November Market Update (Week 1)

After the quantative easing announcement from last week, the USD dollar confirmed his strength during this week. All the majors and minors seem to be getting back to the overall trends which should be work out some good signals for all the trend followers out there. But the big news this week came from Japan where the BoJ fresh stimulus drive was clearly seen on all the Yen crosses and even reflected on the 10% rise on the Nikkei.

The American Indices continued to rise as we saw Nasdaq, Dow and S&P breaking all time records. The European Indices followed and continued the recovery from last week.

Gold and Silver continued the overall downtrend from July and just kept going as we saw Gold completely ignoring the 1180 support level and presenting new lows from the beginning of 2010. Oil price also dropped even further and price action is no showing a still shy rejection of the 75 level of support.

Best Trades This Week

  1. USDJPY (Daily Chart) –Trend Continuation Long – 04.11.2014 – Not the typical trend with the trade but an obvious option for whoever is paying attention to both the charts and the news. After the announcement from the BoJ on the 31st and the clear price action – both from the beginning of this trend in August and the breakout on the 31st – all we were looking for was a small pullback. On the 4th it finally happened on the 4h chart and is currently at a +2% profit. Price is now at highs from 2007 and quite a strong technical resistance level – protect your capital first of all…
  2. Gold (Daily Chart) – Trend Continuation Short – 21.10.2014 – After a significant pullback from the 1180 level, Gold presented an interesting Resistance level on the 21st Oct after hitting the resistance level from previous low. A price action ‘by the book’ trade is now at a +8,5% profit and is still a promising trade as we saw the 1180 level being broken with quite some decision on the 5th Nov. There might even be some scaling in opportunities if the next pullback presents the same technical patterns.
  3. S&P (Daily Chart) – Long  – 16.10.2014 – This continuation Long trade is still going as we can see on the chart below. Again, the technical patterns proved their value – Trend line, clear bullish price action presented by the ‘tails’ on the 15th and 16th. The trade is still running at a very interesting +2,5% profit. We will now protect our capital by moving our Stop Loss and decide on how to manage it. Two options here: the 1st considering a long breakout to newer all time highs and a second considering price action rejection of the of the 2010 level.

EFFECT OF THE NEWS LOOKING FORWARD

  1. Next week should start slowly as there is a Bank Holiday on Tuesday the 11th. On Wednesday there will be a new Inflation Report at the UK so it is highly recommended to take some extra caution regarding any GBP crosses. We can all remember the volatility that took place on the 13th August… It should be an interesting week regarding the JPY crosses as fundamentalist analysis will be wondering about the end of this Yen weakness. It will obviously be up to the Bank of Japan and it will be fun again to see the usual battle between Trend Followers and Fundamentalists…It will also be interesting to see if the American Indices break the previous all time highs and resume the overall 3 year trend or, on the contrary, start showing reversal signals and the end of the continuously high records.Also remember – Non Farm tomorrow so be extra protective with the trades already running and think twice before you enter any new positions.