Monday, July 12, 2010

Weekly charts and analysis

Risk Rally looks set to continue but we could be due for some back and fill first ( AKA chop) ...
I am finding it hard to see trades jump out at me as we start the week, I am going to be watching for direction before jumping in to anything.

Today China announced a much bigger trade balance than expected at $20bln vs just under $14bln expected.  This is good for the risk trade although obviously not for global imbalances.
Breakouts in "risk" commodity currencies and really good employment numbers for Australia and Canada are helping.
Sterling is the weakest of the bunch but watch the BP news, sterling sold off on bad news from the Gulf of Mexico so news that BP have re-capped the spill and interest from PetroChina in BP and that BP is shedding US assets might give it a boost.
We are coming into earnings season and lets say that expectations are not too high.  Bearish sentiment among stock market investors remains at the highest level since March 2009,.  Last June Alcoa surprised with earnings 30% better than expected and this June could again surprise the market to the upside.

Weekly bullish piercing line reversal pattern.  I think this run has a little further to go before we hit the descending weekly trend line from the April highs.  I would expect a pullback there (perhaps to the flash crash low SR level) and then another push higher.  My upside target still 1120-1140.

Weekly bullish engulfing candle has FTSE back in its ascending channel. and has also broken trendline resistance from 26 April.
Buy dips (perhaps back to 5100) and upside target is 5450

Gold has rolled over but fall is halted and the weekly candle is a good looking bullish long legged doji.  I think there is more downside to come for Gold and better prices to buy.  The upside target for this swing is 1227-1234 but I am waiting for price action to sell there with a downside target of 1150-1160

Weekly bullish piercing line.  Crude is now retesting the ascending channel it fell out of and could find resistance here.  I am looking for a pullback to the 74.50 area to buy again with upside targets of 79.50 and then 81.50
Watch the news this week, BP recapping and sealing the leak in the Gulf of Mexico could be bullish for crude (and if it fails bearish).  Monday 19 July  is the rollover of the front month (August) contract and that means Friday could be quite volatile.

Currencies - Majors

Not a big bullish week for the Euro, constrained at the top of a rising channel this could be be setting up an interesting short. EURUSD has fallen just short of two equal measured moves off the lows and short of the 50fib retracement which makes me think we could have one more push higher before we correct down. I am not usually a fan of head and shoulders patterns but on some markets they work better than others and the one on EURUSD could mean much higher levels than people are anticipating.  One to watch because opportunities could be setting up here: one more push higher and a breakout to 1.2880 and then 1.31, or a dip back to the bottom of the channel before a move higher.

Cable is at triple top resistance and looks to have rolled over but trapped between support at 1.50 and resistance at 1.5250.  It is interesting that it hasn't touched the long term descending trendline which makes me think the 1.50 level could hold and we get one more push up from here before rolling over.  I am watching this one closely because if the market pulls back cable (risk off)  is a good short but to get me in it has to retest the descending trend line and hold, or break 1.50.  A break of 1.50 sets up 1.48 next

USDCHF is sitting on a big pivot level at 1.05 / 1.0450 and also the 61.8fib retracement of the move off the Nov09 lows and May 10 highs.  I am looking for this support to hold here and a move back up to 1.09 / 1.102  No price action to get long yet but one I am watching for it.

Sitting on strong support and the big 2008 pivot level at 1.03  I am looking for this support to hold and a correction here but no price action to buy yet.  Stronger support could lie at 1.0220 so one to watch.  A bounce back to 1.0450-1.0490 would be a good spot to add some shorts with a downside target of 0.9950

Higher low is in place, and Aussie has broken trendline resistance.  I am looking to buy pullbacks (perhaps to 0.87 or 0.8550-80) with an upside target of 0.8880 and then 0.9100

Not the best looking trade out there, consolidating sideways in what could be a big flag pattern.  Pass, wait for more information.

Currencies - Yen crosses

No change.  A bullish bounce off the 0.87 SR level, USDJPY has resistance at 89.25 and the daily 20 EMA but I am still a buyer of dips (88.20?) with an upside target of 89.90 initially and the descending trendline resistance.  A break of the trendline means that 91.00 and then the big 91.80 level is next.

Two equal swings off the low at 107.30 could mean EURJPY is set to pull back here and pull back to 110.50 or 109.35 where I would be looking for price action to buy.  I really want to see a higher low and then a break above 112.70 gets me long with a target of 117.60 then 119.50, watch out for strong resistance at 1.14

A big bullish move off the lows failed to break the previous weeks high and stopped at the 61.8 fib retracement of the drop from the June highs.  I expect a pullback here to  76.20 or 75.70 area and then a move higher to 81.90


More charts - the crosses to follow ...


  1. Mornin Nic, trust you had a good weekend.. All pretty quiet.

  2. Yes very quiet. Not tempted to jump into anything yet.

  3. aud seems more correlated with oil than gold?

  4. I am not sure Gold is too correlated with anything at the moment, it is doing its own thing. AUD very correlated with risk / indices / crude I agree.