Global Indices In Fragile Areas

By | Forex | 5 Comments

Looking across global indices from the US, Hong Kong and the EU, they all appear to be in very fragile areas.

Is there going to be a large drop soon?

The news of a meeting between China and Trump has given the market some relief, however it could have just papered over the large cracks in the global economy.


Technical Analysis

Dow Jones

The index is testing the broken ascending wedge formation. There also appears to be a head and shoulders formation signalling a potential break to the downside. If the head and shoulders pattern is correct, we could see a break to the 24600 level over the next couple of weeks.

Trade Set up – Entry 26800 – Stop loss 27050 – Take profit 1 – 26400 Take Profit 2 – 25800

S&P 500

This index is also re-testing the broken ascending wedge, a rejection from this level could see a significant drop. Similarly, there is also a head and shoulders formation on this index

Trade Set Up – Entry 2980 – Stop Loss 3000 – Take Profit – 2900

DAX

The German Index is also approaching a major resistance level at 12400, with a head and shoulders pattern forming. There is also a bearish divergence on the RSI. The direction of this index will depend largely on the ECBs actions on Thursday. Watch out for tomorrows post for the trade set up.

Hang Seng

The Hong Kong index is also at a crucial area re-testing the triangular formation at 26660. A rejection from this level could also signal further downside. No trade set up on this, we are just keeping a close eye.

As you can see numerous indices are in crucial areas. If they drop from this level it will form a lower high from the record highs the month previous. This could signal the start of a downward trend.

If you are trading the set ups, only pick 1 as you do not want to short 2 indices at the same time. Also ensure your stop loss does not go above the 2% risk of total equity.

The ECB interest rate decision on Thursday will give the indices some direction. Please keep an eye out for an additional post nearer the time.

Good luck!

Forex Market At A Major Cross Roads

By | Forex | 2 Comments

The forex market has taken some relief as news has emerged of a meeting between Trump and China in October. JPY safe haven appeal is down, momentarily.  We are going to take you through some forex market analysis for the USDJPY.

Leading into Q4, generally speaking spending increases leading into a positive ‘Santa-clause rally’. 

Looking at the USDJPY, for the last 5 years, Q4 has provided a great buying opportunity with an increase of anywhere between 400-1800 PIPS over the 3-4 month period. The pair are now re-testing the bottom of the triangular formation.

USDJPY – Q4 Rally

Todays economic climate is very different to the ones seen over the last 5 years as recession indicators have been flashing red throughout 2019. The FED have now increased the chances of a recession to similar levels seen back on 2007/08.

The trade war is also very unpredictable with Trump being extremely active on Twitter. His tweets are providing large swings and unpredictable moves not only in the currency market but also for the US stock market. 2019 has seen the JPY strengthen across all major currencies and we are now at a cross roads.

It was only 1 week ago when the USDJPY had momentarily broken the major support of 104.80. This level hadn’t been breached since the financial scare in 2016. The pair have now recovered, and appears to be waiting for some major economic announcements before choosing its direction.

USDJPY – Daily Charts- retesting the triangular formation

The USDJPY is now trading at the 50EMA which is also the same level as the triangular formation. A break above 107.60 could see the pair return to 108.00 and possibly 109-110 over the Christmas period. However, a rejection from this level could see the pair back down at 105.00.

All fundamental analysis is suggesting further downside: The US bond yield curve which has predicted the last 5 recessions is signalling alarm bells, manufacturing index’s are in a contraction phase globally, China’s exports and imports are continuing to decline suggesting a reduction on global demand, US jobs created continue its decline, Central Banks are racing to cut interest rates globally, negative yielding debt is at all time record highs!

Thats right, people investing to get a negative yield is at an all time record high!

Therefore you can see our concern leading into Q4. History would suggest we could see a ‘Santa clause rally’ and a potentially breakout to the upside, especially if the China and US meeting goes ahead in October. However, unless there is a trade agreement, we could see further strength of the JPY. A break back below 106.60 could see the pair continue towards low 105.00.

USDJPY – 1 Hour Time Frame

What to watch out for: A break above 107.60 with continuation to 108-109, or a break below 106.60 with further downside to 105.00.

This is one to keep a close eye on that’s for sure!

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More Fake News?

By | Forex | No Comments

Breaking News….

Bloomberg has just published an article suggesting China will not retaliate to Trumps latest round of tariffs. Trump has already been caught lying this week about a phone call with China, is this more of the same?

The news has given the market a huge sigh of relief, the Dow Jones is up over 300 points!

This could be more fake news as the US GDP is due out in the next couple of hours. A strong result from the GDP could push the market straight back down.

Check out our latest technical and fundamental analysis by signing up to our messenger link, ready for the US GDP release at 10:30pm.