French Presidential Election Round 1 Aftermath

Upon opening bell, EUR skyrocketed to the moon, strengthening massively against all other currencies, after news broke that Emmanuel Macron and Marine Le Pen are through to the second and final round of the Elections.

I had a bullish inclination on the EUR/USD end of last week. Even though it was in the right direction in the end, I did not enter the trade because of the huge uncertainty of holding it over the weekend.
If I was wrong, the magnitude of losses due to this large gap would’ve caused some damage.
My opinion for now is not to touch any EUR pairs for these 2 weeks due to the Elections and any surprise outcome will not respect any technical or fundamental understanding.
The gap has already done its damage to accounts and chart patterns; give it time to settle down and reshape.

Trade safe and trade well!

Trading Idea: EUR/AUD (Short)

H4


EUR/AUD is possibly forming the right shoulder of the H&S pattern.
If it is successful, this should take us all the way down to 1.38742 region.
Note that it has rejected nicely almost exactly at the same zone as the left shoulder.

H1


Going down another time frame lower, we can see that the upward momentum is increasing at a decreasing rate.
Looking top-heavy and possibly ready for a good reversal, especially from C-D-E.
Furthermore, it has rejected the top of the left shoulder region at least 5 times, which should be telling.

Weekly Analysis (27-31 March)

The focus for the upcoming week will centre around GBP, with the other pairs taking a backseat.

GBP

UK Prime Minister Theresa May is expected to kick start the United Kingdom’s departure from the European Union.

It will happen on 29 Mar and I’m expecting spreads to be widened more than usual and GBP-related pairs to be highly volatile – perhaps why GBP/JPY has yet to make a clear directional push, being extremely choppy.

No clear bias from me, just another wait-and-see situation.

USD

The DXY is still trapped within the 99-100 zone, with declining or less-significant movement for the USD-related pairs over the past week.

Trading USD-pairs should be tricky again for this week.


I’m still biased towards a break of the textbook head and shoulders neckline overall.

JPY

JPY-pairs are currently making a recovery after being pummeled pretty badly through the past week, with USD/JPY leading the way with a convincing superficial rejection of 110.6 area.

I am expecting the recovery across the JPY-pairs to be short-lived before it gets punched back down again.

Overall sentiment is very bearish for me.

EUR

As for EUR-pairs, not much comment on it, except that the EUR bulls have run its course and its about time it retreated a little.

On the financial newsfront, not much going on except for the Brexit-launch on 29 Mar.


Meanwhile, keep your risk in check and trade safe.

Time is running out for GBP/JPY

GBP/JPY is currently still trapped in descending triangle structure, but nearing the end of the apex.

The upper bound resistance is not accepting higher prices, sending price down again and again, with each rejection increasingly stronger.

Support is weakening as well after multiple tests.

I’m personally expecting it to give way by end of the week.

gbpjpy

Trade safe and trade well.

Midweek Review

Currently have no positions open since the start of the week, most of my shortlisted pairs have been invalidated and waiting for new signals to show up.
Another week of patient waiting and sitting on my hands.

JPY pairs were hammered yesterday while the rest are all still stuck in limbo – no decisive movement yet.

DXY is now back down to <100 after last night, currently trading in a tricky range between 90-100 again.
Although my general bias is a medium-term bearish outlook for the Dollar, but do be careful when trading USD-related pairs for now as it is not going to be a smooth ride. Unless either 90 or 100 is broken decisively, expect erratic behaviour every now and then.

download

On the other hand, NZD is having its monthly RBNZ cash rate announcement tomorrow at 4:00 AM Singapore time, so do watch your risk on that front as well – from my experience, NZD movements tend to be pretty powerful when it comes to cash rate releases.
No clear bias on NZD from me.

Trade safe and trade well.

FOMC Trading / Midweek Review

Last night’s FOMC was largely predictable by most traders – in the sense that all sentiments of a rate hike has been fully priced in over the past few weeks.

In my previous post, Where is DXY (Dollar Index) headed now? and Weekly Analysis, I mentioned that DXY will still give way to the downside despite a rate hike of 25bp.
Indeed, USD/XXX pairs all fell pretty harshly.
Being a strong believer of technical analysis, there was simply NO reason for USD to climb, despite what Yellen said.


Previously, I have also shared with you how the gurus trade the big news – Weekly Focus/News Trading Strategy.
Similarly, I positioned myself well in the day and took a +4.35% equity gain out of last night’s movement.


This managed to push my equity to further highs, which also crashed through my psychological growth barrier.

Moving forward, there is still the BOJ, SNB and BOE decisions later on in the day.
No immediate plans to trade today since too much volatility on multiple currency fronts is not what I am looking for.
Shall take a step back and wait for new opportunities to present themselves.

Weekly Analysis

This week is going to be another volatility-charged week.

ff1

Here are the key events that I will be looking at:

  • Monday, 9:30PM – ECB Draghi’s Speech
  • Thursday, 2:00AM – Fed Interest Rate + FOMC Speech by Yellen
  • Thursday, usually around late morning/early noon – BOJ Rate Release
  • Thursday, 4:30PM – SNB Rate Release
  • Thursday, 8:00PM – BOE Rate Release

(All in GMT +8, Singapore time)

So if you’re trading on Thursday, do take note of the above events and trade safe.

I will be monitoring if the USD will still give way to the downside, following the assumption that whatever expectations of a rate hike has already been priced in.
If it hikes, this will be the first rate hike of 2017, with the previous hike on Dec 14 2016. I am personally expecting a 25bp increase.

On the JPY front, I will be looking for bearish opportunities within the JPY cross pairs, especially GBP/JPY – which has the potential to free fall on the Daily timeframe.

May the pips be ever in your favor.

Where is DXY (Dollar Index) headed now?

Our favorite monthly NFP has just been released 2 hours ago, with actual figures beating both estimates and previous month’s figures.

But the strange thing is that the USD didn’t seem to move in line with the data release.
Discrepancies in the markets like a deviation from an expected norm should raise some caution among traders.

Here on the DXY Daily and H4 chart, we can see that it is currently in a textbook ‘rising wedge’ pattern:

Have a closer look at what happened during the hour of NFP release:

It should act as a telltale sign that something is not quite right with the USD.

Extreme caution should be taken when trading USD pairs, especially with the Federal Funds Rate next Thursday morning at 0200hrs Singapore Time.

My personal bias would be a downside breakout for the USD as it doesn’t seem to have sufficient bullish momentum to sustain its uptrend, not even outstanding economic data could support it.

 

AUD/USD – Ready for Next Move Down?

We just had the release of the AUD cash rate half an hour ago, which was maintained at 1.5% – no increase, no cut.

AUD pairs spiked upwards shortly after but don’t look upside-convincing to me.

Shall observe what happens after London Open.

If it heads south, these are the next support zones to watch, based on simple price structure:

S1: 0.75385
S2: 0.75066
S3: 0.74552

Once these 3 support levels are cleared, its pretty much free-fall zone for AU till 0.7310 before we see some support.