In our second setup we are taking a look at the EURAUD. We may have position slightly early on the pair in telegram last week. The technicals still suggest a possible reversal opportunity is coming in the near future and we are looking to capitalise on that move.
EURAUD – Weekly Charts
We are approaching a historic supple zone on the EURAUD, this zone has provided support and resistance on many occasions over the past 25 years. This suggests we could see a bounce in this area.
EURAUD – 4 Hour charts
The RSI is creeping higher on lower price action, this tells us sellers are running out of steam creating a bullish divergence.
Price action is also thinning inside a falling wedge formation.
EURAUD – 1 Hour Charts
Trade Setup: BUY Stop – Entry price 1.5750, stop loss 1.5685, take profit 1.5860.
Stop loss: 65 pips
Take profit: 110 pips
If the market breaks to the downside of the wedge this setup becomes invalid and we will close the position.
A couple of positions are on the way out this evening. Firstly, we are looking for a continuation on the NZDJPY position.
NZDJPY – 4 Hour Charts
The trend line resistance worked well for our position last week. We are now seeing a rising channel / corrective structure higher, this can also be known as a bear flag. A bear flag pattern can occur prior to another drop in the market. We are no waiting for the next breakdown to enter a short position on the pair.
NZDJPY – 1 Hour Charts
Trade Setup: SELL STOP – Entry Point 74.80, stop loss 75.25 and take profit 74.00-73.80.
Stop loss: 45 pips
Take profit: 80-100 pips
If the market breaks to the upside of the flag formation that indicates a continuation to the upside may occur, so you can close down the order.
We are looking to go short on the AUDUSD, please check today’s member’s video if you have not already. We breakdown the USD index, this will explain from a technical perspective why we are looking for USD long opportunities.
AUDUSD – Daily Charts
Daily Charts are showing a bearish divergence on the RSI signalling buyers are running out of momentum. We can also see a rising wedge formation which can indicate reversal opportunities as price action thins.
AUDUSD – 4 Hour Charts
Same here on the 4-hour charts, bearish divergence, the AUDUSD has also returned inside the rising wedge formation after tagging the 0.7800 resistance.
AUDUSD 1 Hour Charts
We can see a potential head and shoulders formation on the 1-hour time frame. We are looking to enter here on the right shoulder anticipating a move below the neckline.
Trade Setup: SELL Market execution, current price 0.7750, stop loss 0.7815 and take profit left open to run but targeting the 0.7630-0.7560 levels.
Just a quick update on what has happened throughout the day.
Crazy scenes in the US this morning yet markets have maintained their peaks shrugging off the conflict. Congress confirmed Joe Biden’s election victory shortly after the riots. With the Democrats now looking to take control of all areas, we need to understand what policy changes will come into play in the new year.
Firstly, Joe Biden is set to be sworn in during the peak of the Covid-19 outbreak, therefore it is likely we will see further lockdowns across the US. This may result in a short term risk off scenario in the coming weeks. Secondly, Biden has suggested they will look to increase taxes for high earners and corporations, however not for smaller businesses with less than 50 employees. There is a possibility of a rotation out of major cap stocks that have dominated the market throughout 2020 and Covid-19 (Apple, Tesla, Netflix, Google etc) and into smaller companies. Biden is also planning for a clean energy revolution, therefore keep an eye on the renewable energy space, oil companies may take a hit. Tax hikes will impact the market at some stage, again this may result in a short term risk off scenario.
Thirdly, we can expect even further stimulus and money printing throughout 2021. The Republicans are no longer able to block any further stimulus packages. Fundamentally, the vast money printing paints a very bearish picture for the USD. Traders have anticipated a Joe Biden victory for a while, therefore the outcome may already be priced into the USD. This could be a buy the rumour sell the fact scenario.
Tonight we are turning our attention to the NZDJPY. We see a possible risk off playing coming this evening, meaning weaker commodity related currencies, and strength back into the USD and JPY.
NZDJPY – Monthly Charts
The monthly charts are painting a pretty bullish picture as there has been a bull flag breakout, however on the shorter term we see an opportunity for a retracement trade.
NZDJPY – 1 Hour Charts
The RSI is signalling a bearish divergence meaning buyers are running out of steam, we are also seeing a lot of congestion at the peak of 75.20.
Trade Setup: SELL Market Execution, current price 75.20, stop loss 75.60 and take profit 74.60-74.30.
This year we are looking to position with some more slightly longer term plays building into swing positions. This will be along side our day trading positions. This means we could be holding a trade for a couple of weeks, giving us the opportunity to build additional positions in along the way. Some positions may require a wider SL and lower leverage, but our targets will also be further away. Once a position comes into the green we can build another trade into the trend on any pull backs.
With this strategy in mind, we are taking a close look at the AUDNZD.
AUDNZD – Weekly Charts
The AUDNZD had a strong bounce on a key support zone at 1.0440. This support zone is a historic key support level. As you can see, the AUDNZD is still relatively low on its 20 year range, which suggests there is potential for further upside. The AUDNZD has been range trading between 1.13-1.04 for roughly 6 years.
AUDNZD – Daily Charts
Taking a look at the daily charts, we can see a nice 5 wave structure higher making a possible wave 1 on the larger degree. Elliott wave theory would suggest the market could be setting up for another 5 wave structure that will extend above the major wave 1 at 1.1100. However, first there is a possibility of a pull back into the 1.0600 region to form a wave 2 structure. This will be a possible buy zone for us. Wave 2’s can be deep, and eliminate the majority of wave 1. The AUDNZD must hold its price above 1.0430.
We are looking to position a small position now, and an additional position on a pull back or once the 1.0730 resistance is cleared.
AUDNZD – 4 Hour Charts
Trade Setup: BUY – Market execution, current price 1.0685, stop loss 1.0600, take profit left open to run. Long term targets can be found at 1.1000 (if the plan progresses).
Stop loss: 85 pips
Take profit: 300+
This first position is our “anchor” and we will not be using a full risked position, we will add further leverage at a later stage.
If our SL is hit, we will be looking to reload the position from the 1.0555 support zone with an even greater risk V reward. As always we will keep you posted on any updates.
We are seeing continued selling pressure on the USD leading into the new year due to the continued money printing in the US, which is pushing global equities and commodities higher. Joe Biden is set to become the new President of the US on January the 6th (depending on the outcome of the Electoral College vote count). There is a possibility that a number of the Republican party will disagree with the Presidential vote outcome which may result in uncertainty in the market. However, markets are expecting further stimulus from Biden appointed Janet Yellen who is set to become the new Sec Treasury. Looking across the globe the covid-19 pandemic is escalating further with a record number of cases being seen across Europe and record hospitalizations in the US. Both the pandemic and endless money printing provides a bullish sentiment for metals. With that in mind, we are looking to take a long position on Silver which is still trading at a 50% discount from its record high compared to gold which has already reached its 2011-2012 peak.
Silver Daily Charts
The daily charts are showing a retest on the 24.90 support zone and another break above 25.90. 25.90 is now crucial support and our SL will position below this level. There is also a trendline support in play.
Silver 1 Hour Charts
Trade Setup: BUY Market execution, current price 26.55, stop loss set at 25.40 and take profit 28.40.
Stop loss: 115 pips
Take profit: 185 pips.
Markets are very volatile at the moment, we will be looking to move our SL to open once we are in a profit of 40-50 pips.
Great start to the week with USDCAD and EURAUD hitting the TP targets. The markets reversed a number of the risk off moves over night as the US Government votes on the next stimulus package.
The US China tensions appear to be increasing with the US implementing further restrictions on Chinese officials. The visa restrictions affect officials that are believed to be responsible for the repression of religious practitioners and ethnic minority groups. Further actions are expected which include tighter visa restrictions on Chinese Communist Party members and a ban on goods made with forced labor. The trade war has negatively impacted the AUD previously.
The recent Covid-19 outbreak in Sydney and other parts of the world may also weigh down the risk on currency. The AUD is the main casualties of a negative market sentiment.
Technical Analysis
AUDCHF – Weekly Charts
The AUDCHF is trading at a historic weekly negative trend line. This has been used on a number of occasions as resistance and an area to sell down from.
AUDCHF – 1 Hour Charts
This setup appears to be a text book head and shoulders formation. Keep in mind the 0.6740 level is the invalidation point. A break above that zone will indicate a move to new highs.
We are looking to enter a short position, expecting a break below the neck line towards the 0.6600 level.
Trade setup: SELL Market execution, current price 0.6708, stop loss 0.6753 and take profit 0.6600.
Risk off flows are coming into play this morning as the market digests the $900 billion stimulus deal in the US and the second strand of corona-virus that has been detected across parts of Europe. Please read the full fundamental report posted in telegram.
EURAUD – Daily Charts
The EURAUD is trading on a key trend line support. That daily charts are also showing a number of rejection candles on the support zone.
EURAUD 1 Hour Charts
Falling wedge breakout followed by a retest and a potential inverted head and shoulders formation.
Trade Setup:
Buy – Market execution, current price 1.6095, stop loss 1.6030 and take profit 1.6230
A nice move on Silver and Gold overnight, well done those trading the breakouts. We will look to reposition on pull backs, as long as the technicals agree next week. I have highlighted a potential entry point on gold in telegram.
Today we are taking a look at the USDCAD. The pair is reaching a crucial support zone. Whilst it is difficult buying the USD due to the endless money printing, we see a possible short term reversal opportunity. We are yet to hear about the second stimulus check, furthermore we are yet to see the results from the Senate run off. The Republicans can still prevent a Democratic take over by maintaining their position in the Senate. If they manage to do so, markets will react negatively as they are less likely to approve a much larger stimulus package which is wanted by the Democrats.
Technical Analysis
Weekly Charts
The USDCAD is trading on a major support zone which has been used for areas to buy and sell from over the past 20 years. This could be classed as a historic support level.
Potentially a flag formation on the weekly charts, however this is very ambitious. However, we can see a spin top weekly candle formation from last week which can indicate reversal opportunities.
USDCAD – 4 Hour Charts
We can see a well structured falling wedge formation on the 4 hour charts which can indicate reversal opportunities. The key is to wait for a breakout above the wedge formation at 1.2790 to enter long positions on the pair.
Trade Setup : BUY STOP – Entry price 1.2792, stop loss 1.2710 and take profit 1.2922.
Stop loss: 82 pips
Take profit: 130 pips
It would be beneficial to watch for a breakout rather than enter buy stops incase there is a fake breakout to the upside. If the market breaks back down into the wedge after a fake breakout we will look to close the position.
If the order is not activated before the weekend close out and reposition on Monday.
The pullback on metals occurred overnight as expected, and highlighted in the member’s video yesterday.
We are now looking to position on SILVER and build a trading plan moving forward. We need to be prepared for both a bullish and bearish scenarios playing out.
What is driving metals?
Bullish Case:
Unlimited money supply coming from the FED and US Government.
Uncertainty in the market with fears of inflation still lingering due to the endless money printing.
Joe Biden will appoint Jannet Yellen to Treasury Sec (if he becomes President). Jannet Yellen is all in on the money printing and currency devaluation.
Democrats want a larger stimulus package, if they take the Senate it becomes a possibility of playing out.
Bearish Case:
Uncertainty around the US election, if the Electoral College fails to recognise Joe Bidden as the President the USD could face a reversal due to risk-off sentiment. This would result in selling pressure across commodities and equities.
The Senate blocking further stimulus from the US Government could see some downside on metals due to less USD supply.
The FED pulling the pin on QE (quantitative easing), which is unlikely at this stage.
Technical Analysis
BULLISH Scenario
SILVER 4 Hour Charts
SILVER – 1 Hour Charts
The 1 hour charts are showing an impulsive 5 wave structure higher, based on Elliott Wave theory we may now see another bullish 5 wave structure higher. We can also see a tag on the pennant trend line and an inverted head and shoulders formation in play. If the bullish scenario plays out we can expect a move towards the 26.00 levels.
BEARISH Scenario
A key level we need to be aware of is the 24.30 resistance. This is also a possible head and shoulders formation. If the US Government fail to reach an agreement on a stimulus package we may see further downside on metals and equities due to a stronger USD.
Trading Plan:
Bullish Play
We are entering a slightly smaller long position in the market now. Once the market reaches the 24.30 resistance we will move our SL to the open price in case of the bearish head and shoulders formation playing out. Our plan with this initial position is to let it run for a longer time frame.
Trade Setup: BUY Market Execution, current price 23.90, stop loss 23.25 and take profit left open.
Stop loss: 65 pips
We will be looking to add a second position once the market clears 24.60.
If we see a bearish reversal at 24.30 we will be looking to enter a short position on the break of the neckline at roughly 23.90. Our long trade will be taken out at break even.
If you have any questions on the setup or position sizing jump in the live chat on the trading floor.
