The collision of global markets and social mood

Tuesday, September 30, 2014

Fibonacci Snapshot, Bull/Bear Levels, And A Potential Euro Trade

 Fibonacci is alive and well.

Here is a chart of the December e-mini contract. It's a beauty, and shows the elegant proportion of the market regardless of protests in Hong Kong or whatever news-of-the-day "caused" the markets do whatever.

Hope you noticed that each rally has reached exact Fib levels (38% and 61.8%).

Sticking to the cash market, there is still a gap remaining at 1982.85 that was not reached yesterday. And a bigger one remains at 2010.40.

The structure of the pattern since the Alibaba top it starting to feel corrective. Getting above 1986.37 would only add to the corrective nature. However, the market would need to exceed 1999.79 in order to close the door on an impulsive trend change.

One point to be made, though: currently the market has very little edge and is very middle-of-the-page.  I would like it either higher or lower before I put some funds to work.

Yet in FX land, the euro is getting to a point where I may trade it for the first time in nearly five years. Even though it would look better at around 1.245, I may take a counter-trend trend in it first using FXE calls, then using euro futures options, and then using FX contracts. Can you tell I don't like trading the euro?

Still, when there's a trade to be had, it must be taken. Sentiment figures are incredibly lopsided, with percentage bullish readings at the lowest levels since 2008.

Target: 1.30.

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