The GBP/USD pair rose during the Wednesday session, but failed to close above the 1.6000 level. The resulting candle is a “shooting star-like” candle that appears at the bottom of the recent range. This shows that the bulls tried to rally at the bottom, but haven’t concretely done so. Because of this, we are more likely to look for a rally to short if and when it comes. If not, we would sell on a break lower, but we think the 1.5750 area is the key to going short – if we close below that level, this pair becomes a longer-term sell.
The USD/CHF pair had a very quiet day on Wednesday, which is understandable since the day before had roughly an 800 pip range. The pair hasn’t pulled back yet, but after the recent action in it, we like the idea of buying pullbacks, especially around the 0.83 – 0.85 range. The pair is being supported by a central bank willing to buy unlimited currency, and as such – we are no longer willing to sell this pair. The CHF is no longer a safe haven currency because of this, and as such, this pair will rise on any shocks to the system. Until we get the pullback however, we are simply waiting.
EUR/CHF sat still on Wednesday, which is understandable after a 1,000 pip range on Tuesday. The pair is now pegged to 1.20 effectively, as the Swiss National Bank has decided that the level was where they were willing to defend it at that point. The 1.20, the weekly trend line we broke, and the SNB can all be supportive on a pullback. If the 1.20 area produces a hammer or engulfing bullish candle, we are ready to go long this pair. Until then, we think this pair will be very, very quiet.
The AUD/USD pair rose on Wednesday, and even broke above the gap formed at the beginning of the week. The 1.05 level has held as massive support, and as such – we like buying on dips or even a break above the daily high from Wednesday. The AUD is a pure interest rate play at this point, and traders will be looking for yield wherever they can. We only buy until we get below the parity level, and that is over 600 pips below.
The USD/CAD pair fell on Wednesday, after failing to close above the 0.99 level the day before. The oil markets are starting to come back into play as the storms in the Atlantic could have an adverse effect on oil production out of the Gulf of Mexico. The gap from the weekend has been filled, and now we are simply waiting to see if we can go lower. If we do, this pair becomes a screaming sell. If the CL (Light Sweet Crude) contract gets above $90, this pair is a screaming sell. We don’t buy until this pair gets above the parity level.
The NZD/USD pair rallied during the Wednesday session, although it did not manage to gain enough to clear the top of the shooting star-like candle from Tuesday. The trend is up still, and we aren’t ready to bet against this trend just yet. Because of this, we are looking for a break above not only 0.84, but 0.85 as well to go long. A short isn’t possible until we are below the 0.8000 level.
The EUR/USD pair shot straight up in the early hours of Tuesday in response to the massive 1,000 pip move in the EUR/CHF pair, but quickly faded from that move to an absolute freefall later in the day. The pair is currently sitting right at the 1.40 level, and this is a massive support level. However, the German courts are hearing a case involving whether or not the Greek bailouts are legal in their eyes today. Depending on that ruling, we could see the Euro permanently damaged if the case goes poorly. Because of this, the EUR/USD is a pair we want nothing to do with in the mean time. After the court ruling, the reaction shall tell us which direction to trade in.
USD/JPY rose rapidly on Tuesday as traders bought the USD across the board. The central bank of Japan certainly is happy about this move, and will not stand in the way of a weakening Yen, something they have been begging for over the last couple of years. The market didn’t make a higher high, but at closing, it seems we are just a few pips from doing so. With this in mind, we only want to go long, but only if we break the highs of the Tuesday session.
GBP/USD fell hard on Tuesday as traders around the globe are buying the USD for its safe haven status. The global markets are certainly nervous at this point, and when this happens, this pair falls. The pair even managed to break below the 1.60 area, but remains in the very wide support area between 1.5750 and 1.60. With this in mind, we are not willing to sell just yet. A close below the 1.5750 sends this pair into bear mode. Any supportive candles in this “zone” could be worth a small position to the long side if we get a bullish engulfing candle, or even a hammer.
Yesterday I spoke about what would have to happen for the USD/CHF to be a buy, and all of those points were accomplished. The Swiss National Bank has decided to announce that they are pegging the Franc at 1.20 to the Euro, and as a result – the Franc lost against all currencies, gaining roughly 8% against most on Tuesday. With this in mind we like buying this pair now as the USD is being bought against many other currencies as well. The pullback needs to be in the 0.83-0.85 range, and any supportive candle could be a signal to go long for quite some time. It is far too early to tell, but a trend change could have just happened.
EUR/CHF skyrocketed on Tuesday as the Swiss National Bank has finally played its “nuclear option” in the currency markets. In a statement, the SNB said that it “can no longer tolerate the EUR/CHF cross at anything below 1.20 and that area in and of itself is still too low.” The SNB also mentioned that they were prepared to buy unlimited amounts of foreign currencies to fight this rise in the value of the Franc. Because of this, the game has changed in this pair and all XXX/CHF pairs in general. It appears that the buying of the Franc for steady profits has just come to an end. We need to see the 1.20 level hold for several days in order to buy.
The AUD/USD pair fell hard on Tuesday, but has slowed in the 1.05 area. The piercing of this level is certainly a negative, but the area hasn’t been completely broken at this point. The resulting candle looks a lot like a shooting star, but at the bottom of a down move. The area below looks like a massive consolidation area, and if we break lower we could see that exact scenario. We feel that this pair could fall, but there will be plenty of support until you get to 1.00 in order to break free from the bullish pressure. The pair is very sensitive to the global markets, so if you see a bounce in the stock markets, you could see a bounce in this pair.
USD/CAD rose, fell, and bounced around during the Tuesday session as traders simply do not know what to do with this pair at the moment. The candle looks similar to a shooting star, but not quite as it is somewhere between that and a doji. The market looks a bit confused, but the 0.99 level continues to give this pair trouble. Parity would certainly be a massive resistance area at this point, and it looks as if the trend may still hold. The signal is fairly easy: A break of the lows on Tuesday gets the market selling, but a buy can’t be initiated until we close above 1.0000 on the daily chart. The trend is down, so we prefer selling if possible.
NZD/USD fell hard during the Tuesday session, after initially rising in value. The pair looks like it is trying to find the 0.81 to 0.80 level for support and the daily candle for Tuesday is forming a shooting star-shaped candle to emphasize that idea. The pair has recently made a lower high, and if we can manage to break below the 0.80 area – look out below. The breaking of the Tuesday low is a reasonable sell signal, but as I mentioned earlier – 0.81 is the start of serious support.
The EUR/USD pair fell again on Monday as traders reacted to the losses suffered in German elections by Merkel’s party. The party is paying the cost of continually pressing for the bailout of the rest of Europe. This brings up very serious questions as to whether the Germans will continue to back the bailouts. Granted, this last election was a minor one, but if this is a signal on the larger ones coming – Europe could be in serious trouble. While we like selling the Euro, it looks as if a bounce is in order as the 1.41 level seems to produce them for the time being against the USD, mainly because the US isn’t in great shape either. We expect a continuation of range bound conditions in this market for the time being. (1.40 – 1.45)
USD/JPY continues to sit still at the 76.50 area, as traders weigh out the possibilities of a global recession. The pair should be falling as the USD/JPY is somewhat sensitive to the ill of the West, but the truth is the Bank of Japan has been very vocal about its displeasure in the rising Yen. Because of this, the pair seems to have a floor at 76 and a ceiling at 77. It is going to be a scalper’s market for a while.
GBP/USD fell again on Monday, but the resulting candle is looking more and more like a pseudo-hammer, and as such we feel that a bounce might be in the cards. Add to that the fact that the support in this pair has been from 1.58 to 1.61 recently, and you have a recipe for just that. We are ultimately bearish on this pair, but for the time being it looks like it will stay in consolidation and perhaps rise as high as 1.64 in the near-term. We would buy on a break of the Monday highs, while selling is very difficult until we get below 1.58 or so.
USD/CHF is a pair that has many different forces interacting at one time to persuade its movement. The purple trend line on the chart is the weekly one, and you can see it repelled the bulls in this pair a few days ago. However, the Friday candle was a hammer right at a gap. This pair has a central bank, the Swiss National Bank, pushing it higher with various strategies as well. With the massive trend pushing down, and the SNB pushing up – it isn’t surprising that we are seeing so many conflicting signals at one time. A breaking of the 0.83 level has us both past the trend line and major resistance. We are a long way from there, but it really would take that to clear all the hurdles ahead of it. A breaking of Friday’s lows gets the bears back in control, but only until 0.7500 where we expect a lot of support. Also, the SNB could intervene in several different ways at any time. Because of this, the USD/CHF pair isn’t high on our list of favorite pairs at the moment.
The EUR/CHF pair fell on Monday, but is doing something worth noting at this point. The pair is forming a hammer-shaped candle at the 1.10 level again. The area looks like it might be a “line in the sand” as dictated by the Swiss National Bank. While this is almost always a losing battle in the end, there could be a trading opportunity for the time being. We like buying on a break of the Monday highs and aiming for the 1.15 level. A breaking of the 1.10 level on a daily close would be extremely bearish and would present a selling signal that could get the Swiss central bankers involved again.
The AUD/USD pair fell on Monday, but bounced in the later hours of the session to form a candle that looks suspiciously like a hammer. The 1.05 support level seems to be holding, and if it does – we will certainly see higher prices. The candle isn’t a classic hammer, as the body is a bit too long, but we are seeing buyers come in at these levels, or at least sellers laying off of the markets. Either will make this pair rise, and as long as we are above the 1.05 level, we are willing to buy dips on the shorter time frames.