HYCM Market Insights & Trading Tips

Market Mood S&P500 11.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the S&P500 on Youtube.



The S&P500 should find dip buyers on the news of a US Democrat blue sweep.

This increases the chances of a larger US stimulus package now that the Democrats have control of all of Congress. This should provide support for US stocks. One key technical level to look for is any return to 3743 which is a strong intraday support level.

However, a key risk to this outlook would be any comments from the Fed which indicate a more hawkish Federal Reserve policy outlook.

Trade Risks:

1. The main risk to this trade is from any talk of a US taper to the bond purchase programme.
2. Another risk is if the COVID-19 vaccine is shown to be ineffective.
3. The sharp rise in US 10 year yields can sometimes spook equity markets.

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Boost for copper as Democrats complete the blue sweep
by Giles Coghlan, Chief Currency Analyst, HYCM

Before the US elections last year I wrote that one important development to be looking out for is if the Democrat party were able to win both the House and the Senate races. This looks to now be the case.

One of the consequences of this is that it mean a strong move from green investments likely to benefit from Biden’s ambitious green plans. With both houses now sitting under Democrat control it will be easier for Biden’s policies to pass through the US administration. Joe Biden has said , prior to the US elections, that he will spend $2 trillion over four years to improve infrastructure, create zero-emissions, public transport and create clean energy jobs. That means Green investments now stand to gain heavily with a Biden Presidency. Copper, alongside other commodities, stand to gain on Green investments.

Green investments rising before the US elections

Now note that even before the US elections Wilderhill New Energy Global Innovation Index saw strong gains as they anticipated a Biden victory. Green technology relies heavily on copper for conducting electricity so copper looks set for further gains in the short and medium term. At the very least copper looks a buy on pullbacks for the medium term. For the upside 4.000 is the next key target for buyers. We can see a short term entry for copper marked on the chart. Over the week we will be on the lookout for any decent price action that can be uses to define and limit risk for copper buyers.

Washington and Fed support

We now have two areas of stimulus from the US, form both the Fed and Washington. This means that any problems in the US economy will be met with spending power vs new debt. This spend, spend, spend mentality should ensure dip buyers keep stepping in for the key commodity copper. The key risk to this outlook is if the vaccine for COVID-19 proves ineffective and we see risk off tones. A risk off market will encourage a sell off in commodities like copper.


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Dollar bounces from key support
by Giles Coghlan, Chief Currency Analyst, HYCM

The Dollar Index has fallen into heavy weekly support so it is hardly a surprise from a technical perspective to see a bounce here. Just look at the heaviness of the support on the weekly chart would tell you a small bounce would be in order in pretty much any market. The key catalyst for the bounce higher is the rising US10 Y yields. As yields rise a countries currency tends to rise too. Rising yields = coming interest rate rises = stronger currency. An obvious cap to the US 10Y rising yields is seen at 1.25%. This level should cap any further yield gains and that rate will likely find some US10 Y bond buyers keen to hedge in some gains against an equity fall. 1.25% in US10Y is not bad by recent standards.



Dollar Index

For all the market chatter of the ‘crowded USD trade’ some profit taking makes sense at the 89.00 level on the Dollar Index. The reason for the crowded short USD trade is that there are some very good reasons to short the USD. Seeing a bounce on the DXY is expected. Being short the Dollar index into last year’s end the obvious target for sellers was into this present weekly support level the Dollar Index has just fallen into. Check out the stats here for the seasonal USD weakness. Year end tends to see USD outflows for US taxation reasons:



A natural retracement would only be normal market movements. Next near term resistance marked on the chart with the major trendline above at 93.00. The break higher last week indicates that there is a potential trend shift in the Dollar Index indicating a retracement at the very least.



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Seasonal Insights: Illumina 12.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Will Illumina see further gains this year? Listen on Youtube.



Illumina is an American company which develops, manufactures, and markets integrated systems for the analysis of genetic variation and biological function. It has also got recent backing to track new emergence of new COVID-19 strains. Seasonally this is a strong time of year for Illumina. From January 11 to January 25 the shares have gained in 10 out of the last 15 years. There has been an average gain of +6.86% and the largest loss was -8.92% in 2008.

Trade Risks: The main risk to this trade is if further risk off tones develop and drag US stocks lower.

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Looking at a Dollar retracement
by Giles Coghlan, Chief Currency Analyst, HYCM

An effective method to actually deal with a Dollar pullback

The latest market chatter is how much is the latest dollar strength a retracement vs a shift in the trend? It’s a good question and at the very least we need to be prepared for a dollar pullback. The US10 Y yields spiking higher on the US stimulus package from a blue sweep has been the recent catalyst for dollar strength. Sometimes, when there is uncertainty looking at the technical picture can help us to see areas of opportunity that present themselves.

Technical look at the DXY -Three steps to take

Step number 1: Look for a break of the descending trend line. This is the key trend line on the daily chart as it is the high before the most recent low. This break, which has taken place, is significant and it has already happened. In itself it indicates a probable trend change.


Step number 2: a retest of recent lows. This is still to happen. However, if we get a pullback to the recent lows and a rejection of those prices this tells us a trend change/retracement is probable. Look at the chart below for the area to look for this.



Step number 3: If we see a break higher of the recent highs in the DXY that will confirm a pull back. However, due to the narrow reward here (a possible return to 93.00) a favourable entry would be most likely found on a rejection of a recent low re-test. That kind of entry should provide a low risk high reward entry. The technical risk would be the most recent lows. Any return through this level would invalidate this outlook.


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Seasonal Insights: Visa 13.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Will Visa see further gains this year? Listen on Youtube.



Visa is a well known American multinational financial services company with its HQ in California. Visa is coming into a strong time of year. From Jan 29 - Feb 17 Visa shares have increased in value a total of ten times in the last twelve years. The highest gain was in 2009 with an +18.97% profit. The largest loss was -2.91% in 2016.

Trade Risks:

1. The main risk to this trade is if US stocks move lower on concerns over rising US 10 Y yields
2. Another risk would be risk off trading on COVID-19 lockdowns.

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Time for the Fed to taper?
by Giles Coghlan, Chief Currency Analyst, HYCM

There has been some considerable talk from the Fed around tapering the current pace of bond purchases. The most likely outcome of this is a steepening of the Treasury yield curve which could support some further USD gains in the near term.

Federal Reserve members Evans, Kaplan & Bostic are all warm to a December 2021 taper. In contrast Clarida and Mester considered a taper to bond purchases as unlikely this year. Finally, Barkin did not enter into that conversation. On Tuesday, Bullard said that they were ‘not close to tapering’ and Rosengren says a ‘little while away’ from bond buying debate. So, a pretty mixed bag on the end to tapering.

There has been a rise in expectations of a taper from Wall St. JP Morgan’s analysts are anticipating a December taper for this year. If and when the taper does occur it may look similar to the pattern laid down in 2013 and 2014.

How did the last taper go?

Phase 1: In the year prior to the tapering in December 2013 ( which is exactly the place where we are now) the yield curve steepened. 10 year yields rose almost 100bps with the 3 year yields rising less than 5bps. Remember that 10 year yields have been rising sharply over the last week.

Phase 2: Between December 2013 and the first interest rate hike in December 2015 the curve flattened sharply and 3 year yields rose over 60bps and 10 year yields dropped around 60bps.

At the moment today’s OIS pricing is for a first hike around December 2023 and tapering around December 2021. So, in the near term US 10 year yields may have some further to rise and this could help with the recent DXY retracement and assist USD buyers. Recent lows around 89.00 will need to hold for this to be the case from a technical perspective.

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Week Ahead 18.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

The main story this week was the strong run higher in US 10 year bond yields. This led to a rise in the USD and excited expectations of a faster than expected US recovery. One of the key questions at the moment is whether the recent USD retracement is part of a wider trend change or just a pull back in the broader USD bear market. In answering that question some key areas to watch going forward will be the pace of the US vaccination program, the rate of inflation, and how eager the Fed is to taper bond purchases. Expect the USD to be centre stage next week.

Other key events from the past week

1. GBP: Bailey talks rates, Jan 11. The GBP gained on comments that Bank of England’s Governor Bailey considered negative interest rates a ‘controversial is-sue’. This strengthened the GBP this week as traders priced out negative rates.
2. USD: US10 year bonds, Jan 11. US10 year bond yields broke higher pulling the Dollar Index up with it. The 89.00 level is key support for the Dollar Index. If that holds next week then a break of 91.00 leaves 93.00 the next target for buyers.
3. US Oil: Recovery hopes boost oil, Jan 12. WTI crude futures continued higher after Saudi Arabia’s 1mln bpd production cut last week. The positive outlook for US crude buyers revolves around global COVID-19 vaccine hopes.

Key events for the coming week

1. CAD: Interest Rate Statement, Jan 20. Canada’s oil export economy has been supported by rising oil prices. Will the Bank of Canada adopt a more optimistic outlook at next week’s rate meeting?
2. JPY: Interest Rate Statement, Jan 21. The Bank of Japan will meet next week and rates as well as bond purchase are largely expected to remain unchanged. However, OiS futures market do project 81% chance of a 10bps hike next week.
3. S&P500: Buy the rumour, sell the fact? Jan 22. Will the S&P500 drop lower on a ‘buy the rumour sell the fact response’ when the long anticipated US stimulus bill is finally announced?

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Seasonal Insights Netflix 14.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Will Netflix see further gains this year as lockdown restrictions gather pace? Listen on Youtube.



Netflix saw strong gains this year as a ‘stay at home’ stock which benefitted from COVID-19 lockdowns. Over the last 15 years Netflix has gained 13 out of those 15 years between January 13 and February 12. The average return has been +17.02% and the largest return was a whopping +72% in 2013. The largest loss was -17.98% in 2016.

Trade Risks:

1. The main risk to this trade is if US stocks move lower on risk aversion.
2. Another key risk is the lifting of lockdown measures.

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Stock wars: A key US/China trade tension to watch
by Giles Coghlan, Chief Currency Analyst, HYCM

Will Alibaba and Tencent face a US ban?

As President Trump prepares to leave office, albeit in typical controversial fashion, one of his last actions upon leaving office has been issuing a ban on Americans investing in 35 companies considered to have close ties with China’s military. The recent emerging market rally has been able to absorb that news. However, the companies on the banned list may be about to be increase.

Reuters report that Washington sources have Trump considering adding Alibaba and Tencent to that list of banned firms. That could be significant.

Alibaba and Tencent to face ban

The companies Alibaba and Tencent have a combined value of around $1.3 trillion combined. They are the number two and the number three largest EM stocks in the world and held by almost every major U.S investment fund. If they are banned, and $1 trillion dollars is unwound via an Alibaba and/or Tencent ban, then that is a significant move that could result in some risk off trading. According to the investment bank UBS they think that around one third of Alibaba’s $616 billion market is held by US investors and that 12% of Tencent’s $35 billion value is held by them. These firms combined make up around 11% of MSCI’s $7 trillion emerging market index and Chinese firms make up around 40% of that index which is up from around 17% a decade ago.

This is one area to watch as a ban could push some risk off selling. So watch out for these headlines as key a risk to stay on top of. Remember that if we saw strong risk off selling we would expect AUDJPY selling as an initial reaction.

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Market Mood AUDJPY 15.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the AUDJPY pair on Youtube.



Strong AUD, Weak JPY

The medium term upside case for the AUDJPY pair remains.

The AUD as a pro-cyclical currency benefits from the vaccine hopes which are encouraging gains in commodities and equities as we start 2021. Both rising equities and commodities support the Australian dollar. Furthermore, China’s growth prospects of over 8% this year helps life the AUD. With Australia’s economy benefitting from its close economic ties with China the AUD is set to gain as China recovers. Finally, the Reserve Bank of Australia has stopped cutting interest rates and is set to remain on hold for the foreseeable future. All of this should help support the AUD medium term.

If markets remain calm then the JPY should stay weak on risk on tones.

Trade Risks:

1. The main risk to this trade is from any risk off trading on global growth weakness.
2. If the COVID-19 vaccine is shown to be ineffective this will invalidate this outlook.
3. Any sharp rise in US 10 year yields can sometimes spook equity markets.

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How to manage Bitcoin longs?
by Giles Coghlan, Chief Currency Analyst, HYCM

The BTCUSD longs were sold well before the $20,000 peak was hit last year on a trend line break. See here. However, there was a number of questions about BTCUSD. Some people have bought in at very low prices and are deep in profit. That sounds great, but strangely it can be quite stressful to know what to do with a trade deep in profit. Furthermore, when markets behave like BTCUSD you can see large profits evaporate nearly as quickly as they appear. So having a plan is important. This article will give you some ideas how to manage you profit.

Techniques for managing your profit

1. Trail your stop beneath the daily chart trend line

Take a look at the chart below. You will see the daily trend line.



This is an obvious technical place to trail your stops.

Advantages: If the trend carries on you are in and stops can be trailed to reflect higher prices.
Disadvantages: The stop beneath the trend line is around $30,000 which is considerably below current prices.

2. Take profit now

This would have been a great trade and you need to book those large profits when they come.

Advantages: Remember that markets don’t double every day of the week, so take those gains.
Disadvantages: If price rallies to $100,000 you may wish you had held on. However, you could argue there is more to lose by holding than there is to gain by closing the trade.

3. Take profit at retest of recent highs

Advantages: This seems a good compromise and a decent level.
Disadvantages: If BTCUSD is a new digital currency then get in early. That won’t help you if you have closed your positions. The other disadvantage is if price does not go back to recent highs.

4. Trail stops underneath weekly lows

Advantages: You will be in for a large price shift higher if it comes.
Disadvantages: You will get taken out on the eventual pullback whenever it does come.

Whatever you do it is best to commit to one approach. Also realise there is no perfect answer to the question on when to take profits, as no-one has a crystal ball to see future prices. So, if you do take a profit that turns out to be too early, don’t be hard on yourself. Picking tops and bottoms is often more about chance than skill.

Also remember if you are in the UK that once you close your position you will be unable to open it again due the FCA regulation change. So, think carefully.

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Seasonal Insights Unilever 18.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Can we expect Unilever buyers in anticipation of further gains this year? Listen on Youtube.



Unilever has seen strong gains over the first half of the year for the last ten years. If you take a look at the performance for Unilever over the last 6 months between January 13 and June 03 you can see below that the average return has been a solid 10%. The largest gain was an impressive +30.76% in 2017. The only loss was in 2012 and was a -1.00% loss. Unilever has provided a number of products to consumers in the UK during the COVID-19 lockdowns and that has supported its share prices.

Expect Unilever buyers in anticipation of further gains this year.

Trade Risks: The main risk to this trade is if COVID-19 cases rise and the vaccine proves ineffective.

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Market Mood AUDJPY 19.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the AUDJPY pair on Youtube.



Strong AUD, Weak JPY

The medium term upside case for the AUDJPY pair still remains in place as price falls back to key support.

The AUD as a pro-cyclical currency benefits from the vaccine hopes which are encouraging for future gains in commodities and equities as we start 2021. Both rising equities and commodities support the Australian dollar.

The Reserve Bank of Australia has stopped cutting interest rates and is set to remain on hold for the foreseeable future. All of this should help support the AUD medium term. As long as the global synchronised recovery is expected then AUDJPY buyers should remain. The JPY should remain weak as long as risk off tones characterise markets more often than not over the coming weeks.

Expect AUDJPY buyers from market.

Trade Risks:

1. Any sharp rise in US 10 year yields can sometimes spook equity markets and send risk markets falling.
2. If the COVID-19 vaccine is shown to be ineffective this will invalidate this outlook.
3. The main risk to this trade is from any risk off trading on global growth weakness.

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Is gold weakness set to stay?
by Giles Coghlan, Chief Currency Analyst, HYCM

Gold normally has a great start to the year on Chinese gold buying for the Lunar New year celebrations. In fact, over the last 10 years gold has risen in eight years out of ten during the month of January. 2012 saw a large rise of 9.14%. 2011 recorded a -6.74% loss. Despite the normal strong seasonals (see chart below) this year gold has been struggling during the month. So, is this the end of the strong fundamentals for gold buying?



Will gold break its 7 year winning seasonal streak this January?

The last fall in gold occurred in 2013 when gold saw -1.71%. During the rest of 2013 prices fell around 28% at one point according to Bloomberg. Two days in April 2013 saw around half of that drop lower alone. So, what was the reason? It was rising real rates on the Fed’s tapering. This triggered a sell off in Exchange Traded Funds (ETFs). So any talk of more tapering will sent jitters down gold bulls remembering 2013.

The case for gold bears

1. Economies bound back, so gold plunges on falling ETF flows.
2. The Fed starts tapering this year and the US economy bounces back from COVID-190.

The case for gold bulls

1. Substantial falls brings in gold value buyers.
2. Post COVID-19 economies are still weak and more QE is undertaken which will provide a strong buying environment for gold.

The takeaway

The globe will soon be preparing to exit COVID-19 stimulus packages as long as the vaccine works as intended. This should result in a more optimistic perspective for central banks, including the Fed. My take is that the recovery could be very swift when it comes and the Fed will most likely find themselves talking about tapering sooner that Dec 2021. One interesting tell for me is that the two largest periods of losses in gold have come on the Pfizer vaccine news and the tapering talk. This indicates to me that the directional bias is to the downside the stronger the global recovery is. The key will be the speed to which tapering is spoken about with gold likely to fall on talk of Fed tapering.

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Market Mood FTSE 100 20.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Listen to the latest market mood for the FTSE 100 on Youtube.


The medium term upside case for the FTSE 100 remains.

The UK has been living under the shadow of Brexit since 2016. Now that Brexit has finally been agreed the UK should be able to attract investors again. Some investors had been holding back until Brexit was agreed. This means that medium term FTSE 100 buyers should keep price supported.

However, recent gains have been limited on the sharp rise in COVID-19 cases in the UK. Furthermore, the sell the fact response to Biden’s stimulus package also dragged down the world’s indices heading into the end of last week. This should offer dip buyers a chance to buy the FTSE 100 as price sits above a key daily trend line.

Trade Risks:

1. The main risk to this trade is from any risk off trading on global growth weakness.
2. Any sharp rise in COVID-19 cases in the UK will invalidate this outlook.

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Market Mood Adidas 21.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Is Adidas a great buy now? Listen on Youtube


Adidas is a German sportswear company and it tends to have a very strong time of the year between March 12 and April 27. The average return over the last 22 years has been an impressive +10.09%. The largest profit was in 2000 with a gain of +11.31% and the maximal gain during that period was a very large +39.03%. There have only been losses in 2 of those 22 years during that period.

Is now a great time to buy in anticipation of March gains on global recovery hopes on vaccine optimism? Or is it best to wait until mid-March for buyers?

Trade Risks:

1. The main risk to this trade is from any risk off trading on global growth weakness.
2. Any sharp rise in COVID-19 cases in Europe will invalidate this outlook.

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Hydrogen is hot in the green world
by Giles Coghlan, Chief Currency Analyst, HYCM

Hydrogen has a few key things going for it. Firstly, when it burns its burns clean. There are an ideal replacement for fossil fuels. Remember around 20% of all Co2 emissions come from industry.



Hydrogen could radically reduce this figure. For example hydrogen, when removing the oxygen from Iron Ore, creates water vapour rather than Co2.

Hydrogen could also be used as a clean solution for fueling vehicles as well as heating buildings. Once again its clean usage makes it an ideal candidate.

How do you make Hydrogen?

The main technique is through electrolysis. Ideally that process itself would be funded by renewable energy like wind or solar. In this way the whole process can be become ‘emissions free’ and hailed as a big win in the climate fight against Co2.

The drawback?

Current prices are around $2.50-4.50 per kg of green hydrogen. This cost needs to drop below $1 to start forming a competitive edge against fossil fuels.
Storage: Hard to store, transport and deliver at present.

Who is involved?

1. Mitsubishi Power Americans Inc plans to build three hydrogen ready gas fired plants in the US.
2. Germany’s RWE plan to supply hydrogen to steel maker ThyssenKrupp AG.
3. UK’s ITM power, Ceres Power, and Norway’s Nel ASA are all listed as having a core business involving hydrogen tech.
4. Infinite Blue Energy plans an IPO that would make it the first zero-emissions hydrogen company on the Australian Stock Exchange.

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Week Ahead 25.01.21
by Giles Coghlan, Chief Currency Analyst, HYCM

Risk markets were supported higher this week as incoming US Treasury Secretary Janet Yellen assured markets of ongoing fiscal support. The negative sentiment from the sell the fact response to the Biden stimulus package last week was turned around this week as market participants focused once again on the global return to growth narrative. COVID-19 cases in the US and the UK also fell from recent highs supporting positive sentiment. As long as the number of vaccinations continue risk assets should find buyers on any dips in the coming days.

Other key events from the past week

1. EUR: Interest Rate Statement, Jan 21. The ECB kept interest rates unchanged as expected and reaffirmed what the market already knew about ECB policy. The only shift was a slight nod to Euro bulls stating that the downside risks are now less pronounced for the eurozone.
2. USD: Dollar Index Capped, Jan 18. The 91.00 level capped USD bulls this week as the USD retraced recent losses from the end of 2020. The medium term technical picture still favours USD sellers as long as price remains below 93.00.
3. US Oil: Demand hopes, Jan 19. WTI crude futures continued higher this week on news that oil demand is expected to rise again for the second half of 2021.

Key events for the coming week

1. AUD: CPI data, Jan 27. Australia’s interest rates are likely to stay at 0.10% for the foreseeable future, but any spike higher in CPI this week will encourage AUDUSD bulls as long as the global synchronised recovery narrative remains.
2. USD Interest Rate Statement, Jan 28. Interest rates are expected to be unchanged. However, investors focus will be on the forward guidance and whether future rate hikes will be brought forward from the Fed’s current 2023 projections.
3. S&P500: All time highs ahead? Jan 25. Will the S&P500 continue making all time highs supported by both fiscal and monetary stimulus from both Washington and the Federal Reserve this week?

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Strength for silver ahead?
by Giles Coghlan, Chief Currency Analyst, HYCM

Silver had a rough start to 2021 as it was pulled down with gold as the early taper talk had some gold bulls hit the panic button. This aversion for gold spilled over into its fairer cousin’s lap and pulled silver lower.

However, the dip may only be temporary as silver ETF’s have now hit record levels according to the Bloomberg tally. Take a look at the silver ETF flows below. Interest is still very much alive.


These strong flows suggest that expectations of the reflation trade is encouraging buyers. The prospect of a weaker USD and low rates should be an ideal environment for silver to flourish in. Taking a look at the seasonals for silver shows us that this could be a great time of the year.


Furthermore, on top of this there is rising industrial demand for silver’s use in solar panels. With green tech taking centre stage that is a further potential tail wind for silver.

Silver did very well last year with a strong hard rally in the back draft created by gold’s strong rise. If you can remember 2009 silver had a very strong performance alongside gold, but followed up with a solid 80% rise in 2010. Will that pattern repeat itself this year? If the reflection trade remains in play, assisted by both a weaker USD and rates remaining low then that scenario would favour silver buyers. However, any talk of tapering or normalisation should bring silver sellers out. For now, expect silver buyers on dips and look for near term technicals for timing entries.


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