Thursday, October 14, 2010

Breakouts

After three failed attempts to break 1.40 and what looked like a triple top the surprise tightening by Singapore tonight (widening of the trading band for the SGD ~ allowing it to appreciate vs the USD) has spurred a big jump in risk and EURUSD has made a run on the stops above 1.40. There must have been a bunch of stops because the move is a biggie blasting it out of the rising channel and the triangle consolidation and straight through the 0.618fib retracement. USDCAD also has pierced the parity level and the dollar is being sold across the board.
1.40 should be support now for EURUSD and the top of the triangle breakout.

So where are we at with the dollar?
 Well almost at the bottom of the big weekly wedge which looks to be about 76.00 - 76.50 so the price action here will be interesting and once we have tested this trendline and see if it breaks or is support then we can look at the dollar crosses.



Last weeks weekly doji in EURGBP at the 50fib retracement did not hold as a reversal and this has been busted to the upside too.  The next level of interest is just short of 0.89 where it meets the 61.8fib and the underside of the big weekly triangle that it broke from in April. One to watch.

I am also watching GBPCHF for a bottom, I think that GBPCHF long may have more potential.  The weekly chart shows if we hold here we have a potential double bottom, so I am watching the daily price action.  A break below this support and I am watching for a test of 1.50 and the fib extension at 1.4980 to buy for a bounce.

USDCAD has support at 0.9930 and then 0.9710





EURAUD looks to have broken above a trend line going back to Dec 2008 and daily chart confirms it.  I am stalking a long entry in this pair.

9 comments:

  1. Hey Nic,
    Good to see you are back. Would you be shorting USDCAD here? Agree that GBPCHF looks promising here, are you waiting for a break of the trendline to buy?

    MrG

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  2. Anonymous said...
    eur gbp I got a cluster of 4 fibos at the .8900/50 area.

    Eur aud weekly was a SS, and bounce down from TL so I feel it is still with the general trend short.

    I'm short gbp cad already at BE, watching this rise in cable and long (made a mistake in the order) chf /j

    spinner

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  3. Hi MrG
    I didn't get short on the break, I missed it. I am watching for a bounce back up to 1.011
    I am not really loading up dollar shorts at this point until I see what happens when the dollar index hits the support but USDCAD is one of the better ones IMHO

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  4. Hi Spinner, yes we aren't there yet for a reversal in those crosses but ... I'm patiently watching them. Nice short.

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  5. At some point all this QE2 that the bearded clam is going to be priced in to the dollar and then we have the long wait to the Nov FOMC to see what/when/how much. Mr Market is apparently expecting 1Trillion but some analysts are saying much lower.
    Im pretty sure that the announcement will be a sell-the-news event

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  6. It is difficult for me to imagine the USD not continuing its climb, the primary reason being the BRICs and their desire to win the currency wars. It's a polite way to tell America to "F**k Off."

    http://99ercharts.blogspot.com/2010/10/dollar_271.html

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  7. GOOD TO SEE YOU BACK. LOOKING TO SEE MORE ON EURAUD ENTRIES. THE NON-USD CROSSES OFFER GOOD OPPS, W/O HAVING TO DEAL SO MUCH WITH THE STRONG/WEAK USD WINDS.

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  8. Borrowing Arrows

    This scene from John Woo's "Red Cliff" captures well what I believe is China's strategy to win the currency wars. It's from the most famous battle in Chinese history.

    http://www.youtube.com/watch?v=RWYpK11LlrE

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