Today’s Key Market Drivers: 15th October 2018
“Can traders keep US stock index above their 200 EMA’s?”
The Yen weakened on Friday as stock indexes rallied off their recent lows and mostly held above the key 200 EMA support levels I spoke about on Friday. My medium-term view hasn’t changed and I think there is sufficient momentum for stock indexes to continue to go lower but it won’t be a straight line down and we must never fall in love with our personal opinion or trade positions. Friday’s mild rally on stock indexes is normal as markets correct themselves but I will repeat again any further falls on stock indexes and rallies on safe-haven currencies won’t occur until the key support levels are broken over consecutive days. A one day close below a key support level is not significant, what now needs to happen is two or three days of selling pressure under the 200 EMA’s with fundamental conviction and then the capitulation I have been talking about has the potential to occur.
Monday sees US Retail Sales as the only high impacting data number scheduled and if last week’s stock market volatility returns any high impacting data number may struggle to get the markets attention even if it’s out of line with estimates. The week ahead is full of key inflation data with New Zealand, China, UK, Japan and Canada all releasing their latest CPI figures. Inflation is a key barometer for Central Bankers to watch and my hunch is the Kiwi, UK and Canadian CPI numbers will have the highest probability of impacting the related currencies. The Bank of England and Bank of Canada are in interest rate tightening cycles now and any better than expected inflation figures will see traders buy the Pound and Caddie. The RBNZ has said it won’t adjust interest rates in New Zealand until 2020, however, with recent quarterly GDP beating estimates and such a resilient and diverse economy I think the RBNZ may be forced to change its mind in 2019 if inflation rises faster than expected. The Kiwi inflation data on Tuesday has the potential to push the NZD v JPY higher through the neckline of the 4-hour head and shoulders signal that has formed however the price action on Monday will be important to whether or not the signal holds its form or evaporates.
It’s been a great start to the month and we must remain humble, focused and patient with the setups. Let them appear and ensure when you do take a trade there is no question whatsoever the trade is there. It must be screaming “take me” and if it isn’t then no trade. The market presents hundreds of “take me” setups every year and the key is to wait for them.
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About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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