IIFT Daily Note with Peter Brown

Is the ECB German? We will find out today.

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Commentary:

Well, we are here, the big ECB day!

First up will be the rate announcements at 12.45PM. Two issues here, we expect a drop in the lending rate to .15% and the deposit rate to go negative. That is what the market expects and this outcome should keep the market fairly stable and the Euro slightly lower, Dax, small bounce. If he fails at this hurdle the opposite will happen, but the reaction will be larger.

Then we have the press conference, the main event, we expect to hear further measures to stimulate the Euro economy. This is the event that will seriously set the tone for the weeks ahead. The best way to analyise the outcome is in the candles and the market reaction. Today is not about day trading but the medium term direction. If he disappoints the Euro is heading to 1.4000 and if he does something meaningful it will head towards 1.3000. It is a big play. The action will be volatile but the trade is in the market mood after he has spoken.

I will be square into both the rate decision and the press conference. I feel he will surprise the market with some positive action and the trend will be lower for the Euro and upward for the DAX. However I am not prepared to back that view with a trade prior. There will be enough points to be picked up after I know the direction, even if I miss the first 100.

Latest Trading Strategies.

  1. Dax Fade.

 

We have noticed that after the initial 8am market move the DAX is reversing that move on a consistence basis. Look to fade the initial market move either higher or lower after the first 15/30 minutes. Unlikely to work on days where there is a big story in the market (rarely at present) or where my condition call is Hurricane. Trade is worth 40/80 points.

  1. Dow/S&P Gap play from below.

The gap play has a high success rate when traded from a down gap. Look to set trades between 11.30am to 12.30pm. Be careful if there are major news releases in from the US at 1.30pm. Market may wait until then to start the move. If the gap close has not completed by 3.30pm square up.

 

 

Wall St (DFB)

Good ISM data kept the market buoyed. We are pushing at new highs and the market is comfortable up here. Today is all about the ECB the big day for US is tomorrow and the NFP. Market should remain stable to higher…

 

Conditions:Choppy Resistance: 16765 Support: 16690

 

 

S&P June Future

Very secure above 1900 good figures tomorrow and we will be talking about 2000. We will analyse the NFP in tomorrow’s note..

 

Conditions:Choppy Resistance: 1930 Support: 1914

 

 

DAX (DFB)

Huge day for the DAX. Totally linked to Mario Draghi and stimulus measures. We expect a big day and good news could test 10,000. Bad news and support should come in at 9800.If news is as expected with no big surprises the levels below will apply..

 

Conditions:Hurricane Resistance: 9960 Support: 9880

 

 

FTSE 100 (DFB)

Market is sliding towards support at 6800. A bit of fiz has left the FTSE as expectations for the UK economy slow a little. I do not see major downside and the 6800 level may be a good strategic buy. Slow market this one and for strategic traders only..

 

Conditions:Calm Resistance: 6840 Support: 6800

 

 

EUR/USD (DFB)

I think we will find out today where we are going. Make no mistake the big hitters are lined up on either side of this trade. Mario does his thing and the bears will have it. However if he disappoints the bulls will run all those stops the strategic players have at 1.3650,  1.3700, 1.3750 etc. Big game today..

 

Conditions:Hurricane Resistance: 1.3650 Support: 1.3550

 

 

USD/JPY (DFB)

Sidelined for today. Market will remain range bound. Tomorrow is the day for the dollar…

 

Conditions:Calm Resistance: 102.80 Support: 102.30

 

 

AUD/USD (DFB)

We can close the range to .9320 on the top side. .9200 still serious support. Policy announcements causing the volatility but the range still holds. This market is for the medium term strategic traders at present. Trades take a few days to play.

 

Conditions:Choppy Resistance: .9320 Support: .9200

 

 

GOLD (DFB)

Gold price movement is interesting. We have had a large fall and found support at 1240. We are not bouncing though and that leads me to suspect that the next move may be lower. I am leaving gold alone at the moment waiting for support. Not sure we have reached that level yet.

 

Conditions:Choppy Resistance: 1260 Support: 1235

 

 

SILVER (DFB)

Very similar story, and hard to differentiate the two. The big support in sliver is at 1865. We have not been below that level since 2010. However unless Gold can find some feet these levels will go. There is just not enough risk appetite in the market at present.

 

Conditions:Calm Resistance: 1880 Support: 1865

 

 

Market Conditions

Potential Moves:

  • Calm = 20/50 pts
  • Choppy = 60/80 pts
  • Hurricane = 100+ pts

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