Seasonal influence is to the upside. COT data speaks of a bullish setup. The market is falling while the On Balance Volume indicator is rising. Thus showing accumulation in place (see the arrows on the chart below). A big down day on a huge volume falls below the last significant bottom. Then immediately turns back up. Currently, this instrument is trying to make a higher short-term low.
Sounds like a great buy opportunity isn't it? The only problem is that the instrument is Orange Juice. This is a very thin market and should be traded as such. Anyway, I'll take a good signal if I see it.
Speaking of a good buy let's look at some currencies.
Australian Dollar is trying to finish its consolidation period. My research suggests that it is being accumulated. That indicates that the most probable direction after the tight range is to the upside. We can see one more push down towards 0.6721. Then if the currency starts to take out the recent daily highs, I will look to take buy signals.
Canadian Dollar is another currency worth looking at. Again the market is falling while being accumulated. See the chart below where the green line is the On Balance Volume. The seasonal indicator, courtesy of Larry Williams is showing that we can expect an up move.
I like what the price action is showing the last few days. An attempt to break the last bottom ended without success and the Friday's bar ended in a pin bar form. That day also saw a spike in the volume. I read this as accumulation and will look for buy signals in the coming week. This one has potential because the short-term target is in the 0.76 area.
Last but not least, I'll look at the S&P500. I don't believe the recession is coming (at least not yet). I also keep my bullish stance. But the index can drop more on Monday because the US-China confrontation is deepening.
All of this reminds me of a chess game. And like every good player (which I believe both sides are) I expect the next move to strengthen the defence. In other words to introduce local stimulus. FED will cut rates next month. Trump's administration will offer something on their own. That will be bullish for US stocks.
Founder of Piece of Trading
Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer
Seasonal indicators courtesy of Larry Williams, ireallytrade.com. Charts made with TradeStation®. tradestation.com
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