And so it goes on, stimulus hopes keep it up, reality drops it down and we continue to bounce in this no mans land between 5820 and 5860. The market is basically in a wait and see mode with no one willing to commit anything at the moment, hence the low volumes. Market confidence is low, the reality is that there is more pain to come, but should those concerns ease and the stimulus be larger than expected (when/if it comes) then there could be some more upside. I am still fairly bearish myself, however, I might revise my plan and instead of 5850 being the topping area, move it up to 5890-5950. I am usually 100 points out whenever I try and pick long term tops and bottoms so that would make sense!! (Humble mode!). I am changing that plan following Merkel’s remarks that Germany will work with the ECB to aid Greece, Spain, Italy, Portugal etc. etc.! Also, the daily chart is still bullish, with support being found at the 10ema on each test. Thought test it has and I am sure that it will break soon.
Asia Overnight
Emerging-market stocks fell, with the benchmark index poised for its first weekly decline in five, as concern about slowing earnings growth countered signs the U.S. economy is improving.
Japanese stocks rose, with the Nikkei 225 Stock Average capping a second week of advance, after U.S. building permits reached a four-year high and German Chancellor Angela Merkel reiterated her commitment to working with the European Central Bank.
The MSCI Emerging Markets Index lost 0.2 percent to 974.28 as of 1:39 p.m. in Singapore, extending the weekly slide to 0.5 percent. South Korea’s Kospi index sank 0.6 percent, the most among Asian benchmark gauges, dragged by a slump in Samsung Electronics. Gauges tracking telecommunications services and technology companies were the biggest decliners in the developing-nations gauge.
Outlook
The bottom line is that we can’t argue with the fact that we are still in a bullish uptrend, and have not had decent confirmed bear signals as yet. I do think still though that we are topping out and that the stimulus measure when/if they are announced will see some declines. Looking at the Bianca chart we had support off the bottom of the 10 day and that channel is getting narrower – the top is 5890 so we should see resistance around there. We have had 5910 mentioned a few times as well as a possible top based on another daily channel. Today’s pivot is 5830 so that could act as a support area for longs. Today will probably be another low volume drift about day, especially as its Friday. I have plotted the blue arrows based on that – a dip to the pivot (and the 5820 area that is acting as such great support) and then a climb back again. Fairly obvious probably but the markets are being quite fickle at the moment – they do like to keep one guessing. The drop down to 5830 would also be a “gap close” to yesterday’s closing price. I haven’t added to any longer term shorts as yet but will look to do that in that 5890-5950 region now (slightly increased from the area I was looking at yesterday). Ideally we will get a 10ema break on the daily to confirm that the worm is turning to bear.
ftse 100 prediction
I dunno like if the markets will fall today but maybe the markets is going to fall next week becauze of the changing lunar cycle. I always read this FTSE blog and the stuff is interesting. The bloke says that markets are probably going to fall at the ned of August then make new highs.
sorry my work laptop is well dodgy but i wanted to post this. Freaky but may be true?
http://www.ftsefreedom.com/2012/08/how-moon-affects-trader-sentiment-and.html
Yeah, Merkel OK with bond purchases today… until tomorrow, when it is subject to more austerity. And on it goes.
Hi Donald,
How do you calculate your fib levels. I mean from which low to which high and on what chart??
None of that matters Taiz! Fibs are easy.
It doesnt matter if you draw low to high or high to low, the lines are in the same place.
It doesnt matter what chart either, its the period covered that matters. Generally I would look at the 30m chart going back maybe 3 days and note the obvious low and high on the chart and connect them and thats it!
I prefer to use 5m chart so I just compress the chart to take in the same levels and have the fib lines on that one.
You can keep compressing / going back to draw other fibs at obvious major support levels, and if they overlap / approximate to the more recent fibs…all the better.
Some people draw fibs only between double tops and double bottoms ( or approximations to these) and I find these identify important levels too.
You want all the fib levels and extensions including the 50% retrace (50 is not a true fib number but is very important on retraces) on your chart. It really opens your eyes when you see price stalling in between pivots, usually theres a significant fib level in play.
The important retraces are 38.2 / 50 / 61.8 .
Observe price action at these levels, are they resistance or turning to support? Can be used for stops too.
You can even draw intraday fibs between the high and low of the day and see the levels at work!
what chart software you use?
Thanks Donald. Some very useful tips there. I just use the normal charts from city index.
Can anyone please tell me how the dow chart is looking like ?
Dow is testing March highs 13300 -13200 levels (ALL major indices are). Some of the major stocks on the dow are making new highs, just cant remember which ones from the top of my head, everything is looking overbought at the moment, but the way the upward trend looks on all these indices, it would seem like suicide shorting lol, but however even the weekly data the oscillators are in the overbought zone.
yet another range bound session with very little movement .. probably next week would help gain some clarity…happy weekend everyone
The lack of movement has driven me to forex. Lots more life there! In fact, closed an overnight short on AUDUSD for a decent number of pips. Will return to FTSE when it shows signs of coming out of the present coma!
I trade forex from time to time but it eats up alot of margin, easier leverage the indices, so I scalped FTSE all day in 2s and 3s but return was good. Some people say forex easier but on the same margin I think returns from FTSE and Dax cant be beaten.
Fair point. Bottom line for us as traders is that we thrive on movement. Whichever market provides obliging swings, that’s where we ought to go. As for forex being a bit easier, there’s probably some truth there. I’ve noticed quite often that once a trend gets going in one of the currency pairs, it does tend to last a while. The swings can be fairly orderly which makes it that much easier to get into and out of trades. Of course, there can be wild days too, just as in any other market.
Yes, scalpers day today, my biggest gain was 7 pips from the huge push at US open!
FTSE lagging other indices, Dax was a much better long play today.
Lal/Donald
When trading forex do you use exactly the same principles as FTSE, ie charting or is there more of the fundimentals bulls and bear going on? I find the ftse easier to predict within a certain range more so than folrex but I also find €/$ often follows patterns of FTSE, or the other way round?
E
Hi Eamon,
A problem with correlations is they dont always work! So for a few days FTSE may appear to shadow the euro, then all of a sudden it does the opposite. I know you werent really raising this issue, but the only correlation I like is between other major indices all pointing in the same direction. Even then its tricky, as the DAX would have been a much more profitable long yesterday than FTSE.
People say forex market more technical than stocks which tend to have mindless bulls and death spiral bears chasing them!
Stocks are notionally easier to manipulate than the big currency pairs by virtue of their smaller size.
Personally if I am trading forex I look at the 30m chart for major topping or bottoming signals…place the bet and stop…and leave it for for a few hours.
With stocks, I never take my eyes off the screen.
Hi Eamon,
Yep. I use exactly the same principles when trading forex. As long as there are tradable swings, that’s all that really matters (I’m assuming we’re sticking to instruments with decent liquidity). The one thing I will add is that I avoid trying to predict – I prefer to think in terms of probability.
Donald has already mentioned some very useful points. Add to that trade/risk management (including staying away during major news events!) and trading forex should be no different to trading indices.
Lal/Donald
Have noticed those opposite reversals Donald with forex and ftse, they have catch me out before, and the risk managment defo a good point lal, especially with the more free movement of price.
Thanks guys for wise words once again.
E
Eamon For me it’s exactly the same, I ignore fundamentals…I like to know when data is to be released though, use the economic calendar…and although I have read of certain forex fundamentals involving time of day and big bank action, I just ignore that too. If there are fundamentals that can be successfully played, They are lost on me, perhaps others might comment?
VIX is at the lowest levels since June 2007. FTSE June high was 6750
Its gonna blow soon!