The USD/JPY pair shot straight up on Tuesday as the Federal Reserve minutes made no real mention of any form of quantitative easing coming in the near future. The release solidified the bullishness of this pair as the US Dollar got a boost from this release.
The pair has several things working for it at the moment, and as a result we are only buying it. The Bank of Japan has massively expanded its bond buying program, and this is akin to printing Yen and throwing them into the markets. The Yen overall should continue to weaken over the long term as the situation in the United States seems to be improving at the same time.
The economic numbers in the US have been trending higher, and the Japanese ones have been weak. There is a positive swap in this pair – albeit a small one – but this is another reason to own the Dollar over the Yen. The 82 level has been broken to the upside again, and it looks as if the momentum is picking back up.
Certainly the Federal Reserve looks more likely to raise interest rates before the Japanese, and this should continue to bring money into this pair. Also, the US stock markets should continue to outperform the Japanese ones as there is simply far weaker than the majors in America. Also, the fact that there may not be a pressing need to ease in America, suggests that the underlying economic conditions in America may be strengthening and therefore we should see even more investment going forward in the US.
The 83 level above should produce some decent resistance, but the overall trend of this pair seems to be changing right before our eyes, and certainly the bulls are running the show now. Because of this, we like buying pullbacks as long as we are above the 80 level. It isn’t until we get below that mark that we would even consider selling this pair. The 85 level should be resistive as well, but if it gives way – we are going to go much, much higher.
The GBP/USD pair fell hard during the session on Tuesday as the Federal Reserve failed to give the signal for continued easing during the minutes release. The 1.60 level has held as resistance, and we even mentioned the other day that although we got over it – the action wasn’t all that convincing. At this point in time, the 1.59 level looks like it could be supportive, and because of this – we need to sell only when we get this pair below that level on a 4 hour or daily candle.
Until we get above the 1.60 level, we aren’t willing to buy at this point as it looks like the Dollar is going to gain against most currencies. With this in mind, we are simply looking to sell continued weakness in this pair.
EUR/GBP rose during most of the session on Tuesday, but failed to follow through as the market sold back off. The resulting candle is a massive shooting star at the bottom of the range, so this could suggest that we are finally ready to break this pair down. The 0.83 level is still supportive, and we think that the area is where the real fight happens. If we can close below that level, we are ready to start selling this pair again. We aren’t willing to buy at this point in time based upon the action for the Tuesday session.
The EUR/CHF pair is a manipulated one that we can only buy. The Tuesday session saw a slight gain, but only just so. The 1.20 level is the “minimum acceptable exchange rate” as set by the Swiss National Bank, and as a result we simply cannot sell at these levels. The pair is only bought by us, but there is very little catalyst to push prices much higher. We are buying small positions and trading this pair as a scalp from time to time, gaining roughly 20 pips at a time. Only the patient can trade it though – as it can take some time in order to collect your profits in this slow moving environment.
The AUD/USD pair fell hard during the Tuesday session as the Federal Reserve failed to suggest a case for further easing in the minutes that were released in the US. The 1.04 level has given way, but the channel is still holding things up. The 200 day EMA is broken, and now we see that the lows of the session matched the lows from the Thursday hammer as well. It is at that point that we think the momentum changes. A move below there has us selling this pair for the time being. Over the long haul, we like this pair. However, we simply cannot buy it at this point in time.
The USD/CAD pair rose for much of the session on Tuesday, but fell again once the Federal Reserve released its minutes from the last meeting. The release didn’t give any signs of further quantitative easing, and the markets bought the Dollar as a result. In this pair though, the dynamics were reversed, as the lack of further QE suggests that the US economy will continue to strengthen. As Canada sends over 80% of its exports to America, which means that the US will buy a lot of Canadian exports going forward. Because of this, the pair looks tilted to the downside now. However, we need to see a break below the 0.9850 level gives way on the daily close. We will sell any bounce towards the parity level, or the above mentioned breakdown.
The NZD/USD pair fell on Tuesday as the Federal Reserve minutes gave no real hint of continued easing by the central bank. With this in mind, it sent traders into the Dollar as it appears many of them expected continued easing. The pair failed at the 0.8250 level again, and it now looks like we are going to continue to consolidate in the immediate area.
We see support at the 0.8050 level, and the 200 day EMA is in the area as well. Because of this, and the fact that the 38.2% Fibonacci level is in the same spot, we expect any selloff in this pair to be temporary. In fact, we are going to let this pair pullback and buy supportive action if we find it. A break below the 0.80 level would of course concern the bulls, and could send this pair much lower.
The silver markets fell during the Tuesday session as the Federal Reserve released their minutes from the last meeting. The minutes made no implicit mention of a new round of quantitative easing, and as a result the Dollar gained in general. This had people running for the exits in the commodity pits, and the silver market was no different.
The $33 level was pierced before the release, but the pullback ensured that we ended up under that resistance level at the close. Because of this, the market looks as if it is ready to continue to bounce around between the $33 level and the $31 handle. $30 is also a place where we could see buyers step in, and as a result we think this market falls, but only for the very short term. In fact, a sideways grind could very well be the case.
The argument for the silver market to perform at these levels can be made by the fact that the Federal Reserve doesn’t see the need for another round of easing, which means that the economy is perhaps getting closer to normalcy. This of course means more strength in the manufacturing sector, and that means more demand for silver from an industrial angle.
The candle for the Tuesday session is somewhat like a hammer, but perhaps has fallen a bit too much to be a perfect one. This of course will only reinforce the idea of bearishness. The silver market will often move with the gold markets, and this time shouldn’t be too much different. However, with a healthier economy we could see the silver markets just a bit more like to be buoyant than gold in the near term.
The overall trend is still up, and as central banks continue to print money and ease around the world, the precious metals will still find a bid at various levels. Even if the Dollar does rise, there is a healthy likelihood that the metals will rise in time, but only after a pullback. Out of the two at the moment, silver looks to outperform gold. A daily close below $30 has this market much lower, while the close above $33 has this market running to the $34.50 area. (With resistance all the way to $35)
The Light Sweet Crude markets fell during the Tuesday session as the Federal Reserve minutes came out, failing to give the markets a reason to believe in the possibility of another round of quantitative easing. As a result, the Dollar gained overall, and this of course had an effect on the oil markets.
The move is less an anti-oil one, and more a pro-Dollar one. Because of this, we still believe the pullbacks are buying opportunities, and this one shouldn’t be any different. The $104 level looks as if it is trying to be supportive, and we will be buying this market based upon supportive candles in the area. The market has been grinding slightly lower lately, so we aren’t ready to buy and hold, although the oil markets could very well be much higher over the course of the year.
As we have seen lately, the market will be choppy going forward. The down trending channel hasn’t been broken to the upside yet, so any buy orders will be of the short-term only at this point. In order to get bullish for a longer time period, we need to see the top of the channel broken on a daily close, perhaps to the $107 level. This would suggest that the momentum has picked up for the bulls, and would more than likely have the shorts covering their positions.
The recent action has been a slow grind, and although the market has fallen, it has struggled to do so in any convincing manner. The tensions in the Middle East will continue to put a floor in this market going forward, although the risks of an armed conflict do seem to be cooling off. On the other half of the situation, the demand for oil continues to be strong form such places as China, Brazil, and India. As long as the emerging markets are looking to buy more oil, it is hard to think that this commodity will have any significant fall in price. We are buying pullbacks until we break below the $95 level.
The natural gas markets rose on Tuesday as the Monday hammer suggested it would. Our analysis is still the same: We believe this bounce was overdue, but it will simply be a bounce and nothing more. Because of this, we prefer to sit back and let the market come to us, and sell it at higher prices. Of particular note is the $2.40 level which looks very resistive. However, this market has shown us time and time again that the bounces don’t necessarily make it all the way back to the resistance levels. Because of this, we are on the lookout for weak candles on the daily chart in case we need to short the market before the above mentioned level. Either way, we won’t be buying this contract.
The gold markets fell hard on Tuesday as the Federal Reserve released the minutes of their previous meeting. Much to the chagrin of many traders, the mention of quantitative easing wasn’t in it, and this suggests that the Federal Reserve will be on hold as far as interest rates go. There are many in the market that thought that the Fed may ease a bit more, but the central bank seems to think that there is a real chance that the economy in the US can support itself.
The $1,640 level is being tested again, and with this latest development we are officially neutral of gold for the moment – something we haven’t been able to say for quite some time now. The market can’t be bought with the Tuesday candle closing at the very lows of the session, and sitting right on the support level.
If the level gives way, there is a good chance that we will see $1,600 tested as support in relatively short order. The real area that we see as a “floor” in this market is the $1,500 level since it giving way would end up being a significant event. Because of the longer-term uptrend in the gold markets, we won’t be participating in any selloffs until we get below the $1,500 level, and will simply wait to see if there are signs of support at other handles.
The market could be choppy in the near term, and as long as that is the case, we are flat. If the market can sustain this area for a few daily candles, we would also consider buying this market as well. However, we need to watch the Dollar overall, and as long as it continues to gain overall, this market will underperform. However, in the long run – we think it will bounce back. After all, the central banks are simply far too easy at this point in order for the markets not to want some kind of other currency. In the meantime, we simply sit here and wait to see supportive candles – or at least a sideways grind to show us the bulls haven’t given up.
The EUR/USD pair fell during most of Monday’s session, but managed to bounce back in the end in order to form a hammer. The pair looks like it wants to go higher, but it should be mentioned that this pair will continue to suffer at the hands of headline risk going forward. Certainly, most people are painfully aware of the issues with European debt at the moment, but there are always going to be chances for the news to be worse than feared. After all, the market seems continent to simply overlook quite a bit. Those of you who traded in 2007 will undoubtedly remember what a market that refuses to come to grips with reality looks like when it finally has to. And that is the real fear that any bull has to have in the back of their mind.
The 1.3250 level has been rather supportive lately, and this makes sense as it was so resistive earlier. The level is a bit of a “midpoint” between the two larger ones, the 1.30 and 1.35 handles. Because of this, we aren’t as excited to be involved in this pair until we reach one of those larger levels. It is at these “bigger areas” that we find the best trades, and the most reliable ones for that matter.
The last few sessions have all produced hammers, so certainly the risk in the near term seems to be to the upside, and as a result the short-term trade may find value in going long for the next couple of days. However, as we are a bit more conservative, we prefer to see what this pair does at the 1.35 level, as it should continue to be a larger guide for the market overall.
Signs of weakness at that level are what we expect, and we wouldn’t hesitate to sell form it if we get them. Perhaps a shooting star or a bearish outside candle would be a nice signal from there. We think that a short from that position would have room to run, perhaps down to the 1.30 level. Again, the shorter-term trader may find a break of the Monday highs as a signal to buy, but we prefer to look at larger levels in markets that are as prone to shocks as this one has been lately.
The USD/JPY pair had a rough day on Monday as the bears sold this pair off. The resulting candle is a long red one, and it is sitting right on the 0.82 support level. The pair looks weak at this point, but the area it is sitting in is significant support. We like buying this pair only, and will do so on supportive candles. We are at the right spot, but we haven’t seen the right candle yet. We also like buying at the 80 handle as well, so supportive candles at that point will be bought as well. Selling isn’t an option until sub-80 on a daily close.
The GBP/USD pair rose again during the Monday session, but finished a bit flimsy. The 1.60 level has been broken, but the pair is closing as a bit of a doji, if not a semi-shooting star. The candlestick would have us leery of going long at this point, although the momentum is clearly to the upside. The breaking of the ends of the candle shall be our guide, as if we break higher – then it shows that the momentum has picked back up. If we break lower, this would show a failure to find follow through on the breakout.
The EUR/GBP pair fell for the Monday session, only to bounce a bit off of the 0.83 support level. This area has been stubbornly holding the market up, and it appears that we are simply not ready to break below it yet. The upside is capped by the 0.84 level, and we suspect that the next move may be up – but it won’t get above that mark. As a result, this is a “scalper’s only” type of market. We are interested in buying once the Monday session is over, but only for a quick 50 pip grab, nothing more, and nothing less. Selling will be our plan for a longer move if we can close sub-0.83 on a daily chart.
The EUR/CHF continued to grind along the “floor” of 1.20 on Monday as the pair can’t pick up any traction. Certainly, if it weren’t for the Swiss National Bank implementing a “minimum acceptable exchange rate” of 1.20 in this market, the pair would be much, much lower. The pair obviously can only be bought at this point, and the trading plan is quite simple: We simply buy this pair when it falls, and the closer to the 1.20 level the better. We take profits after a couple of dozen pips, and repeat. Of course, we could have the market move against us as we buy – but that will bring intervention, which will bring much larger profits – fine with us. Selling can’t be done obviously.
The AUD/USD pair fell for much of the session on Monday, only to pop back up and print a hammer in the previous gap by the close. This signals that we could perhaps get serious support in the area, and we certainly see this market as being in an uptrend as well. The pair is currently stuck in a bit of a descending channel though, so we aren’t sure that the usual “buy at the break of the hammer strategy will serve us well. Because of this, we need to see the channel broken, or a print above the 1.05 handle.
The USD/CAD pair fell on Monday as the oil markets perked back up. The pair has been stuck in consolidation lately, capped by the parity level on the upside, and the 0.9850 level on the lower part. In fact, there are many support levels in which to pay attention to below us, as it is because of this that we think this market could bounce again. In this type of environment, we prefer to trade in the same direction as the overall trend, which means selling. However, we don’t see large trades forming. We are presently selling every time we reach the parity level. Selling at this point isn’t advisable as the support levels are too great below.
The NZD/USD pair fell during the Monday session, but bounced in the end to form a hammer. The pair has been bullish for some time, but has recently found itself in a bit of a pullback. The hammer signals that the market will more than likely try the 0.8250 level again, and we think that a daily close above this resistance level is a good enough signal to go long.
The 200 day EMA is just below, so we can see the trend traders jumping in as well. The 0.80 level is also supportive, and the handle is between the 38.2 and 50% Fibonacci level. The pair will move with the overall commodity market, so bullish moves there will support the bulls in this market. We buy on a daily close above the 0.8250 mark, and won’t sell until we clear the 0.80 by a large margin on a daily close.
Silver is a new contract for our analysis videos. When trading silver, it is important to know that it is not only a precious metal, but it also has quite a few industrial uses as well. The market for silver can be a bit more volatile than the gold markets, but it does tend to stick to fundamentals as well as any other market out there.
With this in mind, the silver markets have made a potentially significant breakdown below support at the $33 handle recently. Perhaps it is due to perceived economic slowdown, or perhaps it is due to a sympathy move with gold. Either way, the breakdown mattered as it was such obvious support for about 6 weeks.
Since the breakdown, we have seen a drop to the $31 level, and have now pushed back up against the $33 level, and are presently testing it as potential resistance. It is a points like this that we need to pay special attention, as this could end up being a bit of a clue as to how the market is going to move for the next several weeks or even months. This is because we know that what was once support can often become resistance when broken down.
We will have to keep an eye on this level, and where the market closes in relation to the $33 level. The breaking and close above that on a daily timeframe would suggest that we are about to reenter the previous consolidation level. A failure on the daily close, perhaps a nice hammer or something like that, would signal that the market is about to continue the fall.
Needless to say, a move to the upside would have to keep an eye on the $35 level, as it was previous resistance. (Perhaps even just a slight bit lower than that.) If we manage to break down from here, the $31 level should be supportive as well, but the bulls would have to consider that an important area as if it gives way – this should run the market much lower as the $30 level will come into play, but below that looks to be short of support for some time.