Trade of the Week starting 11 July: short Dow Jones

We want to look to go short the Dow Jones Industrial Average in this week's trade, with a stop and reversal order at 31,510 and a downside target of 30,400. We also consider the long GBP/JPY trade from the previous week. Last week's trade: long GBP/JPY Thank you for visiting this week's Trade of the …

We want to look to go short the Dow Jones Industrial Average in this week’s trade, with a stop and reversal order at 31,510 and a downside target of 30,400. We also consider the long GBP/JPY trade from the previous week.

Last week’s trade: long GBP/JPY

Thank you for visiting this week’s Trade of the Week for the week beginning on Monday, July 11.

The Trade of the Week from the previous week involved a technical transaction involving the British pound and the Japanese yen. We had no idea of the circumstances involving Boris Johnson, the prime minister, and his resignation from the Tory Party leadership. Because of the political unrest, our trading was halted.

And last week, we bought British pounds at 163.85 versus the yen with a stop-loss placed just below this week’s low, at 161.55. Unfortunately, we were stopped out, and the currency pair then began to increase once more.

Therefore, for those of you who weren’t stopped out on this trade, there may still be a chance to re-enter at the level where our trade was made the first time. And this time, if you wanted to go long, you would essentially need to set a stop-loss below the low of the previous week at 160.40. So that was the Trade of the Week from last week.

Trade of the Week: short Dow Jones

There are a number of reasons why shorting the Dow Jones Industrial Average is this week’s Trade of the Week.

First of all, we in Europe are pretty concerned that Russia may not reopen the Nord Stream 1 pipeline when its ten-day maintenance period is up. This is the largest pipeline pouring gas into Germany and is currently undergoing maintenance. And as a result, this may undoubtedly have a detrimental effect on the European economy as well as European markets.

The second quarter (Q2) earnings season has now begun in the US with JPMorgan, a significant American investment bank, announcing results on Thursday. Additionally, we will be receiving statistics on sentiment, inflation, and industrial production from the US during the entire week.

As a result, we intend to short the Dow Jones Industrial Average at its current level of 31,185 with a stop and reverse order in case we are mistaken. All of this might have a detrimental effect on equities markets.

Thus, we would not only close out our short position, but also enter the market long above the high of the previous week at 31,510. And just above there, let’s say at 30,400, would be our downside objective, which is the low from the prior week.

The Dow Jones Industrial Average will therefore be shorted this week at 31,185, with a stop and reversal order at 31,510, and a downside target of 30,400.

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