Monday, January 9, 2012

Weekly Forex Analysis

The commodity dollars against the dollar

The Australian the kiwi and the loonie all lost ground against the dollar recently. we might get a small retracement towards 1.0200 area for aud/usd before continuing south.
Ill be looking for similar short opportunities on nzd/usd. There was a strong rally on usd.cad last couple days, this impressive rally seems to be coming to a halt now. This pair is currently hitting a downward trend line on the 4H, we can anticipate a small retracement towards 1.0250 area before deciding to continue north for its attempt to break through. If it has enough momentum it can also break through the trend line and go sideways for a bit.

The Commodity dollars against the yen.

The Australian dollar isn’t doing so well against the yen either at the moment. It just took out a major low on the 4H and took out the inner trend line on the same timeframe. It is currently gravitating towards the outer trend line on the daily. The bears are currently after the lows on the 77.00 area. The New Zealand dollar is doing slightly better against the yen in comparison with the Aussie. Never the less a similar picture emerges. It just took out its inner trend line on the 4h and is currently hugging it as it retraces upwards. This pair might go sideways in a channel if support holds at 59.56 area. We already shorted this pair. As a matter in fact we shorted all 3 last Friday, aud.jpy just reached target still in the trade with the other two. Cad/Jpy had a nice move south mostly because unemployed figures went up. It is currently approaching the outer trendline on the daily, we might expect a bounce of it, if not it will continue to tank.
The Euro against the commodity dollars.

no change in sentiment here, Eur.Nzd, Eur.Cad and Eur.Aud all still moving south in a strong downtrend. Not much to say here, keep looking for short opportunities here after each retracement. Eur.Nzd might find small support around 1.6200 area. For Eur.Cad the bears are after 1.2780 area this is more than 600 pips away, plenty of good short opportunities to come on this pair.
The European countries against the Yen.

Eur.Jpy is still in free fall going south, not much to say here, keep shorting it. Chf.Jpy also a very clear downtrend, it is currently sitting on small support level we might see a small bounce up. The bears are looking to take out next low at 76.30 area, this is about 300 pips away. For Gbp.Jpy it shows a similar story with the yen being charge. no surprise of course. The bears in this pair are after 117.00 area low, this is about 200 pips away. Overall all 3 pairs losing against the yen, plenty of shorts to come here.

Euro/USd and Usd/Chf

With the crisis ongoing in Europe, I think it’s safe to assume euro/usd will continue to go south. There might be a small bounce at 1.2600 area before it continues further south. If nothing changes we can expect this pair to trade at 1.1800’s very shortly. Conversely we see a strong rally in Usd.Chf this pair just scored a point with the bulls and we can anticipate a retracement perhaps to the 0.9475 area. Overall the story is simple here, look for shorts on eur.usd and buying opportunities on usd.chf.
Eur.Chf and Gbp.Chf

These two are interesting pairs to observe. Currently they are out of correlation on the 4H, Eur.Chf is facing downward pressure while Gbp.Chf is facing the opposite. Usually when this happens to this pair there will be a strong correction from one of the pairs if not both towards correlation. There might be hedging opportunities here. Eur.Chf had a nice shorting opportunity that presented a couple days ago, we shorted it at the trend line break. Be very careful if you plan to short this pair in the future, the SNB can intervene very quickly and stop your trade out.

Aud/Cad, Aud/Nzd and Aud/Chf
With the weakness in the Australian dollar there will be some good opportunities with these pairs. Aud.Chf is currently racing towards meeting its left tip in its bear crown formation. We can expect this pair to climb to 0.9766 area before tanking south. Be cautious if this pair takes out the right tip and especially the center. This pair can potentially drop 200 points towards its outer trend line, this will probably take two fib swings to complete. Aud.cad is currently stuck in a very large channel on the daily. It is currently approaching resistance, if it decides to break it look for buying opportunities, if it fails, look for shorts. A nice trend line break would confirm the move down. Aud.Nzd finally broke its trendline on the daily, unfortunately we missed this entry but we anticipate to get in on the retracement in favour of the New Zealand dollar. It might retrace 50-70 points before presenting another nice short opportunity.

The cable

Gbp/Usd is still trading in the side ways channel, it is sitting on support levels. To trade this pair is very simple at the moment. Any nice bullish formation might signal a buy opportunity towards the top of the channel. It can also break out of the channel towards the south, in this case wait for a confirmation and short this pair. Either way, I suspect the fundamental announcements will determine which way this pair wants to go this week.

Gold and silver

Both metals are currently heading south to meet lower support levels. For gold it can drop towards 1560 area, and if support holds we can anticipate a further rally north. For silver this is 28.05 area.

Overall this week I anticipate the dollar and the yen to strengthen. The euro will keep going down against most currencies. Hence ill be looking to buy the dollar and the yen and shorting the euro against other pairs.

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