Good morning traders.
Not much to say for today other than its ECB day with a FOMC for dessert. In which case my plan is to scalp anything that sets up in the morning and play a cautious approach until after the announcement and presser. Those of you further down the S & M spectrum than Chuck Rhoades (Billions for those of you not versed in such matters) might want to take a position and hold through the event.
The view is that Draghi will be dovish so shorts are perhaps the best bet but you will have to be ready for some whipsaw action. And don´t forget the FOMC later. Not to be advised in my opinion.
If you followed the plan I mentioned yesterday and bought the morning dip into 50s and held to 1.1280s which was our first target you´d have netted around +20.
Incidentally I don´t include these results in the model performance as I want to keep that as a set and forget strategy for those of you who can´t be at your charts all day and have to place orders at the start of each day. I do, however, include such trades in the ´Max´column of the performance table.
On the macro side we had the IMF on the wires cutting 2019 US and European growth forecasts; the former from 2.5% to 2.3% and the latter from 1.6% to 1.3%. Equities were on the slight back foot accordingly.
Brexit was doing its Brexit thing and continuing to make a tragic comedy of shakespearean proportions out of the single most important event in the life of the UK in 50 years. ´Flextension´ is the latest bastardisation of the English language thrown at us to help simplify the process. Looks like a long extension is in the offing to keep the show on the road. Same time, same channel next week folks :).
In other news Trump was on the tweet deck threatening the EU with tariffs to pay for its violation of WTO rules re Airbus subsidies. This brought a swift “back atcha” from the EU noting the same is true for Boeing.
You have to love this latest form of grown up negotiation and diplomacy via social media. Its like Political ´Big Brother´or Legislative ´Love Island´. All that needs to be added are some pouting selfies with drawn on abs, fake eyebrows and bottled tans from Tusk and Trump and…. oh wait!.
Anyway that’s enough of that lets get on to the charts.
The Daily Chart
We posted another positive daily candle and tagged the 38.2 Fib almost perfectly yesterday.
I mention these fibs because traditionally in technical analysis the 23.6 and the 38.2 Fibs are seen as good indicators as to whether a reversal has the legs to travel further or not. If the price backs off from here it would tend to suggest that the rally has run its course. These two Fibs are rally stopper Fibs if you like.
Personally they are purely second level confluence. I look to see if they are at good pa levels in the first instance. Whatever the Fibs might suggest though, today is all about the ECB and FOMC. In which case I infer little from them at this point.
The Hour Chart
No set model levels for today as we need to get the event risk out of the way first.
I have marked up the chart with decent reaction levels for any short term trades in the run up to the ECB.
Tight lines for today dear reader. The ´let the dust settle strategy´ is the best plan for today, discretion being the better part of valour.
Have a good one :).