Gold long, anyone?

Gold. It's something apparently we should keep buying in this present age of fiat currencies but as technical traders we simply trade what we see - not what we think...with gay abandon!

We have a good technical set-up for a long: a low test bar off a trendline bounce and a technical level at 1639 which also correlates with seasonality (gold traditionally very bullish this time of year) and a 0.618 Fibonacci retracement. To top it all, we also have a reversal pattern on the hourly, so a good heads up that the shorter term buyers and sellers are 'playing ball' with the higher timeframe pundits.

Is SGDJPY finally ready to tilt south?

While our previous trade idea: NZDJPY thankfully invalidated itself (on the 7^th Dec) before we entered the trade, the SGDJPY, in our opinion, is looking good for a long-term sell – even if it is going against the seasonality....after all, nothing works the whole time and seasonality too has proven that.

Damned if we use the seasonals as a reason not to get into a trade and it goes in our favour – damned if we use it and it supports a trade decision which goes against us. 

Either way, Wednesday’s bearish pin bar reversal on the daily of SGDJPY rejecting the 69.40 level has not seen this price extremity since May 2010, where it last met and rejected sharply, signifying this is a strong zone of supply where bears will be creeping back into the market. Price action has not been above this level since 2008 so technically we can call it a ‘hard level’.

So, we took the break of Wednesday’s low with a stoploss above the high. The reward to risk makes sense to, with a target at 64.47 – three quarters to the bottom of the range. 

Trading the bounce short in this instance will be more lucrative than trading the breakout long.

Is NZDJPY finally ready to short?

So today is the day I’ve been waiting for...for quite some time! Regardless of the onset of the Santa Claus rally and that old temptress, NZDJPY has reared its head against a rather immense level of resistance, just shy of the 69.00 level. This level has remained intact for two years.

As the bounce is 70% more likely than the breakout, and the reward/risk profile infinitely more....well, infinite, it makes sense to short this bad boy before the such an opportunity – one we have been waiting for since March this year – is lost forever. 

We are blessed with a doji bar (reflecting indecision at the top which demonstrates to us that the balance of power between buyers and sellers in the market is tilting in favour of the bears. We also have divergence (for those of you who bother to look at such things)...and, the makings of a head and shoulders formation on the hourly timeframe. 

While I would prefer a high test at such a level, I shall place my order below Friday’s low, safe in the knowledge that I will only be filled if the neckline of the head and shoulders on the hourly is broken...and, thus, is confirmed as a reversal pattern perpetuating a move on the higher timeframes.

The reward to risk on this trade is epic, with a target at: 60.83 – giving it a reward/risk of: 16:1 risking 1%...or 32:2 (risking 2%)

 Above: NZDJPY (on the Daily)

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