Auctioning at $2880/MT, the biweekly GDT Price index fell by 3.3% from the latest release. Of note was the drop of whole milk powder which forms a bulk of dairy product export by 3.8%. This drop of auction price came as a catalyst and fed to the bear move which was in full swing yesterday. We saw what happened to gold, dropping by over 400 pips its move down has a contagious effect on the kiwi as New Zealand is amongst the top Gold miners in the world. Same bear move was passed on to Yuan, CAD and Aussie. On my previous post, I had put my emphasis on the 0.728 price level, this level was a very important level especially when viewed from the weekly chart where it has acted as support and when it was broken, it was retested a couple of times and it was a resistance line. Early on in August through September, there had been some couple of inverted hammers with an overbought stochastics in the weekly chart. Furthermore, there was a bear divergence move with highs coming when price action broke and closed above 0.745. Price will drop lower in the coming weeks through to December in my opinion, especially when momentum is taken into consideration.
My plan for this pair is to short at all highs, for day traders short at all highs in the 15 min charts when there is an overbought stochastic with a confirmation candle and target 40-50 pips and for long term traders, our target should be at Nov and Dec 2015 highs of 0.69.
Today trade as follows:
In the 15 min chart, if there is a price correction to the minor resistance lines marked, you sell. This will fall in between 38.2% and 61.8% Fibonacci levels drawn from yesterday’s Hi-Lo.
Sell Limit: 0.722-0.726
SL: 40 pips from where you initiated this trade.
TP: 1:3 Risk Reward ratios
Fundamentals to watch out today include the ADP Non-Farm employment change NY Open, ISM Non-Manufacturing PMI at 1400 GMT and then later we have the weekly Crude Oil inventories at 1430HRs. Most analysts are expecting an increase of Crude Oil inventories.
Otherwise, have a good trading day.