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LONG POSITIONAUD/JPY hints at bullish trend reversal The combination of Australia announcing a reopening of their international borders and a rebound of business confidence saw AUD/JPY as one of the strongest pairs yesterday. Price action also warns of a bullish trend reversal on the daily chart. We can see on the daily chart that AUD/JPY opened at the session low and closed near its session high yesterday, clearing several technical resistance levels including the 19 and 9-day eMA and a descending trendline. Whilst this is against our initial bias (which failed to be triggered with a break beneath 81.28) it does put the counter-bias into focus which was discussed yesterday.
by AFFINITY_MARKETS
LONG POSITIONEUR/USD stayed within the flag after holding the support and reversed to the upside, breaking above the formation. However, price is approaching a resistance zone between 1.1482 and 1.1500. If EUR/USD can break above, price many be on its way to the flag target near 1.1575. First support is at the top trendline of the flag near 1.4455, then the bottom of the flag near 1.1376. If price breaks below there, horizontal support crosses at 1.1330. The CPI data for January was strong, and markets were quick to recognize it! However, how much longer could inflation be sustained at this level? Will the Fed hike 50bps at the March meeting to help stem the rise of inflation? With the FOMC meeting a little over a month away, traders should also be prepared, just in case the Fed decides to “jump the gun” with an unexpected intra-meeting rate hike!
Long
by AFFINITY_MARKETS
SHORT POSITIONThe S&P 500 continued its spring off recent lows, but found a bit of resistance around the January 10 low. What I will be watching for in the week ahead is if that recent high can maintain or at least maintain on a closing basis. A close above 4595 could open up more room for further gains, but those gains will still be viewed through a skeptical lens as the broader technical picture has weakened quite a bit. In the week ahead we may not see the market have a meltdown, but rather bobble around as the market makes sense of the recent volatility. In due time, though, risk looks high that we will see the market roll over in a meaningful manner that takes out the January low at 4222 by a wide margin. A head-and-shoulders top, with the left shoulder in September and head in January, could develop if we see recent highs hold or thereabout, creating the right shoulder. It will take a sizable drop below the Jan low will need before triggering the pattern, but it is certainly a possibility . The right shoulder needs a little more time to mature for the sake of creating better symmetry on the pattern, hence the thinking that we may not be ready yet to roll over. Overall, though, the general trading bias on this end leans neutral to bearish.
OANDA:SPX500USDShort
by AFFINITY_MARKETS
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