Foreign Exchange Markets
Global Leaders Discuss Fiscal Deficits at G-20 Meeting
June 28, 2010 at 7:35 pm by CFDTrading Analyst · Leave a Comment
At the recent G-20 meeting in Toronto, the wealthiest G-20 countries said they would halve their government deficits by 2013 and “stabilize” their debt loads by 2016, in an effort to ease investor concerns and calm markets around the world. British Prime Minister David Cameron was most adamant about austerity measures, stating that “those countries with serious fiscal challenges need to accelerate the pace of consolidation.” He further stated that “we have to make some unpopular but unavoidable decisions on tax and spending.” German Chancellor Angela Merkel generally agreed with Cameron’s sentiment, saying that “there is no alternative” to cutting deficits. U.S. President Barack Obama, on the other hand, warned that the world economic recovery “remains fragile” and urged continued spending to support economic growth. He stated that “we cannot all rush to the exits at the same time” and that countries with surpluses should consider how they can “spur growth and spur demand.” Japanese Ministry of Foreign Affairs spokesman Kazuo Kodama agreed, stating: “The important thing is how to strike a balance. We can make economic growth compatible with fiscal consolidation measures.” U.S. Treasury Secretary Timothy Geithner agreed with the general need for a global rebalancing, but came out more strongly for deficit-cutting measures than President Obama. Geithner stated that the U.S. and Europe “have much more in common than we have differences” and that deficits have to “come down over time to a level that’s sustainable.” Finally, Prime Minister Stephen Harper of host country Canada said: “I am confident that all countries that have made these commitments will fulfill them” and that market participants would force their hand otherwise.
Overall, the final G-20 statement reflected the general consensus that a global economic rebalance is necessary, with heavily indebted Western nations undergoing deficit reduction programs and surplus-rich Eastern nations allowing their economies to develop into a more consumer-driven model. Little was made of the value of China’s Yuan, as the group’s agenda focused on a global scale and emphasized recent fiscal troubles in the Euro-Zone. Based on the discussions, it appears that European countries will undergo serious fiscal consolidation in an effort to restore market confidence, while the U.S. will continue its deficit spending in the near-term and look to reign in its budget deficit further down the road. This is generally positive for U.S. stocks in the near-term, as loose monetary policy coupled with government spending would likely buoy economic conditions and provide a boost for equities. However, concerns remain that European nations may fall back into recession if austerity measures squash an already fragile recovery in the Euro-Zone. If this were the case, equities across the globe could be at risk of major downside pressure.
On the currencies front, the U.S. Dollar may resume its strong rally as risk-seeking investors favor U.S. equities over their European counterparts. Recently, the EURUSD has consolidated back to the $1.23 level after falling below the $1.19 level in June. Although austerity measures would often favor a country’s currency by restoring investor confidence, the measures soon to be undertaken in Europe may reduce the region’s already anemic growth to a point at which yield-seeking investors begin searching for other investment opportunities. This would further undermine policy efforts in the region and could lead to a downward spiral in the currency.
Euro / US Dollar
Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com
Swiss Franc Declines From Record High On Speculation of SNB Intervention
June 8, 2010 at 1:49 pm by CFDTrading Analyst · Leave a Comment
The Swiss franc, which strengthened to a record 1.3746 francs per euro this morning, reversed sharply in recent trading on speculation that the Swiss National Bank intervened with the appreciating currency. Many market participants believe that the central bank may have sold francs in order to fight off deflationary forces and keep the currency competitive for exports. The franc has gained against the euro for eight consecutive days and a recent data release showed that Swiss consumer prices rose a less-than-expected 1.1 percent in May from the twelve months prior. As a result of the speculation, the EURCHF pair spiked to 1.3910 francs per euro intraday, before reverting back to 1.3763 at the time of this writing. SNB Spokesman Werner Abegg declined to comment on the move.
Rumors of SNB intervention in the currency market may have been propelled by updated government forecasts and commentary earlier today. Specifically, the Swiss government cut its forecast for economic growth in 2011, citing the likelihood of weak exports as euro-region nations attempt to reduce their budget deficits. The State Secretariat for Economic Affairs said that the Swiss gross domestic product will likely rise 1.6 percent next year, worse than the previous estimate for growth of 2 percent. The state secretariat specifically stated that an “additional burden” to the Swiss economy could be the “appreciation of the Swiss franc versus the euro.”
Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com
Australian Dollar Tests Resistance Line
April 26, 2010 at 7:08 pm by Jamie Saettele · Leave a Comment
LATEST TRADING VIDEO: Euro Concentration
ANNOUNCEMENTS:
-Join me, DailyFX analysts and instructors at the FXCM Forex Trading Expo May 2-4 in Las Vegas!
-check out the NEW DailyFX pivot point table
Euro / US Dollar
The rally from 13266 was in 3 waves and has now been completely retraced. As small as the advance was relative to the preceding 5 wave decline from the 2009 high, it does fit as a 2nd wave correction (ending in the prior 4th wave area). Initial resistance is 13415 and additional resistance is 13505/20.
British Pound / US Dollar
A 4th wave correction may be complete in the GBPUSD just above 15500. The rally from 14780 consists of two 3 leg advances; a double 3 complex correction. After dropping below a short term support line, the pair has rallied sharply in what may be a small 2nd wave. I am cautiously bearish against 15530. A drop below the short term channel is needed in to restore a high degree of confidence in the bearish position. Rallying above 15530 would shift focus to 15700.
Australian Dollar / US Dollar
I remain focused on the reversal from tow Monday’s ago (AUDUSD), which brings forth the potential for a double top with the November 2009 high at 9400. However, bears have been unable to register a close below the short term support line (not to mention the longer term channel line). Of note is the dark cloud cover candle pattern on the weekly (bearish reversal). Today’s high (thus far) is at multi-week trendline resistance.
New Zealand Dollar / US Dollar
Since the October top at 7640, the NZDUSD has stair stepped lower. The structure of the decline at this point is 3-3-5, which is the substructure of a flat. However, there are several variations that would allow for the beginning of a larger decline. As long as price is below 7446, I lean towards a long term bearish position. 7240 is resistance. Watch the top of the short term channel as well. Notice that 21 day ATR is at its lowest point since July 2007 and July 2008 – in both instances the NZDUSD plunged immediately. I am not saying that will happen now but I don’t think this is an indicator to ignore.
US Dollar / Japanese Yen
If the USDJPY is on the verge of breaking higher, then price should remain above 9270. This is the level I am moving risk to on these longer term positions. 9712 is where the rally from 8813 would equal the rally from 8481 (arithmetic) and is the initial objective.
US Dollar / Canadian Dollar
The USDCAD has bounced from its lowest level since June 2008. A bullish engulfing pattern is visible on the weekly (last week’s candle), so the new low may prove temporary. What’s more, Wednesday’s candle was a hammer (bullish reversal), which was confirmed on a rally above its high. A small 5 wave move higher on the hourly would present us with an opportunity to buy a pullback (probably next week). We don’t have that yet however so the USDCAD does remain vulnerable. But consider that 12 month momentum (below) has turned up from its lowest level since 2003). 9710/90 would be the next level of potential support on a break lower.
US Dollar / Swiss Franc
The overlapping nature of the USDCHF advance from 9916 is a warning that the rally may be a completed 3 wave correction. However, from a simplistic point of view (which is often the best view), price action since February top has been nothing more than a sideways correction. As such, I am cautiously bullish against 10430 (longer term).
Gold
Gold formed a dark cloud cover (bearish candlestick reversal pattern) with the completion of last week’s candle. Still, until the metal can break below the year + channel, upside potential should be respected.
Light Crude
Crude has dropped below its short term channel, which warns of a more significant reversal. As is the case with gold, if the decline can extend into 5 waves, then we’ll have the necessary evidence to go short. A glance at the weekly warns of a completed 5 waves from the October 2008 low.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to jsaettele@dailyfx.com. Traders can meet me at the FXCM Expo in Las Vegas on May 3rd and 4th. You can register to attend at www.fxcmexpo.com.
Opportunity to Fade British Pound Strength
April 20, 2010 at 2:45 pm by Jamie Saettele · Leave a Comment
LATEST TRADING VIDEO: Super Bearish Equities
ANNOUNCEMENTS:
-Join me, DailyFX analysts and instructors at the FXCM Forex Trading Expo May 2-4 in Las Vegas!
-check out the NEW DailyFX pivot point table
Euro / US Dollar
Failing to exceed 13700, the EURUSD has now retraced its entire advance from the ‘bailout’ rally gap open last Monday. By definition, the pair is still in a correction until we see 5 waves down from 13695. If we get that decline, then I’ll look to get short for the next leg down towards 13000. A drop below 13415 would make the drop from 13695 an impulse and offer an opportunity to short on a bounce.
British Pound / US Dollar
A 4th wave correction may be complete in the GBPUSD just above 15500. The rally from 14780 consists of two 3 leg advances, which is termed a double 3 complex correction. After dropping below a short term support line, the pair has rallied sharply in what may be a small 2nd wave. Favor the downside against 15530.
Australian Dollar / US Dollar
I remain focused on last Monday’s reversal, which brings forth the potential for a double top with the November 2009 high at 9400. The pair has held channel support on a daily closing basis, which keeps bears in check for now. A daily close below would signal a high confidence shorting opportunity.
New Zealand Dollar / US Dollar
The longer term topping scenario remains valid as long as price is below 7446. Since the February low at 6804, the NZDUSD rally can be described as corrective and best and pathetic at worst. Coming under 6960 should be enough to signal that the next leg down is underway.
US Dollar / Japanese Yen
Bigger picture, I remain bullish against 9160 (moving risk from 9100) in anticipation of a move above 9480. (9700 is an objective from a longer term Fibonacci extension). Near term support is 9270 and 9235.
US Dollar / Canadian Dollar
After breaking through channel resistance, the USDCAD has plunged. I cautiously favor the upside against 9950 but weakness below would expose 9915.
US Dollar / Swiss Franc
The overlapping nature of the USDCHF advance from 9916 is a warning that the rally may be a completed 3 wave correction. Additionally, the USDCHF is breaking below a nearly 5 month support line for the second time this month. The decline from 10790 is impulsive, which is also bearish. Although there may be a short term correction back to 10620, the pair looks vulnerable over the next several weeks. Bottom line – the picture is mixed and there is little confidence in direction at the current juncture. A rally above 10790 would complete a short term inverse head and shoulders and favor bulls.
Gold
Gold formed a dark cloud cover (bearish candlestick reversal pattern) with the completion of last week’s candle. Still, until the metal can break below the year + channel, upside potential should be respected.
Light Crude
Crude has dropped below its short term channel, which warns of a more significant reversal. As is the case with gold, if the decline can extend into 5 waves, then we’ll have the necessary evidence to go short. A glance at the weekly warns of a completed 5 waves from the October 2008 low.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to jsaettele@dailyfx.com. Traders can meet me at the FXCM Expo in Las Vegas on May 3rd and 4th. You can register to attend at www.fxcmexpo.com.
Dollar Yen Tests Middle of Former Range at 9250
April 19, 2010 at 11:33 am by Jamie Saettele · Leave a Comment
LATEST TRADING VIDEO: Weekend Special – GBP and equities
ANNOUNCEMENTS:
-Join me, DailyFX analysts and instructors at the FXCM Forex Trading Expo May 2-4 in Las Vegas!
-check out the NEW DailyFX pivot point table
Euro / US Dollar
Failing to exceed 13700, the EURUSD has now retraced its entire advance from the ‘bailout’ rally gap open. By definition, the pair is still in a correction until we see 5 waves down from 13695. If we get that decline, then I’ll look to get short for the next leg down towards 13000. 13420 is short term support.
British Pound / US Dollar
A 4th wave correction may be complete in the GBPUSD just above 15500. The rally from 14780 consists of two 3 leg advances, which is termed a double 3 complex correction. Dropping below the short term support line would increase confidence in the downside.
Australian Dollar / US Dollar
The AUDUSD has held the topside of the former resistance line, which is bullish. Still, Monday’s reversal brings forth the potential for a double top with the November 2009 high at 9400. Dropping below channel support (and 9220) would indicate a reversal opportunity. Until then, waters are murky.
New Zealand Dollar / US Dollar
The NZDUSD has exceeded 7200 and 7240 is now resistance. The longer term topping scenario remains valid as long as price is below 7446.
US Dollar / Japanese Yen
The USDJPY has slid lower and former resistance at 9200 is now in focus. Bigger picture, I remain bullish against 9100 in anticipation of a move above 9480. (9700 is an objective from a longer term Fibonacci extension).
US Dollar / Canadian Dollar
A move through channel resistance is required in order to trigger a reversal. A move above would warrant bullish action against 9950 for a move to 10300. With 5 waves potentially complete at 9950, I lean towards the upside.
US Dollar / Swiss Franc
The overlapping nature of the USDCHF advance from 9916 is a warning that the rally may be a completed 3 wave correction. Additionally, the USDCHF is breaking below a nearly 5 month support line for the second time this month. The decline from 10790 is impulsive, which is also bearish. Although there may be a short term correction back to 10620, the pair looks vulnerable over the next several weeks. Bottom line – the picture is mixed and there is little confidence in direction at the current juncture.
Gold
Gold has broken above its neckline from the 4+ month inverse head and shoulders pattern. Head and shoulders measurement techniques place the objective at 1250. 1135-1140 is potential support.
Light Crude
Sights are now set on 90 and perhaps 100. The rally from the January low may be wave 5 within an impulse from the 2008 low. Dropping below channel support would warn that a top is in place.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to jsaettele@dailyfx.com. Traders can meet me at the FXCM Expo in Las Vegas on May 3rd and 4th. You can register to attend at www.fxcmexpo.com.
Euro May Correct Further against US Dollar
April 5, 2010 at 10:45 am by Jamie Saettele · Leave a Comment
LATEST TRADING VIDEO: Closer EURUSD Look
ANNOUNCEMENTS:
-Join me, DailyFX analysts and instructors at the FXCM Forex Trading Expo May 3-4 in Las Vegas!
-check out the NEW DailyFX pivot point table
Euro / US Dollar
Failure to extend lower warns that a larger correction is underway in the EURUSD towards 13820-14030 as either a 2nd or B wave. Near term structure is unclear (which probably means in itself that a larger correction is indeed underway). Sentiment readings such as COT also suggest near term Euro strength as speculators hold a record amount of Euro short positions.
British Pound / US Dollar
Either a triangle or flat is underway as a 4th wave correction in the GBPUSD. In the event of a flat, the pair would exceed 15386 slightly before reversing.
Australian Dollar / US Dollar
The rally from below 9000 is impulsive (5 waves), which suggests additional strength as long as the AUDUSD remains above 9127 (last week’s corrective low). Measurements place objectives at 9363 and 9509 (100% and 161.8% extensions of the 8985-9221 advance). However, beware that 21 day ATR is at its lowest since the July 2008 top. This low level of volatility indicates complacency and the potential for a reversal.
New Zealand Dollar / US Dollar
No change: “The NZDUSD is marching to its own beat as a top may already be in place at 7185. The decline from there is impulsive (5 waves), which reinforces the bearish bias. I favor the downside against 7185. A move through there would expose 7240.”
US Dollar / Japanese Yen
The USDJPY has traded to a fresh 2010 high and the larger trend is up but I do expect a pullback near term since a 5th wave rally from 8962 may be complete. One reason to favor the 5th wave interpretation rather than a 3rd of a 3rd wave interpretation is the divergence with momentum at the high on intraday charts. 3rd waves tend to possess the strongest momentum, which is not the case right now. 9300 is initial support.
US Dollar / Canadian Dollar
The USDCAD has traded to fresh 2010 (and lowest since July 2008) lows and the next levels are potential support are near 9900. 9914 is the 61.8% extension of the 13068-10782 decline and 9892 is where the decline from 10307 (probably a 5th wave) would equal the decline from 10784-10368 (1st wave).
US Dollar / Swiss Franc
The USDCHF has broken below 10500 and parallel channel support, which negates the previously held bullish bias. The next level of potential support is 10350 (100% extension of 10908-10504).
Gold
“Gold has traded sideways since December and appears to be building a bullish base. Specifically, the base could be a complex head and shoulders (the head itself is a head and shoulders).” A break above 1145 is needed in order to confirm the inverse head and shoulders pattern and propel the yellow metal to fresh highs.
Light Crude
Sights are now set on 90 and perhaps 100. The rally from the January low may be wave 5 within an impulse from the 2008 low. Bigger picture, the advance from the 2008 low is either a 1st or A wave. Following completion of this rally, larger wave 2 or B will unfold; bringing crude back to at least 70.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to jsaettele@dailyfx.com. Traders can meet me at the FXCM Expo in Las Vegas on May 3rd and 4th. You can register to attend at www.fxcmexpo.com.
Dollar Mixed as Aussie Soars
March 29, 2010 at 11:34 am by Jamie Saettele · Leave a Comment
LATEST TRADING VIDEO: short term charts
ANNOUNCEMENTS:
-Join me, DailyFX analysts and instructors at the FXCM Forex Trading Expo May 3-4 in Las Vegas!
-check out the NEW DailyFX pivot point table
Euro / US Dollar
I maintain that the EURUSD is headed lower in either larger wave 5 or wave 3 of 3. Risk should be kept to 13573 and 13380-13405 is resistance. I view 13000 as the next level that could produce a multi day bounce. 13390-13345 is potential short term support.
British Pound / US Dollar
“The extent of the decline from 15380 suggests that wave 4 is complete. I favor a drop below 14780 over the next several weeks in a 5th wave. Similar to the EURUSD, a small 2nd wave may be complete at 15118.” Favor the downside against that level. A move above there would suggest that a triangle or flat is underway since 14780.
Australian Dollar / US Dollar
Bigger picture – A diagonal can be counted as complete from 8800 and the break of 9090 inspires confidence in the downside. The diagonal from 8800 may complete wave C of an A-B-C correction from just below 8600. If this count is correct, then the entire advance (from 8600) will be retraced over the next several weeks. However, the rally from below 9000 is impulsive (5 waves), which suggests additional strength. 9120-9100 is potential short term support. The picture is mixed.
New Zealand Dollar / US Dollar
The drop below the short term support line indicates that a top may already be in place for the NZDUSD at 7185. Further, the decline from that point is impulsive. The rally from near 7000 has reached the 61.8% retracement so the NZDUSD should roll over from here if the larger trend has turned down.
US Dollar / Japanese Yen
The USDJPY move above 9217 and yearlong trendline resistance strongly suggests that the pair is headed above 9380 in what may be wave c of an a-b-c advance from 8481. I’ll be looking for support to buy into next week. Multi week targets for the c wave advance are 9710 and 10150-10270.
US Dollar / Canadian Dollar
The USDCAD is vulnerable at the current juncture. A new low (below 10058) would complete 5 waves down from 10784.
US Dollar / Swiss Franc
No change: “I favor USD strength in a 5th wave to a new high. Price needs to remain above 10500 in order to keep the bullish count valid. In other words, the USDCHF has gone about as far as it can go if the trend is up.”
Gold
“Gold has traded sideways since December and appears to be building a bullish base. Specifically, the base could be a complex head and shoulders (the head itself is a head and shoulders).” 1075 is potential support. Failure to hold 1175 would put the February low in jeopardy. Notice that a head and shoulders top has just been confirmed as well.
Light Crude
After reversing from a gap several weeks ago, crude has stair-stepped lower. I still favor weakness to at least 7750. It is possible that the rally from the February low completes wave C of an A-B-C flat. Exceeding 8350 would suggest that crude is headed higher for a test of 90.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email to jsaettele@dailyfx.com. Traders can meet me at the FXCM Expo in Las Vegas on May 3rd and 4th. You can register to attend at www.fxcmexpo.com.
Euro at 10 Month Low…and Headed Lower
March 24, 2010 at 11:27 am by Jamie Saettele · Leave a Comment
LATEST TRADING VIDEO: short term charts
ANNOUNCEMENTS:
-Join me, DailyFX analysts and instructors at the FXCM Forex Trading Expo May 3-4 in Las Vegas!
-check out the NEW DailyFX pivot point table
Euro / US Dollar
I wrote yesterday that “a small 2nd wave may be complete at last night’s high at 13573. A move above would expose 13650.” We can say with confidence that the high is in place and that the EURUSD is headed lower in either larger wave 5 or wave 3 of 3 (for more on that and the ‘point of recognition’…see today’s webinar . Risk should be kept to 13573 and 13400-13450 is resistance. I view 13000 as the next level that could produce a multi day bounce.
British Pound / US Dollar
“The extent of the decline from 15380 suggests that wave 4 is complete. I favor a drop below 14780 over the next several weeks in a 5th wave. Similar to the EURUSD, a small 2nd wave may be complete at 15118.” 14930-15000 is resistance and I favor a drop below 14780, which would expose a measured level at 14380.
Australian Dollar / US Dollar
No change: “A diagonal can be counted as complete from 8800 and the break of 9090 inspires confidence in the downside. The diagonal from 8800 may complete wave C of an A-B-C correction from just below 8600. If this count is correct, then the entire advance (from 8600) will be retraced over the next several weeks. It is worth noting that 21 day ATR was recently at its lowest point since July 2008. As a barometer of risk aversion, the complacency that is indicated by the low ATR level warns of a top and reversal.”
New Zealand Dollar / US Dollar
No change: “There is potential NZDUSD resistance at 7200, which is the 61.8% retracement of the decline from the January high (7446). 7100 is potential resistance. The drop below the short term support line indicates that a top may already be in place.”
US Dollar / Japanese Yen
“Given the extent and structure of the USDJPY advance from 8813, it is possible that an A-B-C decline is complete from 9380. A move above 9217 would strongly suggest that the USDJPY is headed above 9380, which would indicate a breakout above trendline and channel resistance.” If we get a daily close above the trendline, then I’ll examine the short term charts for entries on the long side.
US Dollar / Canadian Dollar
Additional strength in the USDCAD targets the 10325-10350 area. Use the intersection of the various channel lines on the short term chart above as points of reference.
US Dollar / Swiss Franc
No change: “I favor USD strength in a 5th wave to a new high. Price needs to remain above 10500 in order to keep the bullish count valid. In other words, the USDCHF has gone about as far as it can go if the trend is up.”
Gold
“Gold has traded sideways since December and appears to be building a bullish base. Specifically, the base could be a complex head and shoulders (the head itself is a head and shoulders).” 1075 is potential support. Failure to hold 1175 would put the February low in jeopardy. Notice that a head and shoulders top has just been confirmed as well.
Light Crude
After reversing from a gap, crude’s decline is impulsive. Expect weakness to at least below 7750. 7613 is potential support. It is possible that the rally from the February low completes wave C of an A-B-C flat. Exceeding 8475 would suggest that crude is headed higher for a test of 90.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email tojsaettele@dailyfx.com.
Sell the Euro on Near Term Rallies
March 22, 2010 at 11:57 am by Jamie Saettele · Leave a Comment
LATEST TRADING VIDEO: short the EURUSD
ANNOUNCEMENTS:
-Join me, DailyFX analysts and instructors at the FXCM Forex Trading Expo May 3-4 in Las Vegas!
-check out the NEW DailyFX pivot point table
Euro / US Dollar
The 4th wave correction in the EURUSD is likely complete. The top is close to parallel channel resistance as well as the 38.2% retracement of the decline from 14583 (common end points for 4th waves). The decline from 13822 ha extended below 13530 and is sharp. Expectations are for a small 2nd wave to bring price back to resistance at 13550-13585. A rally presents an opportunity to short against the larger 4th wave high in anticipation of a break to a 2010 low and an extended decline into the low 12000s.
British Pound / US Dollar
The GBPUSD reversed just shy of the 38.2% retracement of the decline from 16464; at 15425, which is reinforced by parallel channel resistance and former support (15346). The extend of the decline from 15380 suggests that wave 4 is complete. I favor a drop below 14780 over the next several weeks in a 5th wave. 15125 is potential short term resistance.
Australian Dollar / US Dollar
A diagonal can be counted as complete from 8800 and the break of 9090 inspires confidence in the downside. The diagonal from 8800 may complete wave C of an A-B-C correction from just below 8600. If this count is correct, then the entire advance (from 8600) will be retraced over the next several weeks. It is worth noting that 21 day ATR was recently at its lowest point since July 2008. As a barometer of risk aversion, the complacency that is indicated by the low ATR level warns of a top and reversal.
New Zealand Dollar / US Dollar
There is potential NZDUSD resistance at 7200, which is the 61.8% retracement of the decline from the January high (7446). 7100 is potential resistance. The drop below the short term support line indicates that a top may already be in place.
US Dollar / Japanese Yen
“Given the extent and structure of the USDJPY advance from 8813, it is possible that an A-B-C decline is complete from 9380. A move above 9217 would strongly suggest that the USDJPY is headed above 9380, which would indicate a breakout above trendline and channel resistance.” Still, until a move above 9380 or drop below 8813, conditions can be described as rangebound at best. Near term, consolidation last week may take the form of a triangle. Under this interpretation, the USDJPY would rally above 9110 in a terminal thrust before finding a top and rolling over. 9140 would be potential resistance. Potential support is 8950 and 8900.
US Dollar / Canadian Dollar
It is possible that the decline from just below 10700 was a terminal thrust from a triangle. In any case, an impulsive rally from the low is needed in order to suggest that a low is in place. 10325/70 is potential resistance.
US Dollar / Swiss Franc
Like the EURUSD (but as the inverse), I favor USD strength in a 5th wave to a new high. Price needs to remain above 10500 in order to keep the bullish count valid. In other words, the USDCHF has gone about as far as it can go if the trend is up.
Gold
“Gold has traded sideways since December and appears to be building a bullish base. Specifically, the base could be a complex head and shoulders (the head itself is a head and shoulders).” 1075 is potential support.
Light Crude
After reversing from a gap, crude’s decline is impulsive. Expect weakness to at least below 7750. 7613 is potential support. It is possible that the rally from the February low completes wave C of an A-B-C flat. Exceeding 8475 would suggest that crude is headed higher for a test of 90.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email tojsaettele@dailyfx.com.
Australian Dollar Nearing Trendline; Watch 9265
March 17, 2010 at 11:46 am by Jamie Saettele · Leave a Comment
Euro / US Dollar
Favor a test of 13850, which is former support as well as the 38.2% of the decline from 14583. A daily close above the parallel channel line would expose 14030, which is the next level of former support and the 50% retracement. Short term support is at 13720 and only a decline below 13640 would suggest that the downtrend is back underway.
British Pound / US Dollar
The GBPUSD is approaching resistance from the 38.2% retracement of the decline from 16464; at 15425. This level is reinforced by parallel channel resistance tomorrow. Additional resistance would be at 15530 (former support). Look for a top in the 15425-15530 zone in order to position for a drop below 14780 in a 5th wave.
Australian Dollar / US Dollar
A diagonal can be counted as complete from 8800 and a break of 9050 would inspire confidence in the downside. The diagonal from 8800 may complete wave C of an A-B-C correction from just below 8600. If this count is correct, then the entire advance (from 8600) will be retraced over the next several weeks. Look for resistance at 9265. It is worth noting that 21 day ATR is at its lowest point since July 2008. As a barometer of risk aversion, the complacency that is indicated by the low ATR level warns of a top and reversal.
New Zealand Dollar / US Dollar
There is potential NZDUSD resistance at 7200, which is the 61.8% retracement of the decline from the January high (7446). I am looking for a secondary top near that level.
US Dollar / Japanese Yen
“Given the extent and structure of the USDJPY advance from 8813, it is possible that an A-B-C decline is complete from 9380. A move above 9217 would strongly suggest that the USDJPY is headed above 9380, which would indicate a breakout above trendline and channel resistance.” Still, until a move above 9380 or drop below 8813, conditions can be described as rangebound at best.
US Dollar / Canadian Dollar
The USDCAD finally dropped below 10200 Friday, which negates the bullish bias that I had held for several weeks. At this point, there is no support until parity / 9970. Of course, intraday momentum remains divergent and rising from an oversold condition. Former support at 10150 is now resistance.
US Dollar / Swiss Franc
Like the EURUSD (but as the inverse), I favor USD strength in a 5th wave to a new high. Price needs to remain above 10500 in order to keep the bullish count valid. In other words, the USDCHF has gone about as far as it can go if the trend is up.
Gold
“Gold has traded sideways since December and appears to be building a bullish base. Specifically, the base could be a complex head and shoulders (the head itself is a head and shoulders).” The decline from 1145 is in 7 waves, which counts as a complex correction. Look for support near / just below 1120.
Light Crude
After reversing from a gap, crude’s decline is impulsive. Expect weakness to at least below 7705. 7613 is potential support. It is possible that the rally from the February low completes wave C of an A-B-C flat. Exceeding 8475 would suggest that crude is headed higher for a test of 90.
Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates at the DailyFX Forum. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary and trades at DailyFX Forex Stream. Send requests to receive his reports via email tojsaettele@dailyfx.com.
