Indices

[Caseynotes 500]

Dow going a bit nuts today, firstly working it's way up to resistance then a big push down through support on US trade talks member stating US and China were 'miles and miles apart' then reverses again on US PMIs beat.

[Caseynotes 500]

Dow positioned for a possible break higher today. German Ifo Business Climate data 9:00am.

4 hour charts;

[Kodiak 24]

DAX daily

Lot of resistance around 11 700 ish

 

 

[Caseynotes 500]

Both Dow and Dax have made the break up through their respective daily chart resistance levels, Ftse still in the doldrums and Nikkei has some catching up to do. Early in the day for the US session but it's still a Friday so I wouldn't expect price to run away with it.

4 hour charts; 

[Caseynotes 500]

Dow and Dax finished the day sat on the daily resistance (orange) having flown over then under and back up to. Not surprising there was a lack of enthusiasm for pushing too much on week end.  

Easy to see how those precise levels, which were drawn on Monday morning's chart, were well respected in today's price action by taking a look at the 15 min charts below.

Using a few precise levels is a far better option than loading your chart with scores of mediocre ones.   

[Caseynotes 500]

So you might be looking at the Dow and Dax daily chart and thinking could this be a stop run before a big down move? Though it's possible I don't think it's probable.

Concentrating on the Dax, price put in a high at 11279 and reversed on Jan 20th, went down and reversed again at 11000 which is old support turned resistance turned support again. Then back up to poke through 11279 and fall back.

If you entered short on the 20th/21st your stop was just above 11279. A stop run is where large players push price through stops to (in this case) force holders of short contracts out of the market and so make those short contracts available to the market. The level becomes a short contracts accumulation zone. Once the trap has been sprung the large players are feverishly taking up all available short contracts which gives rise to large bear bars on the smaller time frames.

But if we look at the smaller time frames on Dow and Dax the bear bars are not convincing. Compare the daily and hourly charts below, the second pair is of a successful stop run in eurusd and see how it just doesn't compare to the current Dow and Dax charts. The scramble to pick up the short contracts won't always show up on the same daily bar if it happens late in the day but should show up on the hourly bars after the trap has been triggered.

 

[Caseynotes 500]

New week and Ftse looks to continue on it's own path out of sync with the other three. Positive spin expected on the next round of US - China trade talks and US FOMC on Wednesday and US NFP and manu PMI on Friday.

Friday's daily bar Dax and Dow were strong bull so automatically presuming the same to follow today unless proved otherwise so waiting for today's daily bar to turn blue then looking for long entries.

Daily charts;

[Caseynotes 500]

Dax barely moved at all yesterday while Dow made a half hearted attempt to check the tight range low. The markets not finding any real incentive to go lower at the moment nor incentive to drive higher with the FOMC statement coming up tomorrow and NFP on Friday. China's market made gains and looks to have had a knock on affect on the Nikkei this morning which may offer a lift to the others today. 

[Caseynotes 500]

As quoted from John Kicklighters blog today,  "Given that US indices – a proxy for risk trends – are still on pace for the best month’s performance in years".

Dow well over 5% gain for this month so far and as John states is heading to be the best performing month literally for years. Certainly not a month to spend attempting shorts.

[Caseynotes 500]

Just looking at the Dax weekly chart and the bulls must be looking at that wall ahead with a certain amount of trepidation. Probably thinking to themselves they'll be needing some help from Dow if they're to break through that.

FOMC and a trade dispute break through together could do it.

[Caseynotes 500]

US and China trade officials meeting on Wednesday and Thursday. Steven Mnuchin says that if China presents enough trade concessions to Trump, there is a chance that the administration may seek to lift all tariffs.

US delivered a new set of proposals last month now  Chinese Vice Premier Liu He is in Washington with their response. China is facing added urgency to end the trade spat amid the weakest domestic growth since 2009.

https://www.bloomberg.com/news/articles/2019-01-29/mnuchin-signals-chance-to-end-china-tariff-war-ahead-of-talks?utm_medium=social&cmpid%3D=socialflow-twitter-economics&utm_campaign=socialflow-organic&utm_source=twitter&utm_content=economics

 

 

Edited January 29 by Caseynotes

[cryptotrader 86]

in regards to parliamentary amendments later today

"In theory, if any amendments pass other than Brady’s, it’s not good news for May -- though it’s important to note that Tuesday’s votes are not of the binding type May lost earlier this month when her deal was rejected. The Cooper plan to delay Brexit is the one that has the most potential to derail May’s strategy. Meanwhile if the Brady amendment on the backstop secures a majority, May will consider that a mandate to try to negotiate again with the EU."

[Caseynotes 500]

Dax remains stagnant, Dow drifting in tight range as does Nikkei and Ftse continues to be reactive to Brexit headlines.

Today the FOMC rate decision, statement and presser starting at 7:00 pm, also today possible news on US-China talks and more earnings data releases MS, FB, Tesla, Boeing, etc (see last post in linked thread.

Daily charts; 

 

[Caseynotes 500]

The Boeing beat lifts Dow to complete the leg up to the top of the recent tight range seen on the daily in this mornings post.

Concerned chatter on twitter on the possibility the FOMC statement this evening won't be as dovish as the market had hoped and has already priced in.

Hourly Dow chart;

 

[Caseynotes 500]

Another good beat on the ADP  non-farm payrolls today, 213k vs 180k expected. Bodes well again for Friday's NFP which is forecasting 165k.

[Caseynotes 500]

Interesting increasing disconnect between US indices and Europe, UK and Japan. The FOMC boost yesterday propelled Dow through resistance where the others were halted. Dax still reeling from the German finance minister's down grade of the GDP forecast from 1.8% to just 1% for this year, Ftse with the ongoing Brexit concerns and Nikkei presumably waiting for the US-China trade talks result.

Trump meeting with China’s Vice Premier Liu He today at 20:00 GMT.

Daily charts;

[Caseynotes 500]

Dax falling through multiple levels after an attempt and miss on the daily chart resistance (11321), now looking at daily chart support around 11000.

5 min chart.

[Caseynotes 500]

Dow breakout to the upside confirmed yesterday while the other three remain trapped. Dax rechecked the bottom of the range. Ftse falling back into line but refusing at the 7000 fence.

China stocks rise in spite of falling PMI figures.

Daily charts;

[Caseynotes 500]

Big beat on Friday's NFP but the shine taken off by a decrease in the Average Hourly Earnings figure.

US Manu PMI was also a beat at 56.6 vs  54.1 expected while the report also states that the overall US economy grew for the 117th consecutive month.

https://www.prnewswire.com/news-releases/pmi-at-56-6-january-manufacturing-ism-report-on-business-300787873.html

Weekly charts and Dow now well out of recent consolidation and heading for next resistance at 26069 while the others remain capped with strong resistance immediately overhead.

 

[Caseynotes 500]

New week new levels.

Dow with overhead resistance at 25189 and support at 24322, looking for a break and upside continuation.

Dax sitting mid range between 11047 and 11321 so looking for a retest of either.

Ftse held at 7032 and looking to break after a strong run up last week.

Nikkei held at 20967 and also looking to break.

Not much in the way of data releases this week, China public holiday all week.

[Caseynotes 500]

Dow and Ftse sitting on resistance looking to break higher this morning, Dax may follow while Nikkei tried to break earlier but was beaten back.

1 hour charts;

[Caseynotes 500]

Dax lead the charge out, Dow and Ftse followed. Dow back into clear space but Dax and Ftse closing in on their respective weekly chart resistance levels. If Dow can keep going will be interesting to see if Dax and Ftse can follow.

4 hr charts;

[Caseynotes 500]

Dow forms another bull flag overnight and Dax and Ftse follow suit while Nikkei still struggling with it's weekly chart resistance level at 20967. 

4 hour chartrs;

[Caseynotes 500]

Dow spent yesterday defining a new range and very graphically demonstrates what drives price. Price is driven to find buyers if there is a surfit of sellers and visa versa, at the bottom of the range an excess of buyers forced price to find sellers who had congregated at the top of the range, once there, price found an excess of sellers and so needed to find buyers who were congregated at the bottom of the range. You can never be sure 100% where buyers or sellers are waiting but a best guess is at a prior support or resistance level because it's an obvious place to hang out with like minded types, why buy higher up when you can likely get it cheaper, why sell lower when you can likely get a higher price.

Indicators have nothing to do with this reality, the only indicator really worth having is an order book that isn't spoofed or dark pooled. So which way will price move next. Until a break it will continue the orderly retesting of the current high and low. If it breaks lower it will most likely head to the next support level, if it breaks higher it will most likely head to the next resistance level. Gauging direction is that simple, the tricky part is the actual trade execution.

UK bank rate decision today, not much expected but the usual stoking of Project Fear.

[Caseynotes 500]

EU officials have cut their 2019 growth forecast for the eurozone from 1.9% to 1.3%. By country see pic below.

[Caseynotes 500]

Following the early morning post Dow and Dax both broke lower while Ftse held. Dow finding support around 25186 and Dax, following the down graded growth forecasts has dropped all the way to the daily chart support level 11098.

[Caseynotes 500]

Market correction yesterday on the realisation that not only did the recent trade talks produce nothing but that there is little hope of anything before the March 1 ending of the 90 day truce. Bets laid on expecting a better result were taken off the table.

Thought for the day. For a year now the markets have been ruled by the China/US trade dispute's ups and downs but there are those who will tell you otherwise, that it's all down to technical corrections, or that a top or a bottom is in or whatever. Probably the most important attribute a new trader must learn real fast is how to spot BS, this is difficult because the new trader doesn't realise they are completely surrounded by it, this profession above most others attracts the BS'ers. Probably 80% of related content on instagram and twitter is BS. People calling the market, if they are ever right they crow loudly, when they are wrong they go quiet and wait for people to forget before starting it all over again. You need to block it all out and concentrate on reactions rather than predictions and having a plan for whatever the market does.

Back to the charts and several support levels were taken out but Dow looking to find support at the top of the prior bull flag. Dax is more uncertain with the stream of poor economic data releases, fresh data due today so we'll see how that goes. Nikkei still looking for the buyers having not found them at the recent lows around 20401. And Ftse still holding up well and remains in touch with the longer term resistance level at 7146.

 

 

 

[JamesIG 193]

Hi all - we have a Brexit round table today (Friday 8th Feb) which unfortunately won't be live, but we will be able to publish the video afterwards. This will be with Simon French from Panmure Gordon, and Robert Oulds from Bruges Group. It should be a great discussion, and if you have any questions you wanted to put to the panel please add a comment and make sure to tag me with the @ symbol. 

[Justinian 0]

"You need to block it all out and concentrate on reactions rather than predictions and having a plan for whatever the market does. "

Great line Caseynotes.

One reason why I think Macro trading is flawed - based on making predictions and when price goes against you, you can remain wedded to your position and load up with even more 'bargains'. God punishes those who pretend to knowledge and think they know the future.

Anyway, what do you think about the changes in IG's funding costs? Will it alter how you trade? I should start a different thread I guess.

 

 

 

[Caseynotes 500]

That's right @Justinian,  probably number one cause of failure is hanging on to losing trades. It's not even necessarily about the money, it's more to do with not wanting to admit you're wrong. There is a noticeable trend whereby the new trader starts out making predictions on the market then realising they can't do it, next step is to try and find someone who can and that blows even more money. Unless you're getting illegal insider information from an investment bank think to follow the market rather than trying to second guess it all the time.

Major turns happen at major support/resistance levels or on major news, once a new direction is clear look for a place to climb aboard. 

Increased margin means keeping more in the account but not affecting trading otherwise, I never sail right on the edge anyway.