Monday, May 3, 2010

Currencies - Majors

Greece is not a done deal and the market knows it.  No bounce for EUR (yet).

Weekly long legged doji, daily inside bar.  After breaking out of a broadening descending wedge AUD was unable to make new highs above 94 and there is the potential for a double top in this pair.  However the tight flag pattern AUD is making above the old trendline and the inability of the bears to push price back below it is bullish.  I favour shorts below the short term trendline but there is the possibility of a long breakout on this pair and new highs.  As the most risk sensitive pair much will depend on the direction of the indices for AUD.  Pass for now, wait for a break out or break down.

EURUSD is at a big crossroad of long term trendlines as the expanded weekly chart below shows.
Weekly bullish hammer, daily bearish. 
I am writing this Sunday night and already tonight price has formed a bearish engulfing before Europe is even awake.  The bailout bounce has not happened and the strong downtrend continues.  However there is short term trendline support at 1.32 and I would not be surprised to see a bounce here.  I am sitting out and will sell rallies, I am looking for 1.34-1.3430 which is the top of the descending channel.  However the market is heavily short EURUSD and if there is a squeeze above that level then I would look for price action around 1.3580-1.36
Support is at 1.3115 the 2010 low this far but my targets are 1.30 / 1.23

Weekly high wave doji, daily inside bar, high volatility.  Cable has spent the last month trapped in a range unable to close below 1.5150 or above 1.55.  I have been waiting for a run up to 1.57 for price action to short but with the election on Thursday time is running out.  I expect cable to remain supported but volatile into the election and perhaps a sell off afterwards if the results are not what Mr Market is hoping for.

Weekly bullish thrusting, daily shooting star at the top of rising channel.  This looks like a great opportunity for a countertrend short at the top of the channel and price has made three equal thrusts up this swing (three drives pattern) so it is an interesting countertrend short.  However NZD is the strongest of the major currencies and this trade needs the indices to continue to sell of hard to work.

Weekly inside bar, daily bullish but price is consolidating in a wedge pattern on the parity mark.  The trend is clearly down but above parity I favour this long looking for a breakout of the wedge for a long, first target 1.017 the 1.06.  A break down of the wedge and below 1.00 first target is 0.99

Weekly shooting star off 1.089 resistance, daily bearish continuation.  Although USDCHF looks to have broken short term trendline resistance this pair looks bearish and a potential double top forming.  I favour this short below this level looking for a pullback to buy with the trend at 1.0650 and take another run at the resistance.

Weekly hanging man doji, daily shooting star.  The CoT reports show the market is quite heavily long this pair, although that eased off a bit this week.  I am waiting for this pair to pullback to buy and I am not tempted to short this countertrend.  US treasury yields came off quite a bit last week but USDJPY stayed supported.  I am looking for it to catch up and pullback and I am watching for 91.80 / 90.75 level


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