Brief Summary
Kim from The Pivot Trader delivers a morning outlook, focusing on key news events and technical analysis across various currency pairs, gold, oil, and stock indices. The analysis highlights potential volatility due to the upcoming FMC meeting and discusses possible trading opportunities while emphasising the importance of waiting for market confirmations, especially around market opening times.
- The upcoming FMC meeting is expected to cause volatility, with no anticipated interest rate cuts.
- Several currency pairs, including Euro/Dollar and Pound, are displaying challenging price action, suggesting caution.
- Gold and oil are analysed, with oil prices rising due to Saudi's increased prices to Asia.
- Stock indices like S&P 500, NASDAQ, FTSE, and DAX are reviewed, noting potential reactions to key levels and the impact of market openings.
News Events and Economic Calendar
Kim starts by reviewing the day's key news events, highlighting the FMC meeting later in the evening. Volatility is expected around 7:00-7:30 PM due to the press conference. No interest rate cuts are anticipated, with the focus being on the statement regarding inflation risks from tariffs. The solid jobs market suggests the Federal Reserve might postpone rate cuts, despite expectations. Construction PMI data for the UK is out but isn't expected to significantly affect the market. The Bank of England's monetary policy is scheduled for the next day. US Treasury Secretary Bessant is also due to speak, likely discussing tariffs, which could induce volatility.
Euro/Dollar and Pound Analysis
The Euro/Dollar pair is exhibiting ugly price action, making it a difficult market to trade with increased risk, advising to avoid it. Similarly, the Pound showed some initial strength but has given back some gains, although it seems to be recovering from its daily pivot. Resistance levels are noted, suggesting potential for an upward push, but targeting short positions should be approached cautiously, stopping short of the S1 level.
Yen and Euro/Yen Trading Opportunities
The Yen is looking solid against the US Dollar, especially on shorter time frames. A pivot swing occurred, with a quick sell-off that Kim missed. Instead, a Euro/Yen trade was taken, which is currently declining. Caution is advised post-8:00 AM, as the market could stall or reverse. If the setup holds, there's potential for a continuation down to the S1 level. This is viewed as a possible swing trade, with entry points considered on the break of the lows or more aggressively on shorter time frames, but waiting until after 8:00-9:00 AM is recommended.
Aussie/Dollar and US Dollar/CAD
The Aussie/Dollar is running into a trend line but showing signs of picking up, potentially drifting upwards towards the R1. Support is found at its daily pivot. The US Dollar/CAD pair is in a descending channel, but the price action is considered ugly and indecisive. A breakdown towards the S1 is possible within the larger range. The FMC meeting later in the day should be kept in mind, as it could flatten or reverse any morning trends.
New Zealand Dollar and Swiss Franc
The New Zealand Dollar is in a descending channel that is nearly complete. It broke, tested the trend line, and continued to push upwards. A run to R1 would likely finish the move. The push-up seems to be slowing down, with potential for it to pick up again in the early afternoon. The Swiss Franc remains in a consolidated phase despite comments from the Swiss National Bank chairman. A decent breakout is expected at some point, but it's currently too tight and unattractive.
Euro/Yen and Euro/Pound Analysis
Kim is still looking at a decent move down for Euro/Yen, stemming from a larger, albeit ugly, picture. A small intraday trade was successful the previous day. Currently, a bearish engulfing bar is forming, but more confirmation is needed, ideally a break below the 34 EMA and the trend line, for a continuation short. Euro/Pound had a strong move down the previous day, followed by a significant bounce, creating a higher low. This has made the chart less appealing, although there's some divergence on shorter time frames.
Euro Cross Pairs and Pound/Aussie
The Euro is moving up against all its cross pairs, though only slightly, and this could reverse. Kim was previously looking for a move into the weekly pivot but it has now hit the S1. A short position was considered off the weekly pivot, but it never reached that level. The Pound/Aussie pair nearly reached a similar setup, but Kim missed it. The pair has double-bottomed, and it remains to be seen if another pullback will occur.
Gold and Oil Market Analysis
Oil is up 1.5% today. Spot gold had a solid day yesterday but is slightly down today, possibly due to increased market confidence. The hourly chart suggests potential for an upward push. Oil prices are up due to Saudi Arabia increasing oil prices to Asia. Saudi Arabia is in a favourable position due to its cheap oil production costs. North American suppliers face higher production costs. Increased oil prices have slowed down some production, despite overproduction figures. Kim is closely watching the monthly pivot for potential trading opportunities. Short-term time frames look healthy for a continuation, but Kim doesn't trade oil in the morning.
S&P 500 and NASDAQ Analysis
The S&P 500 continued to decline yesterday but is showing signs of picking up. The chart is described as ugly. The NASDAQ is similar. A break above the 200-day moving average, potentially reacting to Friday's level, would be more positive for equity markets.
FTSE and DAX Analysis
The FTSE is slightly up, but immediately after the market opens, it declines. This is not a particularly bright start. Reversals often occur around market openings. The DAX ran close to its all-time high but couldn't make significant progress yesterday. Selling pressure emerged, possibly influenced by initial uncertainty regarding the German chancellor. The lower time frames look messy, but the DAX has potential due to its proximity to the highs. A breakthrough could trigger short positions from retail and larger traders.
Market Summary and Final Thoughts
Kim summarises the earlier analysis, noting how quickly markets can reverse, particularly around the new hour. The Pound, Yen, and Aussie Dollar were highlighted as examples of such reversals. The Aussie Dollar, in particular, is at risk of forming a lower high. The importance of waiting for market confirmation is reiterated.
