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What’s hot and what’s not?
Feels like a TGIF market
What’s hot?
Dollar fis up on the day but off highs
Gold is up but still consolidating
Crude oil is up
What’s not?
Currencies are weaker on the day vs. the USD but off the lows
Bonds are down (yields are up)
What’s hot/not?
Stocks are mixed: NASDAQ up, DJIA down, SP500 about flat
U of M sentiment: Big miss on downside, inflation expectations sticdky to higher
Next up is the Univ of Mich consumer sentiment report
Pay attention to inflation expectations as well as the headline #
Click for the consensus forecast
Trading TP: When to Fade a Correction
There is not a set rule for this but my experience is that fading a correction (retracement) of a prevailing trend that takes place early in the European or NY session has a good chanve of working out.
Think about it.
A market is better able to absorb retracement flows (i.e. buying or selling) that take place early in the session when there is full liquidity and less able to absorb correction flows that take place late in the NY trading day when liquidity has thinned..
As with any trading pattern, the overall picture needs to be taken into account and whether news, technical levels or indicators being violated, etc. have occurred that would make it more than just a retracement and would change the trend.
Trading
Tip: Identify a trend and then keep in mind it is a better odds trade to fade a correction when a market is at full liquidity than later in the day when flows are harder for a market to absorb flows..
The pattern shown in the prior post is called the AT Directional Indicator (EURUSD last at 1.1731
Click for an Amazing Trader 30 day free trial
EURUSD
2 RED Amazing Trader lines drawn off the low  indicates a potential change in directional risk. that would need a firm move through 1.1725 to build momentum.
EURUSD 15 MINUTE CHART
USDJPY
JPY underperforming and confounding as it is generally a beneficiary of lower US interest rates.
It is not clear how much the political instability in Japan is a factor but in any case, it is closest to retracing yesterday’s USD sell off but faces tough obstacles at 148.00 and 148.17
USDJPY 1 HOUR CHART
EURUSD
What caught my eye:
Pause below 1.1750Â (high 1.1747)
Test of 50 period mva around the low at 1.1713, holding so far
Otherwise, no obvious nearby supports other than the low of the day (and 50 period mva) after the one way move up yesterday, leaving 1.17 needing to hold to keep a bid.
EURUSD 1 HOUR CHART
Using my platform as s Heatmap shows…
… the dollar trading firmer after not following through on yesterday’s weaker close.
What caught my eye:
EURUSD pause below 1.1750 (high 1.1747)
USDJPY back in spitting distance of 148
No apparent news behind the firmer USD
On order of relative strength vs the USD*
1. CAD
2. EUR
3. AUD
4. CHF
5. CHF
6. NZD
7. JPY
With the ECB on hold and the Fed expected to cut rates, this article is worth revisiting or for others a must first read about
Interest Rates and Why they Matter to Forex Traders
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