Credibility At Stake – Inter Market Analysis

  • Choppy price action to be expected as we head to FOMC
  • End of year book squaring and low volume trading environment
  • All eyes on the Dollar and how equity market will react
  • Does Yellen et al have their santas’ head on?

Dollar Index

Daily

4 hour

How much has the dollar index priced in the rate hike talk? One thing for sure, one can expect a choppy session going into tomorrow as traders positioned for year end and low volume trading will soon kick in. Irrational price action is to be expected and the aftermath from the Fed statement could well form the next directional play.

Euro

Daily

4 hour

It will not be an easy trading environment going into tomorrow FOMC result. Traders are closing their trading book – squaring their position as they head for their holidays. The EUR/USD parity crowd remain silent now after the disappointing ECB meeting. Should Yellen fail to inspire a strong USD, we expect the Euro to benefit higher as the short squeeze could continue to trip shorts. Only a break below 1.078 will give the bears more rooms lower.

Sterling

Daily

4 hour

Sterling put up a good fight at a strong technical support and if there are no new sellers, pain trade for higher sterling could continue (short squeeze). We will do another article this week (2016 Projection on currencies) so as to discuss what is in store and what may happen. We have highlighted the sell zone and will wait for the signal to trigger.

German Bund

Daily

4 hour

Following some simple rules such as sizing risk and stop loss – waiting patiently for the right moment to take a trade will help pay off taking on the wrong trade. Bunds are reacting well to RSI signal and any sign of a daily blow off top tend to send it lower. The risk reward is there for traders playing within the range.

Gold

Daily

4 hour

Only a break below 1052 will invalidate the rough inverse head and shoulder formation – neckline at 1087 and target of 1127. Traders could well position for some safe haven buying in case of high volatility that could unravel the market. Price action will depends on tomorrow FOMC results.

Silver

Daily

4 hour

We continue to argue that there are rooms for the white metal to test lower but we also acknowledge that price action will be very choppy as we head to FOMC and end of year low volume trading environment. Traders will look to position for 2016 while price will most likely stabilise once we find an equilibrium. The risk reward has shifted and we shall wait patiently on the next trade.

 

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