Market Updates Week Ending 27th Nov 2015
The Fundamentals as regards the uncertainty around the World with the Syria situation and then the Russia/Turkey situation can leave one confused and perhaps afraid even to trade, but as a trader one should look past these uncertain news items and trade what is seen in front of them. If a low risk opportunity arises no matter the direction take it and then manage it with diligence.
Let’s look at what the outlook for the Indices and EURUSD / GBPUSD is for the beginning of this coming trading week.
With the thanksgiving holiday on Thursday past the American Indices have been pretty quiet so therefore we have to look at the bigger picture to see where the next direction is likely to be.
When analysing any Financial Instrument at the end of each weeks trading it is only proper that one looks at the Weekly Vertical bar. Is it Bullish or Bearish?
When looking at the Dow’s weekly bar you can see that last weeks trading range was inside the trading range of the previous week. In other words it was an inside bar. The trading range of the week before (20th Nov 2015) was quite large and also was a Bullish Outside Vertical Bar and has yet to be broken to the upside to satisfy its price action objectives.
When you analyse the weekly bars correctly you can see the weekly market movement three weeks past was pretty bearish but then the week after it turned bullish as per the bullish OVB bar. This is sometimes called in the trade a “Rail Road Track”. The reason for this is that one bar is indicating one direction and then the bar immediately after is indicating a complete reversal. Providing the two bars are of similar length (range) then they look very like a rail track. From a technical analysis/price action point of view this can often be a sign of a good move ahead. In this case a bearish scenario was immediately turned into a bullish scenario. Last week was like a breather (IVB) because of its small range and therefore it is highly likely a decent move could happen this week. Taking all of this into consideration it is more probable for the high of 17914 to be broken and this market to firstly test 17977, then 18137 and perhaps even 18315. The 18100 to 18300 levels have previously shown quite a lot of resistance and therefore it would take a powerful band of buying pressure to push the Dow through these levels. Off course remember to always only trade what you see.
The FTSE weekly chart has a very similar pattern to that of the DOW.
Last Weeks chart was a Bullish Vertical Bar and although the mood from America was that of caution and calm probably because of the holidays the UK mood was little more definitive. The trading on the FTSE in the latter part of the week was a little lost so to speak and this was understandable due to the fact America was in holiday mode.
From a technical analysis/price action point of view the FTSE should break to the upside and take out 6488. It was 6488 that the last confirmed Vertical Bar Trading pattern high was and after making a confirmed higher low at around 6000 there is an uptrend presently in place and this is the reasoning why this market should break through 6488. The only concern I have for the FTSE is that the broad UK market is not yet totally on board but that can quickly change.
My present analysis is that any weakness below the above mentioned levels could be buying opportunities however, as I always say trade what you see in front of you.
I said over this past few weeks that the EURUSD was heading for the 1.0530 level and as I speak the key support in this market is now 1.0470. Our last confirmed Weekly vertical bar trading pattern high is at 1.1712. This is a much lower high than the previous high. We all have heard what defines a trend. Lower lows and lower highs define a down trend and the complete opposite for an uptrend. In this case the bigger picture of this currency pair confirms a down trend and therefore the only thing to stop this down trend is a higher confirmed low above 1.0470. At this time this does not look likely.
The key intraday support is at 1.0565/67 and a break below this could mean further significant weakness. Any intraday buying pressure above these levels could be creating a good short setup trade. As always trade what you see.
Our indicator first gave a sell signal on a 4 hour chart in this most recent bout of selling pressure when this market was at 1.1014.
The overall trend on the GBPUSD is down although it has on a few occasions tried to break into an uptrend. On each occasion so far it has failed to sustain any sign of strength. I think when the GBPUSD was unable to break through the 1.60 level some weeks past the writing was on the wall as to its overall direction. Breaking to the downside recently through 1.5164 was where we confirmed a weekly vertical bar trading pattern low. It is now in open water and I believe more weakness lies ahead. The next key support is at 1.4564. A higher confirmed high above this might stop the weakness in this market but not until this happens would this have any chance of bottoming.
Fridays Daily bar was very weak however we are now forming a double bottom at these lows around this 1.5027.29 area on a 4 hourly chart.
On an intraday basis any immediate intraday rally under the 1.51 market may offer good shorting opportunities. But as always trade what you see.