Market Commentary: Dow Jones Surges Higher and Crude Oil Update, 6th September 2012

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Trading Setups / Chart in Focus:

DJ30

The Dow Jones spot market moved sharply higher today on the back of an inside bar setup breakout. We can see this inside bar trading strategy formed yesterday just above the key support that runs through 12,950 area. Price rose all the way up to close just below the near-term resistance near 13,300, gaining 244 points on the day, or nearly 2 percent. After such a huge move it’s usually best to let the market cool off a bit and see if we can’t find a price action setup in the direction of the surge after a retrace lower into support.

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WTI

The spot Crude Oil pin bar trade that we discussed in yesterday’s commentary did break higher early in Thursday’s trading session, however, price pared gains into the New York close to end the day lower as it formed an opposing bearish pin bar setup. The pin bar from Wednesday has still not been invalidated as price is still above its low, but clearly this market is choppy right now and we may not get any high-probability setups until we see a close outside of this recent consolidation range. We could see this consolidation continue if price rotates higher from current levels and fails to move lower.

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Forex Commentary:

In the currency markets today, the euro moved to a two-month high versus the U.S. dollar on the back of a new plan by the European Central Bank which should help to stem the debt crisis in the euro-zone.

The U.S. dollar was lower against the other majors today, except for the Japanese yen which was today’s biggest loser out of the majors.

Other Markets:

In the U.S. markets today, stocks moved to multi-year highs on the back of a new bond-buying program in Europe that should work to contain the debt-crisis there.

The Dow added 244.52 points, or 1.87 percent, the S&P 500 added 28.68 points, or 2.04 percent, and the Nasdaq rose 65.12 points, or 2.12 percent.

Upcoming important economic announcements (New York time): 09/07/2012

3:00am EST: Switzerland – Foreign Currency Reserves
4:30am EST: Britain – Manufacturing Production m/m
4:30am EST: Britain – PPI Input m/m
8:30am EST: Canada – Building Permits m/m
8:30am EST: Canada – Employment Change
8:30am EST: Canada – Unemployment Rate
8:30am EST: United States – Non-Farm Employment Change
8:30am EST: United States – Unemployment Rate
10:00am EST: Canada – Ivey PMI

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