Santa (Claus Rally)…Thank You and Merry Christmas one & all

Hey there,
 
I hope my final blog of 2014 finds you in good festive spirit 🙂
 
So those of you following the information in my last trading blog (http://springboardyourself.com/2013/12/15/will-santa-rally-the-markets/) should have seen (and hopefully benefited financially) the highly predictive nature of the markets. Global stock markets rallied throughout the whole week as expected and EURGBP turned exactly 6 pips/points higher (0.8466) than the 0.8460 we expected sellers to re-establish their dominance.
 
[subscribelocker] So firstly let’s look back at a great trading week on the stock markets. My last blog focused on the FTSE100 and the S&P500 but you could have taken your pick on any of the major stock markets of Europe and the US as they all did a very similar thing. See below for just some of the BUY opportunities which were flagged on my technical indicators last week:
 
FTSE100 DAILY CHART (Trend Line Support, Stochastic Divergence, 786 fib ret, 1.618 fib ext, weekly hidden divergence, BUY indication provided)
 
FTSE100 BUY
 
DOW JONES (US30) DAILY CHART – A similar technical picture
 
DOW JONES (US30) BUY
 
DAX (German Stock Index) DAILY CHART – Momentum flows through European stock indices too
 
DAX (GERMAN 30) BUY
 
Remember the key thing here is that, as you saw from last week’s blog, we had a major fundamental reason to BUY stock market indices due to the Santa Claus Rally factor but we still needed a technical reason to enter and to help time our positions perfectly. At the time you are about to enter trade, you should have as many reasons as possible (i.e. a strong case) as to WHY you should be buying or selling a particular asset class. In the case of the above examples, each had very strong cases (never any guarantee’s) to buy. They have followed through my expectations and I can now sit on these positions and try to squeeze as much profit from them as possible.
 
The power of Technical Analysis/chart reading…
 
Another position identified in last week’s blog (to keep your eye on) was EURGBP (for sell opportunities) around the 0.8460 level. This was due to an abundance of technical reasons that were spotted in advance most noticeable the significant trend line resistance, horizontal resistance, a 61.8% fib retracement and some clear hidden stochastic divergence. Now I wasn’t expecting such a sharp reaction but react it did and on the very day, posted a sell signal via my indicators (see below):
 
EURGBP DAILY CHART 
 
EURGBP SELL
 
If this pair has a similar run down as the last reaction to the trend line in October, it should provide a nice start to 2014.
 
Charts which look interesting for 2014
 
Due to the festive break, and the reduction in market liquidity I won’t be looking to trade until the second week in January when I know the institutions have returned. But some charts that are interesting me are (but not limited to) the following:
 
NZDUSD DAILY CHART
 
NZDUSD
 
Based on the technical reasons mentioned in the following blog (http://springboardyourself.com/2013/12/15/will-santa-rally-the-markets/) I will be looking for price to break and close above the key trend line resistance. There is fantastic upside to complete a bullish technical chart pattern so will be worth waiting for if it does what we want. I will also need a BUY signal on my indicators to confirm strength to the upside before entry.
 
AUDUSD DAILY CHART
 
AUDUSD
 
This pair has been on an extremely bearish run, with price reaching the major low of 2013 at around 0.8855. Price tried to break it and failed on 2 consecutive days before pushing higher. The stochastic indicator is also putting in clear divergence suggesting a reversal. I will need to await a BUY signal on my indicators before proceeding with this one. A more conservative approach would be to wait for a higher low to form to confirm the changing trend.
 
USDCAD DAILY CHART
 
usdcad
 
This pair has reached a multi year level of resistance and is now beginning to show exhaustion to the upside. A new high has just been formed without being able to hold above (false break). There is also significant stochastic divergence suggesting a reversal is imminent. An aggressive approach would be to look for technical entries / buy signals around this area but this is recommended against given the fact we are heading into the Christmas / New Year break. Waiting for the first lower high would be a more conservative approach.
 
Summary 
 
As ever all of the above are for illustration/education purposes. Use your own skill, experience and strategies to qualify the opportunities you decide to take and as most importantly, risk manage.
 
So, this wraps up 2013. I hope it has been a successful and highly rewarding year for you and has set you up for an even better 2014. I look forward to being part of it.
 
I want to take this opportunity to wish you a very Merry Christmas, have a magical time with your loved ones and catch you in the new year.
 
Best wishes
 
Tom
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2 Comments

  • JM

    Hi Tom, Thanks for this and previous blog very informative learning and good guidance. Would you be able to do a section for gold next as it’s maybe an interesting cross road here?

    Reply
    • tfranklin

      Hey JM

      Really please the blogs are helping.

      Gold is extremely interesting right now. It is heading down to match the major low of last June around the 1180 level. This level corresponds with an almost perfect ABCD reversal pattern on the daily t/f. So it will be one to watch (in January) to see how it responds to this level. I would personally like to see it penetrate 1180 but fail to close below (false break) to then start looking for buy signals. If it breaks this level and closes below I would be apprehensive to sell into an already oversold market and would therefore wait for a retracement back to that level before looking to enter short.

      Merry Christmas

      Tom

      Reply

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