USD Strength
Good Morning,
Already a volatile start to the day with moves and counter-moves in equities and economic releases.
As always, fundamentals first:
**retail sales - a bit above expectations. That can be expected as oil prices have come down a bit and overall, the consumer still seems to have strength.
**empire state manufacturing index - below expectations - please check the sub-components for the employment and new orders components
**Europe is in the "news" and will be for years and years and years. That is the true reality of things folks.
**We have a lot more data coming this week plus some corportate earnings, so if you are trading individual stocks/options on those stocks, do your homework!
Technically, we have the SPX heading back to last week's lows. If you remember a post from last week, I drew the Fib on the upmove off the 1360 level. Here it is again and you can see we are retracing most of it.
Past performance is not indicative of future results
A full retracement means we are testing the old low and possibly could break through that level of support. Could 1350 be the next level of support? Another broadly followed sector would be the financials. The XLF ETF gives us a good look at the sequence, where we are in danger of setting a lower low:
Past performance is not indicative of future results
All in all, the relationship bettween slightly weaker equities and a strong USD is working. Take a look at the GBP/USD followed by the EUR/USD. Both are dangerously close to support levels and if the equity markets weaken, will these support levels be broken?
Past performance is not indicative of future results
Past performance is not indicative of future results
Though these relationships are fun to use, we still ahve to remember that each currency pair has its own "inter-governmental" mingling that can get it to act "all alone" and not care what other markets/pairs are doing. Hence, we must use technical and fundamental analysis as well as trading plans for each and every trade we put on.
Happy Trading and Be Environmentlly Cool
Coach Brian
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
