Markets are in wait and see mode and are meandering in the mean time testing support and resistance areas. I got whipsawed today
As highlighted in the gold blogpost, gold broke down thru the uptrendline and is now $16 away from the bottom of the symmetrical triangle. Obvious stop loss is $1,723. Conservative target is $1,700.6, Nov 30 swing low. Aggressive target is the bottom of the symmetrical triangle which is currently at $1,695.
While gold idea worked, cross currency idea is not working yet.
As you watch markets day in and day out, you develop intuition. It is difficult to explain but one has this nagging feeling that something is wrong or is not acting right. The phrase that comes to mind is from Market Wizards II when Druckenmiller said, "I smelled a rat," when D-mark did not react to news as expected. So, what happened?
I trade off of 4h charts for short to medium term trades and only drill down further to 1h charts when I want to get a clearer picture or improve entry/exit levels. Anyway, between 2pm-6pm AUDUSD tested 1.0300 but USDCAD was not anywhere near 1.0074 (no confirmation?!) and instead doji star was staring right at me (another no no). EURUSD also had a doji while GBPUSD registered a shooting star. Now, I expect EUR and GBP to underperform since they are weak currencies and that fact is reflected in cross-currency rates. However, such non-confirmation especially in USDCAD got my antenna flashing caution. Then, between 6pm-10pm, EURAUD finally made a new low but more importantly GBPAUD did not and USDCAD broke to the upside from its downtrendline while AUDUSD was rejected and came back down. When that happened, my bullish stance turned instantly to neutral and EURAUD/GBPAUD trades were not taken. From that moment I knew we are still in consolidation formation and markets are saying "not yet."
As i ponder more about this failed trade it makes sense to me markets are not moving because everyone is waiting for the results of the next EZ summit this week and those results most probably will act as a catalyst for any large moves. In the mean time we wait. As I keep telling, watch the horizontal range between 1.0150 and 1.0300 in AUDUSD for breakouts.
Above are updated charts for EURAUD and GBPAUD. As often is the case, patterns are clear in hindsight but trading them as they evolve in real-time is a different matter altogether. I am not yet sure whether I should see them as bullish pennants or bearish falling wedges. EURUSD looks like the latter. Time will tell. Your patiently waiting A.
As highlighted in the gold blogpost, gold broke down thru the uptrendline and is now $16 away from the bottom of the symmetrical triangle. Obvious stop loss is $1,723. Conservative target is $1,700.6, Nov 30 swing low. Aggressive target is the bottom of the symmetrical triangle which is currently at $1,695.
While gold idea worked, cross currency idea is not working yet.
As you watch markets day in and day out, you develop intuition. It is difficult to explain but one has this nagging feeling that something is wrong or is not acting right. The phrase that comes to mind is from Market Wizards II when Druckenmiller said, "I smelled a rat," when D-mark did not react to news as expected. So, what happened?
I trade off of 4h charts for short to medium term trades and only drill down further to 1h charts when I want to get a clearer picture or improve entry/exit levels. Anyway, between 2pm-6pm AUDUSD tested 1.0300 but USDCAD was not anywhere near 1.0074 (no confirmation?!) and instead doji star was staring right at me (another no no). EURUSD also had a doji while GBPUSD registered a shooting star. Now, I expect EUR and GBP to underperform since they are weak currencies and that fact is reflected in cross-currency rates. However, such non-confirmation especially in USDCAD got my antenna flashing caution. Then, between 6pm-10pm, EURAUD finally made a new low but more importantly GBPAUD did not and USDCAD broke to the upside from its downtrendline while AUDUSD was rejected and came back down. When that happened, my bullish stance turned instantly to neutral and EURAUD/GBPAUD trades were not taken. From that moment I knew we are still in consolidation formation and markets are saying "not yet."
As i ponder more about this failed trade it makes sense to me markets are not moving because everyone is waiting for the results of the next EZ summit this week and those results most probably will act as a catalyst for any large moves. In the mean time we wait. As I keep telling, watch the horizontal range between 1.0150 and 1.0300 in AUDUSD for breakouts.
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