Charts from March 25th, 2014

Generally speaking, the EUR/XXX and GBP/XXX crosses (vs. AUD, NZD, and CAD) look appealing today. I pointed out EUR/NZD on Twitter, which may break the down channel and has held 1.4252 quite well.

March 24 - EURNZD - Channel

USD/TRY is at the top of its down channel on the 4-hour. The pair gained major ground after some probe against government officials. With the USD strength vs. CAD, AUD, and NZD, I think this move might have been over-sized. A short with a stop above 2.61 seems quite reasonable.

March 24 - USDTRY - Opp sell

No reason to sell the New Zealand Dollar (Weekly Review)

I think the NZD/USD is either a buy or a no-trade pair right now. When I look at the charts and fundamentals, I literally see almost no reason to sell this pair. The only negative out there is the recent dairy auction that did not go very well and the trend could continue.

For fundamentals:

* The RBNZ is still in a neutral stance and the market was looking for it to be dovish (this is a positive). Additionally, it’s one of the few central banks not looking to cut rates.
* The general rebound in commodities is also a plus for the pair.
* The USD pressure is off for now which takes out a lot of downside pressure from this pair. And given the NZD’s relative super-high yielding status, hard to go short.

For technicals:
* The monthly chart is about to leave the largest bull hammer I’ve seen in a while and price will likely lose above the 100 monthly moving average.
* When you zoom in, it only gets better. We have a double bottom on both the weekly and daily charts with the pair above the neckline.
* There’s some stochastics (weekly) and MACD (daily) bullish divergence on the charts
* We broke a big a trendline from the .8800 handle

All-in-all, there’s nothing on the charts right now that says NZD/USD is a sell. .7680/.7700 is a big resistance zone, but that’s not necessarily a reason to sell (it could stall though). The risks right now is a reversal on US Dollar sentiment, complaints by the RBNZ, or a big sell-off in equities/risk appetite.

I see .7530s, .7560s and .7600 as possible long entries. Of course, either .7200 or .7450s were better levels to go long.

Scorecard:

March 24 - NZDUSD Scorecard

Multi-timeframe detail:

March 24 - NZDUSD - Multitimeframe

 

 

Does the EUR/USD break 1.10?

It’s a tough call. 1.10 is a big psychological level and a lot of people were waiting for this level so they could sell the pair. Everyone who missed the first wave to 1.04/05¬† is like “Ooo, let me sell for parity”.

Look, I’m in the camp that the USD will re-surge, eventually. We just need the negative weather effects to dissipate and the strong job market effects to filter through the economy. Tight labor creates wage pressure and inflation. I also think Yellen is serious about raising the Fed Funds by those 25bps (real soon).

But back to today:

*US data is still mixed and the Fed is “data-dependent” (are they not always?)
*European data is improving. Thus, the rate of change in European data is better than the US
*US rates have backtracked. As a proxy, the 10-year rate is back to 1.85/1.90. It was near 2.40 when the EUR/USD was at 1.04/05. If Euro rates continue to be stable, I can’t see how 1.05 happens without US rates taking off again (and it won’t happen this week)
* There’s no serious data for the week until the revised US GDP. Until then, we have a bad US durables number to dwell on and a good German IFO.
* 1.0900/20s held pretty well and the new data does not “suggest” this breaking to the downside in the near-term
* Greece headlines are starting to re-surface but they are not full-blown yet. If it remains like this, the Euro could be OK. On the other hand, this could be a trigger for people to start calling a double top on the shorter-term charts.

Now let’s get technical:
* The weekly chart essentially has a bullish engulfing candle from the 1.05 lows.
* We sort of have a bullish Oreo on the daily with follow through to the upside
* The pair broke the short-term trend line from 1.13
* Post the FOMC spike, the 4-hour chart is leaving higher highs and higher lows

Net-net, this 1.10 level is a place with a lot of opinions and a lot of volume. It could easily be the place where the EUR/USD takes the turn south. However, I think the recent data (+ yields) and dynamic would call for a re-test of 1.1096 or 1.1210.

It just wouldn’t be fun if the pair missed the opportunity to clear some stops. People have orders out there and the market is here to do its one job: fill all orders.

Also, buying at 1.10 is silly (because buying at strong resistance usually has a horrible risk-reward). But pullbacks could be an opportunity.

 

Charts from Tuesday, March 24th

GBP/JPY looks vulnerable as it approaches a major trend line. 175.77 is key support, but there are some moving averages in between too.
March 24 - GBPJPY - Look out below

USD/CHF is at key support. Even with USD weakness, this may be a good pair to think about going long for the longer-term.

March 24 - USDCH - Support

The 10-year yield is slipping. Channel and fib level to watch

March 24 - 10-year note

 

USD/NOK is soft these days after the NOK central bank did not cut rates. Combined with USD weakness, it’s looking to go into the old range (it’s what I favor)

March 24 - USDNOK - Key support

USD/JPY is under the key 120 and a broken trendline. With rates lower, could push to 118.80s.

March 24 - uSDJPY - broken TL

The Aussie is on a tear (Weekly Review)

The Australian Dollar has been kicking some butt since the last FOMC meeting. Before that, it was frustrating the AUD/USD shorts as it failed to sustain the new lows below .7600. Recent data shows that a large junk of Aussie shorts covered their trades¬†(I think more are covering as I type…) . Since last Friday, the Aussie looks very bullish and unless the pair gets below .7700, we’re likely to see more upside. Here is the breakdown:

Fundamental -
Positive:
* Commodities have generally rebounded. Gold and Copper (important to the pair) have seen upside but iron ore (also important) has not. Net-net, still looks good.
* FOMC was seen as dovish, taking off the USD pressure. (major point)
* China data is not great, but no one is worried about it at the moment. Why? Chinese inflation is low and the market expects more rate cuts to fight the weakness. This could become an issue (but we can wait until it does…)
Negative:
* Softer Australian economic data
* An additional 50bps in rate cuts. Note though, that this is largely priced in, so effects could be limited (and maybe they won’t cut…)
* Low inflation (but this is global phenomenon)

Technical -
Monthly
* The March candle is not closed yet, but it looks promising for the bulls. It’s looking to leave a major hammer with price closing above the 200 monthly moving average (.7795).
* Indicators are oversold and the above could be the first bullish catalyst.
Weekly
* We have a bullish engulfing candle from the cycle lows combined with a divergence on the stochastics
* Pair has also broken the trendline from ~..93/.94
Daily
* Massive bullish candle from the lows (FOMC day) with follow through
* MACD bullish divergence
* Pair above key .7856 level

4-hour
*Higher highs and higher lows

What’s left for the pair? I think it needs to break above the.7926 level (50% fib of the .46-1.10 run) and .7945 (61.8% fib of the .60-1.10 run). After that, .8030 becomes a piece of cake. Moving to .8300 would require a lot of horsepower. Why? We would need to crack the 21 weekly MA at .8082 and the 100 daily MA at .8155.

If anything, .8300-.7850/.7900 could become a new range. At this point, buying at .7700/.7740 (re-test of broken trend line) offers the best risk reward. Buying at .7800 could be another entry-level or current market (.7856) for those inclined to just get in. Closing above .7856 is HUGE.

Note how the Aussie scorecard went from a 3:1 sell ratio to a 3:1 buy ratio. Complete reversal.

Aussie scorecard

Aussie multitimeframe

Aussie Daily Chart

Update on Trades #61-70 – A good day, indeed.

The recap of the closed trades since the Sunday open are below. Generally speaking, things went pretty well – total so far is +221 pips.

USD shorts right off the Asian open were the best bet. Commodities were off across the board but NZD and AUD still managed to do some damage. CAD was surprisingly stable in the face of lower oil. Things will start to get tricky the closer we get to Wednesday’s FOMC meeting. I’ll likely stick to fast trades. Volatility may also slow down a bit.

I still like longs on the GBP/Commodity currencies (possibly Euro crosses too – assuming yields stay stable). I’ll post any new trades as they come. Given that GBP/USD regained 1.4810s, I think it will likely try to challenge 1.4890s/1.4900 (see #MorningCharts post from today). Euro is likely capped at 1.0660s pre-FOMC. .7450s on NZD/USD should also act as strong resistance. RBA minutes is up and the consensus is that the dovish tone will send AUD lower (we shall see).

Recap:

Trade #70, long GBP/JPY from 179.30, hit target of 179.95 for +65 pips.
Trade #69, long #GBP/NZD from 2.0133, stopped out at 2.0080 for -53 pips.
Trade #68, Long AUD/USD from .7630, closed early at .7676 (4 pips ahead of target) for +46 pips. A tweet was sent live during the closing of the trade.
Trade #67, short USD/NOK from 2.21, was stopped out at 2.25 for what we could call roughly minus 40 pips. Given lot size for this trade, this is what would make sense otherwise it distorts the pip count. Another example is USD/MXN – when it moves from 15.30 to 15.40, you can’t call that 1,000 pips and then put it next to 1,000 pips on, say, AUD/USD.
Trade #66, long GBP/AUD from 1.9333, was stopped at 1.9290 for – 43 pips.
Trade #65, short USDTRY from 2.6335, hit target of 2.61 for what we call +23 pips (same rationale used with USD/NOK).
Trade #64, long GBP/USD from 1.4742, hit target of 1.4810 for +68 pips.
Trade #63, long NZD/USD from .7324, hit target of .7390 for +66 pips.
Trade #61, long EUR/USD from 1.0471, hit target of 1.0560 for +89 pips.

—–

Trade # 62, short USD/CAD from 1.2791 is still in progress.

 

 

Morning Charts – March 16th, 2015

EUR/AUD weekly chart is at an interesting location. It’s at a key level which now has a 50% fib retracement and 200 monthly moving average right below. If you believe in a Euro rebound, this could be the place to think about going along. Two things to note though: We have some lower lows and lower highs since the 1.50s and there is a bearish divergence on the MACD.

March 16 - EURAUD

The EUR/AUD chart is also at the key 1.9300/06 support level. I would say the break or hold of this level is the most important thing to watch for now. I had also mentioned a possible inverse head and shoulders, but I see this as a minor item or “plus” if thinking about going long.

March 15 - GBPAUD

I had been pitching GBP/USD longs since the Asian session open. This chart showed some key things to watch: trendline from 1.55s, 23% retracement of the recent fall, MACD bullish divergence, and a hammer candle on the 4-hour chart. Any longs will likely be challenged at 1.4900 (first real test).

March 16 - GBPUSD

With the USD losing ground across the board, I was keeping an eye on the USD/MXN too. It’s at the 15.40 support and could look to challenge the broken wedge trendline.

March 16 - USDMXN =