Market Outlook – 25th May ‘09

After some very strong risk appetite for the entire period of last week, we are seeing some signs of slowing down during the first few hours of this Monday morning. However, we should not be fooled by the signs as yet, for we are looking at only the first few hours of a new week. As such, though we are senstiive to the signs being shown, we will not rush into a trade which might be a false alarm.

I am seeing bearish divergence on a/u and n/u, with e/u and g/u slowing down on both the weekly and daily charts. I see bullish divergence on Usd/Chf, which though is a possible trading opportunity by itself, it has strong correlation with Eur/Usd and its indication of a bullish divergence could also mean a bearish start for the Eur/Usd pair.

Aud/Usd Bearish Divergence

Nzd/Usd Bearish Divergence

Usd/Chf Bullish Divergence

My studies therefore indicate a possible start of a bearish trend but we don’t want to rush into any trade setups as yet, as the true indication of the market sentiments hasn’t kicked in with the Eur/UK volume still missing in the equation. It is a bank holiday in GB so i expect a lack of volume, but that also make our setups technically more obedient!

My immediate bias is therefore to sell e/u, g/u, a/u, n/u and buy usd/chf (and maybe even usd/cad). However, i will wait for Eur volume to kick in and confirm the trend before i pick my possible entry points to get in.

As always happy trading and all the best with your trades.

Take care,
Seeni

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