USD/CAD is itching for some action. It’s been confined to the 1.1000-50 range for too long. We can see a descending triangle forming on the 4 Hour which means that the pair is trying to break the 1.10 level. Coming from a big reversal, this follow through pattern makes sense. Whether it “follows through” or not, is a question of probability. As for me, I think the short squeeze on the CAD positions continues. These things typically don’t happen in isolation.
If USD/CAD breaks 1.10, it will be doing a great feat:
- It’s one of those key psychological round numbers
- It’s been a tested support. And as of late, It makes it seem like there is something/someone holding the pair. I like to believe it’s just market reflexivity. Nevertheless, if it is someone, then their covering on a break or lack of buying likely helps with downside momentum.
I like selling now or selling at 1.0995 while targeting the 1.0970s level (first layer of support). Second layer will come in at 1.0910s.
If the break holds, it will also mean that the pair has the intention of slicing both of the daily trendlines right at the 1.1000 zone.
Wait and see.
USDCAD 4 Hour Chart
Unlike some experts and analysts, the Euro Dollar is not in a hurry to go anywhere. It’s actually quite happy to grind up and down with the occasional bull run, mostly just to annoy said analysts. Why the rush?
This week we have the ECB meeting and the US non-farm payrolls number. Two items “everyone” is waiting for. I know a bunch of people are praying every night for that rate cut. Maybe also some talk of negative deposit rates, so we get a lil’ bit of downside action. They’ve been wrong so many times in a row about the downside volatility that it’s bound to work eventually, right? I’m no central bank expert, but I doubt that the ECB will cut rates. The data is mixed-to-good and core inflation came in steady. If there’s anything to bring some downside on the EUR/USD, I think it’s likely going to be from US data (but who cares what I think…let’s focus on price instead)
As of now, the Euro Dollar is in a rage between 1.3745 // 70s and 1.3809. We also have sizeable resistance at the 1.3820s zone. A lot of the big shops have been looking at that 1.3770s level as a line in the sand, so it will be interesting if it breaks and holds to the downside. It would likely shift the bias at a few places. I think 1.3550s is an important level to look at and that the 1.3480s is the rock level to test.
Multi-timeframe overview of EUR/USD:
- February was the month where the pair rejected the January bear candle and gained major ground. Since then, it’s mainly been a tight grind with a downside bias.
- Overall, the pair got above 1.3700 in February which had been an important level on the monthly chart. We’ll likely need a fundamental catalyst for a downside break (this week could offer a thing or two)
- The bullish trend is still in place
- The weekly chart (shown below) clearly shows how the 1.3745 level is key for the pair. Offers were ahead of this level for many weeks.
- Additionally, the 1.3730s also happens to be the 50% Fibonnaci retracement of the 1.3480s-1.3960s run. So you have confluence here.
- Nothing on this chart screams downside momentum. You did have the bearish engulfing candle two weeks ago, but in the big scheme of things, it could just be a healthy retracemet. If the 50% Fib breaks to the downside, then we may have some momentum. This will also put the pair at risk of breaking that trendline on the chart. If positive US data continues to pour in and the ECB delivers a dovish statement on Thursday, we may have a case for the downside. In this situation, selling on a retracement to 1.3745 post a break is likely the best risk-reward trade available.
- I think there are two stories that you can spin from the daily chart (also shown below). First, you have the lower highs and lower lows that have been taking place This would have been a nice catalyst to sell earlier today as the pair reached the 1.3800s. Primary target here would be the 1.3745s level again. This also plays into the concept that we’re in a range. Until the mini-trend is broken, this looks good to me.
- The alternative scenario here is that the EUR/SD could be bull flagging. It’s been slightly grinding to the downside and got held at the 50% fibonnaci. You give me a hawkish ECB and/or a bad jobs number out of the US and you got your breakout possibility.
- I would only play this latter option if price broke above 1.3830s and held. I would argue that 1.3900 would attract in this case.
- Play the range between 1.3745 and 1.3810.
- Until the lower highs and lower lows on the daily chart end, keep playing the mini trend (we may be close to a switch…either big break down or up)
- If 1.3745 breaks to the downside, sell any retracement to this level. Know that 1.3770s is being closely watched. Major support at 1.3550s and 1.3480s.
- If 1.3820s/30s breaks to the upside, sell any retracement to this level. Resistance at 1.3910s.
Overall, the EUR/USD is at an interesting level. This could be a place where it takes off to 1.400 or a place that creates momentum to the downside. I don’t mean to be wishy-washy, but if Dragui says inflation is all good and everything is rosy, the pair is going to react accordingly. If he cries about lower non-core inflation and appears to be scared, the market will also react accordingly. This downside side of the trade “appears” more favorable because you also have the USD flexing some muscles.
When what a guy says moves a major currency, be wary and stay humble.
EURUSD Weekly 4.1.2014
EURUSD Daily 4.2.2014
The USD/CAD sat under the 1.0700 level for a very long time. On January of this year though, the thing decided to pop. All was bad for the Canadian economy, inflation was benign, and rate cuts were looming. Or so was the impression. Recent data have started to tell a different story (better GDP, higher inflation, better retail sales, PMI, etc), but it is too late? Has the ship sailed?
- The monthly chart is not telling much these days. Since the January pop, the pair has been grinding sideways. Some people don’t like the Feb and March monthly candles (saying they look bearish), but nothing really there.
- I think there are three zones to watch: 1) The 1.1230s 50% Fibonacci level of the big bear wave; 2) This current 1.0910s-1.1050 chop zone; and 3) The 1.0700s major resistance that was broken. Play them accordingly.
- I think this timeframe is telling the true story right now. While the AUD and NZD have broken off, the CAD is still quietly ranging. 1.0910s and 1.1230s are the boundaries. Everything else is chop.
- I have a slight bearish bias because of two things: a) last week’s bearish engulfing candle; and b) we do have a trendline coming in that could make things interesting. A break of the trendline could add some momentum so we test 1.0910s. I’m definitely not calling any breaks below this zone for now (would need some strong catalyst). Commodity currency momentum (“April seasonal effect”) along with the CAD data could possibly yield such results.
- We thought that the triangle had broken early to the upside…just kidding. 1.1200 got held and we’re back to the triangle’s bottom trendline. It’s been holding for three days and not even the better than expected CAD GDP was able to damage it. That tells you something: Sizeable buyers at the 1.10 round number for now.
- Pair could drag its feet for quite some time here. After the fall from 1.12, the pair seems to be looking for price compression
- Seems like 1.10 formed a double bottom on this timeframe. The neckline would be 1.1077 with the measured target being at the 1.1150s zone.
- The short-term trendline from 1.1077 is holding the upside for now.
Overall, all I read is consolidation post-pop (monthly), choppiness (weekly), and then price compression as the triangle continues (daily). The shorter-term times frames don’t offer much either.
If I had to pick a direction, I would say it has odds of a bit more downside than upside for now…unless USD takes the world by storm.
No strategies on USD/CAD.
The Aussie just closed a stellar month at top tick for March. Some people are already calling for shorts to the .8600 level. Hold the horses, let’s look where sails the pair.
- Closed back above the 100 month moving average
- Follow through candle after February’s reversal looks bullish
- Closed above the 23% Fibonnaci level when looking from the July 2011 top
- Food for thought: April is an AWESOME month for commodity currencies, especially the Aussie. Will it hold true this year? Maybe a challenge of the .9550s level is in the cards? How about .9750s?
- Overall, broad levels to watch are .9572 and .9754 on the upside and the usual .9130s and .9000 on the downside
- Similar to the NZD story (see NZD Inching Up), the story is bullish for the Aussie right now. With the RBA on neutral mode and scared of inflation, the mixed-to-positive data out of Australia is keeping the fire going.
- By looking at the monthly, you wouldn’t even know that the Ukraine thing happened and that China is not doing all that great. But for now, le market no care.
- Last week’s candle was the line in the sand for now. It closed strong and crushed the .9130s and .9200 levels. It also managed to close above the wedge that I’ll show on the daily chart. After seven weeks of range trading, the pair stepped up the ladder. .8600 already? Sounds like some people are on a rush…
- For now, we’ll watch .9200 and .9360. The .9290 level is a tough level and will not go easy (maybe the RBA will help?)
- First major thing to note is that the rising wedge on the daily broke last week.
- Oh yea, we also broke the 200 daily moving average, right after breaking through the 100 MA. It’s cool to see how the 55 MA carried the pair through all of February and then the beginning of March
- How about the shooting star candle from Friday? Well, it got well rejected with Monday’s price action.
- Overall, the thing is on rocket fuel. The RBA is a wildcard, but I don’t see many long-term short possibilities from it. If there’s a dip, how low will it go? Jaw-boning likely ain’t going to give 300 pips to the downside, let’s be real.
- The China data seems like the larger risk if it ever catches on (this is the catalyst I’m watching).
- Levels I’m watching: Upside – .9270, .9297, .9360, .9450; Downside – .9218, .9167, .9136, .9080
Le 4 Hour:
- The take off from .9000 looks pretty cool. It’s been a freight train that can’t be stopped.
- We have a trendline from the .9000 level that I’m watching, but it does not look very important. The key place I’m looking at is the wedge trendline that was broken. I could see weakness tonight (whether from China data or the RBA) being bought here. It will also coincide with the .9200 level.
- WIth the RBA, it gets tricky. Nevetheless, I like the idea of buying at .9167 or .9200. Definitely at .9136 (also the 200 DMA).
- Selling .9297 could be an option, but price is too close and the RBA statement could create volatility that would easily slice the zone. I prefer selling at the .9360s zone.
- If the pair breaks .9297 to the upside and retraces while holding the level, I could look to buy for the .9350s level.
- Overall, the range I see ahead is .9130s-.9450s. Playing as it comes
AUDUSD Daily 4.1.2014
AUDUSD 4 Hour Chart – 4.1.2014
Why, hello there! I’m back. Steve will pop in at some point too. It’s been a while since I’ve done any sharing, so I thought I would start easy. So, let’s get it rocking with the NZD/USD. Right now (as in when thinking about immediate trades), I’m neutral on the pair and waiting for either the .8645 or .8598 levels to get challenged.
This is how I’m looking at the pair:
- March is about to be the highest monthly close since July 2011. And the RBNZ is hiking rates. NZD gets cookie points for this on my book.
- Nothing more to say really. The trend is bullish and short trades have to be fast and nimble if they happen.
Weekly Chart -
- Last week was a strong candle for the Kiwi. Adds to the bullish story.
- After two weeks struggling to get above .8630s, it finally managed to do. Staying above .8542 was key and this level will likely prove to be a rock when it gets tested.
Overall, if you stop here, you can see that any major theory to short the NZD is a hard sell. USD tapering? With RBNZ rate hikes (the real stuff) occurring, it’s a stalemate at best. Only thing you may have is the infamous “it’s gone too far” card, and that’s never a good start by itself.
So we get down to the daily chart (first chart below):
- The pair is in a range between the orange lines .8645 and .8695.
- There’s no significant reversal pattern in place
- You have the RBA tonight, and if the Aussie rally, the Kiwi will probably follow the wagon
4 Hour Chart:
- Only goes to show the chop that’s happening. The pair tried to break the .8645 level today with no luck. It was a hard task because the Euro was rallying, Captain Yellen came in for the rescue, and US equities are sustaining gains.
- Buy/sell the range
- Buy at .8619-30, which will act as a key support zone. Also have the channel trendline coming in for support
- If .8619 level breaks, sell to .8542. This .8550s is a great place to think about longs
- “Everyone” is skeptical about going long. However, that does not mean that I go short. This is the perfect time for the pair just to grind higher, slowly and painfully (for you)
- Sometimes the RBA fade on the Kiwi can work (if it happens). This is also usually a very fast and nimble trade.
NZD/USD Daily Chart
NZD/USD 4 Hour Chart
It’s EDDY time. The EUR/USD is just up, up, and up, but I think we may have a short window to yell about potential downside. IF THIS WAS ZEROHEDGE, I WOULD SEND A TWEET ON EDDY IN ALL CAPS. But we’re not at FXBT, so moving on:
- The monthly chart looks nasty. This is something I had mentioned before already. The pair left a bearish engulfing candle in January after failing to break the trendline from October 2007. Additionally, every time the pair has reversed like this on the monthly (since 2007) after a bull run, it has usually seen downside. Overall, big picture suggests downside in the near future
- The weekly chart is more of a wash. It’s up,down,up,down and so on. Nothing much to say here except that it did hold the 1.3480s key level on the chart. It needs to break below this for some downside momentum to grow.
- The magic is on the daily chart for this one. We can see the rejection at the trendline from the recent highs followed by the lower lows and lower highs. It’s been maintaining a channel and on Tuesday the pair left a bearish wick off the upper trendline of the channel.
The pair is itching for downside, don’t you think? I like playing the downside until 1.3550s or 1.3480s if we make it there.A break below here and you have a downside party.
If you think this is too much, look at EUR/AUD then. The Aussie is en fuego and probably has firepower until .9150s and .9200 (tough cookie here). If the Euro helps with some minor weakness, you have a trade. The EUR/AUD is also at the KEY support of 1.5020s. If it breaks, it will be looking for 1.4800 (and 1.4600 if you want to be aggressive).
If it holds…sad face. And it could rally hard (likely Aussie downside). Good luck!
It’s what we’ve all been waiting for: the 2014 Olympics! Ice skating is awesome, nah?
On lesser news, the Bank of England is also about to release its quarterly inflation report. The tone and revisions to GDP, inflation, etc will be closed watched. How should we position ourselves?
- The monthly chart is still business as usual. It broke to the upside in December after getting through that super long-term trendline from 2009 and direction has not changed yet (note: trendline got challenged from the top last week as the pair touched that 1.6250s)
- The weekly had been a long grind. For weeks upon weeks the pair got sold as it approached 1.6550s. It finally put another inverted hammer two weeks ago which led to some slight downside (1.6250s), but the pair quickly kicked back. It left a huge wick on the chart that looks quite bullish. So far, we’ve seen some follow through this week to the upside.
- The daily and 4 hour pretty much tell the same story.
The pair now is waiting for this inflation report. Yes, it could be a non-event, but I’m betting that we’re likely to see volatility.
On the upside, we have 1.6570s and then 1.6740s as major resistance. On the downside, we have 1.6350s (expected suspect), 1.6250s (same), and then 1.6180s, 1.6090s, and the other LINE IN THE SAND (similar to 1.6250s) 1.5900s.
I’m keeping an eye on the super key levels (see red lines in chart below) and playing the ranges. If the pair breaks below 1.6250s, then I’m in the 1.5900-1.6250 park. If nothing happens, we’re still stuck in the current 1.6250s-1.6570s zone. And if it goes rocket ship, then we play the upside. And just imagine how many stops are above those highs? Stoplandia if you ask me.
No need to jump the gun here.