The EUR/CHF pair had a very flat week over the last several days, and continues to sit still in general. The pair could be the great trade of someone’s career if the EU gets it together, as the Swiss National Bank isn’t going to let this thing fall below the 1.20 mark. However, that seems to be wishful thinking at this point. We are waiting for the EU to come up with a feasible solution to its problems, and then we would buy and hold this pair for months, if not years. Until then – we aren’t trading it.
The AUD/USD pair had a wildly bullish week as traders bought this pair in droves. The “risk on” trade was in vogue this previous week, producing a parabolic move. The move is strong, and should be considered an opportunity to see what the market thinks. The pair looks set to rise over the long-term, but a pullback during the next week is in the cards, so it looks like buying on a pullback could help. Of course, if there is bad news out of the EU over the next few days, this pair will suffer. All things being equal, we like buying on the dips.
The USD/CAD continued to fall this past week, and decidedly so. The pair looks massively bearish, but the parity level is sitting just below the present level. With this in mind, we cannot sell until we get a close below it. The recent action has been a massively bullish break out, followed by a massively bearish break down. This market is extremely volatile at this moment, and is hard to trade for longer-term traders. With this in mind, we want to see what the next weekly candle looks like, and if it reacts to the parity level in a supportive or weak way. Until then, we are sitting on our hands.
The NZD/USD pair broke the 0.8000 level during the past week. The pair shot straight up during the week, and the move was impressive. It is too far too quick, but the move seems very strong. The pair could pullback, and as such could give the USD a bit of a breather. The area we find ourselves in is very resistive, and any bad news could push this pair down very quickly. The Kiwi is very sensitive to the global risk parameters, and will continue to react according to it.
Gold markets continued to run in a very tight pattern on Friday as traders are weighing the possibility of a European debt crisis solution over the weekend. Oddly enough, there are several higher ranking officials that have stated not to expect one, including the Canadian Finance Minister. With this in mind, there are some traders that are buying gold as protection from the next round of bad news or disappointment that the markets have certainly set themselves up for over the last couple of weeks.
The consolidation continues to favor buying dips, as the lows are getting higher and higher. Also, even on this “quiet” day – gold rose $14 and some change. This market certainly wants to rise in value, and as such we are still buying it on dips. Selling isn’t even a thought at this point to us.
Light Sweet Crude
The CL had a strong day on Friday, capping off a very positive week for the market. The area above is still resistive, but this is showing that over the long haul, this market will be very resistant to falling quickly. Until we can get a daily close above $90 though, we are not totally convinced. If we get that – we would become buyers again. The area above would be a perfect spot to look for exhaustive candles.
The Brent markets absolutely skyrocketed this week, and are racing towards the $115 area at the time of this writing. The next major spot is the $115 level, as it was the recent high before the last fall. If we can get above it, this would show a turn in the trend and we could become long-term believers. The inability to close above it on a daily close would have us bearish as it would show the down trend is still intact.
The natural gas markets rose during the past week as the US dollar continues to get sold off against most other assets. The bounce is a great opportunity to sell from higher levels in our opinion, as the fundamentals haven’t changed in this market at all. The 300 years worth of natural gas in the US alone is reason enough to think supply is going to be an overhang in this market for a long time. The $3.75 level pushed back on Friday, so we think selling can be done again. The $4 should be massively resistive as well.
Gold markets continued to consolidate this past week, barley moving in the big scheme of things. However, the lows are gradually getting higher, and the market has been very resilient in its ability to shrug off selling pressure and rebound. With this in mind and the fact that there are plenty of headline risks out there currently – we like this market a lot, and suggest that buying on the dips is the way to go. We couldn’t sell it – the uptrend has been going on for over ten years now.
Light Sweet Crude
The CL had a strong day on Friday, and managed to break the barrier set up by the last few days. The $90 level is more than likely the next massive barrier, and unfortunately we are just below that – so it is hard to buy at this point. We simply need to break above and close over the $90 to get bullish of this market for any real length of time. The highs are still getting lower, and until we break $90 – that will continue to be true. If it does happen though – this would constitute a resumption of the uptrend we saw earlier this year.
The Brent markets absolutely skyrocketed during the Friday session as traders continue to expect some kind of magic out of Europe over the weekend. The rally in all risky assets has been impressive, and if you happen to be long already, it could be time to take profits. The $110 level has given way, but the $115 and $120 levels are both above and waiting to push prices back down. At this point in time, it looks like we are going to get some long-term answers soon, but we still feel that selling is the way to go if we get some kind of bearish bar to launch shorts. Until we make a fresh new high, about the $116 level – we aren’t ready to fight the trend.
The natural gas markets rose during the Friday session, and on quite large volume. This was predicated on the weakening US Dollar, rather than anything fundamental that was obvious. The bounce was strong, and certainly would set up for a nice rally to sell from. One cannot help but notice that the $3.75 level seems to be acting rather resistive, and the trend is most certainly down at this point. Because of this, we feel that a sell position could be taken in this area. Quite frankly, one would have to believe that the total economic picture would have to have changed overnight to buy into this move. Also, there is that whole “There is enough natural gas in the Midwest to power the US for 300 years” thing too. We are still selling rallies.
Light Sweet Crude
The CL contract had a negative day for the Thursday session as traders took profits after a large move upwards. The market did bounce a bit towards the end of the session though, and this shows how hard this market could fight a fall. However, the highs are getting lower, and this by definition speaks of a downtrend. Keeping this in mind, we are selling on signs of weakness in this market, and aren’t convinced of the bullishness until we can close above the $90 mark on a daily close.
Brent actually had a positive day on Thursday. The market looks tired, but the fact the green candle was printed is impressive. The market still looks like one we don’t want to be long of, and will look for weakness to sell. The market is going to be influenced by global economies, and with the Chinese announcing a cut of 12% in oil consumption, this is not a good sign. In the mean time, we wait for a sell signal.
The natural gas market rallied on Thursday, despite the fact that the inventory numbers came out much larger than expected. The market is still very bearish, but the pop could continue to rise from the $3.50 level, which is a large psychological number. The area shouldn’t necessarily be a major support area, but every time you approach a “50 cent” level, it is common to be a reaction. However, the consolidation that broke down previously suggested that we could be heading as low as $3 in the end. As a result, we sell rallies, and do not buy this market at all.
Gold markets had a soft day for the session on Thursday as traders continue to go back and forth in this market. The Dollar was bid on Thursday, and this can sometimes push the value of gold down. The action was fairly light, and did in fact turn back around towards the end of the session, showing that there is still an underlying bid in this commodity.
The action shows us that buying on the pullbacks is still the way to go, and that the demand should still come into play. The market looks constructive, especially if we can get a daily close above $1,680 or so, which is where we see the last of the resistance. With so many risks to the global economy out there, we are hesitant to sell this market as it will more than likely continue to get the “safe haven” bid every time bad news hits the wires.
The USD/JPY pair fell from the higher end of its consolidation on Thursday. The pair looks like it is ready to continue the range bound trading, and this latest moves solidifies that appearance. The pair is being held up by the threat of intervention by the Bank of Japan, as the central bank doesn’t want a Yen that appreciates too quickly. The actions have mainly been of the “jawboning” type at the moment, but as recent as August this central bank had intervened. Because of this we don’t sell for any real length of time, and prefer buying at the bottom of the range, given a choice. Buying at 76.25 has worked out quite well for a while, as long as you are willing to take profit at 77 or so. Knowing this, we are going to continue to scalp this market by doing just that.
The USD/CHF pair rose during most of the session on Thursday, only to fall back down. The result is a shooting star at the bottom of a recent fall. The candle could be a launching point for further weakness in this pair, as the USD finds itself on the back foot. The resulting set up is if the bottom of the candle gets broken – it should see lower prices. But with the Swiss National Bank working against the appreciation of the Franc, it is going to be very difficult to short this pair with any real conviction. Alternately, if the market breaks this candle to the upside – it is a very bullish signal, which we would be happy to get long on.
The USD/CAD pair rose during most of the day on Thursday, only to fall late in the session. The result is a shooting star at the bottom of a recent down move. The candle could be the start of further weakness in this pair, as the USD finds itself on the back foot against most other currencies. The resulting set up is if the bottom of the candle gets broken – it should see lower prices. The oil markets have proven especially resilient lately as well, and this could continue to drive demand for the Canadian dollar. The parity level could continue to be very supportive though, and we would expect a bit of a reaction to it. A breaking of the top of this shooting star-shaped candle would be massively bullish.
The NZD/USD pair fell on Thursday, only to bounce in late hours to form a hammer at the top of an up move. The 0.8000 resistance level sits just above, and it looks like the market will try to break through it again. However, until it does – one has to assume it will hold.
With all of the global risk out there, the Kiwi could be susceptible to selling at times as bad news hits the wires. The area looks like a massive resistance zone, and we are not willing to buy into it until it close above it on a daily chart. Until then, we are on the sidelines, unless of course the market breaks the bottom of this candle – which would make it a “hanging man”, which of course is massively bearish.
The GBP/USD pair fell on Thursday, but bounced later in the session as traders continue to go back and forth in the risk trade. Volumes are extremely light in most stock markets, so one can only assume the currency markets are the same. This would explain the whipsaw action we have been seeing lately.
The pair is setting up to print a hammer on the daily, but if we break the bottom of it – it then becomes a hanging man, which is horribly bearish. Because of this, we need to pay attention to the direction that the market breaks, and follow it. To the upside, we see 1.60 as the next massive barrier, and the 1.55 area as support.
The EUR/USD pair fell fairly hard during the Thursday session as traders continue to react to news in a skittish way. The market rebounded in the US session though, and saw the pair for a hammer at the top of the recent run up. This candle could either signal that we are about to run much higher, or that it is a “hanging man”, which is a very bearish signal indeed.
A breaking of the bottom of this candle gets us aggressively short of this pair, and a breaking of the top has us buying, but only until we get closer to the 1.40 level, which we see as massive resistance. We would also be quick to move stop losses to break even, as the pair has run up so fast, and there is always going to be danger of bad news hitting the wires that could send this pair straight back down.
The EUR/CHF pair rose on Thursday, but only just. The pair is being manipulated by the Swiss National Bank at this point as the self-declared “floor” at 1.20 still has traders scared of selling this pair. The pair is therefore only a one-way trade, but that would rely on the Euro being a safe currency to buy.
As things stand with the EU right now, the uncertainty makes owning the Euro especially unattractive to most traders. The recent run up in it against the USD could simply be a short-covering rally, as it hasn’t truly been tested by massive support yet. Because of all of this, we are avoiding this pair at the moment, but wouldn’t hesitate buying it if it fell closer to that 1.20 level.