Alpesh Patel
InvestingBetter.com
General market theme
January has been a difficult month for the global markets and in this environment analysis and trading ideas haven’t been ideal so far but we shouldn’t be quick to judge the rest of the year from just one month of excess volatility. We need to remain faithful to the same methodology that has yielded impressive results for us during the past 2 years and especially 2015.
This week has started in the same manner that last one ended, with limited price action and a lack of momentum that makes trading increasingly difficult in these conditions. Traders still remain cautious and with no fresh news from the US it is going to be hard for the majors to pick up any momentum. The Fed meeting on monetary policy later this week might provide fresh stimulus but up until then the market sentiment might remain unchanged.
Price action highlights
More choppy price action and more trading against the market bias were the two key points for yesterday’s action. We were focused on the Euro yesterday in light of the IFO Survey and Mario Draghi’s speech and even though both events had a bearish bias the Euro managed to continue climbing. The Single currency has reached the 1.0855 area against the odds and as we mentioned in our analysis yesterday if the Dollar doesn’t pick up momentum the Euro won’t break into fresh lows below the 1.0800 area.
The Cable was choppy as usual and it is giving us a hard time to keep up with it, our analysis and trading ideas haven’t been as accurate as usual on the British currency that seems to be out of sync with the rest of the market and its fundamental drivers. Nevertheless these things always end sooner or later, yesterday the UK currency dropped lower and overnight the Cable hit the 1.4200 level. Bias is bearish and more losses should be expected moving forward.
Focus of the day
The economic calendar today is mostly filled with second-tier US-related reports but we shouldn’t expect too much of a reaction from the market. After midday a few housing reports from the US won’t do much to provide any friction but later in the day the release of the Consumer Confidence levels could create some opportunities in the market. Expectations are set for a stable printing so any surprises towards either side could attract traders’ attention.
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