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- By: OM ED
Free trading week at www.trade4freedom.com
The markets next week..
What a crazy week it has been. We at Trade4freedom have maintained for over a year that the markets would drive the DJ down to the 8000 region. We just did know that it would be so fast and with a record high in the VIX. The VIX hit an historical high of 75 this week as there was global panic in the stock markets.
It has been an extremely volatile week, and although it can be easy to make money if you are on the right side of the trade, it can also be easy to lose a lot of money if you are on the wrong side. Once again we would like to remind you about money management. I personally never use more than 1.5 % risk on account and in this volatile market I have had to widen stops to 100 pips on day trades and have reduced the risk per trade to 0.5%. I am actually looking forward to the time when the market settles down again and you know once a trend has been set for a session that it is not going to reverse on you by several hundred pips.
GBPJPY hit and exceeded all of our targets of last week’s news letter. This week there are 2 scenarios that could play out.
1)
There is now a 1-2-3 buy formation on the 60 min chart that has upside targets of 172.4 , 173.63 , 175.96 , 177 ( the 177 also ties in with the 50% fib retracement of the down move 188.56 to 166
2)
This is not a reversal off the bottom and this is in fact a bearish continuation pennant on the 60 min chart. If GBPJPY breaks through 168 a 1-2-3 sell formation gives downside targets of 165.89, 164.50, 162 and 155.48.
Looking at the 60 min charts , and based on the G7 meeting comments and the DJ 1000 point rally late Friday in reaction to them , I think the long scenario plays out the early part of next week in to the 50 % fib retracement of the down move.
GBPUSD broke through that 1.7550 level with a vengeance as money was moved into the safe haven of Treasury Bonds. If we get some form of bear rally in the market next week and the initial panic dries up we may see some devaluing of the USD . There are 2 scenarios that could play out depending what the overall market does.
1)
Bear rally in the stocks a 1-2-3 buy formation plays out in the GBPUSD and if 1.7113 is broken we have upside targets 1.7167 , 1,7270 and 1,7550 ( the original break down level mentioned as being support last week)
2)
The DJ crashes through 8000 and the panic continues into next week a 1-2-3 sell formation comes into play on the 60 min and if 1,7050 is broken we have downside targets 1,7020 , 1.6963 1.6830 , and 1,6610
OIL hit and exceeded our targets last week and we are still selling the rallies. However we are expecting a retracement.
1)
If 80 level holds oil will likely retrace with upside targets of 81.86 , 83.47 and 85
2)
If the 80 level gives way then we will see downside targets of 76,75 , 75 , 72.5 and 70
Once again we wish you luck in your trading next week. The team at Trade4freedom expect it to be another volatile week