October Market Update (Week 3)

EURUSD still in a period of indecision although now showing a shy reaction to the 1.28 resistance level. The strong bearish moves on the 15th weren’t enough to confirm the end of the Dollar strength as there is still no still no conclusive price action since the rejection of the 1.25 level at the beginning of October.

The American Indices – S&P, Dow and Nasdaq – seem to be recovering after a full month of lower prices. Heavy correlation on the European Indices although a closer look at the overall price action shows a severe decline on the overall trend that might insinuate the end of a 3 year old uptrend.

Gold (and Silver) is maintaining the rise in price since the rejection of the support level at 1185.

Two Best Trades This Week

  1. USDCAD (Daily Chart) – With the Trend Long – 19.09.2014 – The dollar strength that has been going since May made price rise even more. At a current a +2,5% profit after a potential +4% we can now see a level of resistance from recent price action at 1.1250. We do recommend extra protective measures as price action on the 15th and the 16th supported by a clear Divergence on the Stochastic may be the signals that this trend might be about to end.
  2. Gold (Daily Chart) – Long Reversal – 09.10.2014 – Follow up on this trade taken after the signal on the 6th October on the reversal bounce off the 1185 support level. As expected, price kept rising and is now standing at a +1,5%. This might be the tipping point of this reversal. If price starts presenting new highs and lows we should expect a complete reversal of the short trend from October 2012. Waiting for the Moving Averages to agree with the current cycles. It is strongly recommended to move the Stop to at least break even as “the best to make money in trading is not to lose money”.

EFFECT OF THE NEWS LOOKING FORWARD

After a slow week we should expect a few decisive moves at a near future.

Next week we should be extra careful about

Still this week, the EU Economic Summit conclusion and respective market expectations, along with the Stress Test Results coming out on Sunday, might be the decisive extra push to make the price on EURUSD finally break below the 1.26 level or to definitely reject it and start a new uptrend.

Next week we should expect some moves at the Federal Reserve Statement on Wednesday. A change in the Federal Funds Rate is not expected so any last minute change can be seen across every chart. By the end of the week, a Bank of Japan conference might tell us more about the big moves going on the JPY crosses. As usual – we will wait for price to show us every reaction and “trade what we see, not what we think”.