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Prop Trading Futures

In this issue: $ES_F $YM_F $GBPUSD $USDJPY $EURUSD 5/5 (1)

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MARKETS IN PLAY

CURRENCIES – EURUSD

The long term target for EURUSD remains below 0.90. A weekly close above 1.17 is likely going to mark the end of the bear market of the Euro.

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On the daily chart, the completion of a possible Head and Shoulder Failure formation may help to spot the end the of consolidation that is going on since early December. Look for a decisive close below Friday’s low in the next 1-2 days. Risk a close above 1.09. This pattern would have a minimum measured move target just below December 3 lows.

DEVELOPING PATTERNS

FINANCIALS – US STOCK INDEXES (ES, YM)

Despite the strength shown during the past three days, the US Index did not really moved much this week, as you can see in the weekly charts below. They are still in a critical juncture. Unless we get 1-2 strong weeks now, things can get pretty ugly for stocks and traders can start to look at 2007 highs as the first targets below.

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CURRENCIES – GBPUSD

At this point it looks that Cable is going to retest 2009 lows and probably move to lower levels.

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Even a small intraday rally on Friday was sold at the close (see the chart below).

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Unless GBPUSD recovers 1.46 – 1.47 and stays above it both the medium and long term trends remain down.

CURRENCIES – USD JPY

When a patterns fails it tells us a lot about the sentiment and the positioning of the majority of participants.

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It looks like that last week many were shorts in anticipation of the completion of a 14 month Head and Shoulder Pattern.(Some chartists do look at the dotted trendline (picture below) I personally prefer to ignore sloping Necklines and always keep the most conservative stance before putting money on the line.)

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How much this “short squeeze” will go? There will other traders joining the long and move USDJPY to new highs? Hard to tell, but a daily (and weekly) close above 120 – 120.5 would likely indicate that the long term uptrend in this cross-rate is not ended. On the other hand, a close below 116 would confirm the Head and Shoulder interpretation. In the second case the long term minimum target would be at around 106.

 

 

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