Post FOMC - Trade Analysis

Yesterday's FOMC meeting was nothing short of a celebrity news. Its surprising how some finance portals put their headlines as 'shocking' which is indeed surprising. Are their analysts too smart with their Phd Degrees that they are out of tune with what's actually happening or are they paid to give out false information? A case in point being Barclays which went on to justify why the fed would taper (Read: Trading the 4 Components of Sep. FOMC). Either there's something that i'm missing or perhaps that is the job of 'Sold-Out' economists/analysts who get fat bonuses based on how much of wrong info they give out.

Anyways, moving back to our analysis, yesterday I noticed the Dollar Index, 12 hour chart forming a Wolfe Wave pattern as well. It is bullish in the long term and currently dropping lower to make the wave 5. Needless to say, this basically puts the Dollar index inversely co-related to the EURUSD.

Later today we will see the initial unemployment claims being posted. Bear in mind that last week's better than expected headline reading was skewed on account of under-reporting from some states. So expect a downward revision. Markets should not be reacting adversely but given the insanity, who knows.

Below is the USDX chart, with price now in the 'sweet zone' A reversal could happen but at least not immediately.

Dollar index - Wolfe Wave Pattern, 12H Chart

EURUSD - It might seem like a missed opportunity but it pays to have patience. Euro has also crossed into the 'sweet zone' with upside targets in the region of 1.37 We will have to wait and see how price plays out here. This weekend, Germany, Europe's behemoth will be heading into elections. A Pro-Merkel victory would see the ECB heaving a sigh of relief. But it could be crisis time should the opposite happen. Given the above fundamental view, sitting on the sidelines is the best bet for now.

EURUSD - Wolfe Wave, Price in Sweet Zone

USDJPY - This pair has triggered a sell and our stops reside at 100.59. The first target is going to be 95.95 followed by the final target of 90.7.

USDJPY - Wolfe Wave, in Play

It would be best to book some profits around the first target, move the trade to break even and some pips (to at least cover the negative swaps and/or commissions) and sit back and watch.

Note: I will update the trades on Goldman Sachs and Staples later today. Both of which are shaping up nicely.

Update on charts

No time to write.. so just charts for now... but some food for thought.. the US Debt Ceiling is still due. A reversal is not too far away. More later.

EURUSD - Wolfe Wave Update

USDJPY - Wolfe Wave Update, In Play

Dollar Index - Now in the 'Sweet Zone'

Morning Market Brief - 10/09/13

Of the three pairs, EURUSD managed to make some decent moves, having broken the key price point of 1.32375, closing the day higher.

EURUSD - Daily Charts, 10/09/13

Today will be important to see if this level has indeed been breached. A close higher indicates a move to 1.342. 4-hour Stochs are in the overbought area, so there could be some moves to the downside. What matters is the daily close today. I expect a bounce off 1.32316 level and will be watching the 4-hour price action. A 4-hour close below this level along with a bearish stochs could be the first signs of a possible exhaustion in the upside move to 1.34.

EURUSD - H4 Chart

The Yen pairs literally seem to be stuck in a range. Today's early data from China came out modest but better than expected. Nikkei has been positive for most of the Tokyo session.

GBPJPY is looking to break the 156 region. Should that happen, we'll be dropping the GBPJPY pair off our watch list.

The US Dollar Index is down 0.1% at the time of publishing this article. It is looking bearish (since last Friday), currently at 81.73. If this continues, expect the USDX to drop to 81 - 80.50 levels.

US Dollar Index - 09/09/13, Close

In stocks, Staples and GS are looking good on the portfolio for now.

Not much of economic data today or tomorrow, so the Yen pairs could just continue ranging. Congress goes to vote tomorrow in regards to a military strike. Ironic that on the anniversary of 9/11 we have the US planning to vote whether to support the rebels who already have the backing of Al-Qaeda and the bigger irony is that of Obama, a Nobel peace laureate who wants a war, much against international opinion which recommends a UN resolution.

Sep-taper is going to turn out interesting. More and more editorials coming out trying to understand the recent jobs data. The general take away is that the unemployment rate dropped due to reduced work-force participation, furthermore a downward revision of June/July figures hints a slow recovery phase. Fed might be looking at a small taper of $10bn. There's also the talk of the famed US Debt Ceiling end of September. Contrarian views suggest Bernanke would hold off any taper at least until the debt ceiling issue (which the US Congress famously is known for burning the midnight oil) is resolved, which could mean we'll be looking at a possible Octaper?? Also concerns from emerging markets on capital flight needs to be taken into consideration, least it spirals into another crisis rubbing off from one economy to another.