Home / Market Analysis / December 4: The 7 Best Setups For The New Week And What To Trade

December 4: The 7 Best Setups For The New Week And What To Trade

And here we are again with another Sunday watchlist update. Last week started slow for us reversal traders and then by the end of the week, things suddenly started to move. Right now, there are many interesting setups building and I picked the 7 best charts for you. I encourage you to do your own watchlist because the process will help you build a solid foundation. Take a look at my past article where I explain my screening process: How to create watchlists every Sunday

 

S&P 500

We start by taking a brief look at the S&P500 and the USD-Index because they are at key price levels right now and their development could set the tone for the next week.

The S&P500 has just completed its 20SMA retest after topping out. This is usually a high probability pattern and a drop into 2180 could be possible. However, keep in mind that the year is soon coming to an end and year-end rallies are common.

spx

 

USD-Index

The USD-Index is doing exactly what we anticipated and price action has been rounding off at the top in a textbook pattern. On the right 4H chart, we can see how price is now putting in lower highs and price also broke below the trendline which now also confirms lower lows.

There are lots of USD reversal setups happening right now and it could be an interesting week for USD Forex pairs if the downward reversal plays out.

dxy

 

EUR/JPY

Besides many early USD setups, we also have a few early JPY related reversals building up right now. I just picked the few best ones for this watchlist.

The EURJPY has shown a very long rally and it came to an end (for now) at the key level at 121 which gives great context. You can also see how price showed a fake reversal at 120.00 last week but when you look left, there was no real resistance level at that area. This is a good reminder why we always look for key support/resistance areas for our reversals.

We are also seeing an RSI divergence right now and price closed right on the 20 SMA. It could be a bumpy road looking at the support levels below current price but if sellers step in and profit taking accelerates, this could be an interesting one.

eurjpy

 

EUR/USD

The EUR/USD is also doing exactly what we said last Sunday. The setup is very similar to the USD-Index and price is slowly turning upwards. There could be a substantial upside potential here.

Keep in mind, as of writing this, the outcome of the Italian Referendum on Sunday is still unknown and a surprise could add volatility to the EUR, although I don’t expect too much of a reaction. We have seen that markets clearly overreacted on the BREXIT event and people seem to have realized that.

eurusd

 

NZD/JPY

Another Yen related pair right at a resistance level. On the 4H chart we can see the long uptrend which has lasted a few weeks and when we put on a Fibonacci tool, we can see how price seems to have found resistance at the 161 Fibonacci extension level.

It’s still a little early and price hasn’t shown any real turning signs but it’s a good pair to have on your watchlist.

nzdjpy

 

USD/CHF

The USD/CHF is on the list for the same reasons as the other USD related pairs. The question next week will be, which USD pair shows the biggest move if the USD-Index breaks lower?

If we see a turnaround in the SPX and a surprise in the Italian referendum, we could see more safe haven flows which could boost the CHF and push the USD/CHF lower. It’s all speculation as of now but it’s a possible scenario.

usdchf

 

USD/JPY

The USD/JPY has both components of the USD and the YEN related reversals. There is a substantial downside potential and if price breaks the trendline, we could see a larger drop.

The most important thing is that you remain patient and don’t enter ahead of the trendline. There is enough room to the downside so that you can safely wait for a move lower before pulling the trigger.

usdjpy

 

And that’s it already. There are no really huge news scheduled for next week, except for the usual candidates. But as we know, things usually don’t go according to plan 😉

Happy Sunday and safe trading

 

 

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4 comments

  1. Hi Rolf,

    Over the past few weeks I have read literally all the articles on this website, and realized that using a swing trading reversal strategy is a good fit for me.
    I just have two questions: With your strategy,on average, how many pips do you aim at for your profit target? And on average, how many pips away do you put your stop loss?

    Keep up the excellent work with this website. It seriously helps improve my trading skills.

    Regards,

    Ben

  2. wow…as usual very neeat and clean and effective analysis..
    thanks for sharing

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