Keep Trading the Technicals to Take Advantage of a Quiet News Week

The absence of any significant diarised news announcements this week was highlighted on Monday in Trading Strategies to Suit The Week of 18th October. It’s a case of so far, so good, for those who took on board the approach of using technical indicators. Halfway through the trading week and the finance site ‘Top Stories’ has swung around to news about crypto. That can usually be taken as a sign that Bitcoin and its peers have experienced a dramatic influx (or outflow) of cash, and a lack of potential shock events currently in play. Evergrande, central bankers, OPEC oil ministers and CEOs of big corporations all appear happy to stay out of the limelight for the time being.

Trading GBPUSD Using Technical Analysis

Sterling continues to show strength thanks to the long-term momentum formed by a post-Brexit relief rally. More recently, the Bank of England has shifted its guidance to a more hawkish tone, and the likelihood of rate rises also supports the pound.

Monday’s narrow trading range was identified as a price consolidation pattern, and the security of the 1.37 support level offered an appropriate stop-loss for long GBPUSD.

The breakout to the upside occurred on Monday but in light trading volumes. As a secondary indicator, the lack of increased volume might have left many not taking the trade, but the (blue arrow) doji on the hourly chart at 7.00 am on Tuesday was associated with increased volume. It also saw price break to the upside once more and supported a run-up to a current week-to-date high of 1.3834.

Source: IG

At that highpoint, the Doji (red arrow) posted at midday Tuesday was followed by a break to the downside. Taking that classic trade exit point as a signal to close out the trade would have optimised profits on a trade still showing an unrealised profit to those who decided to let it run.

Trading S&P 500 Using Technical Analysis

The world’s benchmark equity index has had a volatile six weeks. The dip seen at the beginning of October and analysed in the research note ‘Diamond Hands’ Traders Get Ready to Buy did mark a dip worth buying.

Source: IG

Monday’s somewhat speculative trade based on a gap-fill due to overnight weakness in Asia did come good. The initial profit on the trade, from 4456 to 4370, was minimal, but bulls dominated the open of US exchanges, so that took the price even higher. S&P 500 currently trading at 4520.

Final Thoughts

Successful trading comes down to a range of things. The list includes picking the right broker, effective risk management, developing a trading mentality, trade and cash management. One of the crucial and sometimes overlooked points comes right at the top of the decision-making process – identifying market conditions and what strategies to apply.

Crowdsourcing information about scam brokers can help others avoid falling into the traps set by disreputable brokers, and you can share your experiences here. If you want to know more about this particular topic or have been scammed by a fraudulent broker, you can also contact us at [email protected]

About the author: Justin Freeman

Justin is an active trader with more than 20-years’ industry experience of working for big banks and hedge funds. He has an inside knowledge of how the financial markets work, thanks to roles including trader on a $750m Event-Arbitrage desk and CRO and COO of hedge funds running a variety of strategies. From stat-arb and trend-following CTA to fixed-income relative value. Firm’s he has worked at include big banks like Citi, and prominent hedge funds including D. E. Shaw and Millennium Capital Management.

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