Sunday, March 7, 2010

Chart analysis

A week of huge gains for the indices, the biggest since last Autumn and bond yields get crushed ahead of a next week’s big US debt auctions. Funny how that happens. Dollar index is correcting but holding its own. The risk on / risk off trade seems to be a single switch, either on or off. The market rallied hugely on Friday after only 36,000 lost jobs when bigger losses were forecast due to snow storms. The US 3month Libor rate climbed higher than the JPY one for the first time since August 09 which does not look good for the USD as a carry currency and likely the reason for the sharp rally in the JPY crosses although a news report that the BoJ may extend easing (while the market expects the Fed to start tightening) added fuel to the fire.

Dollar Index – Another weekly doji, an inverse of the pattern on EURUSD. A shallow down-trending channel is forming, a possible bull flag. I am looking for the shallow downtrend to continue and retest the trend-line from the lows.

S&P Weekly and daily bullish, past the 84.5 retrace of the last swing and all set to test the highs. A successful test of the January highs puts 1179 in target range.

FTSE An 18-month high for the FTSE and not all of it is down to the weak pound. Buy on dips target 5650, support at 5558, but I would be looking to buy again at 5467.60

Bullish ascending channel has held, a test of the highs at 84 is lined up and $85 looks like a certainty and $90 not out of the question. I am a buyer on a successful re-test of $80.

Gold. Uptrend, not clear if it is impulsive or corrective. Either way price looks set to test the January highs at 1161.88 and it will be clearer then. Break of the daily inside bar is a good long trade entry for me or buy with price action 1125-1128.

Silver. Uptrend, similar to Gold except the uptrend looks corrective not impulsive. Price has closed on the 61.8fib of the last swing hi-lo and if I were tempted long (I am thinking about it) my buy order would be at 16.75

Currencies - Majors

AUDUSD Weekly small bullish continuation bar, daily bullish in congestion zone.
I see the AUDUSD as having topped out and the rally from the low of 4 weeks ago is corrective. Although it has broken through the 61.8 retrace of the last swing, The AUD prefers the 78.6 fib level which comes in around 0.9160 and just short of resistance at 0.9175, if that does not hold I am looking at 0.92 and the descending trend-line from the highs as potential sell areas.

NZDUSD – Almost the weakest of all the major currencies last week the NZD only just beaten out by the dollar. A second weekly doji in a row. I like this short but there is significant event risk this week with the RBNZ rate announcement this Wednesday.  I expect it to break this consolidation range at 0.68 to the downside with a target of 0.6640/0.6580. Resistance at 70.80.

USDCAD – The best performing currency of last week has not changed my view and I am still longer term bullish USDCAD and am looking for price action to buy. A retest of the lows and a triple bottom would get me excited (I still remember the USDCAD triple top). Until then I am going to be patient and wait for the signs! A break below 1.02 will change my view and I will have to concede that we are going back to parity or better.

GBPUSD – Weekly hammer, daily bullish, consolidating after strong downtrend. … I prefer to sell rallies and I am looking at 1.5170/80 for a first opportunity if this is a 5wave pattern. For a countertrend long a retest of 1.50 is interesting but as always with cable, a sideways choppy range is a big possibility.

EURUSD – Four weekly doji’s in a row, it does look like it is trying to put in an attractive rounded bottom. I am in two minds about this pair. Either it has spent what should have been its corrective upswing going sideways and is about to continue down again or this past month was what was required to stop the massive downward momentum and we could see a meaningful upswing from here. (Linda Bradford Raschke says that the longer a pair consolidates sideways the less likely a trend is to continue but in the big picture this is not a long consolidation.) Therefore I prefer to play the ranges short term or wait for a break of the range to show the way. I would buy a breakout to the upside but 1.3860 or 1.40 would have my sell finger twitching.

USDJPY – Weekly and daily bullish in downtrend and downtrending channel. If this had closed on the highs it would be a bullish piercing line reversal but it has instead bounced on the 90.60 level, 61.8fib retrace and the weekly 20ema. It’s really tempting to sell here and I am going to be looking for a short entry or sell a retest of 90.60.

USDCHF – Reverse of EURUSD. I am not sure this pair is the driver but is pulled by the others. I am bullish and only a drop below 1.05 changes my view. First target 1.10, second target 1.15


AUDJPY – I am bearish all the yen crosses but this is the strongest of them. My bearish view is very long term and only a break above the January highs changes it. The weekly inside bar shows a stall in the downtrend and I would buy or sell a break of this candle either way.

NZDJPY – Weekly bullish hammer, daily bullish marabuzo, possible double bottom. This looks good for a counter-trend long if it can clear heavy resistance at 63. Bigger picture the downtrend is still valid. I might be a buyer if a retrace to 62 held with a target of 64.50. Only a break above 64.50 changes my bearish view for now.

CADJPY – I am bearish and 88.50 is the level where I change my view so I am watching to see what happens here. Weekly bullish inside bar after a storming rally last week, I will trade a break above 88.50 or short that level with price action

AUDNZD – Uptrend, this pair has broken from a long time consolidation range and I would buy dips or a retest of 1.2935

EURNZD – Weekly doji indecision in strong downtrend. Daily looks like the downtrend is continuing again with a big bearish marabuzo. I would sell a pullback to 1.9670

GBPAUD – strong downtrend. Weekly bearish, daily showing sideways consolidation after big drop. This pair is in no hurry to retrace and let anyone back in. This is not a place to sell and I am not tempted to buy this either so will wait, looking to sell possible at 1.6970 or 1.7130

AUDCHF – Big weekly bullish marabuzo, daily doji after massive rise, this pair has made new highs and I would be a buyer of dips or a retrace to 94.40 or 94

AUDCAD – Downtrend, weekly bearish engulfing, I am a seller of rallies (I like 9389 level) or clean break of support at 92.   I like this one a lot.

EURAUD - making significant new lows, no end to the downtrend, I am a seller of rallies and like a pullback to 1.5040 to short. A move above 1.5330 would mean the downtrend is over for now and a bigger correction is underway.

EURNZD – Weekly doji at the end of strong downtrend, the rally stalled for this pair at strong resistance level. It made a false break of the descending channel and then bounced back down again hard. There is a possibility of a double bottom here but price has to break above 2.0077 to confirm it which it has not been able to do so far. Pass for now.

GPBJPY – Strong downtrend, small weekly bullish bar, a consolidation after a very big drop. I am a seller of rallies, I have this in a descending channel and I am waiting for a correction rally to sell. Price might bounce at trendlinme resistance at 137.50 but I prefer a retest of 1.40 and the channel resistance line. 
GBPCHF – The opposite of EURGBP but not quite as good looking I think a countertrend long on this pair should go to 1.65 and possibly 1.6585

EURGBP Weekly shooting star, daily bearish, I am short will add on a retrace to 90.50 or a break of the support at 89.70

EURJPY – strong downtrend – I did not expect this pair to break the 120 support. I am a seller of rallies although I might consider a countertrend long on this pair on a pullback to 122 with a target as high as 126.50 Otherwise I will wait to sell as it is hard to get short at these levels. Longer term target 112

EURCHF – Downtrend but No, thank you

USDNOK Three weeks of dojis after an uptrend confirming an intermediate bottom in place. There daily triangle is well formed for a breakout trade. I prefer to wait for more information or a breakout here.

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