Trend trading analysis beginning Sunday December 8th

Dec 9 • Is The Trend Still Your Friend • 2460 Views • Comments Off on Trend trading analysis beginning Sunday December 8th

trend-analysisSunday evening’s trading session sees a raft of information published from Japan, the final GDP figure is predicted to come in at 0.4%, with the final GDP price predicted to come in at -0.3%, bank lending should come in at 2% improvement.

There is important inflation data published on Sunday regarding China’s economy; the CPI is predicted to come in at 3.0% with PPI expected to be in at -1.5%.

Monday sees Germany’s trade balance published; expected in at €17.4bn positive, Germany’s month on month industrial prediction is expected in at 0.8%. The Swiss unemployment rate is predicted to come in at 3.2%, with retail sales up 1.7%. Europe’s Sentix index is published with the expectation of a print of 10.5. There are also various Eurogroup meetings held.

Monday also sees the UK BoE governor Mark Carney deliver a speech as does a significant person from the FOMC, Mr Bullard. The UK RICS house price balance is expected in at 59% suggesting that 59% of surveyors questioned are witnessing higher house prices in the UK.

Japan publishes data on manufacturing index activity, predicted to come in at 17.2, with tertiary activity expected to print at 0.3%.

Later that evening Australia’s leading confidence index, from the National Australia Bank, is published, the expectation is for a print of circa 5, which is similar to the previous month’s print. Australia’s home loans figure is expected to come in at 1.3%. The consumer confidence index for Japan is published, expected in at 44.2, up from 42.1 the previous month.

Tuesday sees the publication of China’s industrial production figures, expected in at 10.2%, retail sales in China are predicted to rise by 13.2%, with fixed asset investment predicted to rise by 20.1% – year on year.

In Europe both French and Italian Industrial production figures are published, both expected in at circa 0.2-0.3%. The UK’s manufacturing production is expected to fall to 0.4% from the previous month’s 1.1%. The UK’s trade balance is expected to stay at circa £9.1 bn for the month. Industrial production in the UK is expected in at 0.4%, down from 0.9% the previous month. The UK’s NIESR also publishes its latest data, suggesting that economic activity will be stable at circa 0.7%.

In Europe the ECOFIN meetings will take place with Mario Draghi then holding court with a speech discussing the outcomes of the meetings in relation to any policy change, or additions.

In the USA there is a raft of information published in the afternoon trading session; the NFIB small business index is published expected in at 92.7. JOLTS job openings are expected in at 3.96 million, with wholesale inventories in the USA expected to shrink to 0.3%.

Later in the evening on Tuesday Australia’s Westpac consumer confidence index is published, the expectation is for a figure similar to the previous month of 1.9%. Japan publishes its core machinery orders, expected in at 0.9%, up from the previous month’s negative print. The corporation inflation number is also printed, expected in at 2.7% year on year.

Wednesday sees the publication of the USA oil supplies data, expected to print at -5.6 bn barrels, whilst the USA federal budget balance is expected to print at $154.6 bn significantly worsening from the previous month’s figure of $91.6 bn.

In New Zealand the cash rate is announced, predicted to stay the same at 2.5%. The press conference, the rate statement and the policy statement will accompany the announcement of the base interest rate, finally later that evening the RBNZ governor Wheeler will conduct a conference.

Later Australia will announce the change in unemployment and as a consequence publish the unemployment rate; expected to rise to 5.8% with circa 10Knew jobs created.

Thursday Mario Draghi speaks, whilst the Swiss publish their monetary policy intentions and assessment with the Libor rate also published, the Swiss bank head Jordan will also hold a conference, and the ECB will publish the latest monetary policy in the form of a monthly bulletin. European industrial production is expected to rise to 0.4% from the previous month’s fall of -0.5%.

In the USA core retail sales data is published, expected in at 0.2%, with retail sales up 0.6%. Unemployment claims are expected in at circa 321K after the surprise fall last week of 289K. Import prices in the USA are expected to fall to -0.7% (month on month).

Canada’s central bank governor Poloz speaks late on Thursday, whilst the business New Zealand index is published, expected to be similar to the previous month’s print of 55.7, whilst Japan’s revised industrial production is expected in at 0.5%, identical to the previous month’s print.

Friday sees the production of the German WPI, wholesale production inflation expected to be at 0.4% month on month, Swiss producer inflation is expected in at 0.3%, whilst employment change in Europe is expected to remain flat. USA core PPI is published on Friday, expected to be flat, with core PPI expected at 0.1%.

Technical swing trading analysis on certain major currency pairs, indices and commodities

We’ll now examine the discernible swing trends by using several of the most commonly used indicators; PSAR, Bollinger bands, DMI, MACD, RSI, ADX and stochastics. All indicators are left on the standard settings, bar the stochastic lines, which are set at 10, 10, 5. We look at key moving averages such as; 20, 50, 100, 200, whilst the price action is determined by use of Heikin Ashi candles. Key looming, round ‘psyche’ numbers are also plotted, in order to determine overall key levels. All trends are discussed on the daily time frame only.

EUR/USD began its bullish momentum on November 19th, currently PSAR is below price, DMI and MACD are positive and making higher highs using the histogram visual, price has breached the upper Bollinger band on the last day of the preceding week. RSI is at 62, the ADX is at 16 suggesting that the momentum trend movement may be weakening. The last two days preceding Heikin Ashi candles were closed, with long bodies and upper shadows, suggesting that the bullish trend may still have more energy. Price is above all the major moving averages. The stochastic lines are in the overbought zone on the adjusted setting of 10,10,5. The next key ‘handle’ for the EUR/ USD is naturally 13700. Traders currently long would be advised to stay so until several of the indicators suggest otherwise. As a minimum the PSAR going above price and turning bearish would be looked for to close the trade and wait for further signals to reverse.

AUD/USD has been in a bearish channel since 23rd October. Despite a few attempts at breaks to the upside the security has remained in this bearish channel since this date. The price action is perhaps suggesting that this sell off has reached its natural point of exhaustion; five of the previous days candles, included two dojis, and otherwise indecisive candles. PSAR is above price, price is below the middle Bollinger band, but (so far) is not threatening the lower band. Price is edging up to the first important moving average – the 20 day plotted on the daily time frame. The DMI and MACD are both negative, but making higher lows on the histogram. ADX is at 35, perhaps indicating a strong trend, with the RSI at 37. The stochastics are perhaps suggesting price is about to break out of its oversold zone. Traders short the Aussie will have harvested significant pips over recent weeks and must have used trailing stops to ensure those profits have been ‘locked in’. Traders looking to go long, if for example the PSAR reversed, would be advised to look for other indicators to also turn bullish given the length of time this security has remained in its bearish channel. Consideration must also be given to the risk in taking long trades when price is below all the key significant longer term moving averages, such as 50,100 and 200 SMA.

USD/JPY has witnessed a significant bullish advance since November 1st. Traders may have finally closed their long trades on December 4th as PSAR became negative and appeared above price. Traders may have also refrained from shorting the security due to few other indicators appearing bearish and price being significantly above the key moving averages. Currently price has flirted with the middle Bollinger band, with Friday’s candle being an indecisive doji. The MACD and DMI are both positive and making higher highs during the last two days trading of the predicting week. Stochastics are in the overbought zone, RSI is also in the overbought area at 68, with ADX at 31. Traders may be advised to await several indicators turning bearish before committing to a short trade.

The DJIA bullish momentum, visible since October 10th, appeared to struggle for more gains in the preceding week, despite breaching the key ‘psyche’ level of 16000 over recent weeks. Naturally, due the volume of orders clustered around this key level, traders will be looking for a significant break before committing to further long trades. PSAR is above price, the DMI is negative, as is the MACD and printing higher lows. The RSI is at 59, ADX at 25, with stochastics having fallen from the overbought zone. Despite the lower Bollinger band being breached earlier in the preceding week, price failed to fall further with price once again returning to the magnetic attraction of the 16000 level. Price is perfectly positioned close to the 20 day simple moving average, but some distance from the other key moving averages. Traders who were long would have closed their long trades as the PSAR went above price and became negative. Thereafter traders looking to short the DJIA would be advised to observe several other indicators becoming bearish before committing to the downside.

WTI oil broke to the upside on December 3rd in reaction to the poor storage data from the USA, indicating that supplies were extremely low. Having broken the 20 day SMA to the downside price violently reversed trend and rejected this key level. The four days’ preceding candles using Heikin Ashi were bullish. The 50 moving average has been breached with the 200 SMA in sight.  PSAR is below price, the DMI and MACD are positive and making higher highs on the histogram visual. The upper Bollinger band has been breached. RSI is at 60, with ADX at 34. Stochastics are at a median level – neither in oversold or overbought areas. The key psyche level would naturally be an area of circa $100 a barrel, with price currently at $97.50. Traders long would be advised to keep aware of any fundamental news regarding oil over coming days. The break to the upside was significant; however, oil has been an incredibly volatile security to trade during recent weeks.

Spot gold had been sold off since November 5th. There have been some failed breaks to the upside during this one month (plus) momentum move. Currently the PSAR is above price, whilst price has breached the lower Bollinger band. The preceding week’s candles were inconclusive suggesting sentiment is still mixed regarding gold. DMI and MACD are negative, but making higher lows on the histogram visual. The stochastics have exited the oversold area. RSI is at 37 and ADX at 40, suggesting that if price breaks out to the upside then the movement may have some momentum. Traders still short would be advised to stay so until as a minimum the PSAR turns positive. Thereafter traders should be looking to observe if many (if not all) of the indicators quoted turn bullish before reversing their trend trades.


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