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 retreats below 1.0700 as USD rebounds
EUR/USD lost its traction and retreated slightly below 1.0700 in the American session, erasing its daily gains in the process. Following a bearish opening, the US Dollar holds its ground and limits the pair's upside ahead of the Fed policy meeting later this week.
GBP/USD holds positive ground above 1.2500 on weaker US Dollar, Fed rate decision looms
The GBP/USD pair holds positive ground near 1.2520 on Monday during the early Asian session. The uptick of the major pair is supported by the softer US Dollar below the 106.00 psychological mark. Investors will closely monitor the Federal Open Market Committee interest rate decision and Press Conference on Wednesday.
USD/JPY recovers toward 157.00 following suspected intervention
USD/JPY recovers ground and trades above 156.50 after sliding to 154.50 on what seemed like a Japanese FX intervention. Later this week, the Federal Reserve's policy decisions and US employment data could trigger the next big action.
Editors’ Picks
EUR/USD retreats below 1.0700 as USD rebounds
EUR/USD lost its traction and retreated slightly below 1.0700 in the American session, erasing its daily gains in the process. Following a bearish opening, the US Dollar holds its ground and limits the pair's upside ahead of the Fed policy meeting later this week.
USD/JPY recovers toward 157.00 following suspected intervention
USD/JPY recovers ground and trades above 156.50 after sliding to 154.50 on what seemed like a Japanese FX intervention. Later this week, the Federal Reserve's policy decisions and US employment data could trigger the next big action.
Gold holds steady above $2,330 to start the week
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.
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