Hello, traders! I hope you’re still on top of the markets. Trading can sometimes take a lot out of you, especially if you’re overworked, not sleeping much, have little children keeping you up at night, coping with stress, solving all kinds of problems, etc. Trading may seem like an easy task, but the mental and emotional strains of buying and selling in a market which can be very unpredictable can be a big challenge.  

I personally had an excellent day in the markets, but it wasn’t easy at all. Many trades didn’t work out, I made a small mistake with one of the trades, and so on. What really mattered was solid money management, a good risk to reward ratio, trading with the trend, but most of all, perseverance. The successful trades which came through, in the end, made up for the losers, and much more.

Trading is like boxing – you need to be fighting fit and tough enough to take a few shots now and then, and stay in the fight until you get the mastery over your opponent.

Okay, so that’s enough about trading psychology for today, let’s look at a few indices, gold, and FX pairs.

S&P 500 – Holding Steady near all-time highs

The S&P 500 has been trading sideways for a few days already. This American benchmark stock index hit an all-time high only a few days ago. Let’s look at a daily chart:

S&P 500 Daily Chart

As you can see, this index has entered an area of consolidation which has lasted quite a couple of days already. These consolidations often lead to powerful breakouts when they come to fruition. However, they can also catch out many a trader by means of false breakouts or ‘fakeouts’ as some people call it.

Despite today’s weak close, the bullish formation on this index is still in play. You will notice an uptrend on this index, no matter whether you look at a weekly, daily, or even a 4-hour chart. This is what we’re looking for – an instrument that gives us the same signal on all the important timeframes.

So how can we trade this consolidation on the S&P? By waiting for a firm daily close outside of this consolidation range, followed by a retracement back to it. Look at the following chart:

S&P 500 Daily Chart

It is important to wait for confirmation that the trend is ready to continue on its bullish course.

Dax – The Bulls are Still Strong

Dax Daily Chart

This German stock index is clearly also in a consolidation phase at the moment. This consolidation has been much less intense than the S&P 500’s, however. The Dax also seems to be more bullish than the S&P at the moment. Although the Dax is not close to all-time highs like the S&P, its formation seems to be more bullish than the S&P’s at this stage. We can be on the lookout for buying opportunities in the days to come, there is no reason for us to look at the other side of the market for now.

Nikkei – Stumbling Below 20-EMA

This Japanese stock index looks very heavy at the moment. Today is the fourth consecutive daily close below the 20-day exponential moving average. Here is a daily chart:

Nikkei 225 Daily Chart

Here we can see that today’s candle run into resistance at the 20-EMA, from where it traded lower again. It would have been ideal if this candle had a much longer upper wick to give us a stronger sell signal. Nevertheless, this rejection candle is something to take note of. I wouldn’t be amazed if this index traded lower during the course of the next week or two.

Gold – Former Support Providing New Resistance.

Gold Daily Chart

I wrote about this technical development a few days ago. Just thought I’d give you a quick update. So it looks like gold has finally met some resistance along the way, and this is happening at an important technical level. This doesn’t mean we’re necessarily going to see a wave lower right away, though, although it’s certainly possible.

I would personally like to see a solid reversal price action signal on gold before I short this commodity. Let’s see what the market offers us in the days to come.

NZD/JPY – The Bull is Storming Again

You’re probably wondering why I’m writing about a minor pair today. Well, most of the major pairs are a bit choppy at the moment, and difficult to predict. On the other hand, the NZD/JPY has made a powerful move in the direction of its larger uptrend today. Look at this daily chart:

NZD/JPY Daily Chart

I like the way that this pair broke out of this consolidation zone with a bang today. Technically it makes a lot of sense to play the long side on this pair. This would put you on the right side of the trend, which is where the highest probability of success lies.

Today’s bullish candle is really aggressive, and I expect some decent follow through in the next few days.

USD/CHF – Some More Downside on the Way?

USD/CHF Daily Chart

This is the major pair that appeals to me the most at the moment. Although it’s not the greatest rejection candle ever, today’s daily bar hints at a further decline in this exchange rate. If we see continued US Dollar weakness in the days to come, the USD/CHF could be a victim of this weakness.

As we head into the weekend, we have some important economic data coming up tomorrow. Out of the UK, we have retail sales numbers at 09:30 GMT, and at 13:30 GMT we have Canadian Core CPI and Core Retail Sales numbers.

Furthermore, we have two important speeches up tomorrow. FED Chair Janet Yellen speaks at 01:00 GMT, and the new U.S. President Donald Trump at 17:00 GMT.

Good luck trading, and have a great weekend!