Risk off trade is Dollar, Not Gold, Dollar takes a breakJoel Wissing
Risk off Trade is in the purchase of Dollars or US Treasuries, not in Gold. Dollar has been screaming up because of the impending doom in Europe.
What is the Risk off trade? Gold, The Dollar Index and the S&P500 emini futures contract are running hand in hand this week as the Euro has been hit. Lets look at the Major trends. You can see as the Dollar index has been rising that Gold and the S&P500 normally run inverse to the major trend. The Dollar is up, Gold and S&P500 trends down. This is showing the major trend to be Risk off trade and flow of currency internationally into the Dollar index.
The Risk Off Trade sometimes exhausts and this is when the Dollar index goes down and in the mid term you would normally see where Dollar index goes down, gold goes up and the S&P500 would also be hit. We would have to enter another chart here as the Euro actually rallied and left the S&P500 behind.
The Risk off Trade can Exhaust in the purchasing of the Dollar and hit major Support.
The Dollar index, the Gold futures and the S&P500 emini futures contract have been moving together this past week in a very unusual rally. This is showing the risk off trade for the Euro but it showing that Gold has hit some support and could be heading for it’s upper resistance at an initial price target of 1580. The Point of control is actually the neckline on this inverted head and shoulders and looking for a move down and reversal from the support at 1555. watch the open tomorrow as there could be a head fake down and then they will squeeze an shorts from this level. 1580 to 1590 could be an equidistant extension for the Inverted Head and shoulders with a top target of 1618 if the ask get’s pulled.
As the Dollar index could see a retracement to 81.80 this would give a brief respite for a move on the S&P500 emini future to 1326 area. The point of control on this move is 1312 with a bounce off of 1305 to get the momentum to break through the resistance at 1320. If the sellers move in to take control from here then looking to test through the psychological support at 1300 and play to 1290-95 area.
Risk off Dollar trade could come back in depending on what news we see out of Europe. Probably will be pre market but the volatility of comments and sentiment as Greece and now Spain comes under fire. The politicians and news are addressing this as a viable solution and if this happens, how do you think Spain will feel going into Austerity measures when they have seen that it doesn’t work in Spain?
Looks like no Deal will be a good deal for those that don’t know how to short this market. Trade what you see.
Here is a video for you. Tomorrow, I will show you how some recent IPO are being sold at a 50% discount and why professional money will be fading Facebook. I call it Fadebook.
Trade what you see and never listen to the so called experts. If you can’t see the direction of the market and don’t understand how to use a stop, then don’t trade. Never take stock tips, and if it is on the TV as a hot pick, it is too late.
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Disclaimer: day trading is high risk, do your own work : The efficacy of both technical analysis and fundamental analysis is disputed by efficient market hypothesis which states that stock market prices are essentially unpredictable. Be responsible for your trades, do your own work and never rely on others. When searching for a Day trading course, be sure you understand the risks involved in day trading and risk off trades.
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