Is this time different for S&P500 and the upcoming FED meeting? Cotton, AUD and more

Is this time different for S&P500 and the upcoming FED meeting? Cotton, AUD and more

AUSTRALIAN DOLLAR

The chart is making higher highs and lows. On Balance Volume (green line) is also making higher lows suggesting that this market is still in accumulation. The AUD reached the previous major top (September 0.6890) but no distribution has taken place so far. This is a sign that we could see another run towards that high. 

Australian Dollar analysis 10/27/2019

Such development can also be expected based on the seasonal chart (blue line). It is suggesting another upward push will begin this coming week.

To enter long here we need a complex price action signal.

CANADIAN DOLLAR

I will look for short-term short signals in Canadian Dollar.

Canadian Dollar Analysis 10/27/2019

The market is starting slow down near the last significant resistance. The seasonal is pointing to the downside. And my short-term COT pattern appeared this week suggesting a short-term down move.

A wise thing to do will be to wait for the market to make a lower short-term high to look for a short signal. 

SOYBEAN COMPLEX

Another short-term COT pattern appeared this week in the Bean complex. This time it was in Soybean Oil. All this makes me think the down move which started this week can continue. I'll be willing to take further short signals in the complex.

COTTON

One of the oldest commodity that is trading today is bringing us “back to the classics”. Yes, classical technical analysis. The next illustration is showing a weekly chart of Cotton.

Cotton Weekly Chart Analysis 10/27/2019

Here you can see that Cotton is in a downtrend since June last year. Marked with red is the trendline of this year-long downtrend.

Next is the daily chart.

Cotton Daily Chart analysis 10/27/2019

Again using the classic charting techniques we can identify a rising channel. This channel has reached the resistance of the weekly trendline. At the same time, the market is reaching another resistance zone around the 65.20 level (blue horizontal line).

That is a classic setup for a continuation of the downtrend.

Now back to the modern stuff :)

Looking at the daily chart we can see two days with increased volatility, accompanied by a big volume spike (yellow). After that, the market stayed in the range of the last of those large range days. And right now it is being squeezed in a tight range!

Let's add the extreme bullishness of the Small Speculators and the Seasonal chart pointing to a decline (blue line) and we have a market set-up to the downside. I'll be looking for short-term signals with a target around 60 level.

STOCK MARKET

Before we go to the position I am still holding in E-mini S&P500, let me show you an interesting coincidence! See the chart below.

SP500 index analysis 10/27/2019

Vertical blue lines are marking three Federal Reserve meetings. Two of them already in the past. One is coming on the 30th of October. 

What is interesting here is that again we are at the same price zone as we were before the last two meetings. 

Also, see the highlighted with yellow daily bars. They look almost identical in size and shape. Both of them happened on Friday, four days before the FED meeting. What are the odds of that? Strange market is :)

Now since I am still holding a short-term long position in the S&P500 index I am asking myself the question:

“Can we see a decline like it happen the last two times? Should I close?”

SP500 real position 10/27/2019

The market reached my second target, and it is now R/R = 1:2. As you can see from the screenshot I am continuing with moving my stop-loss up. I am doing this because the market continues to show strength. We are in the best period of the year according to the seasonal pattern. Also, cycles suggest more strength.

There is also the FED which will either lower the rates or keep them on hold till December. Both decisions I think are bullish. 

From the price action perspective, we see a variety of bars which are associated with strong markets trends.

Because of the FED's meeting, I expect Monday to be an inside day. The worst scenario is to have a break below Friday's low on Monday. 

I am still expecting new all-time highs. Let's see if it will be this week.
 


Now, let's find your missing piece!

Vassil Banov,
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

TAGS: FED, Federal Reserve, CAD, Canadian Dollar, SP500, Soybean Oil, Cotton, AUD, Australian Dollar, Price Action Trading, Seasonality

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