The headline already names the markets of focus for week seven in 2016. While January was a great month, February is pausing a little bit in the Indices World Markets. However, those are not the only ones an avid trader is active in – Gold has soared and keeps trading at those highs, Shorts are working well in the JPY Forex pairs.
Starting out with Forex Markets this time, we are taking a look at GBPJPY. As usual, we’re interested in the overall trend and the big picture – in my opinion this is where you make the big money, because markets will “just run”, significantly with an awesome Risk:Reward ratio. Instead of being stopped out a couple of times before price gets going, you are kept in your trade. The amount of work involved with that approach is minimal, too. Plus, in the end, you will have an awesome trade location for the big move. This scenario could actually be unfolding in the GBPJPY right now. The two fractal sell signals of which the first had been hit weeks ago, are working out very well. In fact, this week this pair proved again that it wants to move lower. There wasn’t only any significant upwards price action, it even closed below the fractal breakout from last week. Next to the Momentum being at its maximal down location, prices are staying below the balance zone (moving averages). There is no reason to assume that this downwards-oriented market will turn its direction soon. Therefore the GBPJPY Short has turned into a great position for the trendfollower. We’ll now just keep holding on until the trend bends. The same scenario applies to USDJPY and EURJPY. Even though price movement is not exactly the same, fundamental news are moving these three markets in the same direction these days.
Next market up for the weekly recap is Gold. It has been a thankful market in the last four weeks as well. It has moved out of its completely boring divergening mode when it was trying to find a bottom. In this mode usually there is neither profitable down-action nor up-actioin appearing. But now it has already hit two fractal breakout signals to the upside and keeps trading above those important resistance levels. The first one was hit at 1114 and just recently another one at 1200 was taken. This week Gold closes out at 1227 which makes this market seem bullish still. Whether a new bullmarket is unfolding, is still questionable – we really won’t know until it is over!! However, to profit from the current market movement I am just following the system, which got me in at 1114 already.
Because this week stayed near the highs and close of last week, I am just holding to see what further price action this market will bring about. There is nothing to think about, just sitting tight and waiting for new information. This is the case despite that the Gold trader on the daily chart would be getting ready to bank his first proftis from this bull move. Momentum starts to decline and price action is nearing the balance zone. A close inside of that area would indicate a first ending to this uptrend. It could be continued at any time, so if you are trading Gold on the daily, stay awake for an eventually turning weekly trend into a new bullish move. If that really will be the case, the continuation of a bullish move on a weekly timeframe, remains to be seen for the rest of the year.
The World Indices Markets are showing a mixed picture in week seven of 2016. While they all had the worst start into any year in history, the european, US and asian markets have split up a little bit, declining under different pressure and at different speeds. Taking a look at the Nikkei Index, the ongoing downtrend is not really the question. This market has hit fractal sell signals and has declined ever since. A second one, even, has been taken and the Nikkei closes out the week right on top that support level. This week has come to be an inside bar which doesn’t tell us much about this market this week, but we know so much as to say: it doesn’t want to move to the upside! Instead it stays below the balance lines and as a trend usual is, it appears to be a waiting game. Short positions remain in place, stops are moved along the trend wisely, and other than that, I just wait until the trend will turn around, right now, there is no sign of that.
Another market situation appears to be happening in the US indices. Taking the Dow Jones as an example, we can see that it hasn’t done anything in the last five weeks. After making a low right on top of the important weekly support level at 15500, it has only traded sideways with this week closing higher, but not at its weekly high either. This market is inside of an internal correction, clearly. The question just is: Is it an internal correction correcting the previous downmove, or is it rather an internal correction correcting the previous upmove from support at 15500?
There is no way of knowing, there is no use in knowing. Trade your plan, consider your risk, and first and foremost: enjoy your weekend!