Trade War and DAX30
The trade tension between the US and China is continuing to affect global markets. President Trump threatened additional tariffs that would tax all imports from China. The US President asked Apple to relocate its operations from China into the US.
In our past research we discussed the DAX30 as there were early indications for some retracement in the German index, which has evolved.
Please click on the chart to enlarge:
The top Head-And-Shoulders (H&S) is being painted in DAX30 monthly chart at the time of this writing. The price has reached the neckline of the reversal pattern. Once the neckline gives way it may pave the way for stronger selling in the index.
At it is a monthly entry it may be fairly expensive remaining in the trade for several weeks. We may attempt a daily entry once it is affirmed, which make take some time. What may trigger some volatility are the mid-term US elections.
Sweden’s General Elections and ECB
The general elections in Sweden took place earlier today. The exit polls suggest the center-left social democrats are in the first place with 26.2% of votes. The far-right Sweden democrats have won 19.2% of the votes according to the poll, making it the second largest party.
The official results are expected to be released around 220:00 GMT. It is still early to determine whether the outcome of the elections in Sweden will have a negative impact on global equities.
One of the key events this week is the European Central Bank (ECB) monetary policy. Mario Draghi affirmed the central is unlikely to hike rates until the summer of 2019 if not beyond. The tension between the US and China along with Italy may weigh on the monetary policy.
EURUSD 4hr Chart
Please click on the chart:
As our weekly entry in EURUSD may have been missed we are turning to the 4hr chart. We first require a 4hr close below the neckline (4hr chart) and then determine how to tackle Euro Dollar.
In an event we do have an entry on Monday we may not wait for the daily close as it is a 4hr chart. Due to many outside market events it is too early to determine what may trigger stronger weakness in EURUSD.
We should highlight that in some monetary policies the ECB intentionally leaks parts of its monetary policy prior to the official meeting.
Another interesting event would be the Turkey’s central bank’s monetary policy following the inflation figures. The bank stated last week that it will adjust its monetary policy following the inflation figures. The ‘natural’ scenario is a rate hike that may trigger a spike in the Turkish Lira (TRY).
Several years ago we have initiated a short trade in EURTRY and successfully capitalized over the spike. We would like to back a short trade in either USDTRY or EURTRY via a technical entry, which is not present at the time o this wrtiing.
The central bank of Turkey is expected to release its monetary policy on 13 September, 2018.
UPDATE: EURUSD corrected higher, which invalidated the potential entry we discussed.
USDCAD Trade Alert
Please click on the chart to enlarge:
USDCAD long at market price (ask 1.3068)
Take profit: 1.3360
Protective stop: 1.2930
Risk Ratio (RR): 1: 2.0 (approx.)
Estimated duration: 14 days
Relevant as long as USDCAD is below 1.3100
Note: The potential drawdown is a re-test of 1.2965. There are 2 support levels within a near proximity in USDCAD, the first support level has contained the weakness.
We layered the protective stop below the latter support, hence the fairly large distance from the market.
Based on USDCAD daily chart it may suggest some struggle in the NAFTA negotiations. We are heavily relying on bullish spikes in USDCAD. We marked the key resistance levels on the daily chart, should they hold if tested we may exit the trade.
This was a last-minute decision, do give us some time to present the daily chart that was used, which will be available on the website.
19/09/18 SIGNAL UPDATE: The dip below 1.2965 triggered stops, we were fairly close to the market before the recent corrective gains took place.
Due to the dip we must have greater distance from the daily low. We are not keen on shifting stops as we would rather incur the loss but we have little choice in the matter. We are shifting USDCAD protective stop to 1.2904.
19/09/18 SIGNAL UPDATE II: USDCAD triggered the protective stop, we are not re-entering the market. The bullish spike that took place earlier today forced the indicators out of over-sold territories, which provided more room for further weakness.
The protective stop seems to have been triggered by a stop hunt due to thin market conditions.
All of the above trade updates on this page were issued via email to our members.
Last Updated on October 1, 2018