This is my plan / thoughts for the week to come.
All the charts I have posted are in order of the markets discussed.
Last week was a rollercoaster ride. The Fed move to buy treasuries certainly blindsided the market - the risk was always there - and the prepared traders were ready on the FOMC statement with their fingers over the buy button on the 10 year T-Note which rose over 500 ticks in about two minutes flat. The follow through move in the Bund has been the only time I can remember in my trading career where it was childs play to make BIG money off a news announcement.
Lets look at the markets then:
Gold
Gold pretty much f*cked everyone as far as I know. It broke the head and shoulders neckline, the pivot point and the ascending TL and then turned on the Fed news and sky rocketed. Fortunately, my strategy of selling the retest kept me out of this as it came straight back in without even pausing for breath. I did say last week that I fancied the downside as
"I think there are going to be a lot of people that bought high in the panic and are holding on without taking the loss...these people must be shaken out.". I think we might well have seen that shakeout! I'm a little mixed on the outlook for Gold in the near term so I'll just note that it had every opportunity to break and couldn't...which is a pretty serious bullish factor.
Crude
Crude has managed to make its way out of the range ceiling of $49 and hold above it also. This gives me a bullish outlook going forward. I did say last week I thought a breakout to the upside could be violent and I wouldn't be surprised to see a follow through this week to $56.
Euro
Well, I said 1.3300 had to be broken for this to be a bottom and we blasted right through that. We are, once again, at a key pivotal area for the Euro. I'm looking for price action on Monday to sell it back to the 1.3300 area for the retest of that breakout point OR if we break higher, I will look for a retest of the level to the upside in expectation of still higher prices. It's worth bearing in mind that this Dollar strength seems to have mainly derived from its announcement of quantitative easing and the ECB may well make the same decision...which could knock the Euro for six...but that's fundamentals and a whole different story...
S&P500
I'm going to do a FireWalker and blow my own trumpet here
I did say in last weeks roundup that 800 was going to cap the rally on the S&P500 and we made a high of 801.25 before coming off about 40 handles
We are still in a major bear market BUT I am looking to see how we react to the lower of the pivots in the chart.
DAX
The Dax is at a MAJOR level in my opinion. If we can hold here and push up through that descending TL then we have a real chance of starting a longer term push higher. As marked on the chart, look for the break and retest.
USD/CHF
I couldn't have got this one more wrong. The news of SNB intervention was so bearish for the Franc that I really thought we were poised for a move higher. And who knows, perhaps, if the Fed hadn't announced its Treasury purchases we may have got it. But either way, one minute we are breaking out of the range to the upside and holding above it. Next minute, we are down, right through the whole range and out the other side. This is a choppy market and I don't like it. In fact, I have never liked the Swissy. But if I had to have a position right now, I'd be selling a rally.
USD/JPY
We came back and retested the swing high that confirmed the double bottom. We've also made the third TL touch of the new trend up and formed a daily inside day at it (although a wide range one). I'm netural on this market right now. If I had to make a decision, I'd go with the long side BUT one can see that we've just broken out of a daily range to the downside and a small move up to retest that area before tanking, could well be on the cards.
EUR/JPY
There is a HUGE area on Eur/Jpy and that makes this pair firmly on my radar this week. I can see little chance we will get through this on the first attempt but you never know. If you sell it here and go into profit, you certainly don't want to be a pussy and take 100 pips profit. This has at least an 800 pip target to the last swing low on the daily and 1900 to the bottom of the range. Don't think it can't happen. ANYTHING can happen in the market. Still, my preference is a break to the upside, followed by the retest - (yes, same as usual, the market pattern never changes) and then a nice, prolonged move up for at least 1,000 pips to 141.00. As usual, trade what you see. Price action is king.
Good luck everyone.
-Tom
