Last day of the trading month & we are ending on a raft of economic releases, with three most significant being preliminary GDP for the UK, advance GDP for the US, and m/m GDP for Canada. And with month end flows as well we can expect a lively session today.
So far this morning GBP has been very positive with strong move higher in all the pairs, but sterling is looking very overbought on 4hr and daily CSI.
Some key levels include : 144.76, the end of January high for gbp/jpy. 1.30 for cable which if breached would take the pair back into the 2016 deep area of price congestion. For eurgbp it's 0.84 which is key as any break lower could take the pair through some important support levels down to 0.83.
Looking ahead we have the usual PMI data, and with stock markets very bullish everyone will asking whether this is the year traders and investors take note of the old adage of 'sell in May and go away' - we shall see. ... See MoreSee Less
Many thanks to those of you who came aong to this afternoon's webinar where we focused on price action in response to the Draghi press conference.
Mario did his usual trick of managing to speak out of both sides of his mouth, with his good news, bad news routine. In other words pushing the euro higher in his statement that downside risks dimishing and everying 'more broadly balanced'. Then during the Q&A saying ECB not confident inflation on track. In other words, no likelihood of interest rate rises or end of QE for the foreseeable. So down goes the euro.
The price action we tracked was across my euro renko trio of charts, namely eurodollar, eurjpy and eurgbp, in conjunction with 5 min, 30 min charts & the CSI. And it was clear that once the volatility had died away on the bearish move lower, the question was whether there would be any opportunity to take a trade to the long side.
On eurodollar it was the low of the session at 1.0851 that marked the support region for the pair, which duly held even through the London fix. From a VPA perspective it was clear the price action was struggling to break lower with a series of narrow spread candles & relatively high volume on the 5 min chart, evidence of Wyckoff's third law of effort and result. In other words anomalies, as there was a lot of effort to push price lower, but no comparable result.
But the move higher for eurodollar has been a grind higher, and whether the pair manage to hold onto these modest gains remains to be seen, particularly with the 4 hr CSI suggesting a resumption of a move lower. Key is still today's low at 1.0850 and any move through here will take eurodollar to test 200 ma at 1.0840 on the daily chart. However, end of month flows into the USD will also help to push eurodollar lower. ... See MoreSee Less
Many thanks for coming along to this morning's webinar. Really interesting session, not only with respect to our three GBP pairs, but also what happened overnight with the CAD which yesterday weakened on the back of comments from DT about NAFTA, only to reverse sharply when it was confirmed the agreement would not be scrapped, but 'renegotiated'.
As David & I stressed this morning politics is taking an ever increasing role in our trading decisions.
This morning's recording is ready and will be uploaded to the members' are of my website.
We are back at 1.45 pm London time, just after the ECB press conference. Hope you can come along. ... See MoreSee Less
I think I'm going to subscribe to DT's twitter because he's laying into Canadian farmers and has been cited as reason for strong move higher by USD. Anyway strong USD/CAD means cheaper Canadian goods! ... See MoreSee Less
Divergence in the majors with USD moving highly against the comm dollars, particularly against CAD & NZD, whilst trading within the spread of the daily volatile candles for eurodollar & cable.
From a technical perspective USD/CAD looks most interesting as current price action is at the resistance at 1.3596 from where it is corrected in October and December 2016. The resistance also marks the top of a fairly wide trading range for the USDCAD with the bottom of the range at 1.2967 and with the USD still looking bullish on the 4 hr CSI we are likely to see this level taken out sooner, rather than later. But we do have retail sales for Canada tomorrow as well as the oil inventories which will certainly have an impact on the Loonie.
Aussie too has the CPI and speech from Gov Lowe.
Meantime markets have put euro aside, at least until Thursday, so it's back to the USD where aside from the CB Consumer Confidence release later today, it's more politics with Donald threatening to announce corporation tax reform, which if substantial should be a boost for stocks. The USDJPY is certainly more bullish today and reflecting further move higher in the futures with NQ & S&P positive into the NY open. ... See MoreSee Less
Those of you who come along to our webinars will have heard David & I stress how important it is for index and stock traders to keep an eye on the currency markets. Not not just the USD, but also the Japanese Yen whose performance will often signal a change of both short and longer term sentiment.
The pair we always watch is the USD/JPY, but there is another pair that correlates well with stock markets and that is the Aussie Yen, as the Aussie is considered a risk currency by virtue of Australia's status as a major commodity exporter, particularly to China.
Furthermore, there is no a Yen index we can follow to make life a little easier. This has been developed jointly by the Dow Jones and FXCM, and we also have one available from our Quantumtrading stable of indicators.
The session thus far has seen the AUDJPY in free fall with the pair now approaching a low volume node on the daily chart which will add additional momentum should the pair breach the key 83 level. Indeed the 4th Camarilla support pivot also sits at 82.90 renforcing the importance of this level.
All now hinges on the US session and whether traders decide to reverse the currency bearish Globex tone. ... See MoreSee Less
I wrote this at the end of January for the VIX which is moving into worrying complacency levels, and reflecting the strong performance of the indices. We are not quite at single figures - but came perilously close yesterday at 10.74, so this afternoon's US session will be interesting. We also have to bear in mind that the index can stay low for an extended period of time, ie years, but as Wyckoff's second law of cause and effect tells us - the longer the complacency, the greater the reaction when it comes.
Recent USD weakness has certainly been positive for commodities with oil too being helped higher. The monthly chart for the WTI contract (on MT4) shows buying coming at the volume point of control in the $47 per barrel region and the start of the move higher that has seen oil regain $50 per barrel before pulling back at $51.06.
The pullback was cushioned by the 4th Camarilla pivot at $50.25 as the commodity is now trading between this level and the first resistance Camarilla pivot at $51.68. These two levels now clearly define the trading range for oil with any driver coming either from the USD or OPEC. ... See MoreSee Less
Problems in Washington over healthcare has seen strong market reaction & fall in USD, so no surprise to see gold back testing $1260 per ounce region. $1263 is level responsible for the correction at the end of February, and if gold does manage to get through,1266 is next significant resistance. This is also coincides with our third Camarilla pivot and a break here would also see gold move into a low volume node for a quick run to 1284 which is where the 4th Camarilla pivot awaits. So expect plenty of action on gold this week, all aided and abetted by Washington politics. ... See MoreSee Less