Hi Traders,
I believe it has started !! RISK OFF - run for your lives. In my recent talks in Singapore, I pointed out the exponential rise of the DowJones Index. What usually comes after an exponential rise ? A sharp drop, which we saw happen last week.
The risk-off scenario is when the market avoids taking risk. Stock markets tumble and from the Forex trading community will naturally see a sell off in the commodity currencies. Similar tumbles seen on the AUDUSD.
In brief, this is what happens in the risk-off scenario. Market avoids risk - sell down in stocks to lock in profits and to reduce risk - sell off in the commodities currency because they are naturally related to growth in the global economy and considered high risk currencies - market buys JPY (commonly used as the funding currency) to repay their loans. In another words, sell AUD, NZD, CAD and buy JPY, USD
Moving ahead next week, I would be looking for the risk-off trades to continue.
On a separate note, analysing the non USD related pair. I see a nice Gartley forming on the EURGBP. The PRZ is also at the Daily Trend Line resistance which gives us a better confluence of potential sellers there.
The momentum up is strong, can potentially look for a long all the way up to the Gartley PRZ.
Trade well and trade safe everyone.
Announcement:
I am holding a Harmonic Pattern Sharing Session this coming Thursday (8th Feb) - 7pm. I will also share the amazing trades that happened these past months. The whole focus of this session is to open your eyes to Harmonic Pattern Trading.
Hope to see you there. Invite your friends along too.