Sandy Jadeja explores upcoming trading opportunities. Market Snapshot he year 2011 will not be forgotten quickly. It was a turbulent year that gave investors a rollercoaster ride. Uncertainty about the economy and rising unemployment has we need only movement. We had plenty of opportunities in 2011, especially in forex. With the euro still on the rocks it be ruled out. The $1890 area will probably be re-visited at some point. Until a clear direction has been decided we may see affected people deeply, leading to global civil unrest.
Given the circumstances, the markets have held up surprisingly well. Although we have had sharp declines, a recovery has brought prices back to a point where a continuation to the downside next year is possible.
In 2007 there were very nasty falls; the recovery took two years, and even then did not exceed the high of 2007. Similarly, it seems the year ahead has many challenges. But along the way there should be plenty of opportunities for traders, who will be able to capitalise on short-term movements. The key will be flexibility.
For nimble traders, the opportunities will be on both the bullish and bearish side. There should be plenty of volatility to satisfy the appetite of swing traders. We will need to watch out for sudden ‘flash crash’ movements – by definition these catch traders off guard. Therefore attention to risk management will be essential. Maintaining a smaller position size, rather than overtrading an account, will help prevent large-scale damage.
The UK FTSE 100 has managed to rally from its lower support levels. With 5015 followed by 5200, the index has also managed to reach for the 5445 level once again. Clearly the FTSE is now trading within a range from 5200 to 5820. A T Figure 1: FTSE 100 Daily will be interesting to see how currency pairs will fare. Much of 2011 focused on the eurozone; with elections in the United States it will be important in 2012 to watch the US dollar as well.
some range-bound activity. Nevertheless, it will certainly be worth keeping a close eye on the metals.
We should be looking for opportunities across various markets – stocks, commodities and forex. Each of these arenas has its challenges; but as traders
Gold will also be interesting to watch. If there are further declines in the stock indices and further currency crises, the possibility of higher gold prices cannot
JAN/FEB 2012 Market Snapshot
For nimble traders, the opportunities will be on both the bullish and bearish side. There should be plenty of volatility to satisfy the appetite of swing traders. We will need to watch out for sudden ‘flash crash’ movements...
Figure 2: Dow Jones Daily is that we have not yet cleared major resistance on the monthly charts at 12876, which will need to be broken for a bullish move. The first five days of January should be monitored: they could point to the direction for the rest of the year.
It looks as though stock indices should provide some exciting moves based on current patterns. Once the consolidation patterns have been resolved both the bulls and bears will be striving to take control. For this reason we look forward to the volatility in 2012.
breakout is needed – traders will just have to wait to see in which direction to trade the break. In the short term the index will need to maintain a firm stance above 5460 and, of course, 5200. If these levels fail to hold at these levels things could get very nasty and a severe drop could be on the cards. For the bulls to return there will need to be a clearance above 5600 to target 5820 and then the 6000 level. Currently the momentum is bullish, but a reversal could occur.
On the Dow Jones resistance at 11472 pushed the index lower. The 11360–11345 level has served well and lifted the market to the upper channel. Momentum remains bullish until the 12350 target is met, but the Dow must hold above 11680 for this to take place. The concern going into 2012
Sandy Jadeja is Chief Technical Analyst for City Index, a leading provider for spread betting, CFDs and foreign exchange. He has been involved with the financial markets for over 23 years and is a respected and widely recognized analyst and trainer in technical analysis and trading strategies. He appears weekly in the media and financial press and can be reached at firstname.lastname@example.org
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