Good evening team,

A pretty choppy market overall with some conflicting movements.

Fundamentally, stimulus talks and positive corporate earnings provide a bullish outlook. However we are seeing some DXY and JPY strength coming into the later session.

Expectations of another large stimulus bill in the US put some downside pressure on the USD this morning. Janet Yellen, US Treasury Sec, urged lawmakers to act big on a corona-virus relief bill, adding the benefits outweigh the expense of a higher debt burden. The USD eased from its four week high with equities and commodity related currencies falling higher this morning.

To add fuel to the risk on scenario, strong earnings have been reported from leading American companies. Goldman Sachs, Bank of America and Netflix all produced strong results. Corporate profit forecasts have been slashed across the board, so do not be surprised if we see further beats on estimates over the coming weeks.

Despite the risk on fundamentals, we see a possible opportunity on the NZDJPY which we have been tracking nicely over the past two weeks.

NZDJPY – 1 Hour Charts

We can see a nice megaphone structure which can occur at the top of a major trend reversal. These structures are generally broken to the downside. The market has already had a bounce from the key structure support, we are no positioning ready for a breakdown.

NZDJPY – 1 Hour Charts

Trade Setup: SELL STOP – Entry price 73.90, stop loss 74.45 and take profit target 72.85. 

Stop loss: 55 pips

Take profit: 105 pips

Good evening guys,

USD strength coming into play at the moment. Joe Biden has been confirmed by Congress as the next President of the US. It appears as though its a classic buy the rumour sell the fact scenario. That means the USD has been hammered down relentlessly in anticipation of a Joe Biden victory, now he has been confirmed by Congress, we are seeing sellers take profit on the USD short positions (or EURUSD long positions). The EURUSD is setting up nicely for a possible sell position.

This is to keep you posted on a set up we are watching.

EURUSD – Daily Charts

Bearish divergence coming into play on the daily charts which has worked well previously at spotting reversal opportunities. There are a couple of trend lines to be aware of on the longer term charts.

EURUSD 1 Hour Charts

We can see a rising wedge, and a possible ending diagonal formation. We are waiting for a breakdown from the wedge to enter short positions. Ideally we would see a breakout and a retest, or a breakout and close on the 4 hour charts out side of the wedge.

We will keep you posted once a trade has been activated in telegram. If you are able to watch this yourself, jump in the live chat and let us know your thoughts on entry points. This isn’t a simple sell stop play. The 1.2150 support appears to be a reasonable initial target zone.