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Prop Trading Futures

In this issue: $EURGBP $USDSGD $CL_F $SPY $DIA $QQQ $SB_F $USDJPY 5/5 (1)

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MARKETS IN PLAY

EURGBP

It took 13 months to form and now it is completed and “in play”, the Inverse Head and Shoulder in EURGBP. The measured move target (that is the minimum target of this chart formation is at around 0.800). The nice thing about this market is that it broke the Neckline with a decisive move, as it is clearly visible in both the weekly and daily chart.

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Since the day of the breakout – that occurred on Jan 15 – 4 out of 6 days closed in the green and this past Friday bulls sealed the deal. In case of correction the market could go as low as 0.750 without invalidate the H&S interpretation. For longs the risk should be below 0.740. Below 0.730 look for a shift move to 0.700.

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USDSGD

The Symmetrical Triangle started October 2015 was completed on January 4, 2016. The resulting target is slightly above 1.475. Based on this pattern, in 2016 this rate could be rallying very well.

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Shorter term (see the daily chart below) this pair could be forming a small wedge that would be a nice spot to scale-in an existing position.

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CRUDE OIL

This past week Crude Oil (below is shown February contract) broke below the lower trendline of the down-channel that contained the price action since December 2014. While the chart suggests a that oil price could get down to single digits, this is probably not the right spot to initiate a short position.

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On the top of that, the COT reports shows that commercials reported positions are net long at a level not seen since late 2012.

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DEVELOPING PATTERNS

US STOCK INDEXES ETF (SPY, DIA, QQQ)

The three charts that follows are made out of weekly closing prices.

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As you can see US Indexes closed the week at the point of maximum ambiguity/pain for traders: just at major support. This means that:

  • Right now there is NO pattern in play in SPY, DIA, QQQ;
  • Many people that tried to preposition for a bounce of a breakdown will soon be wrong and force to cover or to sell their positions. This may fuel a strong directional move this week. Watch out.

Other than these 3 charts there are plenty of sectors and singular stocks that last week did breakdown. Be careful.

SUGAR #11

I keep marking the weekly chart of Sugar#11 as a potential Head and Shoulder bottom, but the more the time passes, the more this chart is morphing into something else.

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The good news for Sugar bulls is the daily chart that is taking the shape of a Rectangle. Look for a close above 15.75 for its completion.

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USDJPY

The decline of the Yen (increase of the USDJPY) that started in 2011 could be over if the USDJPY pair manages to close below 116. In such case it would take few months for the rate to reach its target at around 105.

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Friday’s close was the lowest close since 2012, that, by the way, was just few pips above January 2012 lows. In one direction or the other this market could become really hot in just few days.

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