Brandon Wendell, CMT
Brandon Wendell
If you have been struggling with identifying the trend of the broad markets lately, you are not alone. Globally, there have been wild swings as economies and traders are trying to determine if equities are overbought or likely to continue to rise to new heights.
Through all of the noise of “experts” on television and in print, one thing will always tell the truth: the charts. We need to rely on our own analysis and use the core strategies of Online Trading Academy to find the best opportunities with the highest probability for success.
Focus on the basics of trend and start at the larger timeframe. Looking at the weekly Nifty chart, you can see that we have made lower highs and lower lows in price which suggests a downtrend beginning. The fact that price paused short of the demand of 5907 last week is not a good thing. Usually a pause before a supply or demand allows price to build momentum to break the level.
The daily chart is also bearish as we see the same trend shape. Additionally, the eight period exponential moving average (EMA) is acting as a bit of a trend line for the index. In bullish trends, price fails to close below the EMA. In down trends it fails to close above. Even in Friday’s bullish candle, we closed below that trendline.
As there is no strong demand on the daily chart until 5780, the focus should be on shorting opportunities when prices rally to supply. The moves upward seem to be corrective in nature rather than true buying pressure.
As always, protect yourself with stops when you take any trade. To learn more about trading like a professional, enroll in our courses at Online Trading Academy.
Neither Freedom Management Partners nor any of its personnel are registered broker-dealers or investment advisers. I will mention that I consider certain securities or positions to be good candidates for the types of strategies we are discussing or illustrating. Because I consider the securities or positions appropriate to the discussion or for illustration purposes does not mean that I am telling you to trade the strategies or securities. Keep in mind that we are not providing you with recommendations or personalized advice about your trading activities. The information we are providing is not tailored to any individual. Any mention of a particular security is not a recommendation to buy, sell, or hold that or any other security or a suggestion that it is suitable for any specific person. Keep in mind that all trading involves a risk of loss, and this will always be the situation, regardless of whether we are discussing strategies that are intended to limit risk. Also, Freedom Management Partners’ personnel are not subject to trading restrictions. I and others at Freedom Management Partners could have a position in a security or initiate a position in a security at any time.
Editors’ Picks
EUR/USD holds firm near 1.1850 amid USD weakness
EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.
GBP/USD holds medium-term bullish bias above 1.3600
The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.
USD/JPY falls further toward 156.00 as intervention risks dominate
The Japanese Yen is looking to build on its strong intraday move up amid speculations that authorities will step in to stem weakness in the domestic currency. In fact, Japan’s Finance Minister Satsuki Katayama stepped up intervention warnings and confirmed close coordination with the US against disorderly FX moves. This, along with some follow-through US Dollar selling, triggers an intraday USD/JPY turnaround from the 157.65 region, touched in reaction to Prime Minister Sanae Takaichi's landslide win in Sunday's election.
Editors’ Picks
EUR/USD holds firm near 1.1850 amid USD weakness
EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.
USD/JPY falls further toward 156.00 as intervention risks dominate
The Japanese Yen is looking to build on its strong intraday move up amid speculations that authorities will step in to stem weakness in the domestic currency. In fact, Japan’s Finance Minister Satsuki Katayama stepped up intervention warnings and confirmed close coordination with the US against disorderly FX moves. This, along with some follow-through US Dollar selling, triggers an intraday USD/JPY turnaround from the 157.65 region, touched in reaction to Prime Minister Sanae Takaichi's landslide win in Sunday's election.
Gold remains supported by China's buying and USD weakness as traders eye US data
Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.
Cardano steadies as whale selling caps recovery
Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.
Japan's Takaichi secures historic victory in snap election
In Japan, Prime Minister Sanae Takaichi's coalition secured a supermajority in the lower house, winning 328 out of 465 seats following a rare winter snap election. This provides her with a strong mandate to advance her legislative agenda.
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