Wednesday, June 16, 2010

Wednesday 16 June

FTSE is heading for it's sixth straight day of gains and the S&P yesterday got back above its 200 day moving average for the first time in a month.  That *should* encourage more buyers but last night Cramer told viewers to sell into rallies because there was no reason for the market to rally (yeah but what about the last 15 months?).
All sounds great doesn't it so why is the spread of Spanish bonds to bunds at lifetime highs?  FtAlphaville thinks we have Eurozone news fatigue
Anyway after the continuous grind up the market is due to take a breather or pull back a bit.  If it doesn't happen today it will likely be tomorrow.  Like momo-Mondays, Thursdays are usually the weakest day of the week and now it is summer no doubt many take Fridays off.

Crude inventories today 10:30 NY time.  Consensus: -1.5m ....

USDJPY continues sideways making the yen crosses less attractive trades than dollar crosses.

CRUDE 4hr chart
Now up 8% from the lows it may have formed an inverse head and shoulders and retesting the neckline for support.  If so upside target is 83 which is also the 78.6fib.  A projection of the first swing of the wedge from the breakout point gives a target of 85.00 and the 88.6fib.  I am buying dips.

Is stuck under the 61.8fib of last weeks move and sitting on the 50fib.  It *should* go lower from here, target is the ascending trend-line and then 1200 level.

EURUSD 4hr chart
Is in a clear ascending channel and stuck in a range between 1.2350 and 1.2150.  I am a buyer of dips to the bottom of the range looking for an upside break with a target of 1.2512

May have double topped (yesterdays high failed to break Monday's high) and forming a big bearish Gartley on the daily.  I am looking for one more push higher to 0.87 0 or 0.8885 to sell but this chart might be the first indication of a risk wobble today.

Cable is a tough trade and is bouncing below previous support at 1.48 (March lows).  I am looking for it to break those levels up.  At 1.49 cable will have made two equal measured moves off the lows and hit descending trendline resistance and I will be looking to short there.  The daily is also a bearish Gartley pattern, invalidated above 1.4940 which keeps me from buying cable.

New positions:
CRUDE long 76.40 stop 75.90 - addition
AUDUSD closed 50% @3R 0.8655 (+1.5R)
USDCHF closed 50% @ 1st target 1.1250 (+1.07R)
CRUDE addition closed 50% @3R 77.90 (+1.5R)
CRUDE addition closed balance 77.40 (+1R)
CRUDE first long closed 77.40 (+2R)
AUDUSD stopped out balance 86.05 (+0.5R)

I have the following positions open:
USDCHF short 1.14 stop 1.1470 PT 1.09 - 1/2
AUDCHF short 0.978 stop 0.983 PT 0.955 / 0.9275
EURCAD long 1.2550 stop 1.2460 PT 1.3330


  1. Breakout on USDJPY not far off, with pennant on 4h. Price has the 50 weekly sma as its backbone atm, but is below the daily 50 sma. Sort of messy all round for this pair, a daily close above 93 should be the tell for more upside. It is a window into the real cautiousness of markets now.
    Are we going to have a Euro rally without gold going with it? It appears that when either EZ or others announce QE, PMs come to life.
    Cheers for your analysis and strategy Nic.

  2. Hi honeyeater, I think you are right, this rally might be flagging and if we have a correction day the JPY crosses will be best shorts.
    You are right about the cautious. I noticed in US session US stocks rallied but had a hard time dragging currencies. At some point Spanish debt/bond thing is going to blow up ...
    Gold seems to be in a win/win. Goes up with risk, goes up with the dollar, goes up with fear. I am not tempted to buy here without a much bigger drop.