Press review - page 117
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The US dollar gained against the euro and the yen, but lost ground against the other currencies. the ECB rate decision, Janet Yellen’s speech, US ISM Manufacturing PMI, important employment data culminating in the all-important Non-Farm Payrolls and rate decision in the Eurozone are the highlights of this week. Here is an outlook on the main events awaiting us this week.
Final US GDP growth for the final quarter of 2013 was slightly revised to the upside, reaching 2.6%. In the meantime, weekly jobless claims surprised with a 10,000 drop to 311,000, beating forecast for a 326,000 reading, indicating the US job market continues to improve. Will this trend continue? In the euro-zone, dovish comments by the ECB pushed the euro down, while UK retail sales gave a boost to the pound. NZD/USD reached the highest levels since 2011 and also the Aussie and the loonie enjoyed significant gains.
• Many trading pitfalls occur after the trade is already on
• When the reason for taking the trade has evaporated, probabilities fade fast
• We look at the temptations, hazards and making the right calls with GBPUSD and EURUSD examples
A trade that has been put through the ringer for its fundamental, technical and market conditions merits should skew probabilities in our favor. When we make exceptions, our strategy starts breaking down. Tantalizing technical setups with no fundamental chance or event-driven volatility with no definable guidance in price cater to our emotions rather than our bottom line. But sticking to the plan isn't just for the pre-flight check. Many will alter the plan mid-trade or decide to ignore changing circumstances to revert to hope. Hope is not a trading plan. We look at how sticking to the plan both before and during a trade is important using GBPUSD and EURUSD examples in the weekend Strategy Video.
The light sweet crude market rose during the week, breaking well above the $100 level again. The fact that the previous week had formed a hammer was a clue that we could be going higher, but the actual confirmation came once we cleared the top of that candle. It looks as if the market is still somewhat bullish, and as a result we will more than likely head towards the $104.50 level given enough time. We think that this market will be one that can be bought on dips, simply because there’s so much in the way of support below.
With that being said, we believe that the $105 level will continue to be massive resistance, and as a result we feel that the area will more than likely cause a bit of selling. A break above that area of course would be significant in the sense that it would free the market to go much higher, but at the end of the day we still believe that there’s a bit to go before even get to that issue. We are bullish.
Brent
The Brent markets rose during the week as well, but don’t look quite as bullish of the light sweet crude market. Nonetheless, it appears that we are heading towards the $112 level given enough time, although we would expect some choppiness right around the $108.50 level, an area that did in fact cause a bit of resistance this past week.
Any pullback at this point time should end up being a relatively positive thing, as buyers should step into the marketplace. The $105 level offered enough support to push the market higher last time, and we believe that will continue to be the case. So having said all of this, even if we pullback at this point time, we would fully anticipate this market been somewhat supported. With that in mind, we are not interested in selling, and believe that ultimately we will hit the aforementioned $112 level, but it may take quite a bit of chopping around.
The Nikkei as you can see rose during the week, breaking above the top of the shooting star from the previous week. That being the case, we believe that this market will more than likely continue to at least go sideways, if not go higher. We have no interest in shorting this market until we get below the ¥14,000 level, something that probably isn’t going to happen in the short-term. That being the case, we are buyers on a break of the ¥15,000 level, but recognize the fact that the move to the ¥16,000 level will probably be relatively choppy
German index initially fell during the week, but found the €9200 level to be supportive enough to turn things back around and bounce high enough to clear the €9500 level. Because of this, we believe that the market will continue to go higher, but it might be a bit of a choppy affair. If we can clear the €9800 level, we believe that there isn’t much standing between that and the €10,000 level. Ultimately, it doesn’t matter, we are buyers of the DAX nonetheless. With that, there is no selling opportunity as far as we can tell and we believe that the €9000 level will continue to be the “floor” in this market.
The NASDAQ fell during the bulk of the week, breaking the 4250 level to the downside which of course triggered the cell position that traders could have had based upon the shooting star from last week. However, we had suggested previously that this market has plenty of support below, and as a result we are now looking at the market for support near the 4000 level, and perhaps even the 4100 level. Right now, we are on the sidelines but simply waiting for that supportive candle in order to start going long.
The S&P 500 as you can see fell during a large portion of the week, but found enough support at the 1840 level to turn things back around. Nonetheless, we are essentially consolidating at elevated levels, and a move above the 1880 level would more than likely signal that the market is ready to head to the 2000 handle. We think that it will eventually happen, but we could get a little bit of a pullback in the meantime. We see the 1780 level as a bit of a “floor” in this market, so as long as we stay above there we are “buy only.”
Silver markets fell during the bulk of the week over the last by sessions, but as you can see on the daily chart, there are signs of support coming into the marketplace. $19 is a very obvious support level as well, so we simply think that regardless, we don’t have enough room to start shorting the market now from a longer-term perspective. Quite frankly, we would love to see some type of supportive candle down here because we think we have more room to the upside than the downside.
The natural gas markets rose during the course of the last week, testing the $4.50 level. We even went as high as just under the $4.60 level, but as you can see could not hang onto the gains all the way up in that area. Although this candle is very positive, we have to wonder whether or not there’s any real strength of this move higher, simply because the Friday candle was in fact a shooting star. With that, we are only buyers above the $4.60 handle, and until then will remain skeptical.
Gold markets fell during the week, but have found a bit of support towards the end of the session on Friday. With that being the case, although this market looks bearish, it would not surprise us if the shorter-term charts lead the way here. After all, the $1280 level should be relatively supportive based upon daily charts, so we are bit hesitant to sell here. If we do break down below the $1280 level however, we can fully see how the market could find its way down to the $1200 level given enough time.