USD/JPY – Bears salivating at idea of sub 100.00 levels

Daily chart

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100.00 levels is a line in the sand for many..while a significant majority feels it is the Brexit day low of 98.787.

Presidential debate to trigger further sell-off?

Firth of the three presidential debates is  due today (US hours). It is widely believed the markets do not like Trump. If so then the Trump lead in polls/ victory in debate should rock the financial markets and push USD/JPY below 100.00.

Just how important is 100 level?

Since June 24, the pair has seen a day end close below 100.00 levels just once – on Aug 18. On six occasions we have printed intraday lows below 100.00. So for me, 100.00 is truly a line in the sand and could end up triggering an avalanche of selling if breached. Stay tuned…

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AUD/NZD – Potential inside day candle at trend line resistance

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The daily chart above shows the cross is grappling with the larger falling trend line hurdle. However, shorting the pair here would be too early.

Note that today’s candle could easily turn around to be a ‘inside day’ candle stick formation. By default those are neither continuation nor reversal formations. We need to see the in the light of the larger trend…which is bullish (correction in a larger downtrend).

Given the overall situation an inside day candle today could signal reversal from the trend lien hurdle tomorrow. However, caution is advised. Ideal Sell trade would be on Wednesday in case Tuesday’s candle is bearish.

DLF – Poised for fresh sell-off?

Daily chart

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This could turn out to be a classic case where the MACD traps its followers. It has just turned positive at a time when the share price is failing near falling channel resistance.

Personally, I would want to see Monday’s action. If I see another failure at the falling channel, I would hit the sell button. Two consecutive failures at falling trend line could result in a fresh sell-off to channel support.

Nifty – Right time to initiate straddle

Weekly chart

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A classic rally from February lows to fresh record highs. It is natural to search for signs of exhaustion here. But as of now there is little reason to think that there could be a major correction.

The RSI has breached rising trend line… but is still well short of overbought territory, while the MACD is losing height.

This could be the best time to initiate strategies like Long Straddle or Strangle as volatility could spike from here. Straddle is a long gamma and long vega strategy. Note that it would be ideal to initiate strategy for the next expiry and not the September one.

Nifty – Gap down & close near rising trend line support

Daily chart

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This is getting interesting now. We had a gap down opening today on rising long duration bond yields. From India’s view point, what is negative is the rising bond yields in US. The close is near rising trend line support.

If Brainard kills the rate hike talk, we are likely to see a gap up opening tomorrow leading to gap filling exercise.

On the other hand, hawkish Brainard would result in a breach of rising trend line tomorrow.

More interesting is the monthly chart – bearish inverted hammer candle suggests we could go down to 5-MA level of 8517.