Risk asset train rallied significantly in July but now has spent a week at the July highs without any indication of a significant correction. But needless to say we are always looking across forex and bond markets to see if there is the first of those clouds on the horizon which may give us early leads on to the downside coming. We take note in today analysis of some of those charts and leave rest to your imagination.
We begin with the ES Emini futures daily charts and then proceed to rest of the charts and close out the analysis with Falcon and Gladiator performances.
The Performance sheet: Performance for week of Aug 10 2012
The Traderoom Transcripts: Trade Transcripts from last week
But before we indulge, let me just put a quick quote from one of our subs who wrote this in our trade room:
The squeeze continues as ES closes the week inside the dreaded zone 1400/10. The near term target now is
1411 (upper 25,2 BB) while extnded 1419 (!00,2 BB) while markets are well supported at 1385. To the downside, August will see 1370 as first downside corrective target while 1360 on the next wave.
The previous weekly highs stand at 1413. The Netline weekly buy stands at 1405 while the 25 WMA and 100 WMA stand at 1426. The weekly stochastics are strong while vortex are possitive. Matter of a few weeks post a correction, we should technically see a break of 1413 close for the week.
The dollar index was tested on the 50 DMA at 82.847 on friday but closed well below. This is a bearish pattern which will see further breaks down and hence a push for EURUSD. The dollar index has upside resistances at at 83.1 and then the big one at 83.47 (NetLine buy).
While UST2Y broke down last week below their 50 and 200 DMA, it has strangely not bee reflected in
EU schatz markets. The break above 20 DMA has seen stops being hunted on thin volumes and consequently
yen strengthen. SCHATZ ended the week well above 110.9 which was the touted big level on the upside
consequently we saw the breakdown in EURJPY to under 96 levels. Things look dicey but price action need
to be carefully watched into next week.
End of week push to 50 DMA for bunds but the rock bottom stochastics and vortex both of which are bearish
make it clear that any push for bunds should be capped at 144.2 (20 DMA and 25DMA). That does not stop a
intraday spike above 144.1.
Italian 10 year bonds raced to the 100 DMA and have shown no signs of exhaustion as it closes at the 100 DMA. The stochastics moves into bullish zone while Vortex has already signalled all clear for bullish reversal at 99 zone. This is overall EU possitive and hence look for dip buys in EURUSD.
1627 is the netline buy which capped the rally on friday but the move is not over yet till 1597 50 dma,25dma) holds and provides support. Overall Gold looks a slow riser which gives it a irregulare bear flag pattern but not one which we can trust. Continue to trade Gold with short targets and vigilant for 1630 and 1597 on either side.
Now on to the currency side:
You need to be a subscriber with Captial3x Trading portfolio or Combined Indicator member to read on….. Subs have access to all the market analysis (Copper,BDI, Gold, US treasury, EU bond markets) and FX setups which also feature our FX portfolio. You also have access to Trade Room of Capital3x.
- The Aug Live Trade Sheet
- The Aug Live Trade Room
- The Charts corner
- C3X Performance FX portfolio
- The Bond auction schedule can be found here: Bond schedule
- The speaker schedule can be found here: Speaker schedule
The Indicator links are provided here:
Summary: There is significant difference cropping up between asset classes. Yen pairs are ready to burst through 100 DMAs while some have already done that. ES is still a long as long as 1390 holds but bearish divergences have started to gather. Commodity indices have picked up significant steam over the last week but now have reached the 200 DMAs. Copper too looks bullish but is capped at resistances. On the other side of spectrum lies the JNK/TLT ratio which seem be weakening but ever so little. Bunds and schatz rallied on friday too and hence there opening this week needs to be understood. We could be setting up for a big dash down and as usual once the train leaves the station, it does not stop to take passengers in between. August is traditionally a month where you can make money but I will not long at these levels on risk assets.