Wednesday, August 18, 2010

I have not abandoned the blog!

I am sorry I haven't blogged for ages. I have not abandoned it and I am coming back.
As most of you know I got Lyme disease from a tick bite and it has been a bit of a struggle to get back to full health.  Every time I thought I was better I would run out of energy again and I have had a bit of a struggle with headaches and short term memory loss which is not a good thing for a trader (at all).
I am almost there and I intend to get back to trading next week and will be posting trades here again.
I will post some analysis this week.
Hope everyone is surviving the summer chop alright and don't be in a hurry to short risk in this market, the pain trade is higher this week with option expiration.
Thanks for all the messages and good thoughts you sent me :)

SPX 240min:
Crude 240min:
FTSE 240min:

Gold Channel:

Tuesday, August 10, 2010

FOMC - Correction time?

The market talk of QE has made it sound like a done deal and if the Fed disappoints tomorrow the US dollar could catch a big bid.  It looks like the market realises and the dollar buying looks to have started ahead of the announcement.
As I posted back in July the S&P was rejected at the 61.8fib level in April, retraced back to the 38.2fib and then bounced back  50fib level at 1121.44 which is where we are now.
People who study fibs say price oscillates in a channel at the 50fib area between 52.78% and 47.22%.  So for me .... a close above 1146.71 means we go (much) higher and a close below 1096.16 means we go much lower.  Simple right?  That is what I am watching for and until then we keep oscillating in the 50fib channel.

The dollar index support level in my previous post looks like it has caused a halt to the slide in the dollar for now.
The problem when a market is waiting for a big level to sell or buy is it gets front-run. The whole market is waiting for EURUSD to get to 1.35 to sell again but it looks tonight like it has fallen out of its rising channel and a bigger correction is underway.  The Euro is the only currency that has failed to get back above its 200day moving average vs the dollar which is interesting.
All the talk has been about more QE from the Fed in anticipation of tomorrows meeting and a lot has been priced in.  If there is no more QE we could see some disappointment and a dollar rally.

EURUSD daily chart
Looks to be breaking down from the rising channel. A retest of 1.30 is underway and a break below 1.2950 support area sets up 1.26 next.

GBPUSD daily chart.  the 61.8fib and 1.60 round number resistance is holding and a break below 1.5819 sets up 1.5560 and the trendline/channel bottom support..  A break below there and cable should correct to 1.53 next.

All the dollar crosses look to be rolling over, AUD and NZD particularly.  I don't see any good trades in the yen crosses, I am waiting for breakouts and with FOMC it is all about the dollar this week.

Wednesday, August 4, 2010

USD index and some charts

Although I am really on holiday it is ADP and NFP employment week so I have an eye on the markets.

The dollar index is bearing down on the 80.30-40 level which was major support in 12/04, 5/95 and 2/ 91 (not shown).  These support levels can be funny, just because it passed through it like butter last time, doesn't mean it won't suddenly be kryptonite this time, especially after such a long bearish run for the US dollar and sentiment so poor.  So it is definitely a level to watch for a possible dollar bounce.  The sentiment for the dollar is very poor but NFP could surprise to the upside.

Some major dollar crosses have a bit further to go before they reach potential turning points (I am looking for 1.35 for EURUSD) but some like sterling are already at big levels vs the dollar.
It is still early August but end of August is often a time when new trends emerge. 

Sterling has the bank rate and BoE MPC statement Thursday so I thought I would take a look at some sterling crosses.

Cable has hit the big round number 1.60 level which is also the 61.8fib retracement from the August 09 high to the May 10 low.  Having rallied with such momentum (and its best run in a lot of years) this could be a level for a correction but it could involve some chopping around and retests before it turns.  One to watch.  
A break above 1.60 says 1.6450 next stop.

GBPCHF Weekly chart shows it is back at the 50fib of the rally from the Dec08 lows to the Summer 09 highs and also at trend-line resistance from the July 07 high.  
The daily chart shows it has rallied to the 61.8fib retracement and also a big pivot zone.  A rejection here could should mean back to the lows at 1.58 or a breakout means back to the highs at 1.71.  
Nice size moves either way and I favour the downside and a possible measured move objective of 1.53 if the support at 1.58 does not hold.

If cable has stalled and EURUSD has further to run up it can only mean one thing for EURGBP.  EURGBP is hovering at the 50fib retracement of the rally from the lows and Mondays and bullish tail on Monday followed by an inside bar today suggest saving some energy for a move.

GBPJPY daily chart
Has been range bound for some time below the 50fib and 136.40 level, broke out Monday and has fallen back.  If cable stalls and USDJPY continues to drop this is going down too.

This is a tricky one, consolidating.  Monthly doji and a weekly doji but in a rising channel and the 50fib retracement is holding so it could be that the AUD is more unloved than the pound.  Waiting for a breakout and more information.

Weekly chart.  Broke out above resistance at 1.6230 and then banged its head on the 61.8fib retracement of the Jan high to May low.  Needs to  either break above the 1.64 resistance or go back and test the 1.6230 support to convince me it is going higher here but there is definitely plenty of room to the upside.  One to watch.