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Members Area. Trade Desk Thoughts:
Positives Abound, For Today: The big-picture view for global growth, global expansion, interest rates, forward debt, and central bank intervention, can be left to the analysts and talking heads right now; what will be, will be. In reality none have much in the way of similar historical notes that match the current economic environment to actually work from, and therefore, as traders who trade, we are blocking out the noise from those who claim to predict where we will be in twelve months time, and instead are looking to take each day as it comes, and looking for one day to actually break into a trend that can be held for a while.
Who knows when that will be, all we know is that one day will turn out to be the bottom of the channel, or the bounce off the trough, and we will be a part of it because we plan a trading route each day, in reaction to the global market mechanics.
The other certainty is that the day that things break, and the trends are formed, the talking heads will be covering themselves in glory over the timing of their analysis. The problem for traders with that is the incredible amount of noise that is generated by those who do not actually commit hard earned cash to the cause that they talk endlessly about. The news, right now, is noise, and we need to block it out, and focus hard on the momentum charts as we enter a swing point in global trade.
Today, (not tomorrow, or next week, but today), we have a few global positives that we can build on; Earnings and upgrades in the financial sector (read Goldman Sachs), economics releases that have no surprises, and equity markets that have managed to hold 48 hours of positive trade without a collapse to support. That adds up to a view that the 4 hour chart malaise may just be coming to an end, and after a quick drop lower to take the steam off Overbought major currencies, oil, and equity markets, we may be ready now to take the leg lower that has been threatening for eight weeks, on the dollar index.
Global market appreciation (stocks, oil, gold, currency) comes at the expense of the Usd, with the main reason not that the dollar cannot be trusted (although the headlines would have us think otherwise), it is because of the global stature that the dollar has, because of the scrapping of the Gold Standard to gauge paper debt. The dollar is used in globally to trade all commodities in the open market, and it links to the U.S. Treasury note in the majority form of central bank reserves. As such, when global markets move higher, the Usd moves lower, and vice versa.
Right now, in the second week in July, historically one of the quieter months of the year, the global market has pushed things up to test near-term resistance, which by default has pushed the dollar index to near-term support. We have a 4 hour chart swing point, that happens to also be backed by strong daily chart support. If Wall Street holds in the green on Tuesday, we may well see the Usd break lower, in response to oil holding 60.00, gold able to hold 925.00, and the S&P futures market trading around 900.00. Add in Treasury markets looking to support that same global view, and we may at least get to see a week of movement in the same direction.
Average Trading Ranges (ATR) are on the increase in most markets, and participation levels are on the rise, both at a time of year that things would be expected to hold in a range. This may all lead to nothing, who knows what the next chapter of the re-writing of the new-world order will be as things move out from the shadow of the 2007-2009 credit crisis.
All we do know, this is like pulling on a spiders web; a move in one global arena creates an inverse reaction in another market, and in another area, and right now that looks to be setting up for some Usd weakness, in the near-term.
No noise, no opinion, just tapping into 30 years of watching these things unfold, and reviewing five major global market re-alignments that re-shaped the financial arena; 1987, 1991, 1997, 2001, 2007. There is a lot to be learned from market watching, with the most important being that year-end predictions are absolutely pointless at times like these; we need to be ready to deal with today.
The U.S. session is notoriously unreliable in offering forex moves that hold, it houses only 16% of global forex trade, compared to over 50% in Europe, and 20% in Asia. U.S. trade also absorbs the largest market for bonds, equities, and commodity trade, and therefore has forex values pulled from pillar-to-post on a daily basis. We have seen that if the break of prices has not happened in reaction to 08:30 EDT releases, which really do offer a chance to get things going, it is unlikely to be a session that follows through with too much.
As such, we will monitor the moves, and get a feel of momentum and sentiment as the session progresses, and then look to reactionary trades as the important forex time-frame unfolds; from 20:00 EDT through to 08:30 EDT the next day. July is a month that we tend to have a reduction historically in the number of Signals posted, and we do accept that is a reflection of the global market moving sideways through the July holiday period.
However, not all years are the same, and at a time that the global rule-book is getting re-written we need to be prepared to react to what is on the chart right now in the reads of momentum, sentiment, and strength of price action. Let things unfold where they will in the Wall Street session, and get ready to react to the Asian and European moves to come.
Any intra-day possibilities that may hit ahead of the main trade plan numbers will be posted above and denoted with *.
Daily note from the Desk:
If everybody threw their trading problems into a pile, and actually saw what others were going through, most would quickly grab theirs back. Sometimes the road looks a little longer than it actually is, but one trade at a time, and with a trading buddy to drop back and walk with us, we always seem to get to where we need to be.
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