The week ahead
Posted by The Lonely Trader on October 26, 2008
At this stage of the game, data doesn’t really matter as much as technicals for shorter term views. Longer term views of course will depend more on macro-level developments beyond fundamental events on the economic calendar. Risk aversion is the over-riding theme, as we all know, with the markets pricing in a global recession and further deleveraging. The markets have not completely flushed out toxic assets and several banks are suspected as having not produced accurate balance sheets, suggesting there are more write-downs to come. I think it is safe to say the other shoe has dropped. Now we just wait to see what unfolds. None of this is news to us.
I’ll be watching the markets’ reactions to any resolve (and action) from the G7. I don’t think there is much that any central bank or treasury can do on its own at this point. With respect to the yen and the US dollar, I’ll be particularly interested to see what the equities markets do over the coming week. I’ll be switching to a simpler trading approach on currencies — looking at key horizontal resistance and support, along with trendline and round figure confluences, and aiming for good reward-to-risk profiles. My timeframes will be 4hr and above, with timing triggers on the 1hr and 15min charts.
As someone who will depend on investments and a pension in my retirement, I’m a bit nervous about the coming weeks and months – but not too much, because I’m young enough to fully recover. As a lonely trader, I’m absolutely fascinated. Should be an interesting week.
