Monday, June 14, 2010

Charts and analysis

The Asian session tonight has broken some resistance levels that suggest this bounce has legs.

SPX - 4hr chart
Good rally of the lows from last Tuesday has yet to clear the previous swing high at 1108  and confirm double bottom but tonight the trendline has broken (just) and the rally looks set to continue.   Buy on dips still target 1148 / 1160 (where rally will equal the bounce from the flash crash lows and market will have symmetry.

Still bullish correction, buy on dips.  Breakout from the wedge consolidation and above the 38fib targets the 61.8 fib at 79.50

Sideways consolidation but gold is higher despite rising Euro and risk appetite so it may be back to trading as a speculative trade rather than the fear trade.  Price has broken out long from a wedge but failed to hold new highs.  A retest of the wedge trendline has held thus far and price now needs to either break out to new highs or down from this wedge.
The article about Gold on the front cover of todays NY Times and the 93% bullish positioning makes me think we could correct down from here.

Major currencies

EURUSD daily chart
CoT positioning shows traders loaded up again short the EURUSD and it is back at 2010 extremes.  
Tonight has broken strong resistance at 1.2150 level and set to rally further  Buy on dips, target 1.25 1.2850 and 1.31 and the descending trendline resistance.

The market has tested the 61.8 fib retracement level at 1.47 and bounced but it looks set to try again tonight. I like this long target 1.4850 and then the top of the descending channel and the 1.52 area.  Another failure at 1.4760 and I would exit and forget longs.
I am not tempted to short unless it breaks 1.4345 which is not out of the question.  It is one of the weakest currencies and weighed down with BP.

Finally a turn after 12 weeks up in succession.  I like this short counter-trend a lot and I would sell rallies with a stop above the high at 1.1675 and a target of 1.09

I favour the downside in USDJPY but it is not a trade with rising stocks and other yen crosses pulling it upwards,  it is rangebound and I don't see a trade unless it breaks 90.84 to the downside or 92.24 to the upside.

Speculation that the proposed 40% mining tax will be dumped is helping AUD.  It has broken its wedge and confirmed the double bottom by breaking above 85.50 and the upside target is 87.00. 

Weekly higher lows have reversed with a big weekly outside bar.  Needs to break strong support level at 1.0220 and 1.00 for me to hold short and target is the lows at 0.9930, then 97.00 then 91.00
CAD could be slowed up relative to other currencies with these big support levels and parity level.

Confirmed I like this long with a target of 70.00 so it is a little late to enter here from a risk reward prospective.  At 70.00 it will be a bearish Gartley and an interesting short trade.

Currency crosses to follow shortly ...

Has made a higher high tonight confirming the double bottom at 82.20.  I would buy a pullback to 82.80 and my target would be 84.25 and then 85.50

I am not sure the yen crosses are the best EUR buys but I like this long and the target is 116.75 initially.

Has made a good base at 72.00 and I am a buyer of dips, targeting 80.00 then 82.00/83.00

I like this long targetting 139.30 and I would cut the trade if it fails again at 137.40.  139.30 is when the swing would be equal distant to the swing starting 25 May.

1.40 is an important level for EURAUD from 1997 and I like it to strengthen here and confirm a higher low at the 78.6fib level but it is countertrend and higher risk so I am waiting for a daily candle reversal which we do not have yet.

EURCAD - monthly chart
EURCAD is at a BIG level.  The daily chart shows this could be bottoming.  With USDCAD stuck above big support levels and EUR on a bit of a tear this trade might just work ...  I like this trade, it has very good risk:reward potential.

Bearish, this pair moves inversely with stocks normally.  I am looking for a pullback to 1.7250 or 1.7550 to sell again.

AUDNZD - weekly chart
Selling rallies looking for a break of the trendline support.  A pullback to 1.2670 gets me short, target 1.1650

AUDCAD daily chart
Trend is down but looks set to retest the underside of the long term wedge where it broke out from last month.  Counter-trend long target is 0.925 but looking to short again.  Downside target for short is 0.80

I have the following positions open:
CRUDE long 74.60 stop 74.30 PT 77.00 / 79.50
AUDJPY long 77.75 stop 77.40 PT 80.00 / 81.70
EURCAD long 1.2550 stop 1.2460 PT 1.3330
AUDJPY closed 50% @3R 78.80 (+1.5R)
CRUDE closed 50% @3R 75.50 (+1.5R)
CRUDE stopped out balance 75.20 (+0.5R)
AUDJPY closed 78.90 (+1.6) - fell short of my target but not liking the JPY crosses as much as the USD
GBPUSD long 1.4740 stop 1.4690 PT 1.49 - 4hr bull flag

Interesting article in the Telegraph today: Investors are betting on a Black Monday-style collapse, BoE warns
There is an Irish proverb: The obvious rarely happens, the unexpected constantly occurs 


  1. Just to tell you Nic, that your commentary is always eagerly awaited and much appreciated.


  2. Thank you Prashant!

    Ouch Greece downgraded to junk. I don't know why anyone is surprised.

  3. And may you never either Nic ;)
    Nice Charts!


  4. Up moves in Euro looking very unconvincing to me.

  5. Agree Prashant but above the 1.2150 support is important. And even when the Greece downgrade came in yesterday EUR did not go back and test that breakout level. A lot looks unclear but buying risk on dips seems to be working better intra-day than selling it.