This is only week five in 2016 and markets are still all over the place. It’s not just the indices that keep being interesting. Forex markets add some fuel to the fire of excitement in trading these days, too. Let’s have a look at what major developments took place.
The daily chart of Nasdaq will be our first focus during this weekly recap. If you have followed my blog entries this year, you know I recommended being short all major World Indices right in the first week of trading in 2016 (here, here, here). While all of these shorts have been stopped out with profit, only the FTSE MIB short continous to accumulate profits from a major downtrend in that market. However, all the other indices are already providing new sell opportunities again to get back in on that new possible trend to the downside.
Looking at the picture it is easy to notice the clear support area marked by fractals. Four times price has bounced off this level. It barely was able to close below support during any of the previous four times it turned around at support to go back up. This time though it seems to be a little harder to simply turn and go up on decent momentum again. Last week’s last day of trading was another devastating day for what many still hope is a correction in a bull market. Prices keep trading right around at support, never having gone up again, and now closing decisively below this important level (4050). A weekly breakout will soon occur by the market triggering a sell fractal (3989), which would be nothing else but an indication for the fact that this market just started heading further into bear market territory.
The same can be observed in other indices, especially in Europe and Asia. The HangSeng, Nikkei, Dax and Eurostoxx are painting the same picture as the Nasdaq. Only SP500 and DowJones haven’t been seen trading so low as the others have. Let’s see what the coming week holds in store for us. It’ll probably be just as exciting as all of 2016 has been so far.
This should also be true for Gold (and Silver!). A detailed update has just been posted on the underlying, have a look at this updated chart really showing the clear and volatile breakout to the upside by taking a buy fractal at 1114. This market closed the week at 1173, quite the upwards action compared to what had been happening for 1,5 years prior to the last trading week. Stops should be in place, and for now the upwards action will be enjoyed!
The last post on the USD/CAD needs to be updated, too. Prices have come down a lot, having triggered the B/E stop for the 2nd fractal buy signal. The first fractal buy now sees its stop below last weeks low, since price has bounced off of the support indicated by the moving averages, it makes sense to use this low as the last resort to get out of this long in case price wants to continue its bearish sentiment. A usual exit would be any bar that closes below the dashed moving average – I like to place my stops below the respective bar and simply wait to be stopped out. Who knows what the USD/CAD will be doing next week, a waiting to be stopped out offers the chance for continuous profits as prices take the moving averages seriously and continue to move upwards once they touched them in an ongoing trend. So let’s see for how much longer we’ll hold this USD/CAD long.
I was already really looking forward to the fractal sell signal in the EUR/USD to be triggered. The monthly timeframe has been looking so well for further downtrend action, however, this past week’s trading does not support the continuation of the short-scenario, for now at least. This fx pair has run up into its weekly sidemove very strongly, the fractal sell signal was never touched, so you would’ve never even been in this market. Since the pair was unable to establish a new low below the previous one (as indicated in the chart), the EUR/USD never actually broke out of its consolidation phase that has been going on since the beginning of 2015. And now, we’re right back up in the center of it. There will be no trading activity for trendfollowers in this underlying for a while, lying in wait though, until a trade presents itself!