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Bounces Afoot – 4Oct, 2022

October 4, 2022 /

Market Outlook – Traders continued the rally as the dollar fell and oil caught fire under the newest OPEC+ meeting to prop up price. Nothing has been systemically fixed and so I suspect that this move is more a matter of an oversold bounce and hopeful traders at the floor of support after giving up an entire year of gains. We have employment numbers at the end of the week- remember that good news is bad news in the current space. I’ll be watching the moves closely in the morning.

This becomes a natural place for traders to say – ‘here we should have buyers come in’ – and so they have. But the one thing we should not do is try to short where we think the market will roll over. Instead, consider shorter cycles that will allow you to trade with the trend until the charts stop heading higher.

Remember, you will ALWAYS see the following things when prices reverse-

1- Prices will stop moving in the direction of trend – the prices will either stop making higher highs, or lower lows

2-Prices will begin to test higher lows and breach old resistance (if breaking a down trend) or prices will begin to test lower highs and breach old support (if breaking an up trend)

Once BOTH of these are in place, a true shift in price has begun relative to the time frames of your focus.

Let’s use MotiveWave to show you what charts are doing

I am using a moving average ribbon on this daily candlestick chart to show you real trend. It is still down but these powerful upward candles suggest that getting short is inappropriate
I was very hard pressed to find a series of 4hr candles all having bullish closes and in another example of the power of this move currently

Because the inverse of the DXY is essentially the 6E – let’s take a look at the Euro and how it has been moving

Note the low volume ranges set for the traders above. Euro traders are hoping to regain parity and as long as this move is in play, US markets will rise under the current relationships

Commodities have come roaring back – oil, yes, but silver and gold particularly – our silver and gold plays we opened last week are doing very well under the current environment. Lots of folks are talking about shorting silver. If they are wrong, we will have another squeeze north.

Clear resistance sits above but we are being fueled by the moves in currency so it might be more difficult to reverse trend. That said, we’ll be watching carefully

Gold is also t resistance and threatening a breakout

Oil volume is still disturbing light but moving up – momentum is also light- when this breaks out, it will be breathtaking in speed