Fiber and Cable for the week 8-5-14
Last weeks tally was positive 80. I caught about 90 of the cable's down on Thursday, got 30 shorting the NZDUSD with a simply trend following support broken turned resistance and a 40 pip loss Tuesday on the cable with my botched analysis. I hadn't really been looking carefully at the charts or looking at the COT so hopefully I'm up to speed now. Cable on Monday last week was a continuation pattern, not a reversal.
Fiber - COT shows a 2 year net long by the commercial but open interest is inconclusive. We would be expecting a seasonal low about now. But US yields are up and USDX is up putting down pressure on this pair. We're waiting for a break in market structure to show we're to be headed up, and not a 1 pip stop run, a real break. As of now, we're in a daily sell program, but cautiously.
The week formed a pin bar at the 1.34 big figure and bouncing off the daily swing 50% fib extension at 1.3675. NFP was Friday and I was wondering if the insiders might reveal their hand ahead of time. Wednesday London in red sent the price down. The NY session bought it all up instead of continuing down. Is this an indication someone in NY knew the NFP direction ahead of time? Wednesday's thrust makes me think so. 2-6-3 points is almost exactly what a reversal profile looks like. Strong decisive rejection of a support level. Almost. Point 6 is the 50% fib of the major swing high to low on the daily starting from June 2013 and March of 2013 to May 2014. Plus a 1.3400 big figure and historical S/R level. The "almost" is that Wednesday the ideal would be if point 3 had reached above point 2. It was decisive though and was super typical of a reversal profile in all other respects: the thrust came near NY close (or at London close is ok too). In this case NY bought London's sells. Thursday was an accumlation day, Friday the big jump. When point 4 cleared point 3, market structure was broken. The 200% extension of the break was achieved at 1.3443. That's the distance from point 6 to 3 sitting on top of point 3 to give us point 5. Point 1 was also taken out by 1 pip, confirming market structure is bullish. Just enough to trigger the pending SL's there and let the NY guys take profit. I don't like it to be 1 pip though. I want 10 or 15 pips. Blow through it. If it had been more decisive, I'd say lets all get long next week.
Fiber: Cautiously bullish next week at least for part of the week, while keeping our bearish outlook. If Monday can break above point 5, preferably in a weak indecisive way, I'd think we're heading down again for the week. The downtrend we're in now isn't done and the near term target should be 1.3350. If we break lower Monday, I'd expect a bull week. The WPP is at 1.3412 so maybe we'd hang around there or hit the big figure at 1.3400 before the bounce up on Tuesday. It is a long way down to 1.3366 again and I don't think we'd go that far to run stops, if the goal was a higher week. If we're headed up, we might be reaching for 1.3520. There's probably a big bearish order block there. The Monthly PP is at 1.3484 so maybe we'll have some weak price action up to there and tumble again. The safest thing to do is to wait until we hit one of these and see decisive rejection lower, then get short again.
Long term Fiber goals would be 1.3220 and 1.3100 but we may never see them.
Cable - The COT shows the commercials are at a 2 year net short and open interest sky rocketed last week showing everybody with money is in a sell program. USDX is up and US bond yields are up putting down pressure on this pair. Seasonally we'd expect a low right now but whatever. It is what it is. The Cable is likely in a major mega trade turning point that occurs once or twice a year. Sell it baby, sell it. Friday's noise left market structure intact. We had a bounce off the 1.68 big figure Friday and in a bullish order block from mid June. Classically we'd see Monday close higher, then the week goes down. Would really love to see an intermediate term reversal up that would allow is to get short again but there was no evidence that was happening last week. We're bearish on the week.
Sell at 1.6850 and I'd expect bounces at 1.6750 and 1.67. These are good places to take some profit. I'd really like to scale into this and accumulate shorts. The place we're reaching for is several hundred pips, maybe 1.62 or lower. Any retracement up in this environment will be suspect and will provide more shorting opportunities. If we rallied, 1.6920 and 1.6950 would probably be a decent upside objective to sell from but as of now the fundamentals and technicals don't indicate any retracement up.