AUD/USD Forecast for the Week of December 26, 2011, Technical Analysis

AUD/USD recaptured much of the losses from the week before as the parity level continued to offer support. The light volume for the week seems to have perhaps skewed the results as well, but it should be noted that the pair itself seems to be tightening up into a wedge. This suggests that there is a move coming soon, and we are to wait for it to start in order to buy or sell. The pair does have a lot of support down to 0.95, so any short trades will be difficult. The long side doesn’t look pretty either, as there are a lot of headlines out there waiting to happen that would push this pair much lower. Because of this, the Aussie isn’t a market we like presently for longer term trades.

AUD/USD Forecast for the Week of December 26, 2011, Technical Analysis
AUD/USD Forecast for the Week of December 26, 2011, Technical Analysis

USD/CAD Forecast for the Week of December 26, 2011, Technical Analysis

The USD/CAD pair pulled back for the week and retraced the entire gains from the week previous. The pair has been very choppy, and will more than likely continue to be. The Canadian dollar is heavily influenced by the oil markets, and they have been fairly strong over the previous week as well. This causes demand for the Canadian dollar over time, and beat up the price of this pair as a result.

The 1.02 level is roughly where the week ended, and this area has been minor support several times over the last few months. This area is also the site of a massive doji from two weeks ago, and could set up for another bounce as the markets will more than likely be fairly quiet until January. However, with the headline risks out there involving Iran, Iraq, and North Korea, the oil markets could be subject to shocks in the near term.

The price of Light Sweet Crude is sitting just below the $100 mark at the time of writing, and this area should bringing in sellers all things being equal. This is another reason we think the 1.02 area will possibly hold up as support and give a boost to the pair. Either way, the major levels in this pair are parity and the 1.04 handle. Another sign for the bulls is the fact that the level was once 1.03, but this has gradually risen over the last few weeks, showing a grinding higher in this pair over time.

The breaking of 1.04 should have us running towards 1.05, 1.07, and 1.10 if the momentum can keep up. This pair has a history of very sudden moves, and this could happen much quicker than people suspect. In order to see a breakdown, we need to see the parity level give way, and it should also be noted that the parity level actually goes down to the 0.99 level as the area seems about 100 pips thick currently. The longer term in this pair will certainly be influenced by the oil markets, so watching those markets for clues will be essential.

USD/CAD Forecast for the Week of December 26, 2011, Technical Analysis
USD/CAD Forecast for the Week of December 26, 2011, Technical Analysis

NZD/USD Forecast for the Week of December 26, 2011, Technical Analysis

NZD/USD rallied for the week as the 0.75 level attracted buyers again. This level seems to be key for the health of this pair going forward and should be watched very carefully. The pair is highly sensitive to risk in the markets, and as a result isn’t one of our favorites to buy at the moment. However, it is hard to sell at these lower levels for any real length of time. The highs are getting lower, so we know we want to sell – but are looking for rallies to fade on a short term basis, making the trading of this pair difficult for longer term traders. We see a ton of support all the way from 0.75 to 0.70 in this pair, further complicating the longer term trade in the Kiwi dollar presently.

NZD/USD Forecast for the Week of December 26, 2011, Technical Analysis
NZD/USD Forecast for the Week of December 26, 2011, Technical Analysis

Oil Forecast for the Week of December 26, 2011, Technical Analysis

Light Sweet Crude

The CL contract had a very positive week as traders piled into the market. The formation we are currently seeing is looking like one of two potential reads: either a bullish flag or a downward channel. The burden of proof is on the bulls presently, but a serious break north of current levels would have this market possibly seeing prices as high as $130 in the future as measured by the potential pole for the flag. However, we are willing to sell any weakness at the moment as we would return towards the bottom of the channel.

Oil Forecast for the Week of December 26, 2011, Technical Analysis
Oil Forecast for the Week of December 26, 2011, Technical Analysis

Brent

Brent markets rose as well over the week, and reentered the previous consolidation range. The market looks like it wants to grind sideways with a slightly bearish tone. The next $10 or so will be full of noise on this chart, so selling weakness is our preferred trade at the moment.

Natural Gas Forecast for the Week of December 26, 2011, Technical Analysis

Natural gas markets continue to churn at the $3 area as the markets had a fairly quiet week. This is to be expected at the death of the year, and the light volume. However, by all accounts this market is falling rapidly and should continue to be bearish going forward. With the recent acceleration to the downside however, we prefer to sell rallies at this point as the $3.25, $3.50, and $4 levels all look very resistive.

Natural Gas Forecast for the Week of December 26, 2011, Technical Analysis
Natural Gas Forecast for the Week of December 26, 2011, Technical Analysis

Gold Forecast for the Week of December 26, 2011, Technical Analysis

Gold markets rose for the week, but had a tough time rising much above the $1,600 level. The market is currently sitting on top of a massive support area from the $1,500 level to the $1,600 level. The consensus is that there is enough money printing about to happen in order to drive the value of this market up to the $2,000 level during 2012. The recent action could be classified as a simple liquidation at the end of the year for traders and funds collecting profits. The $1,500 level would have to be broken to the downside for us to consider selling at this point, and by all accounts we are looking for supportive candles to buy from at this point. With the recent fall, it is very likely we will see a substantial bounce soon.

Gold Forecast for the Week of December 26, 2011, Technical Analysis
Gold Forecast for the Week of December 26, 2011, Technical Analysis

Oil Forecast December 26, 2011, Technical Analysis

Light Sweet Crude

The CL contract rose slightly on Friday as traders continued to buy up the market in response to the bombings in Iraq, the tensions with Iran, and the uncertainty in North Korea. The market is currently attempting to break above the $100 level again. The market is currently forming what looks like either a bullish flag or a downward channel. With this in mind, the next few dollars will be very important.

The breaking higher above the $103 level would not only be a higher high, but a breaking to the upside of a massive flag that would measure a projected run to the $130 area. The markets would certainly be affected by a spike in oil prices, and in that scenario we could see a crash going forward. However, in the short-term, we think this would be very bullish for CL.

Oil Forecast December 26, 2011, Technical Analysis
Oil Forecast December 26, 2011, Technical Analysis

Brent

The Brent markets aren’t quite as cut and dry. The $105 – $110 area seems to be some kind of equilibrium for this market. The Brent contract has spent most of the last year in this general vicinity, and could continue to do so. The $112.50 level above is certainly resistive, and the level should continue to keep prices lower. The $95 level below is the absolute bottom of support in this market going forward, but we aren’t looking for a run back down to that level in the near term. The situations around the world right now are simply too volatile to think that the real risk is to the downside, although bad news in Europe will continue to keep the market down in general.

Because of the situation in Europe running simultaneously with the tensions in the Middle East, this market will continue to be very choppy. This could be because the Europeans tend to use Brent much more than the CL contract, and this will certainly be affected by recession in Europe more than the CL which is used extensively in the United States. With this in mind, we could see the spread between these two contracts tighten finally.

Natural Gas Forecast December 26, 2011, Technical Analysis

Natural gas markets barely budged during the Friday session as most traders were thinking about holidays, and not trading natural gas. The market continues to find a little bit of a bottom in the $3 area, and could be ready to bounce from this depressed area. However, there is very little to suggest that the fundamental picture for natural gas is going to change anytime soon. The bounce will certainly run into problems at either the $3.25, $3.50, or $4.00 levels. We are looking to sell weakness at these levels going forward.

Natural Gas Forecast December 26, 2011, Technical Analysis
Natural Gas Forecast December 26, 2011, Technical Analysis

Gold Forecast December 26, 2011, Technical Analysis

Gold markets were very quiet on Friday as the volume dried up. The result was a very flat session that sold off just slightly. The recent shooting star on Wednesday suggests that the next move might be down, but we like the overall uptrend of gold over the last 10 years as a barometer of which way to trade. The $1,500 – $1,600 area is one massive support zone, so we are not selling – rather looking for supportive candles to buy from in the next few sessions.

Gold Forecast December 26, 2011, Technical Analysis
Gold Forecast December 26, 2011, Technical Analysis

USD/JPY Forecast Dec. 27, 2011, Fundamental Analysis

USD/JPY Forecast Dec. 27, 2011, Fundamental Analysis
USD/JPY Forecast Dec. 27, 2011, Fundamental Analysis
The USD/JPY pair advanced last week to its highest level in three weeks, where the cheerful U.S. Housing data helped support the market confidence which increased demand for higher-yielding currencies, sending the yen and the greenback to the downside.

Narrow range trading is mostly expected for the USD/JPY pair during this week, as the volume will be at its lowest due to the holidays which will drag investors out of the market.

On Tuesday at 05:00 GMT, Japan will issue the annual Construction Orders for November, where the previous reading was up by 24.3%, on the other hand the Annualized Housing Starts for November is expected to come at 0.802 million from the prior 0.774 million.

On Tuesday at 15:00 GMT, the U.S. economy will release the Consumer Confidence for December, where it’s expected to rise to 58.5 from the previous reading of 56.0.

Crude Oil Forecast Dec. 27, 2011, Fundamental Analysis

Crude Oil Forecast Dec. 27, 2011, Fundamental Analysis
Crude Oil Forecast Dec. 27, 2011, Fundamental Analysis
Crude oil prices rose on Friday as Baghdad faced today series of bombings that killed more than 72 people, fueling concerns about possible oil disruption to Europe, especially in light of Iranian naval started military, and that will continue for ten days, which raised fears of disruption or interruption regarding crude oil supplies for Europe.

As traders switched on holiday mode with Christmas on doors, so trading volumes ebb down and market movement is rather limited in a tighter range before the New Year’s holiday, yet with slight punch of risk. Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure, where traders will also continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest moves to contain the debt crisis, where we expect volatility to persist over sessions next week.

NZD/USD Forecast Dec. 27, 2011, Fundamental Analysis

NZD/USD Forecast Dec. 27, 2011, Fundamental Analysis
NZD/USD Forecast Dec. 27, 2011, Fundamental Analysis
The NZD/USD pair covered some of its previous losses last week, as the US dollar dropped against most of its major counterparts due to the risk appetite that reduced demand for safer assets.

The current market sentiment witnessed a little improvement on the back of the cheerful U.S. economic data, but caution still exists as the debt crisis remains the overall focus.

On Tuesday at 15:00 GMT the U.S. economy will release the Consumer Confidence for December, where it’s expected to rise to 58.5 from 56.0.

Gold Forecast Dec. 27, 2011, Fundamental Analysis

Gold Forecast Dec. 27, 2011, Fundamental Analysis
Gold Forecast Dec. 27, 2011, Fundamental Analysis
Gold prices stagnated slightly below the opening level Friday, as traders switched on holiday mode with Christmas on doors, so trading volumes ebb down and market movement is rather limited in a tighter range before the new years, yet with slight punch of risk.

Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

Accordingly, we should expect more fluctuations for gold, but should current pessimism persist, we should expect gold prices to extend the rallies, however, the level of uncertainty is very high, so investors are ought to remain cautious.

Natural Gas Forecast Dec. 27, 2011, Fundamental Analysis

Natural Gas Forecast Dec. 27, 2011, Fundamental Analysis
Natural Gas Forecast Dec. 27, 2011, Fundamental Analysis
Natural gas prices may extend drop next week as forecast suggest the weather will warm up next week while seasonal weather will feature most of the central and Eastern United States.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely lower than average over the coming period, and that could bottle up gains and losses in natural gas over the next period.

EUR/CHF Forecast Dec. 27, 2011, Fundamental Analysis

EUR/CHF Forecast Dec. 27, 2011, Fundamental Analysis
EUR/CHF Forecast Dec. 27, 2011, Fundamental Analysis
It is the holidays’ season and trading on Tuesday is expected to be within tight ranges for the EUR/CHF after the Christmas holiday on Monday and with investors sidelined ahead of the end of the year and an infamous low volume trading week.

The eyes this week are only on the Italian debt sale and that summarizes it with nothing major waiting and choppy and tight trading ranges are expected to dominate investors and the market during this week in general.

No major news scheduled and the market movement will be thin on low volume and focused on the sentiment.

EUR/USD Forecast Dec. 27, 2011, Fundamental Analysis

EUR/USD Forecast Dec. 27, 2011, Fundamental Analysis
EUR/USD Forecast Dec. 27, 2011, Fundamental Analysis
It is the holidays’ season and trading on Tuesday is expected to be within tight ranges after EUR/USD the Christmas holiday on Monday and with investors sidelined ahead of the end of the year and an infamous low volume trading week.

The eyes this week are only on the Italian debt sale and that summarizes it with nothing major waiting and choppy and tight trading ranges are expected to dominate investors and the market during this week in general.

The United States will release the Consumer Confidence for December at 13:00 GMT which is expected to rise to rise to 58.5 from 56.0.

USD/CHF Forecast Dec. 27, 2011, Fundamental Analysis

USD/CHF Forecast Dec. 27, 2011, Fundamental Analysis
USD/CHF Forecast Dec. 27, 2011, Fundamental Analysis
On Monday trading, the markets are closed due to the year-end holidays. For Tuesday, as of 07:00 GMT, the Swiss economy will release UBS consumption Indicator for the month of Nov., yet the release is expected to have slight impact on the pair’s movements.

The U.S., on the other hand, will release S&P/caseShiller for the month of Oct., due at 14:00 GMT, which is predicted to record -0.20% from the prior -0.50%, followed by consumer confidence, available At 15:00 GMT, where analysts forecasts a  soar to 58.5 in Dec. from 56.0 a month earlier.

Eyes will track the latest data from the U.S. to see the progress of the economy as last week’s data provided hopes the U.S. economy will lead the recovery path in 2012 without the need of further stimuli from the Fed.

Thus, the pair is expected to be affected by the data, yet it may also follow the general trend in the market which is focusing on the latest developments in the euro region.

For the franc, last week there have been talks last week about further measures to curb the franc’s advance as a panel from the government and the central bank discussed measures such as capital controls and negative interest rates and even restrictions, including a possible ban, on foreigners buying Swiss real estate to halt the franc’s rally which negatively affected prices and exporters.

Therefore, the franc may be under some pressure on growing speculations policy makers will intervene again to push down the franc.

GBP/USD Forecast Dec. 27, 2011, Fundamental Analysis

GBP/USD Forecast Dec. 27, 2011, Fundamental Analysis
GBP/USD Forecast Dec. 27, 2011, Fundamental Analysis
On Monday trading, the markets are closed due to the year-end holidays. For Tuesday, while the U.K. lacks fundamentals, the U.S., will release S&P/caseShiller for the month of Oct., due at 14:00 GMT, which is predicted to record -0.20% from the prior -0.50%, followed by consumer confidence, available at 15:00 GMT, where analysts forecasts a  soar to 58.5 in Dec. from 56.0 a month earlier.

Eyes will track the latest data from the U.S. to see the progress of the economy as last week’s data provided hopes the U.S. economy will lead the recovery path in 2012 without the need of further stimuli from the Fed.

Thus, the pair is expected to be affected by the data, yet it may also follow the general trend in the market which is focusing on the latest developments in the euro region.

In the U.K, the outlook remains clouded with uncertainty as King said last week debt crisis will threat the real economy recovery while the latest announcement by officials referred that the outlook for the British economy will largely depend on the latest developments in the euro zone.

Thus, in 2012, the situation in the U.S. seems to be much better than the U.K. along with the refuge merit of the dollar which suggest further advance for decline for the pound versus the greenback at least in the first half of the year.

USD/CAD Forecast Dec. 27, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 27, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 27, 2011, Fundamental Analysis
The USD/CAD steadied around the opening level Friday, as traders switched on holiday mode with Christmas on doors, so trading volumes ebb down and market movement is rather limited in a tighter range before the New Year’s holiday, yet with slight punch of risk.

Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The USD/CAD pair could still rise if pessimism continues to dominate markets, but we still expect volatility to hold the steer for now, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Tuesday December 27:

No economic data will be released from Canada so eyes will be focused on Europeand the latest updates which could impact sentiments over the holiday season.

AUD/USD Forecast Dec. 27, 2011, Fundamental Analysis

AUD/USD Forecast Dec. 27, 2011, Fundamental Analysis
AUD/USD Forecast Dec. 27, 2011, Fundamental Analysis
The AUD/USD pair advanced last week on the back of the weak U.S. dollar, where the risk appetite returned to the financial market before the end of the year, which supported Aussie.

However, the main trend in the market is still for further gains for safer assets such as the yen and the greenback, and this current break does not mean that the financial market got over the problems and disasters, as the escalating debt crisis is still the current predicament.

On Tuesday at 15:00 GMT the U.S. economy will release the Consumer Confidence for December, where it’s expected to rise to 58.5 from 56.0.