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"The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell." ~ John Templeton
Last Week's Action
Back to normal this week as the shortened trading schedule of last week is now behind us. No real action as the U.S. markets closed marginally higher on Friday and for the week itself. Tuesday produced a decline for the U.S. stock markets majors but TMS questioned the authenticity of the decline in which we labelled it as a holiday hangover move! Markets then staged a slow upward recovery in which 10400 became pivotal for the Dow Jones for the remainder of the week.
The Euro & the Sterling declined against the dollar last week in which the Euro wasn't interested in attempting the 130 mark. A touch above 129 is all that the Euro produced and with it the declining action took us near the bottom of the range.
The Sterling made a new recent low at 15300 but in our previous article we safely suggested that a continuation in downside will not necessarily be the case as hidden support will be kicking in. The following day the Sterling staged a 200 point rally in which the currency moved above 15500.
Euro Action
A fall from 129 saw the Euro move 250 odd points lower in which the market halted at 12650. With the 127 mark acting as a pivot are we to move higher from this recognised pivot or lower?
More to the point the Euro has been in just over a 300 point range for a whole month. This range cannot drag on forever and eventually we will break away north or south from the current boundaries.
It would be unlikely for the Euro to continue in this range for long. We feel that this week could well be definitive in producing a breakout from this range.
Four Hour Euro Chart
The Four Hour Euro chart above basically shows us everything of technical importance. Firstly the chart acknowledges the range bound Euro environment mapped out by the red range lines.
We then also have a more recent tighter pattern that the Euro has been travelling within. This can be seen by the yellow expanding wedge. Should the market break the yellow wedge to the downside then this won't mean a total breakdown as long as prices remain above 12580ish as the range itself won't be broken should the market stay above this level.
We also have the purple technical frame within the yellow wedge and the 300 point Euro range. Again if the yellow wedge breaks to the downside then as long as price remains above 12580ish it will also have the purple framework which would provide the Euro with support at the same sort of levels.
All in all the week could be detrimental for the Euro's bigger moves as we could either shoot higher or simply dive lower. Regardless of the direction, TMS says, the next major move will give a direct 500 points out of the current range.
Sterling Action
The Sterling is failing to make much progress from its pivot point of 154. The market is simply hovering around the level and until the GBP.USD produces a convictional move it will be pointless to speculate at this stage.
If the Sterling produces a new low this week then once again it won't necessarily mean extended downside thereafter. On the other hand a real move above 154 with a four hour close above 155 would see prices head even higher should this occur.
Four Hour Sterling Chart
The Four Hour Sterling chart above shows why TMS stated the previous low wouldn't mean continued downside and instead would create a move higher. From the 15300 low, price moved above 15500 the very next day!
15300 needs to provide support for the Sterling but if price peeps below 15300 then the blue channel support could well kick in once again. TradingMarketSignals.com stated that the Sterling would not be able to move above 160 and that is the very high the market made in early August. Since then price has drifted lower slowly but surely within the blue downward sloping channel. We would expect price to hold and break upwards above the blue channel.
A downside break would open the gates to 150 without a doubt. For now though this week will be pivotal for the pound in which it will likely deliver its medium term directional verdict in the next five days!
You can follow the analysis, market action and TMS system signals that have gained 886 points in August and have racked up an impressive 812 points for the month of September so far!
My name is Ajit Singh and my work with the financial markets started from the young age of 17. We are www.tradingmarketsignals.com and in August our TMS system has gained 886 points. For September our TMS system has already racked up an impressive 812 points(Closed signals) from five major markets: Dow Jones, Euro, Sterling, FTSE100 & Crude Oil in addition to which some gaining signals are still open with more triggers set to take place this week!
Special Attention: For a limited time only TMS is issuing a new client monthly trial rate of $48 in which members will be able to lock the price for the months thereafter. Annual Memberships are no longer available.
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