USD/CHF rose on Thursday, but formed a shooting star at the end of the session as the move faded a bit. The pair looks a little overbought at these levels, and a pullback isn’t necessarily a bad thing at this point. We still believe in the upward momentum of this pair, but no market moves in one direction forever, so we are welcoming a potential pullback as a chance to buy at a cheaper price, and expect the 0.90 level to be very supportive.
USD/CAD continued to fall on Thursday as traders are willing to take on a bit more risk over the last several sessions. The pair is highly correlated to the oil markets, and the announcement of a larger than expected drawdown on Wednesday sent this pair in the downward path. However, the recent impulsive move to the upside suggests that we will eventually see a larger move to the upside. Any bad economic news will more than likely send this pair higher, and if the Non-Farm Payroll number out of America disappoints, this pair will rise as Canada is so heavily dependent on the US as an export market.
NZD/USD rallied on Thursday as the markets are finally starting to calm down after the massive bearish move we have seen over the last couple of weeks. The pair is highly sensitive to global markets and the risk profile at the time, as well as commodities. The commodity markets are also starting to rally on a bounce, so this pair rising isn’t a surprise. However, the recent move down was simply too strong to believe that this pair will rally for any significant length of time. We are waiting to see an exhaustive candle in the next 200 pips or so to sell this pair. We won’t buy as there are too many potential headwinds out there at the moment.
GBP/USD fell on Thursday as the Bank of England announced it was expanding its bond buying program, which of course is a form of quantitative easing. However, the pair found its footing late in the session and formed a hammer at the end of the day. This suggests a bounce is still in the offering, and with the Non-Farm Payroll report coming out later today, we think this pair could move strongly in reaction. The pair is a massive sell if we break the low of the Thursday session, and if it breaks the high – it becomes a short-term buy.
EUR/USD rose on Thursday, showing a continued “risk on” attitude over the last few days. The ECB didn’t do much for the session, even though there was the much anticipated last meeting of Jean-Claude Trichet. The market continues to react to possible coordinated recapitalization efforts by the various EU countries, but in reality the market is still in a bearish mode overall. It will only take a bit of bad news to send this pair back down. With Non-Farm Payroll coming out later today, it very well could. We still favor selling rallies at this point, but any new positions will have to wait until we see the reaction to the NFP numbers out of America.
EUR/CHF rose on Thursday as the “risk on” trade continued to pick up a little steam. It should be noted however that the day candle formed a shooting star. The belief that all is well in the EU is probably a little far-fetched, so a pullback wouldn’t be surprising at all. The Swiss National Bank has set a floor in on this pair at 1.20, so a pullback to that level makes sense. We like selling on a break below the Thursday low, but only down to 1.20 or so if it happens. Overall, we would prefer to buy this pair, but only when the EU can get the debt issues under control.
AUD/USD continued to rise on Thursday as the global markets continue the “risk on” move that they have been in over the last few days. The charts do suggest that we may still be a bit oversold, and this move up is more than likely a short covering rally rather than a serious attempt at bulls to rally this pair with any real conviction. We see the 0.98 to 1.0000 area as potential resistance, and with the Non-Farm Payroll report coming out today, we think that exhaustion could set in on this pair. If we get a bad number – this pair could fall dramatically. Either way, we prefer selling on signs of weakness at this point.
EUR/USD continued to bounce slightly on Wednesday as traders are willing to take a bit more risk at this point. The behind the scenes situation in the EU suggests that there is some kind of coordinated action to recapitalize the banks in that region, and this will help spirits in this market. However, the recent bounce is quite small when looking at the overall downtrend, and as such – we see this as an opportunity to sell from higher levels. We like selling rallies, and are waiting to see a resistive candle from which to short.
USD/JPY continues to bounce around in a very tight range as traders can only scalp it at this point. Wednesday was no different, and we still continue to think that buying this pair at the 76 handle is the way to go overall. We don’t sell – the Bank of Japan has recently intervened in this pair, and will probably do it again if the Yen appreciates too quickly. Because of the pressure to the downside – we are content to buy this pair at 76 or so, and close out at a 40 to 50 pip gain.
GBP/USD had a fairly quiet day on Wednesday as traders continue to bounce around the current level, just under the 1.55 mark. The pair is most certainly bearish at this point, and it is probably oversold as well. Because of this, we are waiting for a rally from which to sell this pair as it is highly sensitive to the global economy. If the picture gets worse, this pair will fall hard. We like selling rallies on the daily chart and with red or resistive candles at this point.
USD/CHF rose on Wednesday as traders continue to sell off the Franc. With the Swiss National Bank willing to sell it as well – this makes sense. Also, in times of concern, the Franc can no longer be thought of as a “safe haven” currency, and as a result – this pair can only be bought at this point. We continue to like buying the dips, and we feel that the 0.9000 level should continue to be a bit of a floor at this point.
EUR/CHF rose again on Wednesday as traders continue to buy the Euro over the last 48 hours in the hope that a coordinated action could help with the banking issues in that area. The Swiss National Bank is working against a rising Franc, so there is only one direction we can go in this pair – and that’s to buy it. However, with the overall picture in Europe still very poor, we don’t like buying the Euro just yet. In the mean time, we are willing to pass on trades in this pair.
AUD/USD rose on Wednesday as traders piled into the “risk on” trade. The rumors out of the EU suggest that the various countries may be working on a coordinated effort to recapitalize the banks, and that it could be coming soon. The ADP employment numbers suggested that perhaps the Non-Farm Payroll numbers on Friday should be a bit more robust than thought previously. However, it should be noted that most of this is simply rumor, and more than likely short covering rather than massive buying at this point. Until Friday’s employment number comes out this pair will be suspect on rallies.
USD/CAD broke below the shooting star that we discussed yesterday on Wednesday. As a result, a “perfect” sell signal was triggered. We understand that the 1.0650 area is a massive monthly resistance area, so shorting from here would normally be a good idea. However, we also see the 1.03 area as a potential reentry from the long side as well. The fundamentals for the global economy simply aren’t strong, and as a result – oil should continue to struggle over the longer-term. The pair should be thought of as a “buy on the dips” pair at this point, and we would be willing to buy at the 1.03 level with supportive candles.
NZD/USD rose on Wednesday as the commodity markets bounced a bit. The Kiwi dollar is highly sensitive to the global risk profile, and as a result – we don’t like buying it at this point. Yes, it is true the bounce is impressive and solid – but when looking at it in the overall context of the chart, it is simply a bounce at this point. There are far too many potential negative headlines in the marketplace to get overly bullish of the Kiwi at this point in time. We still prefer to sell rallies, especially ones that are showing weaker candles after a run up.
Light Sweet Crude
The CL contract shot straight up, and even gained as much as 5% on Wednesday as inventory numbers showed a much more significant drawdown than expected. The market still remains under the $80 mark, and it should continue to be resistive. Although this was very bullish news for the oil markets, the truth is that the world looks very recession-prone at this point. With this in mind, we still like selling the oil markets, perhaps on a resistive shooting star or larger red candle near the $80 mark.
Natural Gas markets continued to fall on Wednesday, and even made a new low. The move should have attracted more sellers, and this market still looks very bearish at this point. We are sellers, and have been for quite some time. Any rallies should be sold, and with this fresh new low, we also feel selling at this point is almost a given as well. We are still aiming for the $3 mark before the move is completely over. We never buy this market, no matter the signal – it is simply far too bearish for that.
Gold rose during the Wednesday session as the market continues to base around the $1,600 mark. The movement suggests that we are forming a fairly substantial support area in the neighborhood, and that the next move is probably up from here. However, we need to see a solid break above the $1,650 level to be convinced at this point. Also, with Non-Farm Payroll being released on Friday, this market could be skittish until then. We are net buyers of gold, and never sell it.
EUR/USD bounced on Tuesday as traders reacted to a story out of the Financial Times that suggested many EU countries were working behind the scenes to shore up the banks in case of a default by Greece, and that the compromise was coming out soon. The biggest problem is that this is simply a rumor, and cannot be trusted. It isn’t like this hasn’t happened before, and we see this as only a relief rally at this point. We like selling rallies, and will be looking for exhaustive candles to sell from at this point, especially the closer we get to the 1.35 mark.
USD/JPY didn’t move mush on Tuesday, but this is normal for this pair recently as the Bank of Japan is threatening to intervene if the pair falls too far, and the USD is still considered a second-class citizen in comparison to the Yen. The pair continues to be a scalping market, with the preferred route being buying from the 76 handle and aiming for about 50 pips. The selling of this pair isn’t recommended as the Japanese could intervene if threatened with Yen appreciation.