February Market Update (Week 1)

This week we could see a significant pullback after the continuous drop since mid December on EURUSD. The dollar strength seems to be losing some of its steam as we can also see the range on Cable, the pullback against the Canadian Dollar and even the minor support found on AUDUSD and NZDUSD.

On the Indices side, the European Stock Markets are still showing significant strength – FTSE retesting the resistance level at 6850, DAX in a new all time high after breaking the 10.000 psychological level, CAC reaching 4.700 for the first time ever. The American indices still stuck at on that range going that started in December after a few unsuccessful threats of breaking to the upside. On the Asian side, both HSI and Nikkei also struggling to break the range started in December.

 

As for the main commodities, Gold and Silver showed some indecision after the uptrend of the last few weeks while Oil finally showing some signals of slowing down after the 1st positive week since last November.

 

Best Trades this week

  1. GBPJPY (4h Chart) – Range trade long – 03.02.2015 – Bouncing of the lower level of this really accurate 175.70 brought by the indecision seen across all Yen crosses and the clear ranging period around the Pound, an Inside Buyer Bar was the perfect excuse for an aggressive trade long. Now at +3% profit, this might be a good exit as it is getting very close to the upper level at 179.

GBPJPY_Feb1

  1. S&P (4h Chart) – Range trade long – 02.02.2015 – A very similar trade to the GBPJPY above… This time, bouncing of the support level at 1972, divergence on the Stochastic Oscillator and a huge Doji bar allowed us to place that order. Currently at +1,5% profit and also near the upper level now.

 S&P_Feb1

EFFECT OF THE NEWS LOOKING FORWARD

Next week we are going to witness the Inflation Report from the Bank of England which might be the trigger for the new drop to the nowadays usual downtrend or the final call for a renewed uptrend back to the 1.70 level as Cable is known to be ‘stuck’ between the 1.70 and 1.50 levels since 2009/10.

As for the other Majors and Minors they all seem to be coming back to the end of a usual (with the trend) pullback. As usual we will let price action dictate our actions. Regarding USDJPY, this is usually a very technical currency pair and it is clearly back on to a quite tight triangle pattern – we are looking forward to see if this is will become once again one of the breakouts like the ones seen in November 2013 and August last year.

Also remember that this is Non Farm Employment announcement week so be protective with the open trades and think twice before jumping into ‘added risk opportunities’.