Monday, January 23, 2012

Week 4 Analysis

Commodity dollars Vs. Usd

The Aussie and Kiwi continued their rally towards the north last week, no surprise here. These two are approaching resistance as we speak. Aud/Usd has resistance around 1.0500, this is where the downtrend and past support acting as future resistance can be found. This pair has been moving aggressively so it’s quit possible for it to break through and have a small retracement. Nzd.Usd being the leader of the trio faces similar problems with resistance approaching around 0.8125. We might see a small retracement at this level before continue towards the high at around 8250 ish area. We are still in this trade from last week; it’s always an added bonus with the positive swap rate. The Cad against the dollar has been lagging in momentum compared to the other two, mainly because of the relationship it has with the states and the low interest rates makes the cad less attractive for investors. We might see the cad rally in time if there is a spike in oil prices caused by a shock from the Middle East. Never the less, the bears continue to put pressure on this pair and knocking it down towards support at around 1.0070 area. We anticipate this pair breaking support and head further south.

Action plan: Buy Aud/Usd, Nzd/Usd and sell Usd/Cad if support doesn’t hold.

Commodity dollars Vs JPY

Aud.Jpy is currently running with the bulls with a fib target of 84.05 this area is also significant for the bulls because they are after the high that resides there. This is also where the next level of resistance can be found so I wouldn’t be surprised if this pair continues to rally this week towards that area. We might see a small retracement before getting there. Nzd.Jpy shows a similar chart with strong levels of resistance approaching around 62.50 area. We are also still in this trade from last week. Cad.Jpy being the weak one from these 3 is currently finishing up its retracement and is sitting at support levels of 75.80. We got a fib target of 76.70 which is very significant for the bulls since this also where the previous high lies. We are looking to buy in once the bullish momentum takes over.

Action plan: Looking to go long on all 3 with caution towards resistance levels.

Australian Vs Cad/Chf/Nzd

Last week we anticipated Aud.Chf to drop around 2/3 hundred pips. This pair ended up retracing about 200 pips and is currently on its way up again. We bought into this pair not too long ago. The only concern with this pair is the resistance around 0.9850 area. If this pair does not break through this area we can anticipate a further drop towards 0.9600. Aud.Cad has been struggling with really strong resistance levels at about 1.0520 area but with the weaking of the Cad across the board we saw this pair break through and rally towards the high in the 1.0660’s. Overall the bulls are in control of this pair now and we can anticipate further moves north. Aud.Nzd found support at predicted levels last week, it is currently ending its retracement and is readying itself towards the north. Ill be looking for buying opportunities once it breaks the counter trend line.

Action plan: looking to go long on all 3

The Euro against the Commodity dollars

The euro ended up rallying against these pairs during the end of the week. Looking at the charts, however, we can see that most pips gained by the bulls were quickly recovered by the bears. We saw how Eur.Aud and Eur.Cad made a new high last week which challenges the bearish momentum, there is a slight possibility these pairs find support and go sideways or rally towards the north. We anticipate these pairs to continue further south; unless the debt crisis in Europe is resolved this week...you probably have a better chance at getting struck by lightning twice in your own home. Never the less the markets will show us what shall happen. The only pair I can see rallying a bit further is Eur.Cad.

Action plan: Looking for shorts, unless support holds.

The European countries Vs. Jpy

Eur.Jpy, Gbp.Jpy and Chf.Jpy all decided to make new highs last week challenging the bearish momentum, we saw this happening across the board as the dollar and yen weakened. Currently all 3 crowned on the 4h and are currently retracing. Eur.Jpy might find support at around 98.80’s/99.00 and continue further north. I would be very cautious around 100.80’s area where an area of resistance lies. Gbp.Jpy was trading really aggressively last week and is still in a really strong rally towards the north. It will face some resistance around 120.10/120.30 area so be very careful to go long around here. We are anticipating this pair to retrace further. Another thing to keep in mind is that a lot of fundamentals are coming out this week that can push this pair either way. Chf.Jpy is currently retracing towards 81.50 area where it can possibly find support. Its got a fib target of 84.75 if the retracement isn’t significantly below 61.8% (38% on my charts)

Action plan: looking to go long on all 3

Eur/Usd Gbp/Usd and Usd/Chf

Like many other euro pairs Eur.Usd saw an impressive rally north last week. Currently this pair is retracing towards support around 1.2850 area, if support holds and the bullish momentum continues the fib target for this pair is at 1.3200, be very careful around 1.3140 where resistance lies. On the other hand Usd.chf took out support and is currently retracing back to meet the retracement levels of the fibs, if resistance hold the fib target for this pair is at 0.9140 area.

Action plan: Buy eur/usd if support holds short Usd/chf if resistance holds.

Gbp.Usd

The cable broke through strong levels of resistance last week and is currently back into that channel it was trading in couple weeks ago. Be really careful trading this pair this week it has many fundamental announcements coming out, most of which can impact this pair significantly. We can expect public sector borrowing remain in positive numbers that can swing this pair south, furthermore analyst expect the GDP numbers to be negative this week which of course is not a surprise with the unemployment rate at 8.4% in Nov. So please take caution in trading this pair this week, if the numbers come out negative we can see this pair tank, and if result come out better than expected we can see this pair rally further north. . If the bulls do indeed take control we have a fib target of 1.5790 which is also the top of the channel. There will also be downward pressure from the trend line off the daily so be careful around this area.



Action plan: buy or sell depending on who takes control of this pair.

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