Trade plans

Wild Wednesday, dollar broke lower, EURUSD and Cable rose strongly, cross rates very mixed, correlations pretty nonexistent.

Strong bear market rally seen in SP500.

Question now is, has dollar dropped too far and needs to bounce? Have stocks seen the low before Friday close and OPEX/Options Expiry?

I would answer that by saying Dollar quite possibly will rise into the close of Thursday, but cannot rule out 1.0600 in EURUSD, a slight new high before a drop may occur.

But you have to take each pair separately at the moment, meaning dollar may behave differently to Commodity currencies, or Yen or Euro…cross rates are causing fluctuations and high volatility , which means lots of opportunities if you have the stamina for it, as money is chasing itself around the markets trying to fool most of the people all of the time.

SP500 is key for sentiment and dollar performance, its close tonight and how Asia performs will be important, it does seem unlikely we have seen the low of the week just because of the time of the current low, but it is possible we will close the week up around current 3900 levels, however, Friday night is a long way off. Bear market rallies can be fierce and hard to trade. Watch commodity crosses for clues of risk.

Hex.

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Markets Notes For Thursday 19th May 2022

Market notes Thursday 19th May 

Well we were looking for dollar buying to come in during Asia and early London on Wednesday and we got it, and then continued through the day.
Of course Dollar was a sideshow compared to the Yen and CHF buying as stocks fell after some very rough earnings figures from Target and Walmart.
USDJPY seems to have finally divorced itself from 129.40, DXY seems headed for the 103.90s again.
Crude down another few percentage points amid an interesting event not seen since 2010 whereby WTI traded a few points higher than Brent due to roll dates, and general confusion. Despite crude, USDCAD was pretty stagnant all day.

Into Thursday more dollar strength is probable, but perhaps a 2 way market may be more likely as we are now in a defined dollar range, and back to pivot around 103.90s.

Besides Aussie employment, there is no major news scheduled, although I heard one trader suggest Lagarde will do a surprise rate rise tomorrow…totally unlikely but at least you probably heard it here first!
G7 meetings and ECB monpol meeting accounts, and then US Unemployment claims and existing home sales figures.

Stocks look to be closing very weak and will probably be sold on any bounce, in such case dollar likely to remain bid but Yen and CHF crosses most active whilst DXY is in this range.

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Market notes for 18th May 2022

Market notes Wednesday 18th May 

The round of talks from Lagarde, Powell and Mester on Tuesday caused a lot of activity but the only clear thing was Powell sounded very hawkish, “wants to see clear evidence inflation is cooling before slowing down the pace of hikes”.
Signals 50bps hikes at next 2 meetings.
Crude dropped 3% in a flash from the high made earlier in the day, stocks dropped, but Canada commented they want to build a new pipeline to supply crude to the US, so Spooz were saved again and bounced to print a new high of day, Dow followed although not a new high at time of writing. 32641 shown now.

DXY took the stops aforementioned, and dollar was given a general lift but nothing convincingly strong enough to drop EURUSD. If it can’t drop it probably has to rise further but it is hard to buy it up here, currently 1.0540.
USDJPY loves 129.40 it seems…
The question is, will Dollar buying occur in Asia and early London, or is Eurusd heading towards 1.0600
As mentioned, OPEX week, strange moves should be expected.

With the current situation, and UK CPI and CAD CPI due, Wednesday might be a good day to do less and watch and wait for opportunities to develop.

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Market notes Tuesday 17th May Pre US session

Cable GBPUSD has been very strong as anticipated due to comments from the BoE. EURGBP very weak. Might be done on the downside for now as Euro is very bid in all crosses.

USDJPY 129.40 still looking pivotal.

As mentioned in the Weekly outlook, noises about US rates being priced down to zero into 2023 are now being heard, hence why there no support in DXY on the way down from last weeks high, the 104.20 hardly gave a pause in the drop.

Looks like the only stops left are 103.70s DXY, so EURUSD may keep rising.

Brent Crude reached some key stops at 114.85 and cleared them. USDCAD may have found some support though, as all cross rates are seeing CAD and AUD sold.

Crude prices will likely weigh on stock prices soon.

Wild times, keep it tight.

Hex.

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Market Preview for Week Commencing May 16th 2022

Monday

UK BoE MPC policy hearings all day.

Tuesday

US core Retail sales

Powell Speaks followed by Mester

Wednesday

Australian wages figures

GBP CPI

CAD CPI

Thursday

Australian jobs numbers

Friday

UK Retail sales

Weekend Australian election

The main theme at the end of last weak was dollar strength as it finally cleared the 103.90s hurdle and sprinted higher, sending EURUSD to a new low of the year.

EURGBP sold off violently as it failed to find support above the prior week high.

This action saw Cable GBPUSD rise stronger than EURUSD on Friday.

Fundamental and technical thoughts

The Federal reserves Bostik claimed in the week that a rise of 75bps is not out of the question, and this gave Dollar the kick it needed to rise strongly. However, if you look carefully the Bond markets are now pricing in less aggressive rate rises out to 2023, which may weigh on the dollar over the next few months. That 75 call was probably a head fake.

I do see a possible new low in EURUSD into 1.0300/0290 which will bought and if we then see a daily close over 1.0350/0400 we may see a tradeable rally to 0700/0800

But for me the better action will in the Cable, Bank of England are far more likely to raise rates than the ECB. Watch Mondays MPC report for signals. While Cable continue to close above 1.22/1.2250 higher prices should be seen, and EURGBP will continue to be under pressure. How low the ECB will want this to go is hard to know but the current talk of a trade war between UK and the Eurozone due to the political situation surrounding Northern Ireland will keep this pair pretty active.

This would suggest GBP crosses will be very active and positive. However the EURO crosses will probably be pulled along by this, and are less violent to trade.

Yen…tricky…USDJPY did head down to the buy zone mentioned in the 128.s but its failure to clear 129.40 might be significant. I would only be a new buyer once we close clearly above that level. If that occurs there is plenty of scope for higher levels into 130s.

Will probably leave the Australian this week with the key news events, plus the election at the end of the week. You might recall the sudden last minute announcements before the previous election regarding home loans assistance or regulation which was used to swing the votes in favour of Scott Morrisons party, so I would not trust anything I hear from Australia this week regarding the jobs figures or announcements.

DXY Dollar index, as a barometer of what is going on can be confusing to some as often the cross rates cause some diversion between the majors and I think this may be the case early on in the week. EURGBP will be watched closely to see if I am correct, as I do not expect a new high in DXY early on, but a new low could be seen in EURUSD, this would mean EURGBP may show weakness early on, then rally, to be sold later in the week.

DXY 15 min chart showing last weeks action.

To Sum up… FX vol is going to continue this week, which I should say is also OPEX week which may also cause some unexpected action and flows

So keep it tight, and dont stay wrong this week traders, there will be plenty of opportunities, have a good one.

Feel free to contact me with any comments or questions regarding all markets and trading.

Hex.

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Market notes for May 13th

So many moving parts…lets keep it simple though. DXY regained 103.90s and found support, sending EURUSD lower to, and through the lower targets.

USDCHF reached Parity 1.000, a price last seen in 2019.

All Yen crosses moved by very large amounts, extreme ranges, yet Gold remain rangebound.

Commodity currencies have been crushed. Possible bounce areas nearby on any sign of dollar rally temporarily faltering.

FX Commodity crosses presented good opportunities, EURAUD and EURCAD for example.

EURGBP strongly rejected from last weeks high area.

Its all about risk management going into Friday with no key news scheduled.

Watch Stocks, will S&P500 find a floor on Friday? That will depend on what happens in Asia, I am hoping to see a good bid overnight and if that holds into the US Open then it could be a good risk on day Friday. If not…well lets see…

Dollar strength is clear above 10390/400 and this is supressing commodity currencies despite higher prices in everything. This will mean controlled prices in the US, but for UK and Europe, weak currency combined with high commodity prices just means more pain there.

Crazy wild week in the markets, one has to love it to do this!

I hope my notes have been of interest to some. 

Day trading often involves taking the contrarian view to find opportunities, and to also get with the trend when the opportunity presents.

Lets see what next week brings.

Good weekend all,

Hex.

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Market notes for 11/12th May 2022

Yen pairs and commodity crosses very much in play and gold showing a strong bounce from a key area.
If it holds its current position near the days high we could see strong follow through higher in Asian session. If not a retest of the 1830/40 area could be seen.
Dollar Index still inside of recent range so the major pairs also rangebound, although with good volatility especially in Cable.

EURUSD still can see a new low unless it can firmly get above 1.0580/90. On the downside possible to see 1.0476/0460 before a correction.

Cable GBPUSD looking weak at the moment as EURGBP nears last weeks high, a crucial level there.

Stocks and crypto displaying very weak action.

Possible bounce in risk could be around the corner though.

Keep eyes on the DXY level 103.90s I have been showing all week, still proving to be a key pivot area.

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Market notes 10th May 2022

EURUSD very much stuck in the range. Positive while above 0500 but needs to clear the levels mentioned on Mondays update

“key is DC  eu… A close blw 1,0500 would encourage CTA/trend followers to push for prior lows 0345, whereas we need a close abv at least 10580/90 to stabilize ( st resist 0527/0550/0565)”

Note USDCHF made a new high, EURUSD did not make a new low, which one is right we will know soon enough.

US CPI Wednesday will be the key event which should set up a directional move for the week, and at a minimum it will add to volatility based opportunities.

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Market notes for Tuesday May 10th 2022

EURUSD, GBPUSD, DXY.

Last update for a few days, just wanted to complete this trade cycle. 

So far the buy on dips view is working, however the more time EURUSD spends in this current range , the more likely it is that we will break last weeks low. Need to stay alert to that possibility.

Markets are nice and volatile giving opportunities both ways, no need to get too committed one way.

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Market update Monday Pre US Session

Key is Daily Close on  EURUSD… A close blw 1,0500 would encourage CTA/trend followers to push for prior lows 0345, whereas we need a close abv at least 10580/90 to stabilize ( st resist 0527/0550/0565)
Note the DXY did push to a new high before London open but the divergence Cable and euro bounced and DXY is back below 103.90s.
SPX dropping to Support zone pre US open. Hold or break will be key for risk on/off.

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Market Preview for Week Commencing May 9th 2022

Main News events

Tuesday Australian Retail Sales

Wednesday UK GDP * US CPI

Thursday NZ Inflation forecast

General market views.

Interest rate and inflation driven environment now, and about time too.

However, after a slew of Central Bank rate increases last week, we will find out this week if we have seen those priced in or if the FX and stock market moves have over reacted slightly for now.

Maybe as is often the case, markets have stretched to a point where they will come back into the ranges for now, and so we need to ask the question, quietly, “have we seen the peak or near the peaks for the next few weeks”

Be open to the possibility of the US dollar dropping slightly or at least not breaking higher for now, stocks may rise, and retrace more than traders might expect.

If that is not the case, we will soon know and can adjust our views to trade on the strong side of the market.

For this weekend review I want to look at the chart of the GBPUSD, Cable.

All this year the GBP has been dropping hard and fast.

We have a possible support zone nearby. Can we retrace up towards the 50% level?

For this to happen, we need USD to weaken, EURUSD to rise, and EURGBP to drop back from its 8600 resistance area.

The BoE raised rates by only 0.25% compared to the US rise of 0.5%, this caused a further sell off in Cable. At some point voices will be heard to say that a weak Pound is a cause of inflation,

and the snap back up may cause traders some severe whiplash, possible to see 1.26/27/maybe 1.28 area?

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Friday May 6th 2022

Pre NFP notes.

Looking at the EURUSD today.
Made new low of the week this morning and was picked up strongly just ahead of the Yearly Support2 pivot level.
The Bund action suggests we should consider EURUSD to be a Buy on Dips for now.
Preferred levels to buy after the news is 1.0530 and if stretched to 1.0510 this level offers the better risk to reward.
targets on the upside are 1.0610 to 1.0620.
A break and strong hourly closes and day close in the 1.0600s suggests potential for 1.0700 to 1.0800 in the course of the rest of the month.

Keep it tight and trade to trade another day.