Sunday, October 11, 2009

Charts and analysis, 11 October 2009

Risk appetite seems to be growing this week as the commodity (risk) currencies all made new highs for the year and the dollar broke a key weekly support at 76 although clawing back at the end of the week. Stocks are on the verge of new highs, gold is already at new highs and crude looks set to retake the $75 level. Exuberance everywhere, except for the poor old Pound.

USD index weekly has a weekly bullish hammer and the tails of the last few weeks suggest some support at the 76 level although it was breached this week and recovered. After two weeks of sideways consolidation for the dollar the decline appeared to accelerate again this week. Shorter term it managed to rally Friday bit only a break above last weeks high of 77.25 would suggest a short term bottom at the 76 level.

Indices – all had strong bullish weeks. The S&P broke out of a daily bull flag forming since the September highs and is all set to retest them, the Dax, Nikkei, CAC, FTSE all found support off a daily rising trend-line and are set to retest the highs. I would be hoping for a double top bounce down but the trend is clearly up …

Crude – uptrend - Weekly bullish continuation, daily bullish inside bar. Price is at the top of the descending bull flag range and had a bullish week on the back of a weak dollar and a more positive demand forecast than we have had for a while and despite trade date showing US petroleum imports at a 3 month low. . I am waiting to see if it breaks out of the channel or if the upper range limit holds.

Gold – uptrend - weekly bullish marabuzo but daily hammer followed by an inside bar. Gold faced some selling pressure Friday as the dollar rallied off its weekly lows following Bernanke comments that the US interest rate may rise sooner than expected. Gold is only at new yearly highs versus the USD and the price is only a result of USD weakness. Against the Australian dollar Gold is 25% off the February highs. Gold seems to have been a hedge against the dollar drop and so any reversal in the dollar makes gold vulnerable.
I would not short the daily shooting star of Thursday but instead would buy on price action on a retrace to the 50fib and previous resistance at $1024.

Silver – uptrend - has lagged gold but still at new highs for the year in USD terms. Like gold it is a buy on dips and I am looking for price action at a 50fib retrace to 16.80 and watching keeping an eye on the dollar index for direction.

AUDUSD – uptrend - weekly bullish marabuzo breakout took Aussie to new highs and above the psychological 90.00 level, daily inside bar with almost no retrace the Aussie is the strongest of all the major currencies and a buy on dips. Price is sitting on the centerline of a rising channel from the January lows. Resistance levels are 92.00 (04.14/08 low) 92.80 (May 08 low) and 93.24 (June 08 low). Only a pullback below 85.65 and previous swing low would suggest a top.

AUDJPY – uptrend – Price has broken out from a long time range and above significant 80.00 level (although still below August highs) so this is a buy on dips. Support should be strong at or just above the 80.00 breakout level and I would buy on price action.

NZDUSD – uptrend – Same pattern as the AUDUSD, strongly bullish but held below the centerline of the rising channel from the January lows and what was support in June 2008 at 74.44 just below the psychological level of 75.00 which is also the 78.6 fib of the 08 extreme high / lows and for this reason I would pass on this one for now and watch what happens next week.

NZDJPY – uptrend – Weekly strong bullish continuation, daily bullish but still below the highs of two weeks ago. This is a buy on dips for me (I am watching 65.500), target 69.10.

AUDNZD – downtrend – Price is consolidating after an apparent double bottom and has broken up through a descending trendline. I would buy a retest of 1.22 breakout point and then look for price action at 1.24 to sell again. Except I hate this pair almost as much as EURCHF so I will pass!

USDCAD - downtrend - Weekly bearish and daily bearish marabuzo’s price has broken down through psychological support at 1.05. After lagging and being the weakest of the commodity currencies for a while CAD took off this week. It’s a sell on rips target 1.0317 and the 61.8fib extension level. If that level goes then the next support is 1.0270 and the December 07 highs. Only a rally above 1.0670 would change my view to bullish.

CADJPY – Uptrend – weekly bullish marabuzo and breakout of descanding trendline, price broke resistance at 86.07. This is a buy on dips. I would buy on price action retests of support at 84.90, 84.30 and 83.11

EURCAD – downtrend– Weekly and daily bearish and break of rising trendline support. Sell on rallies, or retest of breakout level at 1.56 area

EURNZD - downtrend - Weekly bearish continuation after a weekly doji pause. Daily dropped below the psychological 2.000 level but has rallied back through. Sell a retest of the previous lows 2.0280 from underneath.

NZDCHF - same as EURNZD but opposite ... its a buy.

GBPAUD – strong downtrend – 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 inside bar, daily bearish marabuzo this is a sell on rallies, my target is now the 28Sep wick low at 1.5767 and I am looking for a break there to continue further.

GPBJPY – downtrend – Weekly double inside bar and daily consolidates sideways in a bear flag pattern above 1.40. Price broke the neckline at 146.80 and if the pattern holds it could put GBPJPY back in the 120’s. On the daily there is a potential double bottom in place but I am still bearish and sell on rallies. A break of the flag long, above 144.60, and I change to bullish with a target of 1.49 where previous support could become resistance.

GBPCHF – downtrend – Weekly double inside bar, daily bearish marabuzo following a shooting star, price is consolidating in a bear flag pattern above the 61.8fib retracement level. Sell on rallies or break down of the flag, target 1.50

AUDCHF - Uptrend - Weekly and daily stongly bullish marabuzo candles, the weekly taking out the previous week’s long shooting star tail and breaking the range of the past 9 weeks. Buy on dips only.

EURGBP – stong uptrend – Weekly and daily charts are strongly bullish but Friday’s long bullish candle close puts a potential double top in play off the 93 level. I am passing and waiting for more information.

EURUSD – uptrend – Price is consolidating at new highs and a potential short term dbl top is in play however, on the monthly chart EURUSD has put in 6 consecutive higher lows and could be setting up a seventh. Price is above the 61.8fib retracement of the 08/09 high/lows and while 1.50 is psychological resistance the technical resistance is at 1.52. So although the counter trend short off a double top is tempting until the trend changes this is a buy on dips. Above 1.4480 and short term uptrend is intact. Below 1.4175 puts a stop to the consecutive monthly higher lows.

EURJPY – sideways - weekly in the middle of a multi week range, this could be forming a bull flag but I need more information. I’m going to pass for now.

EURCHF - sideways – Pass.

USDCHF – downtrend - Weekly bullish hammer in a sideways range, daily could be trying to make a higher low here but like the possible double top in EURUSD it is against a strong trend and not enough information yet. I am watching this one closely though, I prefer to go long USDCHF than short EURUSD. A retest of the 1.055 levels from the underside might show the way.

USDJPY – downtrend – 2nd weekly bullish hammer in a row in a strong longer term downtrend, daily bullish marabuzo. Although this is a strong long term downtrend a corrective bounce is due price is sitting right up against a steep short term descending resistance line.  A break of this line and a possible double bottom could see a move up to 92.50. However I am holding a short targeting 87.00 (although much less confident after the strong buying activity at the option barrier at 88.00)

USDNOK – downtrend - Weekly bearish continuation following a doji pause, daily bearish continuation after again making new lows for the year. This is a sell on rallies or a retest of 5.75 from underneath. Price is coming up on the Jan 08 highs and resistance may become support at 5.62 / 5.578 so watching for price action there.

USDSGD - downtrend - weekly very bearish marabuzo break of previous weeks doji and new lows for the year, daily consolidation sideways in a bear flag pattern. This is a sell on rallies and if price retraces I am looking for price action at 1.4050 area to short.

USDZAR - sideways, long term downtrend - weekly sideways bearish, daily could be putting in a double bottom here. 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 and waiting ...

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