October (WK3) Market Update

After a weakened US Dollar last week the significant support/resistance levels proved to be in place and acted as barriers. This could be seen all across the major currency pairs: EURUSD bouncing off of the very recent resistance at 1.15; AUDUSD also retesting the 0.7250; USDCAD holding on the 1.28 support, and USDJPY trying but not breaking the 1.1850 from previous weeks.

As for the Indices, in Europe and after the clear recovery, prices started to slow down and are still holding the higher levels from the end of last week. On the US side the recovery went a bit further and after a bit of hesitation around the moving averages price kept pushing to the upside even breaking the previous high from a couple of weeks ago on the DOW and the S&P.

On the Commodities side, after the unexpected rise on the Crude price last week it failed to break the 50 level and pulled back down. As for Gold, price kept pushing higher to levels of last July and is now retesting the 1180 level.

Best Trades this week

  1. EURGBP (Daily Chart) – Range Short – 14.10.2015 – On the 14th an Inside Bar made us place this trade based on a very clear range. The bounce on the upper level at 0.74 and the stochastic oscillator divergence were the main factors that proved the uptrend momentum was running out of steem. Price is currently at +1,5% profit and bouncing of the moving averages so we suggest precaution.
  2. AUDNZD (Daily Chart) – Breakout Short – 13.10.2015 – After breaking the 1.09 support level, the engulfing seller bar on the 13th was the perfect excuse to take this trade. The option was proven right by the lower lows affirming the downtrend and the price is now at around +2% in profit.

EFFECT OF THE NEWS LOOKING FORWARD

A very slow start of the week is expected with the bank holiday in Japan, US and Canada on Monday. On Tuesday we will know the numbers of the US Federal budget. For the rest of the week it should be a quiet one as there aren’t any major announcements. On Friday the JOLTS jobs numbers from the US are always a concern if there are any significant between the expected numbers and the actual results.

After some (finally!) moves this week on the currency market we are hoping to see the transaction volume increasing and leading the charts to a clear direction. This will either become a sign of a definite break of the overall trends coming from last year or a long term indecision period before everything returning to ‘normal’. Recent US dollar weakness is indicating the first option…

On the Indices side there is still reason to believe that the short trends might be about to pick up once again but we are still holding on the sidelines and waiting for price to lead the way. Any break of the latest lows should trigger very interesting moves towards the downtrend…

As for the commodities, price is still within the ranges from previous weeks so we are looking forward to see if the overall downtrend on Gold Silver and Oil start once again.