As I have discussed on this blog, I have expected Brexit to be delayed. I presented two primary reasons pertaining to British and European elites, but the most important is that “they” cannot allow stock markets to fall.
Brexit has now been delayed, and London has until October 31st 2019 to present a deal to Brussels and avoid a hard Brexit.
We have not yet reached the point of where democratic votes have been ignored, but I think this will be the next step. Do not be surprised if they do a second Brexit referendum. This would be the 5th case (to my knowledge) of democracy being ignored.
There was some amazing things being said by Fed chairs and also Larry Kudlow…as well as the banks.
James Bullard of the St. Louis Fed said to expect abnormal monetary policy including QE. Remember, this is when supposedly, the economy is the strongest ever.
Larry Kudlow also came out saying that he does not expect to see anymore rate hikes in his lifetime…As I have said for this year, the next move for rates is more likely to be a CUT. I think we are approaching that sooner rather than later. We may see it happen first in places like Australia, New Zealand and Canada, but the Fed may do it sooner rather than later because they are trying to keep stocks propped. If stocks do not continue to gain, I can see rate cuts and then, the final weapon, will be QE.
Remember, President Trump is fixated with higher stock markets because he needs strong markets for his re-election campaign. Also, the Chinese know this is Trump’s weakness and can wait out until US markets begin to fall so the President is forced to the table to make a trade deal, dictated by the Chinese, which will be stock market positive. However, if US markets continue higher, backed by the banks and the Fed, the trade war will continue.
In fact, President Trump has now started another trade war with Europe…my advice for the President would be: win the first trade war before opening the second front.
On the market side, US equities have been following my path, and we are awaiting the test of previous highs…which will likely break. Markets ended high for the week on Friday thanks to financials and energy (interlinked) as well as Disney…which unveiled its streaming service, and the teaser trailer for episode 9.
Uber has filed for its IPO, disclosing a loss of 1.8 Billion dollars last year. I have spoken about Uber and Lyft and how much money they have lost. In fact, many analysts agree that Uber may never be able to make a profit…Really only revenue stream they can play with is advertisements, they cannot increase prices because people will end up taking taxi’s.
Generally, we see a rush of IPO’s near the end of a market cycle, as companies know this is their last chance before a downturn to make some money through the markets. Lyft stock has been trading under its IPO price, and I expect Uber will do the same.
This week is a shortened week, with US markets being closed for Good Friday. The rest of the economic calendar:
- Tuesday: RBA Minutes, GBP Unemployment (Feb), ZEW Economic Survey (April), NZD CPI Q1.
- Wednesday: China GDP Q1, GBP CPI (March), CAD CPI (March).
- Thursday: AUD Employment (March), US Retail Sales Control Group (March), CAD Retail Sales (Feb).
Let’s get equities out of the way. We are to test previous highs, and a break would give us new all time highs (with momentum). I have provided reasons on why equities MUST continue higher, and I favour more upside. If we are to go lower, I would want to see how prices reacts at previous highs and then potentially take out the previous swing.
I will be watching the US 30 on the 4 hour for a breakout as markets break into all time new highs.
Really like the breakout on the Nikkei 225. Will wait to see how the next candle shapes, and likely await for a retest forming a new higher low.
The German Dax is also an interesting play which I will follow for a breakout as well.
Spoke about Gold set ups last week, and our 4 hour set up triggered, and now the daily set up is back on the radar. We are seeing a kind of head and shoulders pattern on the DAILY chart. I will await for a break of the 1280 zone for a move lower.
Silver is also about to test an important support level, and if it breaks, can go lower. Generally both Gold and Silver move together.
Copper is showing me something different for the metals. If you look at the weekly, we have started an uptrend wave, and are still looking for our first higher low swing. On the daily chart, if we break and close above 2.96 zone, we confirm our first higher low. There is a downside play too if we break below 2.8384 zone.
Will be interesting to say how Chinese GDP for Q1 comes in on Wednesday. Could provide a good catalyst for a breakout.
Both US and Brent Oil are reaching resistance zones on the daily chart. They can still go a bit higher, but I will be looking for an eventual reversal wave. The 4 hour is showing signs of bullish momentum stalling, and potentially weakening. Will watch to see how we break the 63.30 zone.
RBC Capital has put out a target of $75 oil, and potentially seeing $80 for 2019.
EURUSD was a great trade for us once we got the break of the 1.1250 zone. This trade required some patience since we did not gain the momentum for a push higher, however this occurred after the weak hands were flushed out. Wicks are important. The long wick told us that hands were being flushed before a move higher. I took my profits, however, I expect one more wave higher which would be confirmed with a second higher low once we break and close above the 1.1320 zone.
Not much more to be said on USDCHF that cannot be said just by looking at the image. The trendline displays an uptrend, and we are potentially reaching a flip zone. I would ideally like to see some sort of reversal pattern (such as a head and shoulders, or double/triple top) to give me more context. However the trendline is well defined, and am sure is on a lot of traders lists.
EURGBP warrants my attention. It is one I will play depending on the break. I am watching the 0.8650 zone, however we need to watch the 0.87 zone too. I must admit I like the pattern with a downtrend, then a range/bottoming, and we would expect a reversal next.
NZDUSD is looking ready for a reversal. We have a nice downtrend, and formed a double bottom pattern. Am looking for a break of the 0.6775 zone.
AUDJPY nice daily breakout. Will watch the open, but will prefer to see a higher low swing made first, which may come in the form of a retest of the 80.00 zone.
Spoke about GBPNZD last week, and we had the break on a Friday. I will now await the opening candle, and preferably a retest before deciding to take a position.
Lastly, a very nice NZDCAD pattern on the 4 hour. Nice downtrend, and we are seeing a bottoming pattern, a head and shoulders. Awaiting the break.