Daily trading plan, where is the market going?
First the Pink Square that is outlined is showing a consolidated range. Price has been chopping traders out in this zone for weeks. Trading days have been moving from 20-40 points with very fast moves of 5- 10 points occurring with in fifteen minutes. This has been painful for quite a number of traders waiting for the sell off only to be robbed as Price approaches the 200MA.
I have noted on the chart Fib extensions along with projection zones. The small zones above the present price action are revealing some fairly easy buy side targets. With Europe falling into the back and forth around Greece exit – Grexit, and the oil squeeze by the Saudis against Russia, we can expect these large moves as risk on, risk off, QE support and central bank purchases of equities is increasing. Read more about it here: Collision of Outliers.
Remember it is not often that markets run up or down in a straight line so there will be some consolidation in the present price levels looking for news, QE and or market makers to move in when no one is looking. Use your stops in this and don’t trade open positions.
On the Downside I have noted a few areas of support which are open gaps based on a regular trading day, on this 24 hour chart. Breaking down to the previous swing low is also an easy target that would fill two open gaps.
This is where the fun starts. The Trading set up for tomorrow that we are looking for is a bounce equivalent to 50% of the previous days price action with a maximum of 23 points retraced from yesterdays close. From here we are looking for a buyers market in control with a new high coming. Support on 2032 then a continuation of the trend. Buy at 2032 watch for the 10 -20 point run and then back down 10.
The expected range is 16 for a consolidated range day, 23 points for a mid range trade day and 41 points for a volatile range day. There is a chance that we could put in a doji as the market consolidates more before a break of the channel. This could be 2 or three days.
Also expecting a small range day on oil as we had a volatile day setting new swing highs and giving some relief to the Canadian Dollar.
Calgary, Alberta – Trading the Canadian Dollar and the Mexican Peso.
Coming up to Calgary to trade with my partner for the week. There was a lot of volatility and some really nice trades available. Calgary is a boom town that is famous for the Stampede and has a sky line that is populated with skyscrapers from the previous 12 year oil boom. The almost 15 % change in the Canadian dollar is making it seem a little less expensive here. There are Audi’s everywhere and people spend money consuming expensive dinners and wearing Lulu lemon. The cost of living is pretty high (compared to southern California), but people make a pretty good living and it seems that the economy is doing well.. Seems
Rolling into 2015 I am watching as the Canadian Dollar is trading at 1.26 to the US dollar. I have been up to see Fort MacMurray and the 10,0000 people oil camps last year with my son. Last night I met with a group of investor/traders at the Calgary Day Trading Group. It seems the property bubble is still in tact, that jobs are OK, but some workers from the “Camps” are coming home as collapsing oil prices are causing lay offs at the sands. I am putting up two charts of the USDCAD and the Mexican Peso. There are some similarities which you will see almost instantly.
Canadian Dollar trading – the charts show a parabolic move up to what is presently resistance.
What I am seeing in Canada is the convergence of many factors which can fundamentally weigh on the currencies strength and ability to weather this Oil storm.
Technically we could see the Canadian dollar heading to 1.30 then 1.40 over this next 6 to nine months. Unfortunately, it all is reliant on Oil and consumption in Canada. If we look at the chart you can see how the CAD dollar acted at this present price level and that it consolidated at this range for 3-4 months. This would put us into the second quarter.
Oil is the pressure trigger for a stronger Canadian Dollar.
If we see oil recover to a price target of $55 to $60 there will be short term recovery for the Canadian Dollar. If there is further selling, down to the critical price supports the Saudi Oil ministers said they can support we will see unemployment raise, Oil revenues fall and probably a housing correction under way. Presently, there is a stall in the housing market as always occurs when you have a harsh winter. The interesting thing is, that it was 55 degrees outside this week and the sun was bright and shiny. These two rectangles are showing where price could extend or where it could re trace. Both of these levels are crucial to the Canadian Dollar but won’t pull it back to the 1.06 level to the dollar experienced in 2014. Oil would have to soar back to the $70 plus range for strength in the Canadian dollar.
Futures Trading January to February – Where are we headed?
The S&P500 is presently in a chop zone that is roughly 120 points in consolidation on the daily chart. The support came in at 1965 and has moved back and forth between there and the swing high. I have placed a fibonacci extension over the previous correction to the swing high to show possible price extensions. You might note the area from 2060 and the swing high to 2090 is where the market could consolidate and then spring board for the next targets around 2120, 2159 and 2220.
Futures trading January 2015 could see more quick short lived corrections than 2014.
You can probably see again how corrections are taking 4 to 7 days to move down and then 2-3 days to move up when it breaks out of consolidation. Presently, if price falls from this level, we could see a bit longer move down as we are in a Head and Shoulders Bearish pattern. Note that Head and Shoulders Bear patterns have not taken a full extension down for the past few years and that I would expect to see them quickly reverse.
Central Banks are moving the markets and creating a very volatile intra-day trading situation. Futures trading is an overnight market so Central Banks policy, intervention through Quantitative Easing and use of interest manipulation will first show up in the futures market. Be aware that some of these swings have been 20 to 40 handles (points) in the after hours only to be followed by volatile gaps, and intraday reversals covering 20 to 40 points.
Trading Gaps in 2015.
I have highlighted the open gaps on the chart above, you will see them as small rectangles showing where the previous days close and the next days open have not filled. Noting these as downside targets for sell offs. and of course the major psychological support of 1800. If we break under here watch for the bid to be pulled and maybe some free fall. Always remember that trading is risky, don’t trade unless you know what you are doing and have risk capital. Don’t trade with your rent money, that is gambling!