Playing the Ranges

September 29, 2015

Playing the Ranges:
Forex market volumes mildly ticked over last night, with the Yen and Euro catching a bid while the commodity currencies continued to see decent selling.

US stocks continued to buck the US Dollar correlation, tumbling toward Black Monday swing lows. This drop saw the SP500 Index close at a 1 month low, Bloomberg blaming the rout on commodity prices and biotech sector woes.

“The Standard & Poor’s 500 Index fell 2.6 percent to 1,881.77 at 4 p.m. in New York, down for a fifth consecutive session to the lowest since Aug. 25.”

Focusing on the lower trending US Dollar, testing the fortitude of bulls amid the suddenly hawkish Fed environment that we seem to have stumbled into.

GBP/USD Daily:
Click on chart to see a larger view.

The above Cable chart stands out for having clear ranges that we can trade around. But with price clearly at the bottom of one such range, selling here probably isn’t the smartest play. The point is, don’t just look to long USD at the first hint of a hawkish Fed headline, try to hit the edge of ranges in the majors and play from there.

Overnight we did see headlines from Tarullo, Dudley and Evans. All 3 are known doves which adds to the temptation to close your eyes and click buy. The highlight being this morning’s WSJ Pro Central Banking’s Breakfast Interview with William Dudley: Full Video

It’s for pro-account holders only so if you still aren’t on board with the concept of online newspaper pay-walls, ForexLive have a great little summary of what Dudley said here.




On the Calendar Tuesday:
USD CB Consumer Confidence
GBP BOE Gov Carney Speaks


Chart of the Day:
We’ve dug up an old Technical Analysis blog post from August where we went through some Gold shorting scenarios. Scroll down to the final chart on that post and compare it to where price now sits.

XAU/USD Daily:
Click on chart to see a larger view.

As you can see, price has come back up to re-test the horizontal SR zone that we had marked as a point of interest in the previous post. With some short term trend line confluence also playing a role, price hasn’t been able to make a new high.

This area offers a clear level to manage your risk around for a trend continuation play.

Gold Trading – Do you see opportunity?

Dane Williams – @VantageFX

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