We have a calmer session today after yesterday’s tsunami where Stock markets experienced the worst day since 2009. There is a massive crisis of confidence unfolding globally and in these situations investors tend to sell first, and ask questions later.
As of time of writing, Asian stock markets are rebounding from yesterday’s lows despite another Red session in China. The USD is recovering a lot of lost ground from yesterday’s steep sell off. EURUSD rallied over 1.1700 (+340 pips) however is settling now at 1.1550. USDJPY lost 600 pips yesterday as it collapsed from 122 to 116. As of time of writing it is trading at 119.30. Obviously action was seen across all currencies whether in the indices or currency markets. What to do in times like these? Firstly, prepare for the unexpected. Never assume that something is not logical and SHOULD move to a certain direction. At time of panic, emotions prevail, and these emotions are not based on any logic. As to trading, pick your entry points carefully, and use average distance stops to avoid volatility spikes that will close your positions. Things may have calmed down, but just as the sea calms before a Tsunami, this might be just the beginning of something bigger to come.
On the data front, we have the German GDP for Q2 as well as the German IFO. The US releases new home sales as well as consumer confidence data.
Trading Quote of the Day: Trade what you see, not what you think
USDJPY
Pivot: 120.25
Likely scenario: Short positions below 120.25 with targets @ 118.2 & 117.1 in extension.
Alternative scenario: Above 120.25 look for further upside with 121.3 & 122.35 as targets.
Comment: The upward potential is likely to be limited by the resistance at 120.25.
USDCAD
Pivot: 1.3195
Likely scenario: Long positions above 1.3195 with targets @ 1.332 & 1.3355 in extension.
Alternative scenario: Below 1.3195 look for further downside with 1.3145 & 1.3055 as targets.
Comment: Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
USDCHF
Pivot: 0.9395
Likely scenario: Short positions below 0.9395 with targets @ 0.9295 & 0.9245 in extension.
Alternative scenario: Above 0.9395 look for further upside with 0.9455 & 0.9505 as targets.
Comment: As long as 0.9395 is resistance, look for choppy price action with a bearish bias.
GOLD
Pivot: 1149
Likely scenario: Long positions above 1149 with targets @ 1168 & 1173 in extension.
Alternative scenario: Below 1149 look for further downside with 1142 & 1137 as targets.
Comment: A support base at 1149 has formed and has allowed for a temporary stabilisation.
OIL
Pivot: 40
Likely scenario: Short positions below 40 with targets @ 37.75 & 35.9 in extension.
Alternative scenario: Above 40 look for further upside with 40.6 & 41.25 as targets.
Comment: As long as 40 is resistance, likely decline to 37.75.
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