Blog: Market Analysis

Hi peeps

I hope the market has been treating you well, with bullish stock markets and volatile forex markets. This has provided many good trading opportunities, and I hope you didn’t miss out on them.

On the 29th of June, I was looking to initiate shorts, and subsequently did, using a range trading strategy to stack my position size. Although I did have several intraday trades on the 5-min charts, my larger view was bearish, hence I also held on to the bulk of my positions.

This is an example of a breakout play, where price breaks support and provides opportunities for trading when it comes back to test the breakout point.

For this EUR/USD chart, price came back twice to test the support-turned-resistance, giving me opportunities to stack my shorts.

If we zoom in on the smaller timeframe, such as the hourly charts, we start seeing more obvious signals like the shooting star reversal bar, and also a nice downward sloping trendline which provided many shorting opportunities.

My minimum target is the test of the previous swing low, which is likely to get hit before the market closes for the weekend, but I have already started scaling out my positions to lock in the profit.

Cheers
Spencer

Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.

Market Updates – The end of Q2

Regarding the market, we are likely to see a strong opening tomorrow given the strong close on Friday. The Dow closed up 277 points, due to the bullish news coming out of Europe, with new measures to “avert” the latest crisis.

It’s funny how the cycle plays out:
Crisis event – FEAR, FEAR, FEAR, it’s the end of the world!!!
Discussion – leaders discuss how to solve it, and markets creep down as the clock ticks. People are worried that no solution will emerge and markets become oversold.
Just in time! – Just when the sand is about to run out of the hourglass, the solution emerges and everyone is happy.
Next crisis – rinse and repeat

So, the big question is: how long is this bullishness going to last? Let’s not forget the core problems are still not solved. The charts will inform us when the time comes.

Let’s also not forget that last Friday was the last trading day for Q2, which signifies something very important: WINDOW DRESSING. We shall see whether this optimism carries on into the next week

Looking at the chart above, I would prefer to go long near the green circled area instead of the red circled area, where weakness in the form of upper shadows. Given the bullishness, there may not be any pullback, so I will be looking to go long on any intraday pullback or pause bar.

//////// Do note that the current short-term trend is bullish, so stay bullish until the price informs us of a change in direction. ////////

Cheers
Spencer

Market Updates – The Big Plunge on Friday

For the past 2 weeks, we have been calling shorts on all the major stock indices, as well as on the EUR/USD and the CRB Commodities Index. The latter has also led us to call shorts on many commodity stocks, including Sakari and Olam.

After the negative jobs data on Friday, and the US markets plunging, it is no surprise that the markets will open bearish on Monday. If the market gaps down significantly, I might consider taking some profit.

Forex Updates – EUR/USD, GBP/USD, USD/JPY

This is the daily chart of the EUR/USD. It has broken below the previous swing low, and pulled back to test the breakout. I will be looking to short this.
This is the daily chart of the USD/JPY. It is pulling back after a strong upmove, and is now resting on the fibonacci 61.8% retracement. I will be staying out of this one for now. Keep watch to see if the uptrend resumes.
This is the daily chart of the GBP/USD. It is trading in a range, and is now in the middle of the range, resting on support. After the failed wedge breakout, it has decline rapidly, and I am looking to see if the support holds.

1 Comment/by Spencer Li

Stock Indices – Still Bearish

All 3 indices attempted a pullback over the week, and overall the Singapore market was the weakest, closing down for the week, albeit almost flat. Prices may attempt a sideways movement or rebound next week, but overall it still remains bearish, and prices are expected to continue drifting down in the absence of any major positive news. I am holding shorts and waiting for a chance to short more.