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Analyze and interpret price action patterns to identify high-probability trades.
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Things move quickly when the central bank detail that their tolerance for inflation is low. Only recently it was the widely held consensus that interest rates in Australia were on hold for an extended period, and the next move was most likely a cut.
Well, that school of thought has been blown out the window and rate hikes are now once again being priced to rise....
The October ECB meeting is unlikely to be nearly as interesting, or exciting, as the surprise 25bp rate hike delivered last month. Instead, this decision is likely to be a relatively straightforward one for the Governing Council, with no changes to any policy instruments expected, and discussion on some more nuanced areas of the ECB’s toolkit unlikely to reach...
Bitcoin has come alive and after a period of sleepy conditions, we’ve seen the price break out of the defined trading range it held since March, with the biggest high-low trading range we’ve seen since June 2022.
Our high price has been 34,742, the best level seen since May 2022, where the breakout has taken the rally that started on 11 Sept to 40% and 110% YTD....
A Traders’ Playbook; Buying risk when its darkest
Equities continue to find few friends and reviewing so many of the daily and weekly set-ups in our core equity indices, standing in front of the move and countering seems a low probability outcome at this juncture.
The China CN50 and AUS200 look particularly weak, while EU equity markets are in steep decline,...
Sentiment in markets continues to sour, with the market heading towards the safety of gold, the CHF and equity index volatility. We see the VIX index above 20%, showing a pickup in market players hedging equity drawdown, and paying up for downside puts in the S&P500.
The VIX index at 21.4% equates to implied daily moves in the US500 of 1.34%, and 3% over the...
The Trade Off is back and there is a lot going on! Westy and Blake are talking macro (geopolitics, Powell, Commodities & USD), technicals (Gold, NatGas, US500, GBPAUD) and trade ideas (NZDCHF & USDNOK).
Positioning
Clients are skewed long, with 63% of open interest is held looking for upside in AUDUSD.
In the broad market, the big flow desks report that hedge funds (leveraged players) are small net short of AUDs, while ‘real money’ (pension funds, insurance, asset managers) have a large net short AUD exposure.
Factors that could move the AUD?
• The RBA...
Since breaking the Feb highs in mid-March we’ve seen BTCUSD tracking a well-defined range of $31,000 to $28,500, with the former breakout high acting as strong support on multiple occasions.
These levels also marry up well with the upper and lower Bollinger band, if we use the 200-day moving average as the mean of the bands. These levels are significant and...
We noted last week that the investment case for gold was shifting and there were more reasons to be long than short – this remains the case and the investment case, although we are in a headline-driven environment and sentiment can shift rapidly.
What’s important for gold traders is to recognise the changes in trading conditions. Changes in volatility, range...
We look at the scheduled economic data and US earnings this week and question if given the fluid news flow from the Middle East, these events move the dial or if geopolitics consumes the full attention and direct sentiment.
We saw a rush to hedge portfolios on Friday ahead of a darkening picture emerging in the Middle East. The situation is dynamic and it's too...
It has not been the case for several months now, but the investment case for gold is certainly warming up and the reasons to own gold seemingly outweigh the reasons to be short. In a world of probabilities, the odds look to be swinging in favour of the gold bulls.
Keeping me cautious is the fact that the USD still offers appeal, and unless Europe pulls a rabbit...
The high on our Brent crude price has been $89.68 – hit at midday – but while our clients are long of crude (65% of open interest is held long), we’re seeing better sellers in the broader market, as we roll towards EU trade. The early rally felt reasonably orderly, but a lot of questions were being asked and without many immediate answers to obtain the certainty...
After a strong tightening of US financial conditions – primarily led by higher real rates and USD – we hear increasing acknowledgement that the markets are doing the heavy lifting of central banks and replacing the need for them to hike the Fed funds rate. That was the message we heard last week from Fed members Daly, Goolsbee and Bostic.
This suggests that if...
US Q2 earnings this week – Citi, JP Morgan, Bank of America, Wells Fargo, UnitedHealth
This week we get the US big money centres out with earnings. The focus falls on asset quality, loan growth/contraction, net interest margins (NIM) and any commentary on the recent tightening of broad financial conditions.
When we look at the companies included in the US30,...
Westy's back from the Outback and right back into it! In this reunion episode, they're talking macro (market sentiment, Bonds, BoJ shenanigans, NFP/CPI), technicals (EURUSD, USDMXN, Coffee & USDCAD) and trade ideas (long/short NAS/R2K & NZDJPY).
While the Fed’s Bank Term Funding Program (BTFP) has been a key factor in supporting bank equity, the rapid rise in US Treasury bond yields is a concern, and so is the exposure to Commercial Real Estate (CRE). We can see CRE benchmarks rolling over of late and heading lower and this is keeping investors from buying into regionals. One for the radar, but if we see...
