Public trading strategy
European Central Bank forced into rate hikes — short the European stock market
Thesis
The European economy is already fragile, and now their central bank is being forced to raise interest rates to combat inflation caused by high energy costs. When borrowing costs go up, corporate profits usually go down, putting immense pressure on European stock markets. This creates a strong headwind for European stocks in the near term.
Strategy approach
Build a short-selling strategy on the 1D timeframe for EU-related equity ETFs, specifically EZU or VGK. Enter a short position when the price closes below the 20-day EMA and the MACD (12, 26, 9) experiences a bearish crossover. Set a stop-loss at the recent 10-day swing high.