What the trade tariffs is doing to the commodity currencies?

Hi everyone,

As you would have been reading in the news these days,  the US has been trying to implement additional tariffs on imported goods into the US. This has been creating fear in the regional stock markets. Let’s have a quick comparison of several stock market performance:

The UK FTSE, Hong Kong HSI and the Singapore STI are all down since May 2018, whereas the DJI continues to move up. This is expected as the import tariffs will be protecting the companies in the US, hence giving them a better upside prospect.

 

Question is how does this affect the currency markets?

The fear in the market will naturally weaken the commodities currency. The AUD (together with NZD & the CAD) which is seen as a direct proxy to the China economy has been taking the most beating.  I personally do not see this trade war cooling off just yet.  I would be expecting to see more turmoil in the markets.

How should we trade them?  Stay focus on what the charts are presenting to us.

The EURAUD weekly charts is showing us a bearish Bat Pattern completing around the 1.6250/1.6300 zone.

  • the RSI is currently not overbought yet (can potentially go higher)
  • the past week’s up move is strong (not expecting it to reverse so soon)
  • be patient, wait and let the price action show us a bearish reversal at around the PRZ

We could see a potential reversal on the Daily chart as it completes the ABCD pattern at around the 1.6190/1.6200.  However I am more biased to see a reversal at the bearish Bat zone.

 

GBPCAD Daily chart has been falling since March. In the past 2 weeks, it seems to have found support around the 1.6580/1.6620. We saw a quick nice bounce.

My GBPCAD trade plan on the H4 chart.  Wait for a retracement back to the horizontal support or even the Trend Line support to go long.

Trade well and trade safe.  Let’s monitor these trades together.

ANNOUNCEMENTS:

Calling out to those of you who are staying in Singapore. We are running a 3hr (classroom) workshop here on the 11th Sept (7pm sharp). During this session, we will be introducing what Harmonic Pattern trading is all about and we will also be sharing one of our favourite patterns.

Please RSVP to reserve your seat via the link below.  Seats are filling up fast.

https://www.eventbrite.sg/e/forex-technical-analysis-with-harmonic-patterns-favourite-pattern-revealed-tickets-49783308215

Hope to see you there

 

Your Harmonic Pattern Trader

Boon Hooi