How Foreign Currencies Affects Local Stock Market

The lows are in place for the Indices and the rallies have begun, on this most other markets join in on the prescribed. The next question is will the rallies stay under their last highs, for the Dow Jones Index that is 10,408 the S&P500 1,100 the bottom line is if they move through these highs then the larger rally up is not complete and the Dow would be up around 10,600+, that's the bigger picture on the upside, this is turn would take our Index higher and our currency to around 92 before rolling over, it would be the resources rather than finance that move with this, so you will need to understand what levels you are working with, such as BHP being above mTL8/38.00 and CBA being above TL5/50.00. Getting back to the Dow, as a guide stick, the current rally, the 618% is 10,255 the current high is10,236. The reasonable maximum instead than the other high of 10,408 would be the 72% retrenchment which is 10,288 in actuality the mTL3/10,300 is where stops would go rather than over 10,408. Playing it even closer is working with the 10,250 as support or resistance, its ok for it to trade above but on the retest it would need to fail. Even closer still, is that we can expect the price to retest 10,200 in the next session, so if support is found there then exit, if 10,200 becomes the resistance then look to short, but it is the 10,100 than is the support, this is the key to further downside anything above this at the moment is at risk! therefore this is the long and short of the status as it stands and you require to negotiate the variable modify at hand, this is also truthful for any short trades on the local stock market, use the day-to-day Robo system or the levels to protect all short trades, as protecting assets is the primarily rule, we can re-enter using the casual Robo if the Dow rally finds its high. Day traders can use the Daily Robo to enter long for the day especially in the resources sector.

Tricky business this trading, you can have the direction right and still lose money, I find the only way to survive is by under trading, navigating through the last few weeks has been quite a task but all in all I think we have done a great job, yesterday I was a bit nervous of a more bullish picture emerging and we are not out of the woods yet, we still need the Dow under 10,000 as retested resistance, but last night's session has started to confirm we have been on the right side of the markets and we can start to look to adding to our current positions another 25% of position size.

The other important aspect is the US Dollar and the Euro turning, completing their ABC corrections, we have been patiently waiting for this to occur and moves last night help sure this up, we have seen the lead of this through the other currencies pairs. if the Dollar has completed its ABC correction, so the move up will assist force Gold down, so we are likely to sway to Gold moving down from here this would see us add to local gold stock short, the NCM, LGL etcetera the key here is seeing US Spot Gold under 1180.

Thursday delivers the bear day and we are likely to see the Dow bounce off the 10,000 again, so be careful and take this in to consideration. The volume and the closing on Friday is likely to set the scene again for next week's cycle, last week was 90% accurate looking for the high on Wednesday, so it always handy to understand this as it helps in adding positions into a trend over time, shorting the rallies based on price and pattern and the days of the week to align the timing.