Feb18 – Market Analysis

Am back on the trading desk and am allowed to trade STAM today.

FX Analysis

The currencies are cleanly split into three camps now.  GBP continues to be the strongest with 14 points, then I have EUR, NZD and CHF on 10 points each.  Then a big gap and we have the remainder – USD, AUD, JPY and CAD – each with somewhere between 2 and 4 points. 

Thus my bias is to buy GBP (after pullbacks) and sell it against the weak currencies.  I am also interested in selling the weak currencies against EUR, NZD or CHF provided the setup is a solid one.

There’s only one currency pair that fits into these potential strength/weakness combinations – that being NZDUSD.  This pair is not trending strongly at the moment, although it is trending up, it is doing so slowly.  It looks like a little retracement is taking place on the 4H chart, however it actually only amounts to 40 pips.  Thus there is no valid setup on this one.

There’s Tier-1 news for the UK and the Eurozone this morning.

Equity Markets 

In terms of equity markets – the weekly momentum on the S&P continues to be bearish – over the last two weeks there has been a nice run up to the previous highs (which are also the all-time highs) around 1,840. On the weekly chart, there has been a fantastic bullish pinbar for the first February week.  The Dow has a very similar picture, except that price has not yet reached the high of 16,500 – still trading around 300 points below.  Finally the Nasdaq has already surpassed the previous high.  So in terms of sentiment it’s definitely Nasdaq, then the S&P and then the Dow.  The European markets and the FTSE are somewhat in line with the US markets, though some of the indices are actually bullish on the weekly momentum.  I will be interested to take a look if the markets experience a significant retracement.  At the moment, they are mostly trading near the highs.

Gold has been rallying very nicely up to $1,330 and the weekly momentum is bullish.  It is in a S2B environment.  Currently pulling back on the 4H chart. It is still in a downtrend on the weekly chart, but it is trending up on the D chart.

That’s it for the 7am market analysis.  Back at 11am, hopefully at that time, I will also be able to look for S3 setups.

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One Response to Feb18 – Market Analysis

  1. 11am update: I was interested in shorting USDJPY (S2S) but this would involve trading two weak currencies against each other – thus the setup is invalid. NZDUSD continues to retrace. No long setup yet.
    S3 Trades: GBPCAD and Cable looked interesting. I will monitor Cable. I am interested in going long, but would like to see a retracement on the 15M chart followed by some bullish price action, before buying the pair.

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