USD/CHF rose on Friday, and the Dollar is starting to look more and more strong. The Franc is no longer able to be used as a safe haven, and with the downgrades of both Spain and Italy during the Friday session, it makes sense that the USD rose in value. The breaking of the Thursday shooting star is a place we would be interested in buying this pair. We are not selling since the Swiss National Bank is actively working against the appreciation of the Franc.
The EUR/CHF pair rose again on Friday and the pair is even pressing the top of the Thursday shooting star. The pair looks bullish, and we cannot sell because of the Swiss National Bank and it’s “line in the sand” at the 1.20 level. We like buying, but have a hard time getting overly bullish until the EU gets its collective act together. However, there is no way to sell this pair – so we are alright with buying dips at this point.
AUD/USD rose on the session for Friday as the trading world celebrated the better than expected Non-Farm Payroll report out of America. However, the downgrade of both Spain and Italy later in the day put a damper on the rise in equity markets. With the Aussie being so risk-sensitive, this pair rose strongly, only to fall and form a massive shooting star right in the middle of a cluster of orders that are serving as resistance. The result is a bearish pattern that calls for selling on a break of the Friday lows. With the global economy on pins and needles, it isn’t hard to imagine bad news coming out and triggering the continuation of a down move in this pair.
USD/CAD fell on Friday, but managed to bounce in the later hours as the pair retested the 1.03 level. We mentioned that this area could be a place to see support and a potential bounce, and the resulting daily candle is a hammer – a bullish sign. Because of this, we like buying this pair on a break of the high from the Friday session. We know the 1.0650 – 1.07 level is massive resistance, but if it gives way – this pair skyrockets. We are not interested in selling at this point.
NZD/USD rose on Friday, and even pierced the 0.78 level at one point. The pair then fell later in the session, and formed a shooting star in the middle of the cluster of orders we discussed yesterday. The pair has failed to push though that area, and the shooting star shows just how much trouble the pair is having in gaining in this market. With the Kiwi dollar being so sensitive to global risk, we still like selling as there are so many headwinds to the global economy out there. With this in mind, we see the sell signal as being a breaking of the Friday low with an understanding that the 0.75 level will be supportive. If we break the 0.75 level – this pair falls much farther.
EUR/USD had a fairly neutral week, although it did in fact have a wide range. The EU continues to have many issues, and the downgrade of Italy and Spain on Friday doesn’t help the situation. With the many issues in Europe, it is going to be hard to get overly bullish of this pair, and will more than likely make for choppy trading – but with a downward bias. We still prefer to sell rallies at this point as the troubles in Europe continue to plague the Euro.
USD/JPY continues to sit still and in a tight range at this point as traders continue to fear the Bank of Japan and its propensity to intervene in this pair. The 76 handle looks very supportive now, and the selling of this pair is almost impossible at this point. However, the bullish side doesn’t look overly convincing either. Because of this, we don’t expect much of a long-term opportunity at this point.
The GBP/USD pair fell for the week, but bounced from the 1.53 level to form a hammer. The signal is very bullish, and a bounce could be expected at this point. However, the pair is very bearish and we think the pair will only bounce – not change direction. The 1.53 level has obviously become some kind of “line in the sand” at this point, and we figure this is an important area to watch. We are of the mind to fade rallies at this point, as the cable is highly sensitive to bad news as well.
USD/CHF continues to push upwards as the global situation continues to keep traders on edge. The Swiss National Bank is working against the appreciation of the Franc, so the currency cannot be bought as a “safe haven”. The US dollar is being used as a refuge as a result. With this in mind, we think the upward moment in this pair will continue and prefer to buy on dips with an understanding that the 0.9000 level should continue to be supportive below us.
EUR/CHF rose during the week and even managed to press up against the 1.24 level. The 1.24 mark is the start of a larger 200 pip area that is serving as a cap on gains in this pair. The 1.26 level should be the end of massive resistance, and if the market can break that level, this pair should continue to move upwards as the Swiss National Bank continues to work against the appreciation of the Franc. With this in mind, we are willing to wait and see the 1.26 level give way – so we can buy this pair. With the SNB’s recent actions – we are not willing to sell.
AUD/USD fell during the week, and then bounced from low support in the 0.95 area. The pair is highly sensitive to the “risk on” or “risk off” attitudes of traders, and has traded as such lately. The pair will continue to fall every time bad news takes over the market’s mentality. The Aussie is particularly vulnerable at this point as it has become a favorite “punching bag” of the trading world every time the news flow gets bad. However, the resulting candle is a hammer, and it looks supportive on the weekly chart. Further confusing the signal is the fact that the Friday candle is a shooting star, signaling a strong sell. Because of this, we expect the pair to be choppy, and at the whim of news. We prefer selling rallies at this point as bad news is almost a given recently.
USD/CAD had a wild week over the last 5 sessions, and continues to be choppy in its ranges. However, the Friday session saw a bullish hammer which could suggest that the next move in this pair is to the upside. The CAD is highly sensitive to risk, and we should continue to see the Canadian dollar sell off anytime there is bad news. The pair looks set to move up – but the 1.0650 level will be massive resistance. If it gives way, this pair could continue much farther to the upside.
The NZD/USD pair continued to act erratically as the global markets fight investor fear. The resulting candle for the week is a doji right above support, but the Friday action was horribly weak, forming a shooting star. Because of this, we expect the pair to continue to trade in the erratic manner it has been in for a while, with a downward bias. We are not interested in owning riskier currencies at the moment, and the Kiwi is no exception. Because of this – we are selling rallies.
Light Sweet Crude
The CL contract continues to put up a fight as the bears simply haven’t been able to put it away. The weekly candle did in fact attempt to break the top of the “continuation” shooting star from the previous week, so this is in fact bullish – even though it didn’t actually manage to do it. The market has also managed to stay above the all-important $75 level, so this move is seen as supportive as well. However, the recent trend is still to the downside, and we think that should continue.
Natural gas markets continued the sell off over the last few sessions, and the market now finds itself at fresh new lows. We have been avid sellers of this market, and will continue to do so until we hit at least $3. We like selling rallies and fresh new lows like we have presently. We cannot buy this market as the supply and demand side of the equation also dictates lower prices as well.
Gold markets had a very quiet 5 days for the week, just after forming a perfect hammer the previous week. This is very suggestive of a basing pattern being played out at the $1,600 level. We still believe in the long-term story of gold, as the world is in a race to devalue its currencies. The very fact that so much easing is going on should support much higher gold prices. We like buying gold on a break of the previous week’s highs, which we would call at $1,675. We don’t sell this market as it is far too bullish.
Light Sweet Crude
The CL contract rose again on Friday after the Non-Farm Payroll numbers showed that jobs are being added at a faster than expected clip in the US. The optimism overtook the oil markets, and the price rose to retest the $85 level, only to settle a bit lower than that for the day. The resulting candle is a doji, so we are presented with an easy trade set up: buy on a break to the top of the Friday range, or sell on the breaking of the bottom of the Friday range. We see the overall direction of this market as biased to the downside, so we certainly prefer selling at this point.
Natural gas markets sold off hard on the Friday session, and continued to make new lows. We like selling this market even more now that the $3.50 level has given way to bearish pressure. We are selling any and all rallies at this point and new lows as well. We are becoming more and more aggressively short of this market as it is becoming blatantly obvious that the downward pressure is taking over the majority of trading sessions.
Gold markets fell slightly during the Friday session, but remain within the recent consolidation area that we have seen over the last several days. The market still looks constructive, mainly because of the failure for it to fall under the $1,600 for any significant amount of time. Because of this, we still feel that the $1,600 level might be a floor in this market. We are willing to buy in small positions, but will only get aggressive in our buying if we can get a daily close above $1,675. We are not willing to sell gold as the long-term trend is most certainly to the upside.
Light Sweet Crude
The CL contract busted out of the $80 mark area on Thursday as traders continue to buy the market. With the Non-Farm Payroll coming out later – traders will more than likely use the announcement as a gauge of how healthy the economy really is. Because of this, positions before the announcement are highly discouraged as the market will more than likely be volatile. We will sit still on this market until we see the daily close. However, in all fairness – the move on Thursday was quite bullish.