It is often said that emergency departments at hospitals are busier on a full moon and it is also a fact that financial markets are more volatile too and that’s exactly what we saw on Tuesday with currency Market volatility picking up considerably on April’s full moon.
You may think this theory is an old wives tale but many professional traders take full moons very seriously. The next full moon will be on May 10th and I encourage you to be aware of these dates.
The Safe Haven Currencies were the gainers Tuesday as stock markets across Europe and the USA mostly closed lower as geopolitical tensions continue to concern traders. Markets are concerned that the US may strike Syria again and the build up of US military assets off the waters of North Korea may force the DPK to test fire nuclear weapons in a show of defiance. As a further example of how the markets are on edge a black smoke cloud rising from a Moscow airfield was thought by some to have been the result of an air strike. It turned out to be burning gas.
The British Pound rallied sharply after the release of the latest CPI figures that showed inflation in March beat market estimates coming in at 0.4% and 2.3% year on year. At the time of the CPI data release the Pound v Canadian Dollar was down in the Terminator Zone with divergence on the 1-hour chart. The following chart shows a strong rally through the US trading session straight up to the 200 day EMA.
Left wing French political candidate Jean-Luc Melenchon caused the Euro to fall on Tuesday as poll results showed his popularity was rising quickly in the lead up to this years French Presidential election. The Euro has been falling like a rock against the Yen with 11 consecutive days of losses. The chart below is a daily chart where I have marked what I call the Terminator Zone. This is an area where we may see a price reversal that is often triggered around the London open (5pm AEST). Keep an eye on the 1-hour chart in the coming 48 hours if price comes within the blue shaded area. If there is divergence on the 1 hour chart a reversal around the London open could result. I will be sharing more about this strategy at our up coming Free 2 Day FX Boot Camp in Sydney on May 13th & 14th.
With Easter Friday only 48 hours away and financial markets overall in a risk off mood I doubt we will see any meaningful rally on stocks or a shift away from the safe haven currencies.
Investment Banks, Hedge Funds and large speculators will not likely want to leverage themselves back into the markets before Easter, the tensions are simply too high and they will likely wait until after the Easter break.
Looking ahead to today China CPI is set for release; Mark Carney the BOE Governor is speaking at an event in London and the Bank of Canada releases its latest monthly statement.
Keep an eye out in your inbox today for more exciting details of the lessons to be learned at our Free 2 Day FX Boot Camp in May.
About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular key-note speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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