In Forex and Futures Commentary

 

I really hope you weren’t one of those people that liquidated your retirement account last week.

 

The picture to the left is a scientific way of explaining what the equity markets did today.

 

World equity markets are flying through the roof, staging record breaking increases in value today. Currencies are showing similar reversals, but will it last?

 

Main points today:
The US markets averaged +11%, with overnight futures indicating an additional +3-4% . Japan is shattering records as well, up almost 14% today. Europe and the UK are up 11% and 8%, respectively. But do we really all get out of this disaster that has been lingering for months in one fell swoop?
SPX: Over the next few days: looking for this buying to cap somewhere in the 1100’s before we get a sizeable retracement. Short term, sporadic buying we have seen before. Granted, this buying spree today is one for the books, but this pattern of extreme buying on hope and optimism has been recorded in the past….for now, the metrics haven’t changed. This is initial hype. I think many investors feel that the Fed and other world governments are out of options, and they’re exhausting last-ditch efforts to bring resolution to this crisis. In other words,” it isn’t going to get any better than this, so let’s buy”. Would need an open below 980.00 tomorrow to stage any real impending weakness.
Oil: More risk piling on again today; seeing similar pulls upwards, with a current target on a long at 86.00
Gold: Declining overnight, but overall still in consolidation. Expecting consolidation to continue with current bias to the upside, on the back of a weaker dollar. Looking for a break of 823 for any clues of a further push down.
Dollar index: Nailed the 764 retracement on the head and pulling back. I would expect a deeper move down from here.
For the currencies:
Carry pairs, on the back of the equity markets, have been soaring upwards. GBP is now above confirmed areas for upside movement, but a retrace of the massive moves today are expected. GBP, AUD and NZD are likely suspects for further increases; EUR is likely to be muted due to concerns over the ECB’s management of the current crisis and further rate cuts expected. JPY pairs have been moving up strongly and are also on the radar for shorter term reversals. Looking for dollar shorts, except against JPY, but short term targets are almost there.
Looking to fade today’s move overnight while the markets cool off, with buys still on the radar for EUR, GBP, AUD, etc. Very overbought short term indications are there so a hundred pips or more isn’t asking for much. On deeper pullbacks looking for longs to hold, ultimately. Buying off of key areas shouldn’t be difficult given the current conditions. USD/JPY same story. Looking for bigger areas to get hit before stacking on any more shorts.

 

Our trading environment has been changing rapidly day in and day out; never a dull moment.

 

Levels:
GBP has sells at 1.7650, 1.7730, 1.7840, 1.7950, buys at 1.7330, 1.7262, 1.7220, 1.7190, 1.7110-00, 1.7042
EUR has sells at 1.3780, 1.3800, 1.3880, 1.3900, 1.3970, 1.4090, buys at 1.3610, 1.3550, 1.3490, 1.3450, 1.3400
JPY has sells at 103.45-50, 104.45, 105.40-50, 106.20, buys at 101.45, 101.30, 100.00, 99.50
CHF has buys at 1.1246, 1.1210, 1.1145-1.1130, sells at 1.1440, 1.1488
AUD has sells at .7350, .7415, .7685, .7810, buys at .6842, .6662, .6550

 

What I’m reading today:

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