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Prop Trading Futures

Commodities, Financials and FOREX Special Situations for the week of February 2, 2015

In this issue:

COMMODITIES

  • CC (Cocoa), GC – Gold, Beans (ZL -Soybean Oil, ZS – Soybeans)

FINANCIALS

  • Global Stock Markets

CURRENCIES

GBP/EUR, DX – Dollar Index, USD/SGD, USD/MXN, AUD/USD, EUR/USD

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COMMODITIES


CC – Cocoa

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There are not many new setups in play or developing this week. Cocoa is an exception.

Cocoa is a market that we were looking for a few weeks and that finally, on Thursday, completed a year long Head and Shoulder top.

GC – Gold

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Despite a very encouraging price action (on decent volume) on Friday, Gold closed the week in the red. For our main (bullish) hypothesis to remain valid, Gold should not close below $1233 and possibly not even below Thursday’s low.

Apexes of Symmetrical Triangle are often the place where market turnaround happens. Will this be the case for Gold?

Nobody knows what will happen next week (no matter how many hours one is going to spend in analysis).

We could only get prepared with a clear mind and with a “IF – THEN” game plan.

Beans (ZL -Soybean Oil, ZS – Soybeans)

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Beans bear market is still well in force. Above is shown the daily chart of Soybean Oil.

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Here is Soybeans weekly continuation chart.

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Above is ZL daily. We shorted at $31.29

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Soybean formed a decent Rectangle pattern.

But the risk-reward in ZSH was not optimal, so we did not took this setup.


 FINANCIALS


 Global Stock Markets

During the past week stock markets around the world were volatile, to state the least.

Several global indexes that we track closed the week with negative gains. Breakouts in the Stoxx 50, Taiwan SGX and China Index Fund had no follow up. It still had to be found out if these breakouts will fail (FXI already did) or there will be a recovery.

Fridays we witnessed a broad base sell in US equities. Strong names (with strong earnings) like Apple in the last trading hours of Friday gave up gains very easily. That is bad and makes us believe that further decline will follow in the US, but not solely.

Here follows weekly charts of: Dow Jones Industrial Average futures, Euro Stoxx 50, Taiwan SGX Index, China Index Fund.

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CURRENCIES


GBP/EUR

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EUR/GBP is heading to its second measured move target at 0.668. The first one was met at 0.750.

DX – Dollar Index

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Overall a very respectable month for the Dollar Index. We do not believe that February would be the same.

Obviously some choppy action in the dollar or, even worst, a sharp retracement would have implications in several FX pairs, commodities and US stocks.

If there were only one market to watch, that is the dollar.

USD/SGD

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USD/SGD is still trading within a multi-month range channel to its measured move target at 1.3558.

It has been a relatively strong move, but not yet volatile or parabolic. Surprisingly, after the first spike higher that followed the Bank of Singapore decision to weaken the SG$ there was lack of follow-through. We are long half position in the spot market.

USD/MXN

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The very good price action of last week should prompt a few day rallies. The 1st key level to watch is 15,000. Above we will remain aggressively long. Below we will start to consider about getting defensive.

Above here is shown the weekly chart (showing Friday closing prices only). As you can see, 15.237(second key level to watch) is the highest weekly close of all the time.

Next week could be an interesting one for the Peso!

AUD/USD

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We could see a really free-fall of the Aussie from these levels. And, even if not, the long term trends remain down until the AUD-USD trades below 0.08295 (where our stops are).

EUR/USD

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The humble, weak, bounce attempt by the Euro should be short lived. But if the pair managed to close above last week highs we expect a retest of 1.16 levels before the end of the month.

We currently use EUR-GBP, EUR-NZD and DX to gauge the strength of the EUR-USD pair.

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