Market Analysis (December 16, 2013)

Fundamental Picture

You know it’s going to be a good week when you see a couple of central bank speeches and statements on your calendar!

Last week our trader friends focused on yen and dollar strength on stronger speculations of the Fed tapering soon. Well, the dollar bulls and bears will finally know more about the Fed’s schedule this week! The dollar could end the month on a strong note if the Fed decides to be more specific about its plans. Of course, the FOMC minutes could also disappoint especially if the Fed takes the wait-and-see approach.

The Fed isn’t the only star of the show though. This week we’ll also hear from the ECB, RBA, BOJ, and BOE officials. There’s room for a bit of jawboning during those speeches, so be careful in committing to a direction this week!

Potential Trades

GBP/USD: Bearish

GBPUSD

Last week a stronger-than-expected USD rally took out my GBP/USD trade. This time I’m looking at a possible resistance at an area of interest and former support. What makes this setup more exciting is that I’m also seeing a potential crossover of the 100 and 200 SMAs. I can’t wait to see how this unfolds!

USD/JPY: Bullish

USDJPY

Is it time to load up on USD/JPY again? The dollar has just tested a rising trend line on the 4-hour chart, which is further supported by the 100 SMA. I’m not quite sure yet if I want to put on a position ahead of the FOMC minutes. I hope I’m not missing out by choosing to stay by the sidelines for now!

How about you? See any good setups this week? 🙂

XOXO,

Huck

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  • David

    If you want to get in there but you’re not sure about the timing, why not just put a proverbial toe in the metaphorical water and go long but with a small position size? Personally I’m a great fan of unit cost averaging in these situations where you are fairly sure of the overall trend but not so sure about when to leap in. Just a thought.

    • Hucklekiwi Pip

      Thanks for the advice, David!

      USD/JPY is testing the support levels right now, so I’ll probably wait until I see a couple of reversal-friendly candlesticks.

      Are you in any trades this week?

      • David

        I’ve been very slowly scaling into a long USD/JPY position for some time with several small trades. My philosophy is that that USD is going to go up eventually (QE must end one day) and the JPY is going to go down (the powers that be in Japan want a weak yen), so if we take a very long-term view and keep position sizes small then we should end up with a profit eventually. In theory. Hopefully.

  • Marion

    We had an earl warning sign yesterday when the MA50 crossed up the MA100 0700GMT & crossed the MA200 1800GMT; 27 pips up slop in six hours. The MA100 crossed the MA200 0700GMT this morning while the MA50 looks like it is action like support on todays H1 candles. Looks like there is some profit taking at 0900GMT this morning.

    I think the move is up for the short term intra-day.

    H4 charts still show all three MA’s indicating pressure is still with the bears going down the hill.

    • Hucklekiwi Pip

      So far the bears are still dominating price action. What do you think of entering a countertrend trade on the shorter time frames?