October Market Update (Week 4)

According to the ECB bank lending survey, the credit standards are still tight in historical terms. As the banks expect a net increase in loan demand in Q4 we can still see the EURUSD hanging tight at the 1.27 level. After the announcement from the Federal Reserve on the 30th about stopping the quantative easing, some major intraday moves were spotted which might be the trigger for the overall down trend from May.

This week American Indices continued to show some strength. The European and Asian Indices followed and recovered some of the losses that started the big sell off from September. We will have to wait to confirm if that will be the beginning of the overall trend continuation or a simple correction and a pull back before the new down trend regains control.

The same pullback was seen on the 2 precious metals – Gold and Silver – after the rejection of the respective support levels we are also watching a correction to the rising prices. Oil price, on the other hand, seems to be dropping day after day most likely to continue as the next support level showing is around 77.

Best Trades This Week

  1. EURCAD (4h Chart) – Range Short Trade – 16.10.2014 – Using the very obvious levels from the Daily chart – resistance at 1.4440 and support at 1.4040. At a current a +4,5% profit, we strongly advise be protective or even take the profit as it is about at the bottom of this range and a very welcome 1:5 risk reward ratio.
  2. EURCAD (Daily Chart) – Range Long Trade – 22.10.2014 – Another Range based trade between 1.1280 and 1.10 levels. A rejection started on the 15th with a tail on the candlestick finding extra support on the following days. The 22nd Engulfing Buyer bar was all the confirmation we needed. The trade is now at around a healthy +3%.
  3. S&P (Daily Chart) – Long – 16.10.2014 – After the strongest pullbacks of the last 3 years on the American Indices, the overall trend showed its strength. The signal on the 16th, supported by the apparent rejection on the 15th, was good enough to make us take this trade. After all, this kind of longer time frame analysis has more than proved its value in the past and as technical traders, we live by these patterns. At a profit of almost +2% we will now have to decide whether this is a definite return to the overall trend or a major correction to the end of it. As always, protection of capital and risk management should be the main concerns.

EFFECT OF THE NEWS LOOKING FORWARD

This week was quite slow until the Federal Reserve announced the stop on the dollar printing by the End of the month. It is highly recommended that we wait for the right signals from the charts as this will definitely become a period where all the ‘big players’ are working on how to download their medium term positions on to the market.

Monday and Tuesday news should be interesting to watch regarding the Canadian Dollar cross pairs and, as usual, it is Non Farm week so be extra protective with those positions and/or Stop Losses after Wednesday.