Blood From A Stone

That’s pretty much how trading equities has felt over the past two months or so. I’m not one to complain and obviously am always on the hunt for promising looking setups across other market verticals. What seems to drive most of the blog traffic is related to stocks and bonds however and the personal hell I’ve built for myself is one where I have to find something interesting to say about a sector that often simply spends extended periods going absolutely nowhere. Or in other words: summer tape.

Theoretically speaking we’ve got ourselves one very juicy looking short setup on the E-Mini. Yesterday’s session strengthened our case by maintaining the current series of lower highs and lower lows on the short term panel.

The volume profile shows us still whipsawing inside a high volume range and there’s frankly no telling when or if we’ll be able to resolve either to the up or downside. Should the E-Mini drop below 2400 however then we could easily see as drop all the way into 2330.

Yesterday’s session finished slightly negative however UVOL/DVOL was pointing up. I very much enjoy seeing the opposite, e.g. a slightly bullish session which shows an increase in DVOL.

And finally what really nails the coffin shut on the bearish case for me right now is that the NQ is actually starting to look like a symbol I would want to buy. That short term panel is suggesting a break out pattern and the daily closed above a NLBL. That’s usually a buy in my book. However given that both the YM and ES are pointing slightly lower I can’t justify getting involved on the equities side.

The USD/JPY however has continued to trend beautifully and once again I’m advancing my trail by a few pips to lock in a bit more profit. Take a look at that 100-day upper BB I’m pointing at – that’s my preliminary target.

And if you’re a gold bug then you definitely want to pay attention to this pair as gold has been correlated for a long time now. In other words, what happens in the Yen will most likely affect gold as well.

Here’s a long term perspective on the USD/JPY – weekly on the left and monthly on the right. I think that upper 25-week BB only has limited credibility but it happens to be very close to a prior spike high. And a push above that SH would most likely result in acceleration higher – after a retest of the 100-week SMA most likely. Also note the monthly context which shows us a NLBL near the 115 mark. So it’s fair to say that we’ll see some turbulences soon and that may also help gold find at least a temporary bottom. But if the USD/JPY continues higher from here later this year then the gold bugs are most likely heading into one long nasty winter season.

AUD/USD was a setup (for the subs) yesterday and it’s looking okay thus far but not ready yet to modify our ISL. I think this setup has great potential, however it’s early in the game and we may have to face a more pronounced retest of the 100-day SMA. One of the most promising looking setups right now however.