We kick this off with Bitcoin. Compared to last week, there wasn’t much action this week. I've been mainly concerned about a recent low and how this consolidation could influence its future trajectory. This side-ways movement could be a critical phase in determining whether we break through a major support or pull back.
In contrast, Ethereum has been displaying relative weakness. Even as Bitcoin continued to hit new highs, Ethereum could not muster up the strength for a breakout.
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"I focus on strength and short on weakness. Ethereum and altcoins, which I see as weak currently, are a no-go for me. Instead, I'm keen on the Bitcoin rally."
Currency Market: Dollar, Yen and More
The dollar index has been on a free fall, which provides a fantastic opportunity for short positions. This decline has worked out great for trading Forex this week. This was primarily influenced by a nominal CPI (Consumer Price Index) print, which significantly affected the overall market.
Speaking of other currency pairs, let’s discuss Yen briefly. An interesting pattern was noticed on many Yen trading pairs - a breakout over the resistance, followed by a drop. This trend was seen in pairs such as Aussie-Yen and Cad-Yen. I won't be surprised to see some Yen strength demanding our attention in the coming weeks.
In contrast, it appears the Euro is outperforming here, achieving a sizable breakout this past week with the aid of CPI. This robust trend is making trading more enjoyable. One unexpected thing is the weak pound, which couldn't replicate the massive move of the Euro, showing some relative weakness.
The New Zealand Dollar and the Aussie Dollar are showing similar relative weakness. If there is a momentary lull in the dollar and it bounces back, it might be worth looking at these weak options for shorting.
Equity Markets: Trade Ideas
It’s time to turn the conversation towards equity markets. Be sure to check out the trade ideas on the website at statsedtrading.com. It’s quite clear that the SPY (SPDR S&P 500 ETF Trust) is thriving and although I'm inclined to look for short positions on weak names, I'm still game for participating on the long side, given the clear trend.
"The SPY may be heading into overdrive at resistance. But don’t get the wrong idea — being 'overdone' can be resolved in two ways: via price or time."
I'm anticipating that the SPY might go sideways for a few days or weeks as we observe some level of consolidation.
You can see slightly smaller indices like the MDY (MidCap Fund) catching up while the IWM (iShares Russell 2000 ETF) participates in the stock rally. This broad market rally reveals that larger stocks are leading the charge.
Two interesting sectors to watch are the Uranium sector and Communications. Uranium stocks have been strong contenders, breaking through a base to form profitable trades. The Communications sector is showing relative strength with a breakout and resilience near its all-time high.
Even the Technology sectors represented by the XLK (Technology Select Sector SPDR ETF) are delivering weekly closing highs - certainly not a bearish sign.
Potential Trade Ideas
Now that we've reviewed the markets, let’s dive into a few potential trade ideas that you might want to keep track of.
DUOL 0.00%↑ : A news-driven gap followed by a pullback and skyrocketing above the anchored VWAP puts Duolingo on our radar.
MNST 0.00%↑ : This looks similar to Duolingo with an anchored VWAP just before the gap. If it breaks through the $55 area, it’s worth noting.
AFL 0.00%↑ Solid base support at the VWAP following earnings makes this a potential slow burner.
BLNK 0.00%↑ : A more speculative play with a whopping 27% shortflow and potential break at the $4 area.
WOOF 0.00%↑ : A solid bottom base with support from the low anchored VWAP.
BYND 0.00%↑ : High shortfloat of 40%, positive action off of recent low and holding the low anchored VWAP.
AI 0.00%↑ Despite recent pullback, a 36% short float and support at gap VWAP make this promising if it breaks past $30.
Remember that these won’t always pan out, so it’s essential to set price alerts and continue monitoring them.
Wrapping it Up
Wrapping up the weekend market analysis, the focus has been to identify clear leaders and laggards in currencies and sectors, staying watchful of potential trade setups in selected stocks. Observing market reactions is a key part of this process, as it can provide added insights that static data might not. Don't forget to subscribe to our email list at statsedtrading.com to stay updated.
It's been a pleasure sharing these insights with you — enjoy your weekend and take a break from the screens. Remember to like, comment, share and subscribe - the algorithm certainly thanks you for it. Until next time, happy trading!
"Let the market guide your decisions - not your emotions."
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I don't trade Forex, but I do watch central banks closely, for monetary policy - BOJ is the rogue affecting the Yen pairs. They seem to not care about stepping in a t any moment and throwing a proverbial wrench in.
Thank you very kindly for the crypto update as well, I appreciate all your hard work!!
Excellent report, Thank you!
I don't trade Forex, but I do watch central banks closely, for monetary policy - BOJ is the rogue affecting the Yen pairs. They seem to not care about stepping in a t any moment and throwing a proverbial wrench in.
Thank you very kindly for the crypto update as well, I appreciate all your hard work!!