Daily Alert – Friday 25th June 2021: Reversal trade provides stellar week

Mark NugentDaily Alert, June 2021

Daily Alert – Friday 25th June 2021: Reversal trade provides stellar week

Good afternoon traders.

This week was all about trading the reversal of last week’s Fed-inspired USD rise. It has worked like a charm. On the weekly charts, all six currencies that we pay close attention to have reversed last week’s move. As has GOLD and the major equity indices. The reversal has not been complete, and I did not expect that. However, the move has been sufficient to allow for decent profits to be made.

As of the time of writing (4pm BST), all five of my trades are still active and the unrealised profit is around 13 percent. I will close them tonight if not before and there will be a full report and brief videos on each trade on Monday.

Looking at the economic calendar, the USD has been weighed down by misses on Services PMI, Capital and Durable Goods Orders and today’s Core PCE Price Index (inflation). The GBP was reversing nicely until yesterday’s Bank of England Super Thursday where the Monetary Policy Committee were dovish, indicating no desire to increase interest rates and saying support for the economy will be required for some time. This is in stark contrast to the hawkish Fed last week that gave this week’s reversal opportunity.

The oil market was immune to two factors that should pressure pricing. Firstly, on Tuesday it was reported that Russia was considering proposing an increase in OPEC+ production at next week’s meeting. Secondly, on Wednesday, outgoing Iranian President Rouhani‚Äôs Chief of Staff said an agreement had been reached to lift sanctions on Iran at the nuclear deal talks in Vienna. Oil did not care, rising over 3 percent on the week.

As we exit the week, equities are all up and the S&P500 and Nasdaq look likely to make new all-time highs. WTI is close to price levels not seen since November 2014. Currencies are behaving for the first time is a good wee while. All is calm and orderly. I love it.

My weekly trading experiment is also doing nicely. Full report on Monday.

Trade of the week was the reversal play. Nailed it.

Have a great weekend. I will be back on Monday.

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