Beware July 6th!

July the 4th and the independence celebrations in the US are behind us, and now we quickly have to turn our attention to July 6th. NFP week as we all know is a day not to be trading forex, but it also happens to be tariff day in China, and targets 34billion and represents 25% tax on 818 products. The markets in Asia are noticeably nervous.

This is an overall sentiment barometer and especially other equity indexes so one to watch over the next few days.

And this is the Shanghai Index this morning, still falling:

China is intending to respond immediately with their own tariffs if the Friday deadline passes without ant backing down on the part of the US administration. Add to that the slow down in manufacturing and you have a worrying sign for global growth.

This is reflecting in copper now being dumped by the funds. It is a chart that can fire warnings and attention is being paid. It has broken a big support level:

So we know what the ‘smart money’ is thinking.

Meanwhile, the US10 year yield is still pressured under 3%

 

I will be looking at all these strands at the weekend, post FOMC notes and post-tariff day as well as any NFP surprises. The bias remains short in the longer term for the USD

As for Europe, a tentative agreement has been reached if both countries suspend tariffs on autos from each other.

Beyond that, there is plenty of other event risks in the diary.

AS I have mentioned, FOMC notes will be out later today and they can move markets depending on the content, of course. We get to see the chinks in the Fed policy as well as judge how hawkish they really are… NFP rounds out the week.

I am waiting to assess the USDX at the end of the week. Here on a weekly chart is ‘the resistance is so far being resisted for the 6th week in a row:

The Watchlist

I should really call this the ‘why list’ and it is little changed ahead of the next crucial events.

FTSE

A hold and I have two targets which include daily and weekly support.

My focus remains on the sentiment theme and is focused on equities so I am looking for further opportunities to short.

DOW

This needs a break of support and pullback, although there are higher levels to watch should it strengthen first. With event risk there is a chance of volatility that can do just that: I am showing this on the market profile chart which shows the levels I am interested in and the fact that right now, we are in the middle of the balance so we shall wait our moment! :

DAX

This is a good structure and I have a limit order sitting there waiting for a pullback:

Forex Pairs

USDCAD

We wait now for NFP but with crude likely to go higher and the USD a bias short, I like this fundamentally. I prefer a pullback but it lines up well and is becoming mature enough to consider the break:

USDJPY

I am waiting for the break below 109.30, but there are shorter term choices available: 110.40, 110.04, shorts only:

GBPUSD

Again a wait now, but it is a bias long and the data this week from the UK has been surprisingly supportive. It is inflation that is key here:

Cross Pairs:

AUDNZD: leaving this, with Copper prices still falling, these are both weak.

EURGBP: leave this for now, the bias for me, is still down but it is way too choppy and political and the chart is now very messy and unclear. .

GBPAUD

This may be a better pairing than the GBPUSD fundamentally, longs only and I will wait for the dust to settle from NFP:

I keep my plan simple. Fundamental conviction is the starting block and once I have that I look at the structure, prepare my levels and then decide where to make entries. I also work on a longer timeframe which is much less stressful, and less stress means better quality decisions and the brain and the ego can be tamed!

I focus on simplification and a clear set of rules for entry, stops targets and management and of course market profile charts which I would not now trade without!  I also keep my weekly list short and sweet looking only for the best probability opportunities. Contact me in the forum or via the helpdesk if you wish to find out more.

Be careful with the rest of the week, it is likely to be unpredictable and choppy!

Judith Waker