In this week's analysis, we will touch briefly on 4 markets that we believe will have considerable short-term moves and therefore, present the best trading opportunities.
ES/SPX 60 Minute Chart - Apr 26th
Despite historic unemployment data and the uncertainty caused by the pandemic, the broader markets seem to maintain their short-term strength and recovery mode. The FED is there to keep the Titanic from sinking, hence the unreal strength in every bear attack. Nonetheless, we couldn't care much since we trade what we see in the market and not what we want. The following are our two hypotheses for the last week of the month:
- Hypo #1 (bullish): Never tests 2750 on any pullbacks and rallies towards 2930.
- Hypo #2 (bearish): Never rallies over 2850, sells-off below 2750, holds below this level, and retests 2700/650.
We always trade according to hypothesis #1 unless we get invalidated.
YM/US30 60 Minute Chart - Apr 26th
The same analysis goes for the Dow! When markets rally, Dow rallies the hardest; when markets sell-off, Dow makes sure to leave no one alive. The following are the trading hypothesis in this market:
- Hypo #1 (bullish): Never retests or breaks below 23k, hold p/bs above 23,400 and rallies towards 25,200 as the first target.
- Hypo #2 (bearish): Never breaks above 24k but instead dips below 23k and thereafter sells-off towards 22,300 (less likely to happen).
EURAUD Weekly Chart - Apr 26
This currency pair has completed primary Wave A-B-C vs. 1-2-start of 3, and we are currently sitting in the reversal leg which needs to aim at least 1.560 in the coming months. For this week, we are expecting a dip near 1.670 then a reversal back above 1.700 resistance.
- Hypo #1: Holds below 1.700 and continues the down-move towards 1.670. Then rallies over 1.700 for higher prices in the month of May.
- Hypo #2: Never crawls back above 1.700 and continues the down-move directly towards 1.600.
We will be trading in accordance to the Hypo #1.
GBPUSD 60 Minute Chart - Apr 26
Not much talk is needed here. The clearest pattern exists where targets and invalidation are right in front of our eyes.
- Hypo #1 (bearish): Gives us a retest of 1.2440 so we can short near the Right Shoulder. Risk remains slightly above 1.250 and the target way below 1.22 (see chart).
- Hypo #2 (even more bearish): Never breaks above 1.2420 but instead trades below 1.2300. We start the short here with risk 1.2350 and target area the same as Hypo #1.
- Hypo #3 (bullish): Holds above 1.230, breaks above 1.240, rallies over our Hypo #1 entry (1.2440) and strongly closes above 1.250. This scenario exposes April 14th high at 1.2640.
Prepare-Execute-Adjust-Execute!
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