Sunday, October 25, 2009

Analysis and some charts, Sunday 25 October 2009

So Sterling took a beating Friday with negative GDP forecast when a positive one was expected. Prospects for more quantitative easing are increasing and prospects of a rate hike move even further out. Often Sunday nights / Monday morning the trend of Friday continues before being re-evaluated in the US session or on Turnaround Tuesday (aargh). Let’s see.

Event risks this week are US GDP and consumer confidence numbers, RBNZ rate announcement and AUD consumer prices.

Despite its strong downtrend the US Dollar was the strongest of the majors on Friday as the S&P, gold and oil and risk-on trades faltered. Lower time frames suggest the dollar index could stage a counter-trend correction going into this week. It has built a strong base against USDJPY. Weekly candle is a hammer type off the 75 level, the daily is a bullish confirmation of Thursday’s inverted hammer and the 4hrly shows a double bottom off 75 suggesting good support at this level or a counter-trend rally is possible.

Indices. The trend is bullish, but markets faltered for a second week. The S&P made new highs but failed to pass the important 1100 level and then pulled back to a weekly spinning top following on last weeks doji. The Dow broke 10000 but has resistance off the 1060 level and has formed a countertrend weekly shooting star. The S&P needs to close below 1075 to confirm more downside correction or above 1100 to confirm a breakout of this range.

Crude. Weekly doji, daily big bearish engulfing marabuzo following an inverted shooting star. Crude broke out of its bull flag Wednesday and broke the 80 level out of step with the indices. It looks to have just broken a rising trendline Friday afternoon which kept me in my short instead of closing it and I am watching for more confirmation of a countertrend pullback as we start the week. My short target is 75, a 50% retrace of this months high/lows and resistance becomes support off the September high, but I realise this is countertrend and we may not get that far.  Failure to break the prev low at 77.61 and I will step aside. 4hr chart -

Gold put in a weekly bearish shooting star type inside bar following a similar candle last week makes gold look toppy with two tight range weeks. It’s in a strong uptrend but stalled with a possible bull flag forming so I would like to see the 1024 level retested successfully before I got long, or a decisive break above 1075.

Silver has a bullish weekly inside bar and a much better looking bullflag forming. Like gold I would buy a dip or a break of the flag / weekly IB.

AUDUSD – uptrend - weekly bearish doji and daily is a sideways bull flag off the May 08 swing low at 0.9275. AUDUSD is well bid and next resistance is 0.9350 – the August 08 swing high, a break of this level and the 08 swing highs of 0.9850 are in range. 0.910 support looks strong at the moment and I would not be tempted to trade this countertrend above that level …

AUDJPY – uptrend - Weekly bullish and daily doji (pause). After breaking out long two weeks ago AUDJPY has been trading in a steep channel. It is presently at the top of that channel and I expect a pullback here. A break below 83.90 and I would be looking for support at 82.00 (also 50fib) for a long entry.

NZDUSD – uptrend - Weekly bullish continuation, made new yearly highs, daily bull flag. Next resistance is 0.765 and a break above means a retest of the 08 highs at 0.8215 could be on the cards. I would not consider a countertrend short without a break below 0.7480 and target first resistance at 0.7310

NZDJPY – uptrend – Weekly and daily strong bullish continuation, this pair is approaching key resistance and 50fib level at 91.00 and I am watching price action here for direction.

AUDNZD – Pass – haha there are much better opportunities out there, unless the RBNZ rate announcement surprises …

USDCAD – downtrend - Weekly bullish continuation of last weeks countertrend hammer, daily is inside bar in a tightening range / flag. I am countertrend long this pair, looking for price action at 1.06 / 1.0650 for price action to reverse with the trend or continue.

CADJPY – rangebound - weekly is bullish continuation, daily is bullish continuation but well below the highs of the week and I would not be surprised to see more downside correction. I would pass on this one; there are better opportunities out there.

EURNZD – downtrend - Weekly hammer type candle at new lows, daily bearflags this pair is in a step climb down and a sell on rallies. 

GBPAUD – downtrend – weekly bearish, daily bearish marabuzo. Price is moving back with the trend after a modest pullback. Sell on rallies until the trend changes looking for a break of the previous low at 1.73.

GBPUSD – down trend – weekly bearish shooting star has closed back below a descending trend line that it broke up from, daily bearish marabuzo. This is a sell on rallies or a break of Friday lows with my targets 1.62, 1.61 and a break of 1.61 suggests a retest of the lows. Cable appears to be trading a range between 1.6735 and 1.5780 and is today trading mid range and at June 01st levels … which suggests the range is right where someone wants it.

GPBJPY – downtrend – Weekly long legged doji, daily bearish engulfing off descending trend line and a close back below the 50fib of the Aug highs and September lows.  I am short and have an order to add on a break of the 150 level. My targets are 147 and 145.50

GBPCHF – downtrend – Weekly sideways consolidation / bearflag in strong downtrend. I am a seller of rallies looking for this to retest the lows and 1.61 and continue down.

EURGBP – uptrend – Weekly bullish hammer type candle, daily bullish marabuzo off the 90.00 level. Possible head and shoulders forming. Chart remains bullish and a buy on dips.

EURUSD – uptrend - Weekly bullish continuation, daily sideways consolidation at 150 level with rallies extending to 150.60. Key support is 1.4830 and next resistance at 1.5185 and then 1.5240 (78.6fib retracement of the highs to lows).

EURJPY – sideways - weekly bullish continuation, daily bullish continuation. This pair is at key resistance (138.75), triple top and my favourite trade for a reversal. I will try and sell this level because I think the R:R is pretty good, targeting the bottom of the range at 129.75 which is also trend line and fib resistance. Resistance is at 136, 135.50 and 134.40. A break above 138.75 is a big range breakout for this pair and I would buy a pullback and retest of this level.

EURCHF - sideways – Pass.

USDCHF – downtrend - Weekly bearish continuation, daily consolidating at new 2009 lows just above the parity level 1.00 Trend is still strongly bearish and the consolidation right above the level suggests a break or test below could be not far off. 1.003 is the low and 1.0037 is the 100% fib extension of the drop so a bounce is possible also.

USDJPY – Up trend – Weekly bullish continuation, daily continuation with key resistance at 92 – 92.55. I am long but have tightened my stop as a reversal to the longer term down trend is not out of the question at this level.

USDNOK – downtrend - Weekly bearish inside bar, daily bearish consolidation above the 5.50 level. This has come a long way without correction but is still a sell on rallies or a break of the 5.50 level.

USDSGD - downtrend - weekly inside bars, daily sideways consolidation below the 1.40 level support broken at the beginning of the month. Price is in a range between 1.40 and 1.3850 for the past three weeks and I am watching for a breakout trade.

USDZAR - sideways, long term downtrend – weekly & daily sideways consolidation above the August 08 lows at 7.20. I still like this long if the indices correct down and the dollar rallies. The spread is ugly but the R:R looks really good so I am still watching for a break of the descending weekly resistance line.


  1. thats a pretty much comprehensive overview of the markets. so much better than the "professional" reviews. To the point technical analysis.

  2. Great stuff Nic - our 'stars' align again which is comforting - we may be seeing the same things on our way to the next level LOL