So, since today is a Monday and there is no major economic news from either economy, we shall look to mince Vice Chairman Stanley Fischer’s speech he made over the weekend at the Program on World Economy on Saturday. Amongst the highlighted issues is the employment and inflation concerns and if this is analyzed considering Yellen perspective, then it is obvious that the economy is almost at-if not at full employment and inflation is forecasted to reach the ideal 2%-check core PCE inflation which was 0.4% from the 2% Fed target. What we can conclude from Fischer’s remark is that the economy is strong enough despite the global slowdown and majority of Central Bank shifting to zero or negative interest rate. If we check the Fed Fund Futures, chances of a rate hike have increased to 88% for a 25-50 basis point increase and a 12% for a 50-75 basis points increased in the September meeting-check them out here http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
With Fischer’s speech over the weekend, the markets opened with a gap down and this has been our expectations anyways looking at the fact that there was a bear divergence in play since mid last week. Most of the time, there is a tendency of a gap to be filled before the trend continues and this is what should be expected in the European sessions. Our strategy is for us to sell at 61.8-100 Fibonacci levels drawn from Friday’s Hi-Lo and ride with the tide.
Look for sell opportunities in the 15 Min chart as follows:
Sell Limit: Between 0.7245-0.726
Stop Loss: 0.73
Take Profit: Trail profit
Have a good trading day