What a great week for traders who follow my analysis! If you’ve been following my previous weekly analyses, you’ve probably noticed that I’ve been focusing on crude oil and on the USDCAD currency pair. Crude oil is especially fascinating during a volatile market. USDCAD is also fascinating as it is basically a mirror view of market sentiment for oil. The Canadian dollar and oil have strong correlation.
Market movements follow my technical analysis from last week:
Last week I wrote last week: “…on a daily chart it breaks the support line… cases I would try to find signals for put options on a short time frames”
Below is a chart of USDCAD that I posted last week.
Here is the result:
Last week we also discussed a breakout of the trendline for crude oil. The result was perfect long trend. We made a lot of successful trades with CALL options. By the way, when I recognize a strong and volatile movement in the market I start trading with ladder options. It’s the perfect option for that scenario. If you want some more information, check out an introduction to ladder options.
Market Analysis for This Week
This week it would be irresponsible to try and guess the movement of CADUSD. There are a couple of signs that sellers have reached their first support line. You may notice a CALL option signal on a 4 hour chart however, the CADUSD can surprise even the most experienced traders with a short move towards the second support line as shown in the charts below:
Chart: USDCAD Bollinger signal:
For both oil and CADUSD, I would sit on the fence a bit longer and wait for a clearer picture to emerge.
For a more reliable trade with much higher chances of success, take a look at AUDUSD. Last week this currency pair soared, breaking through the resistance line. But, currently it’s broadcasting a signal to go short with some PUT options. Using the Bollinger band strategy , you can see the daily chart reach the 3rd standard deviation band with almost the entire candle between the 2nd and 3rd standard deviation bands. In the beginning of the week I most likely would expect a retrieve or a neutral trend.
Chart: AUDUSD – Bollinger bands daily chart
Look at a chart of the S&P, we see the index is moving between the boundaries, displaying a nice upward trend. The trend eventually reach a resistance line of 2000 points. Here I anticipate a retrieve to the support line of the trend. If the trend eventually breaks 2000 expect a big move in the upward direction.
One of the most technical currency pairs is the GBPUSD. The pair has great volatility and when you get a signal from one or two strategies it’s usually a winner. As for this week’s direction, after a long downtrend, you may have noticed a retrieve last week – a technical correction with an uptrend move. The question is what are the chance this uptrend will continue? The answer is displayed in the monthly chart.
I use the below chart for another strategy I use that shows diversions between the chart and indicators. In the below chart I use the MACD and stochastic. You can easily notice the diversion. While the candle chart shows a downward trend, the stochastic shows a neutral move between the two lows. On top of all that there is a cross between stochastic lines. All-in-all it indicates an upward trend.
Chart: GBPUSD Monthly Chart
To make a successful trade out of the GBPUSD movement mark the trend for a short time frame.
I marked the GBPUSD daily chart with resistance and support lines. Once you see a clear breakout, it’s time for a CALL option. It may also retrieve back towards the support line, but most likely chance of returns is to wait for a true breakout passed the resistance line.
Chart: GBPUSD – Daily chart
If you have any questions about my strategies, how to mark a trend, ladder options or anything else, feel free to shoot me an email! Have a great week trading!