Charts and Patterns Q3 2017 Commentary

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Instruments traded:FX Spot and CFDs
Asset Classes:FX, Equity Indices, Commodities
FX, Equity Indices, CommoditiesTrends and Technicals
Quarterly Return:-0.49% (gross of service or any applicable performance fee)
Q3 2017 daily return volatility:0.71%
Average Trades per week:3.6 (since inception)

Market Overview

The market for the third quarter of 2017 (Q3) continued in much the same manner as the second quarter. Indices continued to remain resilient and were the best trending market. Metals started to look positive but again the bullish move has retraced back to similar levels as at the start of the quarter. This is related to the US dollar, which was weak for the majority of the quarter but strengthened in September. It was again generally a difficult period for active trades, with no continuation of trends, other than the indices, whilst currencies have been very choppy.

Portfolio Performance

July-0.7%
August1.8%
September-1.5%

Equity indices were again the main trending market for Q3 but as with Q2, there were limited retracements to allow buying opportunities. The Nifty Index provided a nice opportunity and profit was taken during third quarter. Charts and Patterns continued to look for a larger correction but this has yet to materialize. The retracement in August was very shallow and did not dip to the entry levels desired to enter long positions. In contrast, the slow moves higher were not conducive for the models this trading strategy utilizes.

At the start of this quarter Charts and Patterns was looking for some buying opportunities in the soft commodities and took positions in corn and wheat. These positions resulted in losses as soft commodities have generally been very weak.

Charts and patterns also attempted to capitalize on the strength of metals during Q3 but this resulted in a loss for a palladium trade, which unfortunately finished its strong move higher earlier than anticipated.

In Forex, the quarter the AUD-NZD trade provided a nice profit, although this took a very long time to play out, but it eventually hit its target.

Outlook

At the start of the fourth quarter, it is the strategy manager’s view that equity indices will continue to move higher in the longer term. It remains to be seen if a larger correction will occur this year but we will be looking to buy upon any weakness.

Metals may provide a buying opportunity over the next quarter, with more strength expected in the sector and with the aim of buying upon retracements. The strategy manager is still expecting soft commodities to be bullish but confirmation in markets is required before any trades are initiated. Charts and Pattern is likely to be very selective within forex markets, with limited currency pair opportunities in scope at this moment.

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