2018-05-06: Weekly update on OMX30, SP500, Euro/Dollar and the cryptos

OMX30

still appears trapped in a down-slopping trend. However, after the effectuation of the double bottom, whose second touch played out in April and the break out of the rectangular squeeze, we have been trading higher. At the moment price action is stuck just beneath the 1600-level, the upper band in the negative trend channel and, to cope, MA-200. In short, resistance on the upside is massive. Consequently, time does not seem ripe for bullish bets.

My opinion is, in spite of the strength of the last weeks, that a turn to the down side is more probable. However, as volatility remains high, the situation can change fast – thus taking profits or cutting losses should be done too soon, rather than too late. What are we looking for then? As we are positioned just below this massive wall of resistance, I deem any move, or break, to the downside as worth playing. Thrusts to the upside should be handled with more care as a quick pull-back is probable after the initial break.

Long-term view: Mildly negative
Mid-term view: Negative
Short-term view: Negative

20180506-OMX.png

SP500

Friday ended on a positive note after the testing of the important 2060-level the day before. As resistance-levels hold firm, this setup increasingly is beginning to look like a “recharge” before new pushes upwards. However, it is important to note that neither the sloping trend nor the box (whose roof overlaps with the gap-level from late March) has been taken. Until we see some kind of break, trading the SP500 is bound to be a tough business. As MA-200 meets up on the downside and the sloping trendline drops in from above; some kind of culmination appears nigh. According to my philosophy, this would make the odds of a “trend-shift” highly probable (but of course not certain, this isn’t math!) and something worth following.
To summarise, until we se a clear break (preferably to the upside, in line with the long term trend), my advise is to stay clear from the “buy”-button.

Long-term view: Positive
Mid-term view: Negative
Short-term view: Neutral

20180506-sp500.png

Euro/Dollar

Of late the dollar has strengthened against the big currencies. After trading horizontally since late January (in a lovely trading pattern – this is when trading gets easy) the dollar strengthened made a clear-cut break. This has coincided with similar moves in most currencies and, as highlighted in the latest episode of Macro Voices, against currencies such as the Swedish Krona and the Swiss Franc, the strength of the dollar has been apparent since early this year. The long term trend is still positive and, from a mid-term perspective, we are neutral. With this in mind, I see potential bullish signals as positive. However, keeping the strength of the break in mind we should see more of a stabilising before acting.

Long-term view: Positive
Mid-term view: Neutral
Short-term view: Negative

20180506-eurodollar.png

Crypto currencies

Of late most major crypto currencies have broken upwards. From a technical standpoint things looks set for a summer of new crypto rallies. After the long bear trend was broken in late April, a new positive phase seems to have been initiated – yes, this is how technical trading is supposed to work – and that we, until the charts tells us otherwise, should find positions to go long. While the flattened long term trends are somewhat negative, this in my view has to be seen in light of the extreme valuations from last year.
There are two perspectives to view this: either (1) the hype has just but begun and that these “new” currencies are here to stay. According to this story, the last months of massive selling in the crypto currencies was a much needed correction and that new highs are probable. Or (2), that crypto currencies was nothing but a fling which, under the compounded weight of reality and upcoming regulation, is bound to deflate. If you follow this perspective, this is but a correction before we continue down.
Either way, breakouts from long term trends are, in my opinion, strong indicators to buy. Adding the caveat that, while trading is a risky business as it is, trading the crypto currencies is ten times so. In sum, the odds for a positive break are good and, to be sure, better than what we have seen in the last months. We have witnessed the most confident move upwards in Ethereum and we might be about to see a break in Litecoin. Bitcoin and BitcoinCash have also seen similar moves – albeit with slightly less power.

Long-term view: Neutral
Mid-term view: Negative
Short-term view: Positive

Ethereum-20180506Litecoin-20180506

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