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Rangebound

RANGE BOUND - USDJPY: TRADING STRATEGY - PART 2 Trading for this week: 1. My plan for next week focuses on point "3." from the previous post - I am waiting for risk-on or risk-off assets to confirm investor conviction by using USDJPY as a barometer for net risk sentiment. Despite the market uncertainty and high volatility UJ last week traded within a 200pip range for the between 101.3-103.3. Therefore, I consider a 60pip break of either level to confirm the conviction to a sentiment e.g. 60pips higher is risk-on (Yen selling), 60pips Lower is risk-off (Yen buying). So of the two possibilities for this week (based on the previous post) Most likely i think is: 1) Global risk continues its recovery as I ask myself what possible risks/ events are there that could tip risk-off sentiment? My answer is none. However, there are several arguments for a risk-on bias e.g. 1) Central bank easing continues to offer risk higher e.g. a dovish RBA (5th) and BOE meeting (14th) price JPY lower and UJ higher 2) Implied vol continues dropping below realised vol, aiding bullish sentiment. 3) Brexit uncertainty continues its de-risking/ pricing as its unlikelihood increases. Further, I think Equities have another week of rallying to price before earnings uncertainty selling will become a factor. Trading Strategy: If Yen carries on Ranging I advise buying UJ at lows of the range e.g. between 101.3-101.9 - or you could buy at any price in the range as I have a target of 106 in the near-term and 110+ in the next 4+wks. Alternatively, I advise placing BUY STOP orders at 103.9-104.2 (level that confirms a risk-on breakout) as there will be 80% of UJ short Stop-Losses at this level, so we will likely see a short squeeze take us 200pips up instantly once UJ trades to at or about 104. I like owning UJ structurally in the medium term as even if UJ falls lower in the near term which is unlikely (what risk is likely to drive it lower?) as UJ trading at or below 101 (and the further it falls) the more likely the BOJ will be to launch emergency FX intervention and/or near term lower UJ increases odds of an aggressive BOJ cut at its July 28th meeting - which will make UJ trade 500pips+ higher, dependent on the measures/ aggressiveness taken. For some background/ support for the UJ higher trade 1. based on BOJ easing, recently JPY retail sales disappointed at -1.9% vs -1.6%, as did inflation which was seen at -0.4% nationally for CPI and Core and -0.5% for the same in Tokyo + BOJ's own Core measure continued its strong MoM downtrend at 0.8% (from 0.9% last) - consistently unresponsive inflation is the single biggest driver for BOJ easing/ cutting policy, and the poor inflation has been problematic since the last cut in January 2016 so this gives further weight to another cut, especially since it was 6+ months ago. - Also BOJ Kuroda and JPY Govt Aso and Abe had several emergency meetings last week as a result of the Brexit vote/ JPY appreciation, in which they discussed FX levels, although taking no action, such rhetoric and actions imply and give likelihood that the BOJ will take substantial action in July. - Technically, UJ has been oversold for several weeks, even if UJ higher isnt structurally long, we should at least be able to realise a 600-800pip recovery rally before moving lower again. Volatility - USDJPY Realised Volatility is trading higher than implied (bullish signal) with 2wk and 1mth at 19.64% & 15.6% vs implied's trading at 11.25% & 13.43% + there are some large notional OTM call strikes at 104.2 and 105, indicating the market may have a bullish bias. Also, the UJ 1wk/1m 25 Delta Risk Reversals Trade at apprx -1.6%, and falling, indicating the market is becoming more bullish by 1) being positioned long in the spot market but buying less downside option coverage and/or 2) Speculative Demand for UJ downside puts is falling. *Read my previous post "RANGE BOUND - USDJPY: IS THIS GLOBAL RISK RECOVERY REAL? PART 1" for analysis of last week and mo
Long
by QuantumLogicTrading
1
RANGE BOUND - USDJPY: IS THIS GLOBAL RISK RECOVERY REAL? PART 1Expectations vs Reality: 1. Following the referendum decision on Friday, as expected GBP sold off 10%+, the FTSE plummeted in a similar fashion and global risk assets sold off across the board, but FTSE/ Risk recovered a significant amount of those losses into Fridays close and for the rest of the next week.. So what happened to BREXIT? - Such behaviour would lead you to believe that the Brexit decision was all just a bad dream, with much of the price action volatility confined to Friday alone - rather where I had expected the decision on Friday to start a cascade of risk-on asset selling, as the brexit backdrop provides the perfect impetus to trigger the risk-off fear for the wider global risks e.g. US Election, Global growth, China Debt - and, ofc, the Brexit Macro economic spill-over itself. Why did we witness this Risk Recovery Paradox? 1. I think the main reason that risk managed to avoid carrying its bid bias into this week from Friday was PM David Cameron's decision early on Friday/ Monday to 1) Resign in October and 2) Refuse to sign the Article 50 which formally/ actually starts the Brexit Negotiations - the net effect is that brexit risks have been shifted into 2017 (or never) rather than present, thus providing investor confidence to buy risk at its Friday discount (why not) and take bets on a Brexit no show (illustrated by a buoyed GBP which imo should have fallen more). - What this combination of events now means is that Brexit now trades as a function of Political possibility rather than as a certainty because 1) By resigning in Oct and refusing to start the negotiations now, it means that Brexit itself is put on hold until at least October. Further, the fact that the above is the case, the whole "Brexit" likelihood is brought into question in itself as 1) How likely is the new PM in Oct going to sign the article 50 as soon as they get into office? I think VERY unlikely, its career suicide to start such a volatile process immediately when in office so that means the Brexit Negotiations are pushed further out and likely into 2017 (66.66% chance it occurs in 2017 now from odds-checker). 2) Will Brexit go ahead at all? I think Brexit absolutely is unlikely, as the new PM wont want the economic and political uncertainty that will follow - especially as the vote didnt happen under their leadership - imo its more likely that the new PM will forgo the blame onto Previous PM Cameron and/ or call for a re-referendum or scrap the idea completely and instead offer a solution to solve the "leave" voters problems e.g. Bid to fix EU immigration. 2. Worldwide Central Banks supportive/ Dovish statements - All Major CB have offered their support if their economy calls for it as a result of Brexit - namely the front-end of the FOMC's rate hike curve was severely flattened (Dec or 2017 hike now likely) and the BOE Gov Carney put 250bn in QE and 25bps of Int rate cuts on the cards - the net effect of these actions has been to smooth investor fear, and allow risk to rally, as low rates and QE has no doubt been the biggest driver for stocks in the last 8 years - the FTSE's recovery was/ is 100% underpinned by the BOE stance imo. 3. And the most interesting possibility is that - Investors don't believe in this risk-rally, instead it is just a micro unfolding that will eventually unravel, forcing risk to sell-off in the near future. And by looking at the stability of Gold, Bonds and Yen, this argument does carry alot of weight and is something ive been watching all week. All risk-off assets have traded flat/ higher, despite risk rallying - when risk-on and risk-off assets FAIL to maintain their negative correlation (as they are failing to do now, and are actually slightly positively correlated as they both rise) it usually means the rally is being undermined by a longer-term macro view - since liquidity is a 0 sum game in the long run, all assets cant grow at the same time, either risk must sell-off or
Long
by QuantumLogicTrading
Nifty Hourly : Will descending Triangle complete ?We have news today which market has never expected : R3 won't be RBI governor for 2nd term. That's Bad News, Atleast for Indian Economy & our banks which are high on NPA's. If I start on explaining this scenario & complex situation of our economy combined with Global scenes , it will go on, so let me cut here & jump back to what we do always - Analysis. After the channel breakout , Nifty go into ranging mode and if you guys remember our Bearish Crab targets are still to be reached around 8000's. But here is another chance for who missed it. We have potential triangle formation but the inner moves offers us a chance to short. Check chart for targets,stops. Determine Entry after checking your risk-reward. Happy Trading !
NSE:NIFTYShort
by InsiderB
10
POSSIBLE BEARISH BREAKOUT AUD/JPYAfter being range bound for a while now AUD/JPY finally looks like it is preparing to make a break. I am favouring a downside break for this pair to 75.848 and possibly beyond. i will be waiting for a breakout, retest and continuation to enter into this one which looks like it could offer a nice risk reward as well. If this market was to turn on its head and break the other way i would expect a move up to 82.993 however at this point in time I am heavily favouring a downside break.
Short
by Joe_Keegan
NZDUSD Short opportunity in play, using the Daily chart.With the Long-term trend being down and the break of a Short-term up-trendline, I see a Short opportunity together with Price Action Bars, ofcourse. Although We can see that Price currently is in an Range structure and we have to be Cautious for the Tests of Support and Resistance. Further we see previous Divergence of the RSI with the Dominant trend and RSI at the present now being in a Downtrend. I have also drawn an horizontal Support/Resistance line at the number 0.6450, finding that price makes some nice opportunities there. I am also using a 200Daily SMA and a 21 & 34 EMA, with the 200Dma being the Long-term indication and the 21 & 34 EMA being the Short-term trend indication. The crosses seem strong and on point as of how I like it . As last I have set an Short position on the chart with a 1:1/R:R ratio target at 0.6500, though i do not use a Target in my trading,, I trail Stops. Beneath a Snapshot image of the 4-hour chart at the time being:
Short
by Vranken
A range bound EUR/USD may rise back to its top Sitting in a range EUR/USD may rally back to the top of the range. If not, it may retest the level halfway and continue downward. Signs of bullish anticipation are shown by price finding support at the bottom of the range, a near resembling low test bar - but really a bullish reversal bar , and Stochastic and RSI bullish divergence . entry - above high of reversal bar stop loss - below low of reversal bar target - at around 1.1100 or 1.1450
Long
by amanpaulbhogal
1
SPY - Bullish or Bearish ??This is a WEEKLY chart of the SPY. All moving averages are also weekly. These are longer term signals I am pointing out. I want to focus on a few things on this chart. 1) The broken uptrend line 2) The new horizontal range 3) The last two weeks and a Monday 1 - The Broken Uptrend Line There is a green uptrend line that started back in Oct of 2014 and was broken in June of 2015. You will notice that the week of June 8 was the first week the SPY closed below the uptrend line. The closing price for the week was $210.01. What is the rule when an uptrend line is broken? It usually means there could be some downside to come. The longer a "stock" stays below the broken downtrend line, the higher the likelihood it will remain under the downtrend line and that lower prices are in its future. 2 - The New Horizontal Range The SPY has changed its complexion. It used to mimic a rock climber traversing a mountain. Now it resembles a person walking on a plateau. The question is what will come next? Will this person fall off the edge of the plateau or will the rock climber begin up another mountain. Believe me, I have tried everything to see farther to the right. To see what the next candles look like. "C'mon", I have yelled to my monitor, "Show me more!". But no luck. As I see it, the bottom of this new range is about $204.50ish and the top of the range is about $212ish. The bottom of the range has held pretty well but the top of the range is not so cut & dry. There have been a couple times where it looked like the SPY would break out of the channel to the upside. But very quickly is just sank back down into the channel again. The SPY is range bound. And it will be until the SPY breaks out of the range one way or the other. 3- The Last Two Weeks and a Monday Please take a look at the week of July 27 and August 3. I want you to notice that The week of August 3 is an inside week. Meaning the week of August 3rd has a higher low but also a lower high than the week of July 27. You should also notice that today (Monday 8/10) continues the pattern and is also an "inside week". Why is inside week in quotations? Because Monday alone does not make a week. We shouldn't really talk about another inside week when only Monday has passed. Now if Friday comes along and this week has a higher low but a lower high than last week we can lose the quotes and just call this week another inside week. But we will have to wait a few more days for that. So what is the significance of an Inside Candle anyway? The rule goes like this. If the candle after the inside candle gets higher than the inside candle, then we could see higher prices. If the candle after the inside candle gets lower than the inside candle, then we could see lower prices. So the chart may be telling us (this week) what is coming next... The high of the week of August 3 is $211.31 and the low is $206.87. Keep those two numbers handy and remember, above $211.31 may point to higher prices while below $206.87 may point to lower prices. There are many other things to consider along the way and many reasons why this rule may not be telling you what it seems. No rule of investing is 100%. But the Inside Candle rule happens often and has a pretty good track record. I will be keeping an eye on this weekly chart even though I typically trade based on daily charts. I hope you too will remember to look at the longer term picture of a stock that you are trading or investing in. For me, it is nice to step back and look at the longer term trends. One more thing. The answer to the question in the title of this idea... I just don't know :{ It could go either way. The candle after the inside candle is a hint. You will have to take it from there. Trade What You See... Not What You Think, Or Feel, Or Hope, Or ... The Trend Id Your Friend Until It's Not Limit Risk & Protect Your Profits
AMEX:SPY
by TheTrendLineInvestor