24 February 2017 - Daily Brief

Market update Friday February 24, 08-00 AM GMT

The Gods of markets have finally heard us! Massive greenback sell-off across the board took place yesterday. Seems like uncertainty starts turning into a trend. Even if this trend is a local and temporary, it could give a sweet fresh profit. We stepped out of majors yesterday, focused on exotics like USDMXN, USDZAR, and ran away from the markets with our daily catch. The main question now: is this a new trend? Will it continue? Our technical outlook tells: yeah!

Precision metals as fear assets had a sky rocketing surge yesterday. GOLD managed to break above 50% Fibonacci retracement level and important psychological mark of 1250.00 USD per ounce. SILVER and PLATINUM followed it. This achievement opens the road to the next resistance range of 1274.94..1280.00, which is also 61.8% retracement of the downtrend which started in June 2016. Look at the daily charts, aren’t they bullish??

Dollar index is forming a huge Head and Shoulders reversal pattern on daily chart. Moreover, there is a potential of MACD divergence, which is very strong and rare bearish signal.

This pattern together with the divergence has potential levels to work out down to the levels from November 2016, when the huge buying “Trump Euphoria” started. It’s a long way to go and lots of confirmations will be required, but it could give us fresh daily profits in the upcoming weeks at least. 

We got also a recommendation for those traders who are rushing to join the uptrend in US stocks. We do not think that buying on historical top is a good idea. Remember, that greed vs fear factor is very high nowadays. The latest movement is driven by people who afraid to miss the opportunity and get into going train. They forget that there will be always opportunity on the markets. It would be much wiser to wait for a pullback down, analyze if the further upside trend could be sustainable in a long term.

Trading major currency pairs is not so attractive still. We will prepare a huge weekly report on Monday to have a mid-term positioning. The only exception today could be British Pound, which surged yesterday and has a potential to continue its’ bullish run today. But remember, that this currency has a restricted upside potential due to the Brexit issue continue to weigh on Cable.

After taking profits from yesterday new lows, we’ve been expecting a pullback in exotics, and we already jumped in fresh shorts of USDZAR. Look at the hourly chart below:

We’re ready to add shorts in a conservative sell zone, which is around 13.0000 – 13.0400. We’ll consider these levels as a gift from the market.

Trading strategy of Mexican Peso could be much more easy. Just wait for early hours of NY trading session, sell USDMXN, hold it 2-3 hours, take your money and run. Don’t forget to make it official!!