Trading Setups / Chart in Focus:
S&P 500 (USA) Index – S&P 500 lower from fakey / pin bar sell signal
On May 23rd we posted a special alert on our social media pages (facebook, twitter and google plus)…. discussing how the S&P 500, DOW Jones, DAX and FTSE stock market Index’s had shown strong ‘sell signals’. We also discussed our bearish views on the S&P 500 Index in our May 23rd commentary. Our analysis noted the market had shown exhaustion and sell signals up near the 1670 price area and that we could see some significant selling near those same levels of resistance if the market re tested that area on the chart. On Tuesday of this week, the market finally re visited that price resistance up near 1670 – 1685 area and strong selling pressure came back into the market resulting in a fakey pin bar combo sell signal. We can see prices consolidated on Wednesday and Thursday and then sold off today, breaking down through near-term support at 1632 area and closing below it to end the week at 1627. Given that the market has closed below support and that the price action has been quite weak recently, we would not be surprised to see further downward movement in the coming days as the next key support is not seen until down around 1595 area. Traders can continue to monitor this market for price action sell signals on the 4 hour and daily chart time-frames, ideally on any rotations back up to value. (ie: sell into strength). Check out the members commentary and live trading forum for more trade ideas and analysis on the stock Index’s this week.
EURUSD – Euro/dollar moves up through key level
The EURUSD moved significantly higher since we last discussed it in our May 28th commentary. Realistically, it was pretty difficult for most to get a profit from the pin bar sell signal we talked about back in our May 22nd commentary, although if you entered on a retrace of the pin bar’s tail (one of the pin bar entries I discuss in my courses) the trade was potentially profitable. The EURUSD rotated lower today, moving back down to retest the key level near 1.2950, which is now support. The market did show some rejection of that level as we can see it ended the day modestly up off the lows. If the market holds above 1.2950 on a daily closing basis next week, we could see the recent move higher continue. Whereas a daily close back below 1.2950 would open the door for a larger move lower.
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In the currency markets today, the U.S. dollar gained ground against most of the other major currencies on the back of strong U.S. economic data which supported speculation that the Federal Reserve might scale-back its economic stimulus policy soon.
The greenback did however lose ground to the Japanese yen on the back of increasing volatility in equity markets.
Commodity-linked currencies like the Australian, Canadian and New Zealand dollar all lost significant ground today against the U.S. dollar.
In the U.S. markets today, stocks lost ground late in the day and ended significantly lower as investors took some profit off the table as May came to an end.
The Dow lost 208.96 points, or 1.36 percent, the S&P 500 lost 23.97, or 1.43 percent, and the Nasdaq lost 35.38 points, or 1.01 percent.
Upcoming important economic announcements (New York time):
9:30pm EST: Australia – Retail Sales m/m
4:30am EST: Britain – Manufacturing PMI