*Taking a look at FX markets, Indices and open positions I am holding*
Welcome back to the blog! I have returned from a much needed break and I am ready to start bringing you some more epic blog content. I hope you have all been trading well whilst I have been away and keeping things simple and effective.
Let’s get right in to it and look at the progress of my open trade position on the FTS100 Index. The FTSE short position has now been open for almost 10 weeks and is still looking increasingly profitable long term with my higher timeframe bias still bearish.
FTSE100 Index – Short Trade.
Since I last wrote about the FTSE on this blog, my technical analysis and near term price prediction became fairly accurate. Price did continue to rollover and, in the last 2 weeks, formed another lower high and came back down to test the support zone at 5800. Monday this week opened and closed extremest bearish with price falling more than 225 points from the highs to the lows.
As it stands, I think it is still safe to assume a bearish bias on this stock market index and hold short positions. The daily and weekly EMA’s are all aligned bearishly with the 50EMA below the 200EMA and price trading below both of those on their respective timeframes.
We are seeing a pullback in the market today after the slightly increased lockdown measures were announced this week. These were priced in on Friday last week and certainly Monday this week and since then buyers have come back in. This is a classic case of sell the rumour and buy the news I suppose. I don’t believe there is enough good news to keep buyers in at levels much higher than 6000 and the U.K GDP data next week could be the catalyst for another sell off.
Spot Gold (XAUUSD) analysis.
This is a tricky one for me. I bought in at $1928 /oz back in the beginning of this month on the breakout of a wedge consolidation pattern. At it’s highs on the 15th September my positions were trading around +2.2% but since then the price of Gold has sold off again.
I had moved my stop loss to my trade entry price on my gold longs when price closed back below the 4hr 50EMA with a large bearish candle closure on the 21st September. It then continued downward and took me out of my long trade entry with no gains or losses realised but still not ideal.
The wedge pattern breakout (circled on the chart above) was a great trade set up but did not develop in to a longer term bullish move. However, price is now once again showing signs of support at the $1880 level where it bounced from back in early august and I do still believe that fundamentals Gold prices are set to rise.
The second wave of the virus is beginning to develop across the globe once more and if this continues in the U.S then I expect further stimulus to be required. No doubt this will involve continued “printing” of Dollars and therefore USD devaluation. This will help to push gold higher in the medium/long term with inflation expected.
I think buying at any level around $1900 per ounce could prove profitable through the remained of this year and in to next year. I have now put my money where my mouth is and bought some more spot gold contracts at $1880 per ounce with my long term price targets set at $2200 before year end and $2500 in 2021.
FX Currencies – What am I looking at?
Before I went on holiday I provided you all with a full technical analysis breakdown of the NZDJPY FX currency pair including multiple timeframe analysis and my price predictions. Since then price has fallen over 3.5% from the lower high that was forming around the 72.00 level.
I am still bearish on this pair and I think short trades entered at that level will continue to prove profitable over the next few weeks and months as the New Zealand Dollar continues to weaken agains the Yen and also other currencies. New Zealand has had a very strict approach to combating the coronavirus with nationwide lockdowns and closed borders. This shows with a clear lack of demand for their currency right now and I think this will continue because they are unlikely to change their stance when cases and deaths are rising elsewhere across the globe.
The technicals with the bearish EMA’s, bearish trendline and clear lower highs and lower lows support this fundamental theory.
EURUSD is uneventful for me right now but it is actually playing out exactly as I expected and want it to. I am not interested in buying Euro until it comes back down to the 1.15800/1.16 price zone where, as it did in 2018, it then formed a higher low and went on to climb over 1000 pips.
Price action and technical analysis is formed on the idea of trading repeating patterns and price movements and this trade will be exactly that. I am currently sitting patient for the time being. If you are interested in reading my full analysis on the Euro Dollar then please click on the link below.
Financial market fundamentals.
The calendar below shows the next 7 days of high impact economic data releases. The data I am waiting for is the U.S Consumer Confidence data on the 29th September, the U.K GDP Growth Rate on the 30th September, the Euro Area Core Inflation Rate and the U.S GDP Growth Rate.
Consumer Confidence data is good for looking at the changes in household consumption and also saving and is ideal for predicting the trend on how much money is going to be spent in the economy. There U.S is the largest economy in the world so it provides an insight as to how other countries data might follow.
Global GDP rates are still set to fall year on year for 2020 despite some growth in each month/quarter recently. The UK GDP year on year growth is forecast to still be negative at the end of Q3 this year before gaining through Q4 and becoming positive in 2021. I personally don’t think this is likely to occur and many forecasts will be revised.
Inflation and deflation are a hot topic right now, specifically in the Euro Zone area where the Euro has seen some strong gains against the U.S dollar in recent months. This is actually looking to cause more deflationary pressure in the Euro zone. As you can see on the image above, last month inflation was low at 0.4% and this could still go lower.
A useful website for looking at economic data and forecasts/predictions is Trading Economics. They have a vast library of financial markets and economic data for you to look at. Click on the link below to check out the United Kingdom – Economic Forecasts.
No matter what you plan to trade over the next few weeks, be careful and keep your risk in check. At the end of September with have month and the end of quarter 3 so expect some wild volatility on the closing days.
I think it is also wise for me to say that economic data and forecasts are certainly not as accurate as they have been in previous years because data is changing rapidly right now on a week by week and month by month basis. Models used to forecast economics will be struggling to produce accurate results compared to previous years before coronavirus.
Have a great week, I look forward to bringing you more content on Friday and I will leave you with this picture of me with a beer in the pool of the holiday villa in Corfu.
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