Trading Plan – Monday 19th July 2021: OPEC+ surprise with Sunday deal
Good afternoon traders.
OPEC+ surprised the markets with a production increase deal on Sunday. The market has continued to fall today which I find surprising as it would indicate that concerns about the Delta variant are having more effect on pricing than the threat (before the deal) of an OPEC price war. I expected some rise in pricing when the deal was announced and the price war threat receded, but there was none. I think this move down will reverse because the oil supply/demand balance remains in deficit despite this new agreement.
Equities have also taken a bit of a hit this morning as risk sentiment sours. Sentiment moves always reverse, so I will be on the lookout for that.
The JPY is rising and the commodity currencies are falling on the negative sentiment, just like they used to do in the good old days of last year when we traded this dynamic very successfully. Looking at my notes for last year I see I traded the AUDJPY twelve times for a gain of over 25 percent.
Risk event of the week is probably the ECB rate and statement on Thursday. The media is reporting that there are significant disagreements within the ECB, particularly on stimulus.
As always, I go through my trading ideas in more detail in the VIP Club video.
I will be back on Wednesday.
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