EUR/USDBearish
GBP/USDBearish
AUD/NZDBearish
XAU/USDBullish
SPX500Bearish

EU struggles to pass 1.2000s as US markets fall from overvalued prices in the stock market. The pair is back in a support zone showing that price wants to go lower. A break in that support zone (which is a common pattern we see in a couple other pairs) would be a sign that we are in for continued downtrend.

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GU comes back for a second test on support without making a promising rally on the daily chart. GU has very strong support on the daily chart with June support and the 200 DMA. A bounce would seem likely, however, a break would be very bearish for the pair that's been running up since March.

AUDNZD falls to another low as it comes up to resistance. Key support is not very clear on the daily chart except for the 200 DMA way down at around 1.6000s. Gold continues to fall as well which is not good for the Aussie.

Gold now breaks through support, and a close below it would be more bearish for this metal. No clear support lies on the daily chart until the 200 DMA as well. A short term bearish bias is definitely viable for gold, but only because USD rises in times of panic or crisis. USD will continue to rise as markets fall, but that will not last over the long term in my opinion. For reasons stated in the other articles I've written, USD will fall again due to the immense amount of money printing we saw earlier this year with inflation rising. Gold also tends to outperform the markets and is less volatile. This pair is definitely a safer place to put your money.

Before I continue, do you see a pattern here? All these pairs are dropping, but why? What all these pairs have in common is their correlation to US equities. When the US market falls, these pairs drop as well. When the market saw its largest bull market in history, so did these pairs.

After creating lower lows on the daily chart, the market continued to sell off hard as soon as it opened this morning. SPX500 is currently hovering on support, but key support lies on the 200 DMA. If price comes down here, we will definitely see a bounce, but the question is: will it be enough for another bull rally? The market historically uses that moving average as a place to long again, but uncertainties with the election, coronavirus vaccine, cases rising again, lack of stimulus, inflation, suffering economy, etc. is aligning for a fearful market. After a season of greed, fear steps in and takes over market sentiment. With September being a month of selling also contributes to bearish sentiment. This is because the months before are usually high-profit periods for investors.

Regardless of the fear taking place, I think this downside movement is healthy for our market. A correction like this was a long time coming, but the bulls wouldn't let it drop. What we're seeing is just a big flush out of stocks so the market can find a balance at 'reasonable' prices for investors to find more attractive. If you plan on investing or putting some money in to the market now, the best thing to do is to dip your toes in. Don't be swayed one way or the other, just be ready to hold whatever you have for the long run. With a small amount of your portfolio in the market or major pairs, you can always long again if prices continues to work against you.

Remember, this is not a time to panic like most sellers. Keep a cool head and trade on! With proper risk management, there is nothing to worry about; especially in the long run. Stay safe and trade safe.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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GBP/USDBearish
XAU/USDBullish
SPX500Bearish

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GBP/USD

GU broke a long term upward trend line on the daily and 4H charts which dipped price below key support. With poor Brexit news and an uncertain US economy, the pair is stuck near a decision point. The pair has been climbing for months after the crash in March, but now faces heavy resistance. Bad retail sales reports on USD is probably what's causing this rally up to resistance, but my overall sentiment remains bearish, and a possible future lower low will come out of this on the 4H chart.

Indices will have a volatile day as the Fed chairman is set to speak at 2:30 EST with FOMC economic projections at 2:00. The SPX still hovers below resistance on the 4H chart after its steep decline starting from 2 weeks ago. Today will provide further insight on the market's direction from now up until the election. The 200 SMA on the 4H chart suggests that price is very uncertain on where to go. It seems to be taking turns stabilizing just under or over the moving average as investors wait for the FOMC projections. I remain bearish for the week unless price breaks over that resistance level around 3430s.

After breaking out of former wedge, gold makes higher lows on the 4H chart and hovers around the 200 SMA. In the long run, gold outperforms the benchmarks, but still dips a little with each market retracement in the short run. Big money and analysts think that this metal has the potential to climb as US economy and USD decline. I remain bullish on this metal and believe that a test at 1990s would be likely in the next few weeks. However, poor US economic data could hinder the stock market which could adversely affect gold. The dips are not as momentous and recoveries outperform indices.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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GBP/USDBearish
AUD/NZDBearish
SPX500Bearish

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GBP/USD

GU broke a long term trend line on the Daily chart, sending price below support around 1.30460s. Today's rebound happened synonymous with the US market, which occurred for no clear reason other than investors might have been looking to buy up to level out their accounts before another major sell off. GU also sank with poor news on Brexit which may continue GU's decline. Possible short setups look clean at 1.30460s.

AUD/NZD

This pair looked to be recovering off the 200 period moving average on the 4H chart, but it is now showing some clear rejection from the candles. Gold is still trading mostly sideways so, there is a different reason for the pair to continue its dip below highs. We have a short term bearish sentiment on this pair as Aussie is still favored by most investors, but a down trend looks probable in the short run.

SPX500

The 4H chart shows clear rejection on that falling trend line, but a lot can change from now until market open. Jobless claims reports, which have been major drivers of market direction, is expected to be a little lower than last week's. This could be a good sign for bulls if claims are as expected or better, but a greater problem looms: big tech is now losing momentum after a long August run. A break in that trend line would be good news, although it does not look like it has enough momentum to carry passed that level. Shorting the market is always too difficult as the market tends to sell off hard before it recovers twice as much. With the newly mounting millions of retail investors trying to place a stake in the game this year, strategists see this as a possible concern for the market since it's brought stocks up to well overvalued. What we may likely see over night on smaller time frames is the price creep up before a big sell, and repeat.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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AUD/NZDNeutral
USD/JPYBullish JPY
USD/CHFNeutral
XAU/USDBullish

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AUD/NZD

Another wedge forming on the pair as it hovers in consolidation zone. A breakout could be bullish for Aussie, but GDP q/q report this Tuesday is expected to be much worse than last quarter at -6%. AUD does have an advantage over the New Zealand dollar which would stem from their gold industry. Gold is looking more valuable to investors now that the USD is going to keep depreciating over time. AUD's report on GDP today will be big in picking a direction, and if the report is as-expected or worse, we can count on this pair to continue to fall.

USD/JPY

USDJPY sentiment is still bearish mostly from weakening sentiment on the USD. Analysts seem to be favoring the yen as the Bank of Japan has record high debt issuance and while the US now has limitations on their businesses to work with Chinese companies. Here on the 4H chart the pair is struggling to break that 200 period SMA all while stuck in a wedge. We see a potential short set up on that moving average as well as the top of the wedge and a close/break below the rising trend line.

USD/CHF

The pair crossed below long term support from back in May 2015. Now price is coming back up to the new resistance. Despite this, investors are bullish on the pair. It looks like price is trying to break that hard trend line where next key resistance lies around .93750s. A breakout would be good news for the pair, so we're remaining neutral until movement is decided.

XAU/USD

Gold seems to be up against resistance on a key Fibonacci level around 2000. Although technicals are important, we don't believe them to be too notable for this pair since the Fed's recent actions regarding inflation and extreme stimulus measures. One analysts sees price over 2000 by the end of the year with the possibility of it outperforming the market once again. 2000 is the major level it needs to break which would be the biggest bull sign on the metal.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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AUDBearish
NZDBullish
USDBullish
GoldBullish

AUD/NZD

Candles look like they're creating a wedge on the 4H chart. Signs show that the next few candles want to come up to test the falling trend line. 14-Day RSI hit all the way up to 83 before coming down last week, and it seems like the downtrend is likely to continue with the lower highs and lows that have been showing up on this time frame.

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USD/JPY

UJ on the daily taking the opposite approach of AUDNZD as higher highs are created. The long term downtrend may show that the 200 day moving average will contribute to some considerable resistance. It may also respect that falling trend line starting from March earlier this year. USD did see a rally today, so we are thinking that the movement is going to continue for now.

Gold

Gold on the 4H chart looks to be coming back down to support in the low 1900s with that 200 period moving average which price has been respecting thus far. Gold on its way to make a third test of the moving average, so a critical direction point is going to be decided soon. 14-Day RSI (not the RSI shown on the chart above) came down to 50 since new highs suggesting that price could move in either direction now.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

Warren Buffett, one of the most successful and richest investors of all time, long-time owner of the established conglomerate, Berkshire Hathaway, and mega bull has recently turned bearish on the US stock market. Granted, he has been saying this since the April rebound, but he finally put his money into action.

Although Buffett would probably never short the market, he decided to get rid of his bank stocks by dumping JP Morgan, Wells Fargo, Goldman Sachs and other banks with smaller positions. He sold over 250 million shares, hundreds of billions of dollars worth in total, but that's not all.

https://www.cnbc.com/berkshire-hathaway-portfolio/

The oracle of Omaha had also replaced his stake in bank stocks for a gold mining company, Barrick Gold Corp (NYSE: GOLD).
But why sell bank stocks when the Fed has funded them with trillions of dollars and pushing the S&P passed all-time highs?

Surprisingly enough, bank stocks have largely under performed the market in this latest bull rally. This is due issues regarding credit and debt; Analysts expect banks to be close to $900 billion in losses by 2022, according to CCN.

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https://www.advisorperspectives.com/dshort/updates/2020/08/04/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator

Here's the indicator Buffett uses to measure the Wilshire Stock index valuation compared to overall GDP. The way it's measured on this site (which is the accurate way) is by taking the annual GDP from Q1 and using that as the denominator throughout the year. So, it is basically the index divided by Q1 GDP.

In most recent numbers, GuruFocus has us at 179%, which they consider 'significantly overvalued' for the market. They also predict a 2.9% decline in stock market returns this year.

https://www.gurufocus.com/stock-market-valuations.php

What Now?

It's hard to predict what is going to happen in the market with tons of factors at play. For example, two weeks ago, jobless claims dropped into the 900,000s range, and investors believed the economy was recovering. The market shot up. Last week, jobless claims (which have been driving the market either up or down) reported back over 1 million at 1.1 million. Despite bad news, the market shot up harder than the previous weeks.

The problem investors are running into is that Wall Street will tell you that the economy doesn't reflect the stock market. And when there's bad news about the economy, the market tends to go up. However, when there's good news about the economy, that news matters all of the sudden, and it causes a buying frenzy. As an investor who's got most of their money sitting on the sidelines since April, it's frustrating to try to get an idea of when is the best time to buy. Do we brush off the fact that the US is in a recession? Do we join the hype train and ride with the bulls?

The answer is painfully simple: Bull and bear markets all come to an end eventually before it resets. Look past the trees and view the whole forest. Is a vaccine going to fix the damage already caused by the pandemic? Most stocks on the S&P 500 are showing negative returns expect for a certain few. There is lasting damage to the economy, and if you were forward-looking, it would make sense to see the market reflect that in stocks. Some analysts are talking years of rebuilding before the economy 'normalizes' again.

Here is the US30 on the 4H chart showing long wicks on both the tops and bottoms of several candles. That is a big sign of uncertainty where investors can't decide on what to do. No one really knows what is about to happen in the next week, month or year, not even Buffett himself. It's about being rational and understanding what makes sense in the long run.

Put yourself in an unbiased position and ask, 'should the S&P really be at all time highs right now?' The obvious answer should be no, but again, the market does not always make sense.

What to Look Out For This Week

Watch for vaccine news: This week may see another frenzy of buyers as a successful breakthrough on treatments to the coronavirus will most likely become approved by medical officials.

Watch Big Tech: The stocks like Amazon, Apple, Google, etc have been the main drivers of the market. Analysts are finding long entries on all of these companies excluding Netflix.. Traders are likely to follow.

Watch Technicals: This is definitely a trader's market now. News does affect price, especially good news, but indices are respecting lines of support, resistance, breakouts, wedges, etc. On the 4H chart, the US30 broke above the wedge with a strong green candle. A break in highs could mean that the SPX500 might want to continue its run for now.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

Featured Pic: https://news.theceomagazine.com/wp-content/uploads/2020/02/warren-buffett.jpg

There's a phase most traders reach when they begin learning to trade and it becomes a struggle to get past this first phase. Let’s call it the Analyst Phase. It’s a great place to be however not where you want to stay!

Let me explain.

This is the stage in your development in becoming a trader where you can perform some great analysis. You can break down a chart really well, explain what's been happening in the markets, Understand fundamental analysis, what different levels are showing you on the chart and what may happen next in the markets. In other words your becoming a financial analyst. 

The problem with this phase is, that's where the process ends... as a piece of analysis work! People that are stuck in the Analyst Phase aren't using their analysis to complete their trading ideas and actually execute trades.

In other words, they're a great analyst & market commentator, but they're not a real trader yet.

If you're stuck in this phase ( Many traders get stuck here ), it's likely you're there because of one of these points or both of the points I'll be discussing. These two tips should help you to start opening your eyes to what you are doing and take the leap into the real market from analyst on the side-line to a real profitable trader.

1. Know what trade set ups to look for

Imagine a situation in your life outside of trading & the markets (yes, life outside of the markets does exist! ) where you are looking for something, you are trying to find something .

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Now, think how successful you would be at finding that thing if you actually had no idea what it was you were looking for. It would be like trying to find the pot of gold under the rainbow.

Occasionally you might find the thing just by stumbling upon it and realising that it was, in fact, what you were looking for in the first place. However, in most cases you're going to go through a process of searching and searching until you either go without finding anything or just give up on the search (finally admitting there is no pot of Gold at the end of the rainbow).

That sounds stupid & crazy, but this is what traders that are in the Analyst Phase do. They're looking for trading opportunities & analysing markets but without knowing exactly what a trading opportunity is to them. They don’t have a system! Many traders don't have a trading system and ends up setting themselves completely unachievable goals. To learn more about setting realistic goals read our previous article on goal setting for traders https://a1trading.com/setting-realistic-trading-goals/

Of course, the markets are dynamic and you're not going to get a completely identical situation for every trade set up, every trade is different, but there should be certain characteristics or criteria for what a trading opportunity a real profitable trading opportunity involves.

That should be beyond simply the confirmation points for the entry to go long or go short at a given level, but also the overall situation and movement of the market. How long would you expect to be holding a trade for ,What sort of outcome is ideal for your trading style ? Is it one move in the market, are you trading the structure of a new trend? Do you know what are your exit criteria ? When do you know when to move your stop loss to protect your capital ? Do you know where to set your stop loss?

By understanding what sort of move you are looking for in the market, you'll know what sort of signs you're looking for to show there's an opportunity for you to enter into a trade or to exit a current trade. Now your analysis becomes more meaningful and real as it will be leading to a real trade that you will execute and have specific points of interest in the markets.

If you are a VIP Member, we have many Analysts that they explain the exact reasoning for why they take a trade and why they exit. Also we have plenty of educational videos where we break down how trades are entered and exited. Explaining the process of building a trading system and analysing the market in depth .

2. Look for trades in the Right place

OK, so you now know what you're looking for in your trading system... great! So why are you looking in all the wrong places for set ups?

Imagine you're looking for the sink to wash your hands, you wouldn't search in the living room or in the attic just to be 'more comprehensive' would you? No, direct your search in a way that's efficient and is likely to lead to the result of becoming a profitable trader.

This is what we need to keep in mind with our trading. There is no point in having a clear idea of what a trade looks like for you and then doing irrelevant analysis on markets you haven’t studied enough that won't lead you to finding it. 

Remember, your time is valuable, use it wisely as the saying goes Time is money. This is especially true when markets move and you just stay watching not having a plan to profit from these moves.

Think of your analysis as a guiding process. You're going from having all the possible markets at the top of the funnel and you're going through a series of steps (your trading system) that takes you from that huge list of potential markets all the way down to finding the trading opportunity  that suits you and your system and executing it.

By taking this clear approach, you make every step in your analysis purposeful and meaningful . This will not only make you more efficient, but will also help you to reduce the confusion and so you can actually move from being an analyst of the markets to being a real trader.

It is very common for traders to do a huge amount of analysis and end up confusing themselves or just having a lot of unnecessary work there just for the sake of it and try reassure them of their analysis, rather than directing their efforts in a way that actually leads to them finding a trade set up.

Be more precise, be more purposeful in your actions and your analysis and enjoy the benefits of a more directed trading approach going from an analyst to a trader.

If you want to get start to learn more about trading styles, risk management and how to get start in the financial markets 

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3 Steps to Trading Successfully 

  1.  Join A1 Trading and focus on learning the reality of trading the financial markets.
  2. Start applying trading concepts learnt and focus on achieving consistency and discipled trading and learning the basics of risk management.
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AUDNeutral
USDBullish
EURBearish
GoldBullish

AUD/NZD

Mixed sentiment on this pair since Australia's economy moves well with gold. Monetary statement is happening today as leaders bring forward-looking analysis on the economy and whether or not the cash rate will go up, down or remain the same. 14-Day RSI has not been this high (83) since 2011, so it looks like the pair may need to see some sort of pullback here soon. Gold surged this morning which is probably causing the pair to continue its uptrend since March lows. However, a pullback on this pair seems almost definite.
Potential Longs: 1.09780
Potential Shorts: 1.10200

USD/CAD

UC stuck in consolidation at the trend line, so that potential retest we talked about last week was hit. We're still expecting to see the pair rise as the dollar is starting to gain some strength back.

Long wicks on the 4H chart suggest that the price does not want to break support, and a rally on this pair may a long time to develop as lots of resistance lies in the way.

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EUR/JPY

The yen may also be another currency that will start to gain strength as investors start to move to risk-off pairs. 4H chart is creating lower highs and lows, suggesting possible further movement to the downside. Candles have also not reverted to their 200 4H moving average in over a month. The euro has been highly favored since March, but analysts don't expect that to last long.
Potential Longs: 125.600
Potential Shorts: 126.091

Gold

Analysts think gold has entered a downtrend, but it appears that gold wants to come back up to test highs again after bouncing off the 4H moving average. Warren Buffett recently sold bank stocks like Goldman Sachs and purchased half a billion dollars worth of gold stock. Because he likes to hold positions for the long term, he is most likely long term bullish as well. A breakout on the trend line on the 4H hour chart shows that the bulls haven't given up yet on the metal. Some resistance lies in the way at 2016, but price seems likely to break after gold takes a healthy pullback before continuing its bull trend.
Potential Longs: 1964
Potential Shorts: 2016


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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USDBullish
NZDBullish
AUDBearish
BTC/USDBullish

USD/CAD

The pair breaks resistance at 1.33320s and now using it as support. This second test on support could mean we'll see a higher trend to the upside if it gets a bounce. According to DailyFX, UC is nearly 60% net long positions which means we have buyers in the market looking to take price higher. RSI now in the 40s after coming up from low 30s on the 14-Day RSI. Prices may be trying to come up to that moving average on the 4 hour chart before we see considerable resistance. A breakout and close above the green line shows that the pair has probably entered a new trend.
Potential Longs: 1.33452
Potential Shorts: 1.34949

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NZD/JPY

On 4h chart, entered a period of consolidation in this zone between 69.6 and 71.6. The pair nearing the bottom of the zone to possibly test support. 14-Day RSI crosses under 50 and sits at 45 showing potential that the pair still has move to run to the upside since price never hit overbought on the last high. Price is now looking at support at 69.6 while a second test on the highs at 71.6 is expected to get hit. If daily candle crosses and closes below 69.6, we will turn bearish on the pair, but for now, we think we'll see price hit resistance at 71.6.
Potential Longs: 69.655
Potential Shorts: 71.649

AUD/USD

AU on 1h chart. Mild support lies at 0.71509, but we think this week will end up to the downside as big reports come out on the pair. DailyFX shows 59% of traders are net short on the pair, and we think this will likely continue throughout the week. There are some big fundamental reasons to be bearish this week is which will be covered in Wednesday's article. Price crossed back beneath the 200 hour moving average for either a bounce at support or continued direction downward.

BTC/USD

Bitcoin sold off hard last night, and news says it was in order to fill in a futures gap in price. So, what happened was a technical sell off with no bearish news on the crypto. The coin actually respects the 200 H moving average very well, but now hits resistance at 11939. Support lies at that moving average as well as 11809 where price just bounced off on the hourly. We're looking to see Bitcoin break the 11939 resistance, and continue its bullish momentum. The rally does not seem like it has reached its end yet.
Potential Longs: 11809, 11544
Potential Short: 11939


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Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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EURShort bias
USDLong bias
GBPShort bias
AUDNeutral bias
CADShort bias
JPYShort bias
NZDShort bias
CHFLong bias
US30Short bias
MetalsLong bias

EUR/USD

Technicals show resistance on EU on the 1H chart. Prices became overbought over the passed couple of months and starting to come down. Price bounced right off 200 H moving average but is touching resistance. Resistance now lies at 1.17431. With an overall short bias this week on the Euro, we're looking for more short setups on new and/or future resistance levels.

EU on the 1D chart showing prices coming off highs after 14-Day RSI hit 81. Seeing support in the 1.14000s. We have short sentiment until 1.14 with possible short entries at 1.17400s.

USD/CAD

1D chart of UC stuck in consolidation zone between 1.33247 and 1.34980. We have expectations that the USD will be in more demand this week after showing signs of economic growth. If UC can break resistance, we will look to catch the breakout above 1.34980 and look to close at the 38.2% fib retracement level (red resistance line) where resistance lies as well (around 1.38364). We will probably wait for a breakout above resistance before entering so the market picks a direction first.

GBP/USD

GU on the 1D chart finally retracing back after hitting a 14-Day RSI of 81. Price also ran into some resistance in the 1.32000s before coming down a considerable amount. We are sticking to a short bias until price comes down to around 1.28000s where lies some key support.

AUD/CHF

On 4H chart, price bounces off 200 4H moving average and resistance at 0.65500s. We will probably see some more consolidation on Aussie pairs as gold follows. With a long bias on CHF, we are thinking that resistance will hold and look for a break below 0.65123 to the downside on AUD/CHF.

NZD/JPY

US30

Falling trend line on the 4H has shown some respect for that resistance level. Good market news brought prices up today, but there are now signs that the market is short-term overbought. Looking at a short set ups around 26800s. Possible TP around 200 4H moving average.

XAU/USD

Gold price broke out of its wedge on the 1H chart. We have long term bias on gold with near-term short sentiment. Looking for buy entries around 200 H moving average and where prices broke the 3-year high at 1918.


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