Overview: What's happening?
The risk assets have been confirming their short-term weakness and the need to correct and digest recent gains. We can see that most of the stock indices are in negative territory these days. The big technical picture of DXY also suggests possible upward momentum. We can expect the increased volatility in the Forex market in the upcoming months as USDJPY is approaching the long-term triangle's inflexion point.
What patterns are driving Forex?
DXY has formed H&S pattern on Daily timeframe, which is another evidence of a possible reversal, especially that it's formed around the long-term support. If DXY breaks 91.00, I want to be long on USD against some relatively weak currency.
USDJPY tells us the story of the approaching volatility storm in the Forex market. The pair formed a long-term symmetrical triangle. If the triangle breaks out in either direction, it will have a powerful impact on the market as both USD and JPY are safe-haven currencies.
No-brainer: short the weakest!
At this point, it's good to look for short-sell setups in indices. The logic is simple - consider the indices that got hit the hardest by the correction and historically have been underperforming relative to other indices. HK33HKD and IN50USD are good examples of such relatively weak indices. What's left is to wait for specific setups in these instruments according to your strategy. HK33HKD behaves interestingly - recently I mentioned it's been relatively strong for a short time due to capital inflows from Mainland investors. Now the underlying relative weakness came back and shrugged off recent sentiments of the Hong Kong market.
Summing up
There may be nice short-sell setups in indices these days. Watch out for the breakouts of the key levels in DXY and USDJPY and proceeding volatility.
The risk assets have been confirming their short-term weakness and the need to correct and digest recent gains. We can see that most of the stock indices are in negative territory these days. The big technical picture of DXY also suggests possible upward momentum. We can expect the increased volatility in the Forex market in the upcoming months as USDJPY is approaching the long-term triangle's inflexion point.
What patterns are driving Forex?
DXY has formed H&S pattern on Daily timeframe, which is another evidence of a possible reversal, especially that it's formed around the long-term support. If DXY breaks 91.00, I want to be long on USD against some relatively weak currency.
USDJPY tells us the story of the approaching volatility storm in the Forex market. The pair formed a long-term symmetrical triangle. If the triangle breaks out in either direction, it will have a powerful impact on the market as both USD and JPY are safe-haven currencies.
No-brainer: short the weakest!
At this point, it's good to look for short-sell setups in indices. The logic is simple - consider the indices that got hit the hardest by the correction and historically have been underperforming relative to other indices. HK33HKD and IN50USD are good examples of such relatively weak indices. What's left is to wait for specific setups in these instruments according to your strategy. HK33HKD behaves interestingly - recently I mentioned it's been relatively strong for a short time due to capital inflows from Mainland investors. Now the underlying relative weakness came back and shrugged off recent sentiments of the Hong Kong market.
Summing up
There may be nice short-sell setups in indices these days. Watch out for the breakouts of the key levels in DXY and USDJPY and proceeding volatility.