May Stocks Crash as Dollars Roar? May 2nd to May 6th, 2022

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Disclaimer

The examples presented in this article are only to be regarded as a technical demonstration when used with the trading system. Accordingly, these examples should not in any way be construed as a recommendation for any type of trading strategy and they do not constitute any form of advice as to the advisability of investing by the use of any trading strategy. Any Investor who uses a trading strategy must build a trading strategy on the basis of independent testing and according to their specific requirements and needs.

Last week in Review

Forex & Commodities: Central Banks Scramble Rates

Central Banks continue to scramble to find a sweet spot for their national interest rates as inflationary numbers and events outpace rate changes. Pre-existing supply chain crunches continue to be exacerbated by the Russian invasion of Ukraine. The war clearly escalated into an economic war between the West & Russia when Russia halted fuel shipments to NATO members Poland & Bulgaria. The US Dollar. often serves as safe-haven currency when Europe or Asia are in crisis.

US Dollar Soars to 20 Year High  Vs. JPY & EUR

Historians might find it incredulous how Putin comes out of this conflict without unsavory concessions he will find unpalatable. Remember, US stocks and indices are priced against the USD. So, May Stocks Crash as Dollar Roars to a 20 year high against the EUR and JPY? Further escalation of the conflict in Europe or complacency of the Bank of Japan could even push the USD to higher highs.

USDX reaches 20 year high
US Dollar Reaches a 20 Year High Vs. Other Major Currencies

Stocks & Indices: Market Crashes? NAS100 has worst month since 2008

Amazon  (AMZN) suffered over a 15% or $150 billion USD correction after reporting disappointing 2022 first-quarter earnings. With Amazon’s market value over $1.5 trillion before the release, the fall has Bears salivating and Bulls wondering if this a good time to enter long positions at a discount price.

Amazon loses $150 Billion USD
Amazon lost about 15% or $150 Billion USD in one day…a time to Buy or Sell? May Stocks Crash as Dollar Roars?

One trader had some serious trades set up to make some serious money on Amazon if it became “oversold.”

Here’s an example of how to take advantage of an asset being “oversold”
A Trailing Take Profit helps ensure earned profits aren’t recaptured by the market when you are not looking

It’s not everyday a $1 trillion plus asset like Amazon becomes “oversold.”

This Big Play is scalable where 14 $10,000 USD trades were set up in the same strategy for a potential $760,000 USD profits or 14 $1,000 USD trades for $76,000 USD. How would you try fine tuning it for even better results? Back-test your idea and let us know.

Cryptocurrencies: Is this the Dip? Will Cryptos Show Relative Strength & Rebound?

Bitcoin struggled trying to broach $40,000 resistance level. Shorts were bolstered by a majority of future orders for April 29th sitting at 40K plus buys.  Market sentiment couldn’t get there and the month long bearish trend continued. BTC tests it’s 3 month support. Will the Bulls get another 10K rebound to the high end of the current channel or break the support?

 

Bitcoin couldn’t close above $40 K for the month. Will USD interest & NFP rates sink it further or give it a punch up?

Here’s one sample strategy a trader sent in. How would you improve the results?

When back testing a strategy, if the results do not meet your needs then try changing one condition at a time  and back test again. Otherwise, you might not know what the issue was when creating other strategies on other assets.

A strategy with the Exponential Moving Average (EMA) can account for more recent movements than a regular Moving Average

63% of these trades closed in profit. How would you improve the amount of profits?

What’s Up and Coming this Week?

Stocks & Indices: No Trillion USD Players but Opportunities Still Exist

Nasdaq (NAS100) had its worst month in April since 2008

The NAS100 (NASDAQ) experienced it’s worst month in April since 2008. No trillion USD companies reporting this week with AMD & Starbucks on Tuesday and CVS & Moderna Wednesday featured as the biggest players. Surprises in job numbers or interest rates might help Bulls gather their nerve to stop the hemorrhaging indices.  No surprises, Bears might continue to flex their muscles though there might be some dead cat bounces and opportunistic buying along the way.

Forex & Commodities : Have the EUR & JPY Gone As Low as they will go?

EURUSD Hitting 20 year Support

The USDJPY shows an interesting channel for traders.

USDJPY has been hitting new Highs as US hikes rates and BOJ keeps calm

Some of this week’s Major Events on the Economic Calendar GMT time.

Monday, May 2 German (EUR) 7:55 & USA (USD) 14:00 Manufacturing reports start off the week . May Day holidays around the world markets slow the weeks rollout although the USA, Canada, New Zealand and most of Australia celebrate “Labor Day” on a different date.

Tuesday, May 3 The Royal Bank of Australia (AUD) 04:30 announces any interest rate changes in the early hours.  German Unemployment (EUR) 7:55,  British Manufacturing PMI (GBP) 8:30 and New Zealand Unemployment  (NZD) 22:45 provide trading opportunities throughout the day.

Wednesday, May 4 Australian Retail Reports (AUD) 01:30 play off the previous day’s rate announcement. while the day offers strong USA (USD) reports with ADP (private USA payroll numbers)  at 12:15, Non-Manufacturing PMI at 14:00 and the US Fed Rate (USD) announcement roars at 18:00. Commodity traders eye weekly US crude oil inventories (WTI) earlier at 14:30.

Thursday, May 5 The UK (GBP) takes the stage with morning PMI reports  at 8:30 and inflation numbers at 11:00 at the same time as Bank of England interest rates.b

Friday, May 6 USA (USD) & Canada (CAD) NFP unemployment numbers at 1230 caps off a week that is full of promising trading opportunities.

Cryptocurrencies: Who let the Doge out? Musk!!! Musk!!!

Cryptos are showing relative strength this week when you look at how hard other assets are suffering against a strong USD.

Dogecoin reacts dramatically to Tweets from Musk and now he owns Twitter. What’s Next? 

Here’s one example of a strategy a trader might consider if they were preparing for the right entry before and exit after Elon Musk’s next Crypto related Tweet.

Crypto traders often aim for larger returns to justify trading on this highly volatile market sector.

 

A 56% return on two trades are results some traders crave while others might try to find out ways the same strategy could even make more.

Stay tuned to your email and our trading blog for future Capitalise.ai market updates and strategies to show you opportunities for trading you might be missing.

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