Tuesday, October 26, 2010

Tuesday 25 October

The shooting star daily candle in the S&P is interesting, having cleared out stops above the resistance level.  I have the bigger resistance, the 1.618 fib extension at at 1198.  I am still leaning towards a shallow correction in stocks, a bigger correction in gold and bonds (esp the long bond) and a big bounce for the USD dollar.

Big news today is UK GDP - forecast is for +0.4% q/q vs last quarters +1.2%.  I think the trade here is in EURGBP (even though I have had one false start trying to short this).
Weekly chart:
Now at the big 50fib retracement from the December 2008 highs and June 2010 lows it is also at major trendline resistance.  I still like this short even though pundits are now talking about parity again for EURGBP, this is a big fib level and big trendline and at the very least we get a bounce here.

Also this morning is the Riksbank rate decision.  Sweden has already made two 25bps rate hikes since the crisis and made it clear it will hike again.
EURSEK weekly candle was a bearish shooting star and the 6 week  bear flag has broken down setting up a retest of the lows at the downside measured move and fibonacci target is 8.920.
Having said that I think this hike is priced in and this chart is setting up a bullish gartley pattern and so I am watching for the bounce and price action back at 9.22 and a retest of the trendline to see if this is a trade.

Finally EURSGD is an interesting chart.
Daily chart shows two equal swings off the lows and stalled at a 1.27fib extension,  the tight trading range of the last two weeks looks like it is about to break down.  I was looking for a retest of the SR level at 1.8580 but if this range breaks down then downside targets are 1.7480 and then a retest of the lows.

New trade:
EURGBP short 8860 stop 8890 PT 0.85 - 0.8530
Crude short 82.20 stop 82.50 PT 81.30 - will close at US open - POMO day
Crude closed break even
AUDUSD closed at target 0.9830 just before POMO (+3.3%)
EURSGD short 1.8040 stop 1.8190 PT 1.7650 / 1.70
USDCHF closed 50% @3R 0.9800 (+1.5R)
EURGBP closed 50% @3R 0.8770(+1.5R)

Open trades:
USDCHF long 0.9710 stop 0.9680 PT 1.00 - 1/2 position
EURGBP short 8860 stop 8890 PT 0.85 - 1/2 position
EURSGD short 1.8040 stop 1.8190 PT 1.7650 / 1.70


  1. I just love Gartley Patterns and their variants. SPX:

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