Jan13 – Market Analysis

Markets overall

Equity markets are a little mixed following weak US NFP.  Gold is up to $1,250.  The weaker NFP numbers have put some doubt into people’s minds as to whether this could impact on the tapering process.

News is lighter this week, with more focus on US earnings – fewer economic announcements.

No remaining positions – following NFP I was stopped out on remaining portion of GBPAUD position – overall the return was +0.9R.  AUDUSD got stopped out at the revised loss level for a loss of -0.3R.

This is the start of the 2nd week with the Old Street gang.

STAM Analysis

USD is down across the board slipping to 6 points.  Strong currencies are GBP (14) and EUR (12).  NZD and CHF are in the middle with 9 each.  On the bottom there is CAD, AUD and JPY, each with 1-3 points.

Thus I am looking to buy EUR and GBP, and looking to sell CAD, AUD and JPY.

Currently a lot of the pairs are retracing – EUR and GBP are falling a bit across the board even though they are still the two strongest ones. Yen has strengthened across the board during the Asian session.  AUD has also been strengthening .  Look for affirming price action on 4H chart before taking setups.

Thus at the moment there are no setups – recall we are looking for a pullback followed by good price action.  However is this likely to lead to a lot of S3 setups?

Change in weekly momentum – a total of 14 pairs had a change in weekly momentum last week – that’s 50% of all the pairs.  The weekly momentum is now quite out of synch with the STAM ratings.    JPY, AUD and NZD are now the ones with a lot of weekly bullish momentum.  It seems as if everything has gone criss-cross.  Tread with caution!

Equities + Gold

The weekly momentum is bearish for the US indices and the Nikkei, but bullish for the European indices (incl. FTSE) and Gold.  The four European indices continue to be in S1B environments.  However no proper setups thus far.

S3 Analysis

As expected, following on from the STAM Analysis, many of the pairs are heading into potential S3 setups.  On the 4H charts many of the pairs are already in oversold/overbought territory and on the ‘correct’ side – I will check charts ahead of 11am, to see whether things are setting up.  There are potentially 9 currency pairs that are setting up for S3.

Action to take

  • Check S3 setups again between 10.30am and 11am.
  • Check STAM again at 11am and 3pm.
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