The Weekly Update: Hunting a Death Cross

Digital Derivatives MarketsResearch, Weekly Market Analysis

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Dow Jones 30, Nasdaq100 and USDCAD

Reviewing last week’s performance, our protective stop loss was triggered in our EURJPY short trade, incurring a loss of -59 pips although partials were booked while the trade was in in fair profit. Our best trade from last week is our decision to execute a long trade in Corn ahead of the United States Department of Agriculture (USDA) supply and demand report. You may review our full performance and success rate in a dedicated section in our website.

The market is still reacting to Russia-Ukraine tension and the on-going crisis in Iraq.  Risk appetite materialized at the opening of the markets  as US Indices futures gapped higher following the news the Kurds took over the strategic dam that was seized by ISIS.  Despite the positive opening we believe there may be another turning point in global markets as we have successfully captured not long ago by shorting the indices.

18/08/14 UPDATE: DJ30 edged higher but beyond our expectations. Price is nearing our protective stop loss order but we are not making any modifications. If the short trade will be stopped out we will revise our entry and continue observing the market.

DJ30 and NADAQ100 Technical Analysis

An entry is provided in DJ30 and NASDAQ100.  As we are combining multiple time frames including the monthly chart it is possible current levels may not be the best entry for placing short trades and we may incur a minimal drawdown for the next couple of weeks. We will also highlight out technical entry does not meet all our technical models but the Risk-Ratio (RR) as well as other technical indicators are clearing the path for the market bears.

NASDAQ100 Weekly Chart

Please click on the chart to enlarge:

NASDQ100 Technical Analysis 18/08/14

NASDQ100 Weekly Chart 18/08/14

DJ30 Daily Chart

Please click on the chart to enlarge:

DJ30 Daily Chart 18/08/14

DJ30 Technical Analysis 18/08/14

In the NASDAQ100 we are noting the bearish divergence  on the weekly chart while in DJ30 the 21-Daily Moving Average (DMA) in  black is threatening a death cross with the 100DMA in green. We are executing the short trades ahead of time as the NASDAQ100 requires a monthly close and the death cross in the DJ30 has yet to be confirmed. We estimate current levels to be the best entry for executing short trades and are more than willing to incur a minimal drawdown. Naturally, we have our protective stop loss orders layered for a healthy risk management. All our trades are based on technical analysis and are fundamentally supported.

We are executing short trades in both DJ30 and NASDAQ100 at market price. For the DJ30, our protective stop is layered at 16,870, targeting 16,220. RR for DJ30 short trade is  1 : 3 (approx.). For the NASDAQ100 technical trade, our protective stop is layered at 4,085, targeting 3,800. The RR for NASDAQ100 short trade is 1: 2.4 (approx.). It is essential to emphasise we are  employing heavy stops as we expect to remain in the trade for more than 30 days we have used the monthly chart for our technical analysis.

USDCAD Technical Analysis

In the Forex market, USDCAD has painted a reversed Head-And-Shoulders (H&S) on the daily chart (and weekly chart). Recent dip, which is right-hand shoulder of the noted reversal pattern is also supported by the 21DMA in purple.

USDCAD Daily Chart

Please click on the chart to enlarge:

USDCAD Daily Chart 18/08/14

USDCAD Technical Trade 18/08/14

Our technical trading strategy is not to wait for a firm break above the neckline but rather capitalize over the dip for to enhance the RR and tighten our protective stop loss order. We are entering the trade at market price, protective stop layered at 1.0831, targeting 1.1010. The RR for the USDCAD short trade is approximately 1 : 2.

We would also like to take this opportunity and remind you we are launching new trade alerts for global traders, which you are more than welcome to apply for and benefit from.

19/08/14 UPDATE: DJ30 short trade was stopped due to moderate gains in global markets, Nasdaq100 short trade is holding. USDCAD long trade is in a decent profit, current price is 1.0942. We are closing 50% of the long trade at market price and shift the protective stop to the entry.

21/08/14 UPDATE: USDCAD is trading at 1.0974 at the time of this writing. We are shifting the protective stop to 1.0921 and close 25% of the long trade at market price.

22/08/14 UPDATE: Ahead of the Canadian data at 12:30pm GMT, USDCAD is trading at 1.0953 at the time of this writing. We have already liquidated 75% of the trade with a fair profit. We are shifting the protective stop from 1.0921 to  1.0935.

26/08/14  UPDATE: Despite recent gains in USDCAD we were stopped out at 1.0935 (above our entry). We have booked a decent profit over the long trade. DJ30 short trade was stopped out, incurring a loss of -153 points. The NSDQ100 short trade is barely holding as the market narrowly missed our protective stop loss order.

29/08/14 UPDATE: NSDQ100 short trade was stopped out, incurring a loss of -77 points. We will revise our entry for the indices based on the daily/weekly chart and issue a trade alert when found relevant. The incurred losses for DJ30 and NSDQ100 were absorbed by our long trade in corn.

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Last Updated on August 9, 2015