Weekly Updates 11/9/23 – 15/9/23 September 11, 2023
This weekly update is designed to help you stay informed and relate economic and company earnings to potentially value-add your CFD (Contract For Difference) trading via hedging (risk reducing). This article should be used for educational purposes only and not as financial advice. We urge all traders to carry out your own due diligence before submitting trades.
Recap for last week (04 Sep 2023 – 08 Sep 2023)
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s market movement revolved around US employment data, it shows that the market remained robust but may not be strong enough to be worried that the Fed will need to hike interest rates further. Most investors are laying their eyes on next week’s inflation data as a higher number cause worries in the market that Fed will hold interest rates higher for a longer period which gives reason for investors to turn towards safe haven assets which led a drop in most of the indexes. The S&P 500 IT sector lost more than 2% last week due to the news of China laying a ban on government employees to stop using iPhones for work.
Updates for the week (11 Sep 2023 – 15 Sep 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
This week’s macro news will be revolving around the latest inflation data which will be this week’s main event before the Fed’s September policy meeting. Economist consensus calls for a 3.6% YoY increase in the CPI. Market participants expect a hot CPI data, putting the Fed at a split road and more reasons to lead towards a longer high interest rate environment over pausing and lowering of interest rates. Traders and investors are advised to manage their position before the news release to reduce the negative impact incase of a surprise.
This week’s corporate earnings focuses on Oracle, Adobe and FuelCell’s earning release. With most of the US tech companies have released earnings, market participant’s expectation on upcoming companies are anchored by their competitor’s performance. As the financial quarter is coming to the end, market participants are getting ready for next quarter and less companies are releasing earnings.
If you hold equity positions in these stocks, you can hedge your positions using CFDs to mitigate the risk of disappointing earnings releases.
For those looking to speculate or capitalize on the increased volatility, CFDs provide leverage and ease of going long and short across a broad range of products available.
USD/JPY Approaching Range High To Set-up Short Side Trade – By Jeraldine Tan
Key Entry Price Pivot(s):
- 151.945
Recommended Trade:
- Short at 151.88
- Stop Loss at 153.38 (150 pips)
- Take Profit at 148.88 (300 pips)
Alternative Case:
- Long at 152.38
- Stop Loss at 150.88 (150 pips)
- Take Profit at 155.38 (300 pips)
Remarks:
- USD/JPY has been in a Broad Bull Channel since the start of 2023 following a sharp sell-off from the highs of 151.945 in Q4 2022, perhaps due to consistent rate increases in US
- Broad Bull Channel means bear pressure is strong although general trend is up. Hence more likely, we should expect this to be a bull leg in a range, rather than a strong continuation pattern leading to a breakout
- We can expect traders who went long in the Broad Bull Channel to take profit around the previous major high of 151.945, which is at the top of the channel. This also coincides with the big round number 152.000
- The Broad Bull Channel is forming the last leg (wave 5) in an Elliot Wave and we could expect 2 legs down from there (wave A-B-C)
- With the confluence of these 4 factors, we propose a trade structured with a stop loss of 150 pips (based on ATR of around 120pips) with a 2x reward at 300 pips below entry price which looks reasonable for a move towards the bottom of the Broad Bull Channel
- Alternative case is presented above for traders who are bullish on USD/JPY to structure a breakout trade
If you have any feedback or questions, feel free to email us at samht@phillip.com.sg or onishathyeyn@phillip.com.sg or cfd@phillip.com.sg.
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About the author
Sam Hei Tung (Dealing) and Onisha Thye (Dealing)
Sam graduated from National University of Singapore with a Master of Science in Finance. He personally manages his own investment portfolio and does equity and economic research in his free time. Sam believes that education and information is essential to making good financial decisions.
Onisha is a dealer at the CFD Dealing Desk. She graduated from Monash University with a double major in finance and econometrics. Her natural curiosity for finance is what drove her to be in this field as she is fascinated by all the possibilities and opportunities that are available to grow one’s wealth, either through trading or investment.
