
A/U: 60 pips
For this S&P500 trade my TS signal came through when the S&P500 was at $1423.21. I would then have looked to buy the Nov $142 Put which opened at $1.01. This Option moved to $2.60. This was an increase of $1.05 during the trading session:
The ROIC, return on invested capital, for this trade was over 100%:
ROIC = (1.05/1.01) x 100 = 104%
I think I need to move!
So, what are my trading plans: I'm going to wait now and see if the 80 level on the USDX can be breached. This would no doubt trigger more 'risk off' signals. I am concerned by the lack of 4 hr signals on the likes of the A/U and G/U. This makes me cautious with ANY 4 hr trading. Like I said earlier...I've seen this choppiness before and I don't want to fall victim to it!
There still has not been a make or break of the major resistance level on the USDX:
The A/U is flirting with the bull trend line though:
The G/U is flirting with the 1.6 level.
The moves will no doubt come, if at all, whilst I sleep!
So, if we do get a return to 'risk off' AND if price on the USDX closes and holds above the weekly 200 EMA, the 61.8% fib retrace from the last swing high and the psychological 80 level then I will be looking for the best suited 'risk off' trade. So far, the A/U and G/U look best to me.
From my current observations I tend to favour the A/U:
A close and hold below this daily bull trend line would tend to line up with the position when price on the Ichimoku closes below the Cloud on the 4hr chart. Price is already below the Cloud on the daily chart.
The G/U is in the running too with a close and hold below the 1.6:
Price on the G/U is already below the Cloud on the 4hr time frame and currently descending down through the Cloud on the daily chart.
Leaving for the time being: The E/U is above the Cloud on both daily and 4hr time frames for now. The Swissie is below the Cloud on both the 4hr and daily charts. I'm loathe to short the Yen pairs with rumours of BOJ easing around. The EUR/AUD is drifting sideways as the EUR and AUD are back tracking in sync. I'm wary longing the Loonie as it approaches the key 1.00 level.
I also wouldn't be at all surprised to see the USDX fall back down. I have a feeling the Presidential Election factor might start to kick in soon...if it is going to kick in at all. The data and earnings out of the US are still all quite upbeat.
I also wouldn't be at all surprised to see the USDX fall back down. I have a feeling the Presidential Election factor might start to kick in soon...if it is going to kick in at all. The data and earnings out of the US are still all quite upbeat.
The USDX has had another break of the bear trend line. The next, and more important, resistance level is now just above current price. this is at the area with the weekly 200 EMA, the 61.8% fib retrace from the last swing high and the psychological 80 level:
We now see that price has pierced up through the Ichimoku Cloud on the 4hr chart. price is still below the Cloud on the daily chart though. This divergence may make the markets a bit more choppy than usual.
Price on the EURX Ichimoku charts is still trading above the Cloud on both the daily and 4hr time frames.
I have been stopped out at b/e from my E/J LONG trade.
Tuesday 23/10 (5.30 pm)
Here we go...again! Another attempt by the USDX at resistance:
Tuesday 23/10 (3.15 pm)
I have updated my Stocks: Oct page with my Option trades from this morning.
There hasn't been much change with the USDX.
The USDX is back to bouncing around:
Thus, no new signals. I have my stop at b/e on my E/J trade.
Tuesday 23/10 (10 am)
Look how the Ichimoku Cloud on the 4hr chart has restrained the USD!!!!!:
The E/J is up about 50 pips and the A/J about 25 pips. A continued 'risk on' trend will probably result in some new TS signals soon. The E/U and A/U are probably closest to forming new 'risk on' signals. I'll be keeping an eye on these at the 12 noon candle update.
I've updated my USDX chart to reflect the resistance from last night. This change isn't noticeable on the daily chart though, more just on the lower end of the 4hr chart:
The USDX has continued to bounce around overnight amid some mixed Earnings results. I tend to think that this indecision may be in part due to the upcoming US elections and, even in the shorter term, to the Presidential debate scheduled for a few hours time! The EURX is bravely clinging on to the 102.25 previous S/R level as well and is giving as little away as possible:
The two signals from last night, the E/J and A/J are still up but are not out of the possible bearish 'double top' woods yet. I've moved my stop to entry on my E/J trade:
These two technical plays are being driven by fundamentals at the moment so I'm cautious!
The E/U continues to be choppy:
The A/U is trying to hold it together above the 1.03 level. I've relaxed the upper trend line here a bit:
The G/U is choppy as well and trying to hang in there above the 1.6 level.
It seems we have another day of waiting to see what the USDX decides to do. Will it break up and over the strong S/R level of the weekly 200 EMA, psychological 80 level and 61.8% retrace from the last swing high? The trading world will keep watching on!
BTW: I've sold a few more Options and will update them later in my Stocks:Oct page.
Monday 22/10 (9 pm)
The USDX is struggling to close above the trend line but there is almost an hour until it closes:
The E/J trade is up but I am concerned about a possible bearish 'double top' forming if the USDX does reverse and rally. I'll probably tighten my stop.
The USDX is still trying to decide where to close:
I've had TS 'Long' signals on the E/J and A/J (weaker) but this is more due to rumours about further BOJ stimulus by way of easing than a return to 'risk on'. I'm long the E/J.
Hmmm...this is what you call 'FX limbo':
My next trading platform candle update is in about 1 hr, at 8 pm. I'm not sure I'll have signals by then given this indecision and choppiness though.
BTW: Some Calls expired OTM last Thursday. Thus, I've put some new orders in to sell some Call Options on AVP and GE. I'll update tomorrow if they get filled. I'm going to see if the trading channels on the S&P500 and the DOW get broken tonight before deciding whether to sell more Puts.
Whilst waiting for candles to close...this feed came through my e-mail from Matt Jones at Capital 19. Matt has approved me reproducing his notes here. Food for thought!
I am hearing a fair bit of nervousness from investors due to the big sell off on Friday. But putting things in perspective the US markets moved higher over the week. We have had 37 companies in the S&P500 report earnings so far and of those 23 have exceeded expectations.
China put out GDP figures during the week that showed a growth of 7.4% which was largely in line with expectations and slightly lower than the previous quarter. The Chinese economy continues to contract but there were some very positive highlights within it. Export growth was 9.7% up from 2.7% the prior month. Industrial output was 9.2% up from 8.9% and retail sales was 14.2% up from 13.2% a month earlier.
So yes, the Chinese economy is slowing, but in line with expectations and this month saw some impressive turn around's in the components. Could this be the bottom of their cycle?
The Euro has also risen from 1.20 to 1.30 in the last few weeks. That is a promising sign the worst may be behind the Euro Zone.
US housing continues to improve and although there is a lot of rant and rave from the election candidates both will want a strong economy next year so I feel a lot of this bluster is just pre-election nonsense that will not actually happen once someone is elected.
In summary, I see no reason not to remain bullish in this market. The macro economic picture is improving and more companies are exceeding expectations than missing.
The mood this Asian session has been mostly 'risk on' with the USDX bouncing back down from the triangle trend line:
The EURX is trying to break out and up from its trading channel too but, as yet, has not done so:
I've just had a 4pm candle close. There have been some trend line breaks towards 'risk on' from the chart set ups I posted on the w/e but I don't have any TS 'risk on' trend signals just yet:
E/U:
We are back in a trading environment more suited to 'risk on' according to the Ichimoku charts. This might be hard to believe after Friday's market plunge but, that's the picture. I will be on the lookout for 'risk on' signals until the signs say otherwise.
There is no clear new trend on the Indices just yet. The USDX has not broken out and up from the triangle pattern. The EURX has not broken out of its trading channel. So, it is still 'wait and see' for me!
If anything, the movement has been more 'risk on' than 'risk off' so far today. So, after Friday's bearish moves I'm not expecting any new TS signals on my 12 noon candle update.
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