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Market update Week Ending 11th Dec 2015
As Monday 14th Dec 2015
The major indices showed much weakness last week and none more so than the Friday’d price action.
On my report last week I stated that the US indices such as the Dow were not correlating with the major European indices such as the FTSE and the Dax. At that time the US was looking bullish whereas the European Markets were bearish after both the FTSE and Dax had made a weekly Outside Vertical Bar to the downside. For all us price action technicians we know an Outside Vertical Bar (OVB) is the most powerful single vertical bar formation and its close confirms with a high degree of accuracy where the next direction the market in which it relates is going to take. To reiterate both the FTSE and the Dax’s weekly OVB’s were indicating that both indices were more likely to trade lower. We now know this is exactly what happened. The weakness of the European markets brought the US lower in tandem with them.
The outlook for this coming week in the major indices is pretty negative presently but remember nothing falls or rises forever or should I say not at least in a straightforward manner. This is why everyone trading needs a methodology with strict trading rules if they are to be successful at trading.
The Dow has Major support at 17210 and this might give it some reprieve in the short term. A break through this level and it is quite likely this market will go much lower. The FTSE and DAX have broken support and unless the US can hold on to some major support levels that are near then the Dax is very likely to fall another 1000 points to 9265 before it shows any sign of the weakness slowing. The FTSE has a very similar pattern to that of the Dax with it being very bearish and the likelihood of it breaking below 5767 being pretty great. The strategy in the short term if the opportunity presents itself is to sell any retracements until such times as the Daily price Action objectives have been achieved.
I would also like to state that all these three Major indices are setting up lower weekly confirmed Vertical Bar Patterns and this does honestly not bode well in the medium term. The Christmas rally that we were all expecting does not look likely to happen as per my reading of these charts. Again as I keep saying, trade what you see in front of you!!
The EURUSD has certainly changed direction over this past two weeks. Again we have a Weekly Bullish bar indicating the high of last week should be at the very least broken to the upside this week. As regards the Weekly time frame chart this markets bullish move up is really in a counter trend move. I say this because the recent low this market made at 1.0537 was a lower low than the previous confirmed Vertical Bar Low at 1.0807. With this having happened a down trend was confirmed and this is why we are in a countertrend rally until such times as the high at 1.17 is taken out to the upside. There is absolutely nothing wrong with countertrend trading and it should not interfere with ones trading decisions as long as the signals on the time frame you are trading are clear and precise. What you should be aware of when countertrend trading is that there is more risk attached to the trade as the confirmed trend is in the opposite direction. This market has plenty of room to move to the upside and any short term retracement could offer a good trading opportunity for a long trade. If you have the use of our trading indicator then use this fantastic tool to place and time your trades.
The GBPUSD is very much making similar patterns to that of the EURUSD however fundamentally it is just not as strong in the immediate short term. The confirmed trend in this market as per its Weekly bar is down. This would not be negated until 155.07 was broken to the upside. Again last weeks vertical bar was Bullish and any retracement into last Weeks range without the price action objective being achieved could be used as a buying (long) opportunity. Last Weeks high is 152.38 and the probability of it being broken to the upside this week is strong. For timing and better trade entry use our trend indicator if you are able to do so. If not then look at our website and consider joining us as a member and discover the benefits you will receive from being part of our trading family.