By now you should know that I like to analyze the market based on technical signals – signals derived from technical analysis. However, to fully understand the market you need to take into account major financial news. Generally through technical analysis you will see a trend line or resistance line that is heading towards a breakout. We time our trades based on a technical analysis of when that breakout will happen. But knowledge of breaking news in the financial markets, can color your analysis. A big news story is the UK referendum set for June 23rd where British voters will decide to remain a member state of the European union or leave the bloc.
For now the consequences of either a yes or no votes are uncertain. The British public is split fairly evenly in both camps. You can actually see the split on a financial chart. The market shows a neutral trend with perhaps a bit of an uptrend. In the event the British public decide to leave the EU, it will create a chain reaction. Most likely the shock will cause a downward trend across the market. The question is where will it stop. On the other hand, if they decide to remain in the British public, the decision will fuel an upward trend that will include a couple of breaking points.
By using technical analysis we take a look back into the past in order to make assumptions about the future. Breaking financial news (fundamental analysis) are used as signs along the way. Be sure to mark June 23rd on your calendar. It is seen as a major junction for the market.
Until then the market will continue to play within a neutral trend. Here are some of the assets that might be interesting to watch and use in winning trades.
The EURUSD currency pair presents a perfect neutral trend on the a daily chart. I simply market the support and resistance lines to play between the boundaries. It works perfectly with long term binary options.
When zooming in to a four hour chart, there is a breakout of a trendline, meaning, the EURUSD is experiencing a downtrend toward 1.06.
Remember the breakout we experienced with the JPYUSD? Now it is back to the resistance line. At this point I would act carefully and search for the right moment to continue with the downtrend.
Any uncertainty in the market will usually lead to an increasing value for gold. The logic behind this rise is that when risk getting higher, people and governments want to stick to gold, a permanent and tangible asset.
Lately we can see a rectangle shape the gold creates, I’m going to wait for a buy signal, although the gold is near the support line.
As for gold, the best is yet to come.
The S&P Index is near the area of its last peak and is moving towards a new record. My guess is that a new record will be reached, but the questions is if it will keep rising, or fold to a new downtrend. As for next week, we should experience a retrieve mostly because of stochastic index which alerts us for a sell signal.
S&P daily chart:
Keep in mind June 23rd. It’s a great day for the financial markets and may very well determine a new direction.
That’s it for this week. Have a great success with your trading, if you like the analysis please share it.