Monday, September 21, 2009

Analysis and some charts

This week starts with a three day bank holiday in Japan, and the big Eid Al Fitr holiday throughout the Muslim world and then we have the FOMC statement midweek. No rate change expected from FOMC but the comments will be closely watched. For those reasons it could be a quiet and sideways start to the week.

USD index has put in a weekly long-legged doji, the first pause in a long slide. This can be a moderately reliable reversal signal (although more reliable on tops than bottoms) so what happens next will show the way. It’s not a trend change, not a reversal even yet, but it does show indecision in the market. The daily shows it has gained some traction although Friday’s candle shows some upper wick … but I am sure not to many would want to be long dollar going into the weekend. The bearish dollar sentiment is so extreme that some correction and balancing would be logical.  The stories about the dollar being the new carry trade however are everywhere

Indices. The trend is bullish, the weekly and dailies are bullish and the indices have held every level they have climbed to without any significant pullback which is very bullish. There is no point in fighting the trend. Having said all that this past week the indices made new highs and then closed below the previous days lows, not a good sign for most as it was off key levels. This is the Dow chart showing levels (the top of a weekly inside bar that controlled the price range for weeks afterwards). Although the risk of correction increases the higher we go this is a market that does not want to go down (the US Govt still have some QE money) but we could have a sideways pause here.   There is apparently some money leaving the indices too:

Crude. Weekly is bullish but range bound, the daily has rejected the 73.50 level and closed the week above my 72 level. There is the possibility of a bigger bull flag break out and retest setting up. However crude is vulnerable to any strengthening in the dollar this week which would cause it to fall off. It lagged other commodities in every dollar rally last week and has been falling hard on dollar strength. I am watching for a retest of $70

Gold put in a weekly doji with the high 6 pips short of the December high. Daily is in a bullish stair climb with no indication to short yet but the weekly candle is a sign of indecision, possibly a reversal in the making.  The would be an Evenig Star reversal pattern in Japanese candlesticks. Failure to break this high keeps it in the flag consolidation pattern with a retest of the 950 level looking more likely. Waiting for more information from here.

Silver has finally broken the 17.00 level but failed to maintain above it although it is now firmly in the congestion range from 2008. Weekly is an indecisive doji whilst the daily pattern remains a bullish stairclimb. The dollar will determine which way it goes from here. I will sit out and wait for more information.

AUDUSD – uptrend - weekly bullish continuation, daily made new highs for the year but then fell back to find support on previous resistance. Looks all set for the next run up. This is still a buy on dips with no indication to short yet … I am watching for price action at fib level at 0.9032 if reached …

AUDJPY – sideways - Weekly bullish but range bound, daily is coiling up in a tightening wedge and needs to break out to tempt me either way. The big 50fib level is at 80 and has held as good resistance this far and I would not go long into this level.

NZDUSD – uptrend - Weekly bullish continuation, made new yearly highs then pulled back to key weekly SR level. Daily is in a bullish stair climb. Bearish divergence warns of failure but no indication to short yet. A close below 69.00 and it is back in a range and a possible drop to the 65 area support.

NZDJPY – uptrend – Weekly and daily are bullish and has broken out of a bullish descending wedge and is above 38.2fib with targets all set for 66.00, it’s a buy. Short term support is at 64 and a break below 63 and the uptrend is broken and it is back in the range.

AUDNZD – downtrend – weekly bearish engulfing was followed by bearish weekly inside bar. Daily is sideways in wedge I would short a break of the weekly candle with a first target of 1.20 and then I am looking for 1.17

USDCAD – downtrend - Weekly bearish engulfing bar made new lows for the year, daily inside bar following a shooting star after a pullback in a downtrend. This pair has been very choppy but the trend is clear. I would only buy this now on a daily higher low. Until then it is a sell and looks set to retest 1.06 and then 1.0330 which is a multi year SR level and 61.8 fib. It’s a sell until the signal changes.

CADJPY – long term uptrend, medium term downtrend - weekly is bullish but sideways, daily made a dbl bottom and then rose in continuation of the longer term trend. Looks as though it has broken out of a bullish descending wedge pattern I really like this long ... it is a buy for me on a break of 86 SR level.

EURCAD – medium term downtrend, longer term uptrend - Weekly doji off descending upper resistance line that goes back to December highs, daily shooting star could be putting in a lower high. The price action I was looking for to sell off 1.58 / 50fib & down trending resistance line has happened and like this short to perhaps 1.50 level. The long term trade here is a break out of this wedge back to the 1.75 level and I will be watching for a break.

GBPAUD – downtrend – weekly big bearish marabuzo, daily bearish continuation. Price is approaching all time low levels and risk of reversal is high but no indication of it yet. Sell on rallies until the trend changes.

GBPUSD – down trend – weekly bearish marabuzo, daily bearish marabuzo this is a sell on rallies to retest the bottom of the wedge at 1.60 If the head and shoulders patterns succeeds then the pattern projects back to 1.50. This is a sell on rallies but could encounter choppy consolidation.

GPBJPY – downtrend - Weekly bearish continuation of a double top pattern, daily bearish continuation in a downtrend. Sell on rallies. I am looking for a break of 1.468- neckline support targeting the 1.38 level next. Thank you, no need to gift wrap. A break up through the down-trending resistance line from the dbl top would target a retest of 153.25 highs.

GBPCHF – downtrend – Big bearish weekly marabuzo, daily bearish continuation this pair is closing in on possible support and my first target of 1.66 area and 50 fib level. Chart remains bearish and sell on rips (rallies) but long term trend is up and I am looking for a daily higher low or price action at the 50fib point.

EURGBP – uptrend – Weekly bullish daily bullish, Chart remains bullish and a buy on dips. Long term the trend is down and I would be looking for price action around 91.0 and the 50fib level.

EURUSD – uptrend - Weekly bullish continuation, daily sideways consolidation. EU has passed the Dec 08 high at 1.4723 and the next level is 1.4871 the Sep 08 high and 1.4850 is a 100% fib extension. There is significant bearish divergence on the daily chart but no indication to short yet. Price action could entice me into a counter-trend short targeting 1.43 SR level in the hope it would turn into a longer term move.

EURJPY – sideways - weekly bullish engulfing and daily bullish inside bar but range bound and no clear direction yet. Has broken a down trending resistance line in place since the beginning of August and looks bound for 1.3613 highs but not a convincing trade for me.

EURCHF - sideways – I don’t know why I look at this, I have not traded it since last Autumn. It has been trapped in the same wedge since last October. I have had a sell stop order just below 1.50 for months but it’s never going to happen. Pass.

USDCHF – downtrend - Weekly bearish continuation, daily bearish inside bar at new lows for the year. I do not like to short at these levels without a correction and would prefer a higher low to take a counter trend long looking vfor a corrective bounce to the 1.07 levels and go from there.

USDJPY – downtrend – Weekly bullish inside bar, daily inside bar in bullish correction of longer term downtrend. I remain bearish until 91.80 is re-tested but could correct all the way prev swing high at 93.30 and still be bearish so awaiting price action to sell again.

USDNOK – downtrend - Weekly bearish continuation, daily sideways. A break of the descending resistance line from early July would get me long counter-trend for a corrective bounce, targeting 6.14 and then 6.20-6.27 areas. Until then this is a sell on rallies or another break to the downside.

1 comment:

  1. Great stuff Nic - a point to note is that my latest MS stuff is showing that cable is the FX pair that tracks Oil the best - 82% correlation. I'll try and send it later as I've been away all weekend!