Friday, May 28, 2010

Dollar Index double/triple top?

The Dollar index could be putting in a double or triple top (daily chart) and a break down below 85.17 would confirm it.
This breakdown could target a retest of the long term trendline shown in the second (weekly) chart.  The previous correction on the dollar index was very shallow and if this one is equally shallow then the support at 85.17 could hold and we could form a wedge or bull flag here.

The dollar Index had been moving up with the Indices this year unlike last year when it moved inversely. Today's move shows the old correlation is back where equities move up and the US dollar is moving down.
EURUSD is 50% of the dollar index and looks to have put in a double bottom but with stocks moving higher I think that the commodity currencies of AUD CAD and NZD are better longs vs the USD.

Thursday, May 27, 2010


So looks like the pre-holiday rally is underway and everyone is looking at the inverse head and shoulders on the hourly  S+P with neckline at around 1090.  This would give a target for the bounce in the S&P of 1150.
I like this 1150/1152 target a lot:
1.  It is a measured move so would be equal in distance to the bounce off the flash crash low
2.  Its the level where the S&P broke the daily trendline from the March 09 lows
3. It's the previous resistance from the January highs.

All in all if the S&P can break 1090 then 1150 is a very reasonable target and pretty nice reward.
This also means that the AUD and CAD long trades (and NZD too) should work very nicely.

I'm Back

Thanks for all the e-mails and messages, I had some other stuff to take care of.
So where are we in the markets ....

This is a long holiday weekend in the US and the UK (Monday) and normally going into a holiday weekend the market reverses its prior trend and then following the week it should resume it again.  The trend of late has been down so I would expect to rally into the holiday but Thursdays are usually the biggest down days of the week and I therefore think we go down today and possibly end the week with a face-ripping rally.  Which all makes it pretty dangerous out there!!  I might not trade very much until next Tuesday.

So what looks good.
Euro is weak vs everything.
You can draw a pretty good wedge of EURGBP on the daily and a break of yesterdays low is a break of the wedge and says we have much more downside.
EURAUD is a good short on its way to at least 1.45 but I think the breakout level of 1.42 is possible.  EURCAD is dropping like a stone also, next key support is at 1.28

Gold fell from the highs, and has bounced up to the 61.8 retracement at around 1218.  I think it is a pretty good short here although slightly higher risk.  Waiting for a daily reversal candle might be better or a break of this 4hr trendline.

Crude is rallying I think on the hope that the fix in the Gulf will stop the leak.  Crude is pretty overbought and I think from here it rallies to test the 75.00 level and the underside of the channel it broke out from but I think a rally has the potential to take us to $80.  Any bad news from the Gulf will not help crude longs so I am watching the news closely.

In summary, we look likely to get a big risk reversal into the holiday weekend and EUR is not the best buy right now.
I like long AUDUSD to 87.00

and short USDCAD to target 1.03 - 1.025

Finally ... USD prelim GDP and employment numbers could be a market mover, out at 08:30 NY time

Tuesday, May 18, 2010

Tuesday 18 May

I have taken profits and closed my EURUSD and CRUDE shorts for the following reasons.

Crude has fallen over 20% without a bounce and tomorrow is the release of the UN draft sanctions on Iran. Iran has said it is prepared to block oil and "wreck Western economies" if sanctions are imposed.

EURUSD has fallen hard today and bearish sentiment is really extreme.  The all-time low is at 0.8228 in October 2000 and the all time high at 1.6040 in July 2008 so that means the 50fib is at 1.2140 … and the 1.618 fib extension of the last swing is around 1.2165.
In fibonacci terms this is a good place for a bounce.

S+P futures have stopped tonight at the 50% retracement of the bounce off the flash crash lows.  It makes me think that the indices could rally from here.

Remember .. I am often wrong :)

Monday, May 17, 2010


On all the higher time frames while the trend is clearly down this pair has so much upside potential if you can get an entry and hang on to it.
4hr chart:
Daily chart:

Sunday analysis

The futures are all red tonight and its a pretty ugly start to the week for risk.
EURUSD has smashed through the 08 support levels and 123 level and Sterling has broken major support and the flash crash lows and AUD is closing in on them fast.  
This article in the Sunday Times about the Euro going to parity has not helped and overseas all the asian indices have opened much lower.
There is a traders old wives tale apparently that when Asia makes these big moves it us usually the end of a run, so we shall see.  The commodity currencies look all set to take over from the continental currencies as the weakest plays vs the dollar.

Bearish sentiment in the Euro is worryingly extreme which could mean some nasty volatility or short squeezes. The CFTC data shows a net short position in EURUSD of 18bln and last weeks rallies reportedly only due to short sellers buying upside option protection and "Le Tarp" trillion dollar bailout buying only the briefest of rallies.  Likewise Gold bullish sentiment is at 98% (a record) and means that Gold is vulnerable to a sharp correction before continuing higher.  The big break down in risk appetite has hit crude hardest with those shaken out of the market showing no inclination as yet to jump back in and no bounce whatsoever in crude which has now collapsed 17% in two weeks and fallen out of a rising channel it has been in for the past year indicating a bigger trend could be forming.

The biggest event risk this week for the dollar is the CPI figure.  So far is has held above target even though the Fed says it sees no inflation pressure.  If it keeps putting in higher numbers expectations of a rate hike will rise and it may force their hand.

S+P futures: 
The S&P has rolled over just short of the 61.8 retracement of the big drop from the credit crunch and this week retraced to the 78.2 fib of last weeks big fall and then fell off again.  This and the close back below the trendline from the March 09 lows is bearish and suggests a continuation to 1090.  We have a clear trading range now with last weeks high and the low of two weeks ago.  I prefer to sell rallies and I have a 1120 then 1075 target, BUT the drop of Thursday/Friday could just be a pull-back in the big rally off the lows and we could continue higher from here.

FTSE futures
After the dramatic fall of two weeks ago putting the FTSE below the daily trendline from the March lows the trendline has been retested from the underside and rejected.  Below this line I would sell rallies with a target of  4850 and I would be looking for price action around 5320 to short.  Like the S+P this move down could also be a shallow correction from the rally off the crash lows and we could power higher from here.  For me the trend is down and below the trendline I would sell rallies until last weeks high is taken out.

Strong up trend, Gold made new highs last week before correcting but finds support at the previous high 1226 level.  This rise is so steep gold could correct all the way back to 1100 without breaking the trendline from the March 09 lows.  Gold is at significant fibonacci resistance here and when it makes new highs and that does not bring in significant new buyers then I would expect a pull back here to the 1170 or 1145 area and look for price action to buy again.  If Gold continues to rally here then next stop 1275 then 1337.

is in a strong uptrend but for the reasons I outlined last week I am counter-trend short looking for a pullback to 18.75 and then 18.00 (61.8fib retracement).

Bearish weekly and daily with no bounce.  Crude has fallen out of a long term channel and this has implications for a longer term trend change. 
I would sell a retest of the trend line from the underside.  Crude is in steep contango again and the last day of trading the June contract is Thursday 20th so if you are trading the front month expect a rally into Thursday followed by a sell off and lots of volatility (usual pattern). 

A sharp rally in the US dollar has broken it up out of a rising channel and this weekly chart shows it has also broken out through 8 year trendline resistance.  This is an extremely bullish breakout and I would expect any retraces to be held on a retest of that trendline in the 84.50 area.  In the short term there is nothing much in the way of resistance before 88.00

Weekly inside bar, daily bearish reversal at the 61.8fib of the previous weeks big drop.  AUDUSD has dropped a dramatic 130 pips on the Asian open tonight and broken support at 0.8800.  Drop is halted at the 78.2fib retracement which is a favourite reversal level for AUDUSD.  AUDUSD needs to break below 0.87 to confirm the lower high and set up the February lows at 0.8580, which is a key level.  If this is broken the objective becomes 0.7700

Technically NZDUSD is in a rising channel which looks to have been broken tonight along with the 200sma which has been long time support.  As this has just happened in the last two hours in the Asian session I am waiting for a pull back and retest before I entertain a short.

The weekly inside bar broke long in the Asian session tonight and is now held down by the daily 200sma.  It has been more than a year since USDCAD has traded above this moving average and a close above would be significant.  USDCAD has broken out above the resistance line from early 2009 and succesfully retested it and I am bullish this pair, buy on dips.

EURUSD - monthly chart
EURUSD has broken major support tonight at 1.2320 and the 2008 lows.  This level also represents fibonacci extension levels and the bottom of channel/trendline support.  I am wondering if the moves that broke this support in the Asian session are an exhaustion move and we may see some sort of correction here where we can sell again.  After such a big move down and the market so extremely positioned it is hard to enter short here and I am looking for consolidation or possibly a bounce.  I am looking to sell the next rally below 1.25 and the next objective is 1.18 and the 161 fib extension, 127 fib extension and trendline support from the 2000 lows .

Bearish.  I had 1.44 as my target for this swing (1.618fib) which has been exceeded and in the Asian session tonight when cable broke the "flash crash" lows.  I am looking for a bounce here to retest the break at 1.45 initially to sell again and my next target is 1.4120

Strong uptrend.  My target for this swing based on Fib extensions was 1.14 and again it has been hit in the Asian session tonight.  I expect some consolidation here and possibly a pullback to buy again.  The correlation with EURUSD and the bearish extreme sentiment makes this a tempting short with the right price action.

USDJPY looks like a range trade to me at the moment within the huge candle of two weeks ago and price has stalled tonight at 91.80 resistance level.  We could rally from here but if we dip then I am looking at the 90.80 or 89.50 levels for price action to buy.

Bearish extreme! A close below 112 support sets up a test of the spike low and 109.94 (1.618 extension). and a break below that targets 103.00.  We have tested 112  tonight and I am watching to see if it holds.  The market is very heavily short EUR and this pair is very volatile and we could have a couple of weeks of consolidation within the big weekly candle of two weeks ago.

After a solid rejection at the 61,8 retracement of the spike low GBPJPY is all set to retest that low after dropping 275 pips in the Asian session tonight.  A break of the spike lows gives a fib extension target of 120 but after such bog moves I would not be surprised to see some consolidation in the spike range before that happened.


I am taking a bit of a break this week and so will not be posting daily trades.  I will be checking the charts though and if I see anything that looks good I will post it.
Hope everyone has a great week.

Friday, May 14, 2010

Friday 14 May

Markets are very nervous ... Asian markets sold off overnight and European stocks look set to do the same.  The dollar and yen rally look set to continue.
Every bounce in Euro seems to get sold and the UK  election euphoria has worn off and sterling is sold even harder than EUR.
Having said all that I would not be surprised to see 1150 hold in the S+P and a rally in US stocks to end the week.  The sentiment seems overly bearish and that level is very sticky.  If it doesn't hold look out below.
Either way we look set to close the week with a lot of inside bars after last weeks flash crash.
The EUR looks set to be the only one to break last weeks low but I guess a trillion dollars does not buy you much bounce these days.
If there are no bounces I will be selling breaks of support today.

EURUSD short 1.2515 stop 1.2550 PT 1.2330 on a break of 1.25
EURNZD closed 1.7575 - euro rally over - (+1R)
GBPAUD closed BE - trade not working

AUDCAD long 0.9150 stop 0.9130 PT 0.9350
GBPJPY short 134.95 stop 1.3545 PT 133.10 / 131.20
EURUSD short 1.2515 stop 1.2550 PT 1.2330 break of support
EURJPY short 116.00 stop 116.50 PT 114.40 / 110
AUDUSD short 89.32 stop 89.57 PT 88.30 / 87
GBPJPY stopped out at US open (-1R)
BRENT crude short 79.90 stop 80.40 break of low of daily doji
SILVER closed 50% @3R 19.060 (+1.5R)
EURUSD short closed 50% @3R 1.2410 (+1.5R)
EURJPY short closed 50% @3R 114.50 (+1.5R)
BRENT crude short closed 50% @3R 78.40 (+1.5R)
AUDUSD closed 50% @3R 88.57 (+1.5R)
BRENT short closed balance 78.00 (+1.9)
EURJPY short closed balance 1.1410 (+1.9)
EURUSD short closed balance 1.2360 (+2.2)
AUDUSD short closed balance 88.55 (+1.54)
AUDCAD closed 91.65 (+0.75)
USDJPY closed balance 92.40 (+1.35)

Open trades:
EURUSD short 1.3110 stop 1.3135 PT 1.23 - 1/4 
SILVER short  19.630 stop 19.820 PT 18.65 - 1/2

Thursday, May 13, 2010

Thursday 13 May

I am late today because I am a bit busy with things this week outside of trading.  
I am short a few sterling crosses because sterling usually drops the month following an election.  I particularly like GBPJPY but it will not do well in US sessions if stocks rally.
However a lot of XXXJPY crosses have broken out of wedges this morning, and I have liked the yen crosses lower for some time.
GBPJPY 240min chart

AUDCAD has broken out of the range I had been waiting for.  It looks good counter-trend long to retest the breakout level here but I am going to wait and sell a retest rally.

GBPJPY short 137.80 stop 138.30 - addition
GBPAUD closed 50% @3R 1.6510 (+1.5R)
CRUDE long stopped out (-1R)
BRENT crude short 80.75 stop 81.25
GBPJPY closed 50% @3R 136.30  (+1.5R)
SILVER stopped out (-1R) - will try this one again
GBPAUD short balance closed 1.6250 (+4.1)
GBPAUD long 1.6250 stop 1.6190 PT 1.6450 / 1.6550
SILVER short again 19.630 stop 19.820 PT 18.65
BRENT closed 80.50 (+0.5R) - trade not working
CRUDE long 74.50 stop 73.90  PT 76.00 / 78.00
GBPJPY short (today) closed 1.3580 (+2)
GBPJPY original short 1/4 balance closed 1.3580 (+2.55)
GBPJPY long 1.36 stop 1.3550 PT 1.3750 / 139.00
GBPUSD long 1.4680 stop 1.4630 PT 1.4950
CRUDE long closed 50% @ 76.30 (+1.5)
CRUDE closed balance 75.00 - price action too confusing (+0.4)
EURNZD long 1.7525 stop 1.7475 PT 1.7675 countertrend
GBPUSD long stopped out (-1R)
GBPJPY long stopped out (-1R)

Open trades:
EURUSD short 1.3110 stop 1.3135 PT 1.23 - 1/4
USDJPY short 93.75 stop 94 - 1/4
GBPAUD long 1.6250 stop 1.6190 PT 1.6450 / 1.6550
SILVER short  19.630 stop 19.820 PT 18.65
EURNZD long 1.7525 stop 1.7475 PT 1.767

Wednesday, May 12, 2010

Wednesday 12 May 2010, Silver

Nervous markets continue ... UK GDP numbers this morning are the big mover for sterling shortly in a low news day.  I have noticed since the crash I have not seen one Greek riot shot on CNBS :)
The Euro is starting to look very weak.  EURCHF is 40 pips above all time lows and if EURUSD breaks last weeks spike low we could see a sharp further fall.  Yen crosses are struggling to gain back last weeks falls and tripping at key fibonacci levels.
If / when stocks fall off again I will be selling AUD or NZD.

I like the setup in GBPAUD for a short today if stocks rally and short USDCHF. I also think there is some value in a countertrend long in AUDUSD with an upside target around 91.50

PS - Be very careful.  If you only sell and don't buy the CFTC will investigate you for causing market crashes.

I am looking at a the 19.51 area as a possible short for today or tomorrow.  (Fibonacci timing tool says tomorrow should be the top).
My reasons are:
1.  That would be a double top
2. That is where the swing equals the swing from the end of Jan to March (AB=CD)
3. That is the 1.618 fib extension of the swing from end of Jan to March
4.  Top of the channel resistance (3rd touch)

The International Energy Agency today released its monthly report for crude demand and for the first time in a year it has reduced its forecast for crude.  Looking at the crude chart for the past week it makes you wonder how many people had advance warning of this report, especially as crude hasn't even sold off on the news.
Inventories this morning might perhaps get this market moving.

CRUDE 3rd addition closed 50% @3R 75.80 (+1.5R)
CRUDE 3rd addition stopped out balance @76.60 (+0.5R)
SILVER short 19.560 stop 19.750 PT 18.650 / 18.00
GBPAUD short 1.6660 stop 1.6710 PT 1.6500 / 1.6380
CRUDE short 76.40 stop 76.80 PT 75.50
CRUDE short stopped out (-1R)
CRUDE short again 76.20 stop 76.60 PT 75.00
AUDJPY short 83.10 stop 83.50 PT 81.00 (gap fill from Sunday)
CRUDE short closed 50% @3R 75.20 (+1.5R)
AUDJPY stopped out (-1R)
CRUDE today short balance closed 75.50 (+1.1R)
CRUDE short 25% balance from 79.70 closed @ 75.50 (+2.1R)
CRUDE short 25% balance from 86.75 closed @ 75.50 (+7R)
CRUDE long 75.40 stop 74.90 PT 78.50 / 82.00

Open trades:
EURUSD short 1.3110 stop 1.3135 PT 1.30 - 1/4
USDJPY short 93.75 stop 94 - 1/4
GBPJPY short 140.90 stop 141.40 - 1/4
SILVER short 19.560 stop 19.750 PT 18.650 / 18.00
GBPAUD short 1.6660 stop 1.6710 PT 1.6500 / 1.6380
CRUDE long 75.40 stop 74.90 PT 78.50 / 82.00

Dow 1929 and now - video

Here is an excellent video from Jamie Saettele at DailyFX, author of  Sentiment in the Forex Market

Technical Implications from Last Week’s Equity Plunge

There have been just 2 instances in the history of the US stock market (as measured by the DJIA) when a 10% intraweek decline followed a top that was preceded by a 52 week rate of change of at least 50%. Those 2 occurrences were the weeks that ended October 25th 1929 and last week. The former is the week prior to what is referred to as Black Monday (10/28/29) and the stock market crash of 1929.
*I understand that last week’s decline is being blamed on a number of factors, ranging from algorithmic trading to someone hitting a B instead of an M (billion as opposed to million). There is always a ‘reason’ that something might have happened. In 1929, margin accounts were blamed…in 1987, program trading was blamed. Bottom line; it happened. More importantly, it happened after a rally that reversed at the 61.8% retracement .
In both instances, the actual highs occur 8 weeks after their 52 week rate of change extremes (67% in 1929 and 59% in 2010). The 1929 decline occurred following a new all-time high while the 2010 decline occurred following a retracement (of 61.8%) of the decline from the 2007 high. Either way, the implications are that last week’s wild ride is the beginning rather than the end of a larger decline….and perhaps even a crash.

Tuesday, May 11, 2010

Floored the movie

Floored Part 1

Floored Part 2

Floored Part 3

Floored Part 4

Floored Part 5

Floored part 6

Tuesday 11 May

The S+P has retraced to the 61.8fib retracement of the flash crash and is sitting on the long term daily trendline from the March lows.  A key inflection point and where we go from here might determine what the market does for the next few weeks.  A rally from here would likely see news highs and a break lower sends us to retest the lows.
The FTSE Futures shows how these previous support turned resistance are holding across the board.

In FX the market feels heavy.  The EU's bazooka or "debt baguette" seems like an invitation to me to all the EU banks to try and dump their toxic Sovereign paper and ZH reports European Banks now feverishly betting against Euro.  My new target for EURUSD is 113.  BUT this is a very one-sided trade and short sharp squeezes are likely.

Sterling is heavy with the election still unresolved and the possibility of a LIB/LAB pact and talk of ratings agency downgrades with the uncertainty.  Not even good manufacturing data could lift it this morning.  Cable has bounced at a retest of the trendline and is a pretty safe bet to retest the lows now.  My only worry is now MS likes it short too!
GBJPY also retested old daily trendline and 61.8fib and has been rehjected.

All the JPY crosses look weak and Yen looks strong as USDJPY has been rejected at the 93 level and previous trendline support.

If stocks do indeed break lower today I will be looking to short AUDUSD which has struggled to get back above the 9000 level.

USDCAD also is a good looking long opportunity
if it successfully holds above the previous trendline resistance and at least we know where to put the stop.

CRUDE is extraordinary.
 I have never seen such a big drop in crude without a bounce.  We now hover just above the 75.00 level and I would not be surprised to see this broken and then a retrace higher.  I think some longs may be getting pretty squeezed down here.  When we bounce we could go all the way back to 82 and I still keep my bearish view and sell rallies but for now 78 is pretty strong resistance.

GOLD is a one way ticket north.  I missed it and I have been reluctant to chase it at these prices but while the mood continues today may be the day we see new highs in Gold.  The broadening wedge in Silver continues and I am watching for a test of the top and the 19.00 level.

Time to wait for the US to open and see how risk appetites does today but the bullish chatter in my twitter stream has quietened down a lot .... actually that might be a buy signal ;)

A quiet day here
GBPJPY short addition closed 25% @6R 137.80 (+1.5R)
USDJPY short addition closed 50% @3R 92.55 (+1.5R)
GBPJPY short addition 25% balance stopped out 139.40 (+0.5R)
USDJPY short addition 50% balance stopped out 93.05 (+0.5R)
CRUDE third addition 50% balance stopped out 77.20 (+0.5R)
CRUDE short 77.00 stop 77.40 PT 75.00  - try again

Open trades:
CRUDE short 86.75 stop 87.15 + 79.70 stop 80.20 - both 1/4
EURUSD short 1.3110 stop 1.3135 PT 1.30 - 1/4
USDJPY short 93.75 stop 94 - 1/4
GBPJPY short 140.90 stop 141.40 - 1/4
CRUDE short 77.00 stop 77.40 PT 75.00

Monday, May 10, 2010

Monday 10 May

I still have small parts of positions running from last week but I am mostly watching to see how everything shakes out after last weeks big moves.  This morning I am watching for short opportunities on the JPY crosses and perhaps a countertrend long in crude in the US session.

AUDUSD balance stopped out 0.9020 (+0.25R)
AUDJPY balance stopped out 85.05 (+0.25R)
USDJPY short 93.30 stop 93.55 - addition
GBPJPY short 140.20 stop 140.60 - addition
CRUDE short 77.70 stop 78.20 - addition - gap fill I hope
EURUSD short 128.75 stop 129.25 - addition, gap fill
EURUSD short addition closed 127.65 gap filled (+2.2R)
CRUDE closed 50% @3R 76.20 (+1.5R)
GBPJPY short addition closed 50% @3R 138.70 (+1.5R)

Open trades:
CRUDE short 86.75 stop 87.15 + 79.70 stop 80.20 - both 1/4
CRUDE short 77.70 stop 78.20 - 1/2
EURUSD short 1.3110 stop 1.3135 PT 1.30 - 1/4
USDJPY short 93.75 stop 94 - 1/4
USDJPY short 93.30 stop 93.55 
GBPJPY short 140.90 stop 141.40 - 1/4
GBPJPY short 140.20 stop 140.60 - 1/2

Sunday Analysis, 9 May

Extreme Volatility!  The kind of price action following last weeks moves might be difficult for swing traders and favour day traders.  Patience and discipline required :)  with weekly candles and trading ranges not seen since the Lehman aftermath.  Forget fat fingers and computer meltdowns.  The computers switched off, the market reverted to people and the people panicked.  
Prior to the drop of last week the stock markets were extremely bullish and I expect a volatile week and a substantial rebound however the speed at which the market panics and becomes bearish is not good for bears as sentiment needs to stay somewhat bullish for this down-leg to continue.  It really bothers me we have not dinged the 61.8fib retracement in the S+P.  I would not be surprised to see a new high to touch that big level before the downward correction continues again.  In the meantime we have a wide trading range in which we could be chopped to death by a thousand cuts if we are not careful.

The EU have announced their market calming package and it it certainly bigger than I was expecting, it is almost a trillion dollars but it still has to pass at national government levels.    The package also indicates they will intervene in the debt markets.  The market is massively short EUR so even if the package is less than inspiring the EUR is going to be prone to short sharp squeezes and looks set to make a corrective rally irrespective at this point.


S&P futures: 
Weekly opening black Marabuzo that covers 8 prior weeks of gains, daily inside bar following Thursdays huge range.  The diamond top reversal of last week worked better than perfectly!  Despite the sharp rebound from the lows the close below the daily trend line support and 200 daily moving average indicates a trend change in the offing.  However because the 61.8fib from the big drop has not yet been touched I would not be surprised to see new highs in this index before we continue down again.  Technically the 1152.75 SR level and the underside of the weekly trend line from the lows looks like a good place to try a short and if that fails then 1188 would be my next area of interest.

The dow in its drop fell right onto the 61.8fib retracement level.  Very neat and a little clean ... hmm

FTSE futures
Weekly opening black marabuzo, daily inside bar following Thursdays wide range. Downtrend correction.   Friday price came up and tested the 200 daily moving average and bounced down again.  Obvious levels to watch for shorts are 5390 and 5562 but the upside could be capped at 5275 with no resolution to the election horsetrading.

A bull market in full swing.  Weekly bullish continuation, daily doji made new highs following Thursdays long marabuzo. Price has paused at 161.8 fib extension of the last swing and has made two symmetrical swings to reach this high so I would expect a pullback here to the 1161.88 level  before continuing higher to test the previous highs.

Silver has a weekly hanging man doji (bearish) and despite a long bullish day Friday failed to close above the open for the week.  The daily shows an interesting broadening wedge pattern which clearly defines the ranges and possible entry short. 

What a week, weekly bearish long marabuzo, daily inside bar following Thursdays steep drop only halted by the round number 75.00 level.  I know people who are bullish crude and who simply do not believe that crude has dropped 1200 in one week (and are in some pain).  The triple top of last week has produced a drop that has removed 10 weeks of gains (a drop not seen since Sep 08), price has closed below the trendline support from the March 09 lows and below the 200 day moving average for the first time.  Price has stopped smartly on the daily 50sma and the August 09 swing high, so I expect a good bounce here but the trend has clearly changed.  I am looking at a retest of 80.00 / 80.80 and the underside of the trendline or 81.30 / 82.00 as areas to add shorts and I would also add to shorts on a clean break of 75.00 but selling rallies is preferred and we could have a big bullish week after this drop.


Dollar index is at the upper reaches of an ascending channel.  While the bull trend is intact a pullback is possible at this point of the 85.00 round number and fibonacci resistance.

This chart has rolled over.  Weekly dark cloud cover potential reversal, engulfs multiple weeks of gains and has broken trendline resistance from the February 09 lows and 200 daily moving average.  I am a seller of rallies and I am looking at 91.30- 92.00 as a good area for price action to get short again targeting a break of 85.75 support.

Going back on a long term chart for this pair, using data for the ECU that the Euro replaced you can see that 1.25 and 1.30 are important pivot levels for this pair and a bounce here would not be a surprise.  The market is very short EURUSD and even if the market ultimately does not like the rescue package or it is bearish for EURUSD, sharp short squeezes are inevitable when sentiment is so lopsided.  Added to this we have EURUSD on longterm trendline support which although penetrated, it has closed above.  This pair has hit my objective of 1.26 and so I will let the rally play out and look for price action at 1.3040-60 and 1.3120 to get short again.  Only a close above 1.36 changes my view with regard to the trend.

Weekly opening black marabuzo, daily inside bar following Thursdays long hammer on high volatility.  The trend is down and n this pair due to Thursdays election that still has not resulted in a majority Govt.  Although the trend is clearly down in this pair and it has broken long term daily trendline support it is clear a retrace is on the cards.  I am watching for 1.5125 + 1.5175 area to short this pair but it has to clear the resistance at 1.4840-1.4950 where we could bounce back to the lows.
NZD is the strongest currency after the USD and JPY so the best countertrend long and the least rewarding short.  Weekly is a doji (almost a hanging man but with a bigger body) and daily is an inside bar following Thursdays long marabuzo.  This pair briefly popped out of the bottom of the ascending channel but back in now and all set to retest the highs.  I would sell rallies, but this is not the most rewarding pair.  Pass.

Weekly bullish marabuzo with long upper tail, daily inside bar following Thursdays huge rally.  This pair has broken long-term trendline resistance and hit my target of 1.07.  I would buy dips.  I am looking at 1.02 but I would not rule out a retest of 1.00 

Weekly bullish marabuzo, daily inside bar following Thursdays big rally.  I am a buyer of dips, I am looking at support at the bottom of the channel 1.0650/1.07 for longs.

The market was very long USDJPY and got sqeezed badly when it failed at the 95.00 SR level.
The weekly drop erased two months of gains and no doubt a lot of longs had their stops eaten before a sharp bounce off the lows.  I favour more downside for this pair and I am watching for a retest of the short term trendline at 93.00/ 93.50

Saturday, May 8, 2010

Weekend Entertainment

Hat Tip to the TheReformedBroker blog
Why you should not do a webinar for paying clients during a stock market crash (erm because you sound like a raving lunatic)

I have T-shirts available, e-mail me :)

Friday, May 7, 2010

NFP Friday

It's NFP day and it might all be a let down after yesterday's history making day.  The biggest intra-day drop in US stocks and historical drops in yen crosses (at the height of the market’s fear-driven run CADJPY plunged 9.6 percent, AUDJPY dropped 9.4 percent, GBPJPY tumbled 8.2 percent and even USDJPY fell 5.9 percent) and it was all over within an hour.

I lay awake last night thinking about this for ages.  If you look at a chart of the January 9% correction (also right after earnings) it took a couple of weeks to play out and most bears were able to participate and profit.  Yesterdays drop of a similar magnitude took place in a couple of 5 minute candles, almost as though all the big players decided to pull the bid simultaneously, and then we bounced off the lows very hard and very fast.  Never mind good luck getting filled, most people I know couldn't not even get in to their brokers platforms.  And then last night the US Senate votes to reject the Brown/Kaufman bill to limit the size of Banks to 2% of GDP.  Is that a coincidence?  I am struggling to believe it is.  It is almost as though they wanted to scare the senate but didn't actually want anyone to participate or profit in the moves.
I realise this makes me sound like a bit of a tin-hatter but this market correction has been on the cards for some time.  The stock market has moved higher and higher in a bearish rising wedge held up by huge taxpayer cash injections and no volume.    There are lots of things being blamed, The ECB fiddling while Rome is burning in Europe, The mining disaster followed by the Gulf oil spill hitting energy and commodities hard, China tightening, etc..  There isn't a technical analyst on the planet that didn't predict this correction but to have it all done in an hour where if you took too long for lunch or went to the bathroom you missed it?
Now we have a wide trading range to back and fill for the next couple of weeks while the market sorts out what is what.  I would expect that we retest these lows at some point but we could be bouncing around for a while and also do some retracing.

Last night the BOJ intervened for first time since Dec, injecting 2 trillion yen to weaken their currency. 

Cable has dropped 300 points in the hour before the open on news of a hung parliament and Soveriegn CDS are widening again, UK CDS are 16bps wider at 102 bp, a record.  This is sterling negative.  European bourses that missed the afternoon fun are about to open.  Normally markets would be quiet running in to NFP but this is not a normal NFP day.  NFP forecast is for +190,000 jobs and no change to the jobless rate at 9.7%.

Has broken trendline support from the lows of 2009 and is sitting on the daily 200 moving average and the 61.8fib retracement of the recent Feb low / April high swing,  which is support for now.  I expect a good retracement before more downside but that might be a move for next week and I am looking at 81.00 or 82.20 as levels to reload shorts.
Here is Phil's crude chart with TL support and a large bearish rising wedge 

Continues to sit on the big daily trendline I pointed out yesterday.  A massive double no touch option is rumoured to be at 1.25 / 1.35 which would explain why EURUSD did not participate in yesterday's big drop (that must have cost someone a lot of money).   I would sell a retest of 1.30 or 1.3120

These are the hot risk meter charts ... although CADJPY was the biggest loser in yesterdays moves.

Below the short term trendline and 92.50 I like this short and I am a seller of rallies.  If 92.50 does not hold I would sell 93.50 and a test out of the breakout level.

EURCHF balance 25% stopped out 1.4145 (+0.5R)
GBPJPY short 1.35 stop 1.3550 PT 1.32 
CABLE short 1.4650 stop 1.4710 PT 1.4350 - post election
GBPAUD short 1.6440 stop 1.6490, PT 1.61 break of daily TL
GBPJPY short addition stopped out (-1R)
GBPAUD short closed 1.6470 (-0.4R)
CABLE short closed 1.4680 (-0.5R)
4hr hammers forming everywhere on sterling thanks to Moodys for saying hung parliament no threat to AAA
GBPJPY short 135.30 stop 136.10 PT 130
GBPJPY short addition closed 1.3450 - stocks rallying hard - (+1R)
EURGBP balance stopped out 86.25 (+0.5R)

Open trades:
CRUDE short 86.75 stop 87.15 + 79.70 stop 80.20 - both 1/4
EURUSD short 1.3110 stop 1.3135 PT 1.30 - 1/4
EURGBP short 0.8650 stop 0.8675 PT 0.8446 - 1/2
USDJPY short 93.75 stop 94 - 1/4
AUDJPY short 84.65 stop 85.05 - 1/4
AUDUSD short 0.9035 stop 0.9050 - 1/4
GBPJPY short 140.90 stop 141.40 - 1/4