Happy New Week Surfers – wow, what a gap!!
Let’s just put Friday aside (we don’t trade anyway) and take a look at what has transpired since. As much as I’m an anti-fundamentalist, there’s no mistaking the reason the market has gapped substantially over the weekend. New rescue plans for Eurozone and confirmed bailout plans for Spain’s troubled banking industry have been greeted quite favourably and a massive gap of 135pips has appeared in our charts this morning.
In my trading career, I have not begun a trading week with 3 open gaps in the charts but that’s precisely the situation that confronts us this morning. Most would have forgotten the two to our North but the gap that is the standout feature of today’s charts, will take some ignoring. We are not gap traders but acknowledge the magnetic attraction to Price Action so will keep it in our mind’s eye, no question. Extra compelling evidence for shorts is the proximity of Daily, to Weekly Pivot. When these guys combine their powers, they are hard to avoid and they’re perched just where the gap will close. The yawning void has played havoc with our analysis, leaving us precious little in the way of inter-related highs & lows and hence; trendlines (our tools of trade). On an intraday basis, you would have to say higher highs and lows are telling us the trend is Bullish. The mixed pivots and long term Bearish nature is difficult to ignore however and we need the market to give us a little more to play with. I’ve sent an SOS out for our missing tools – hopefully this morning’s session will return them.
The Day Ahead
Should be an interesting opening to the week. On the one hand you would expect a positive start for the Euro, given the weekend news. Flip side of that is the strong magnetic force (the gap & pivots) beckoning traders to the Southside. The beauty of our strategy is that we can take a comfy perch purveying all that transpires in the tussle, safe in the hope that Price Action will reveal some hotspots for us. Only when that occurs, will we have some tools to use and a plan of action. Currently, there is no credible entry for us. From a sentiment perspective, I’m Bearish out of respect for the Daily/Weekly Pivot combo. Without lower lows, it will be difficult to find an entry however. Like a shag on a rock – I’ll watch & wait.
Have a great day & week.
Geoff Pyne | Certified SurfingThePips.com Trader
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