EUR/USD fell hard during the week as the debt crisis is starting to infect Germany as well. The Germans had a failed debt auction this week, and the markets got spooked as a result. The pair is decidedly broken at this point, and the all-important 1.35 level finally gave way to the bears. The breaking of 1.31 will be watching for now, and could open the door to 1.30 and 1.25, respectively. The pair could and probably will bounce at one point or another, and this could be looked at as a selling opportunity as the EU looks unable to come to grips with the problems facing it in the debt markets. We sell rallies, and will not buy this pair anymore.
The EUR/GBP pair initially rose during the week, but was sold off in the second half as bond auctions went very poorly throughout the EU. The markets are starting to abandon the EU in general and the Euro as a result. However, the UK is highly connected to the EU and the results of that area. The UK exports over 30% of its goods to the EU, and as a result – poor economic news in the EU is poor economic news for the UK as well. The Pound is being sold off as a result now, and this pair is certainly a fight between two unwanted currencies. That will make this pair choppy, but the bias is more than likely to the downside. The two preceding weeks formed supportive hammers before this week’s shooting star. This pair appears to be winding up for a move, but the direction won’t be clear until we either get above the 0.8650 level, or below the 0.85 level. Until then, we are sitting tight in this pair.
EUR/CHF had a bearish week this past week as traders reacted to the relatively weak bond auctions in the EU. The Germans even had trouble selling debt, and as a result this pair sold off. The Swiss National Bank is defending a floor at 1.20, so the pair continues to have limited downside potential, but the very fact that it still managed to fall in that scenario shows just how weak this pair really would be if it weren’t for the SNB meddling in it. This says everything you need to know about the Euro: Sell it on rallies. In this pair though, we would like to buy if it can close above 1.25 or so. Until then, there simply isn’t anything to do.
The AUD/USD pair had a bearish week again as the world’s risk appetite continues to deteriorate. The pair is rapidly approaching a hammer on the weekly chart that was the start of the most recent up move in this pair. The 0.95 level just below should be supportive, so selling at this point is going to be difficult. We prefer to sell rallies at this point in time, and will continue to do so as negative headlines will continue to push this pair lower. The breaking of 0.93 to the downside would shift this into a down trend overall in our opinion. The markets are very nervous, and that never bodes well for the Aussie. We sell rallies, and will not buy at this point.
Light Sweet Crude
The CL contract fell during the Friday session, only to bounce again and form a hammer for the day. The $95 level continues to show itself as support, and until it is broken to the down side, we simply cannot sell. The breaking of the top of the Friday candle should show buying strength, and could be used as a reason to place a short-term buy in this market. However, we think the headlines will eventually push this market down. None the less, this market will be choppy regardless.
The Brent markets fell on Friday as traders continue to sell off riskier assets. The $105 level acted as support though, and continues to keep the market up. The range is still form the $105 mark to the $115 level, but the pressure to the downside could continue as the US GDP was so weak. The EU looks like it will be going back into recession, and the demand curve should flatten a bit as a result. The situation in Iran is about the only real reason to buy oil at this point. However, until we see the breaking of the $105 level, we cannot sell. In the meantime, we might try a scalp or two to the upside if we get above the Friday highs.
Natural Gas markets continue to bounce from the $3.50 psychological level that brought out “value hunters” in this market. The northeastern United States continues to get colder, but the supply is far too strong for this bounce to last too much longer. We are waiting to see the reaction to the $3.75 and $4 areas. We will not hesitate to sell at those levels, and should continue to see sellers step in at these areas as the trend is far too bearish for buyers to have any real strength at this point. We will not buy natural gas at all.
The gold market fell again on Friday as traders continue to buy the Dollar in general. The market isn’t breaking however, and is quite content in sitting at these levels. This shows that the gold market might finally be getting the much needed rest that it wanted for so long. The $1,600 level should continue to be massively supportive going forward, and as a result we are still buyers of this market – especially if we can get a couple more of these relatively quiet days.
The strong rise in the USD/JPY on Friday was certainly impressive, and many traders would probably feel fairly good about buying this pair at the moment as the Dollar is quickly becoming the currency to own overall. However, the Yen is also considered a safety currency as well, and the 0.80 level above is going to continue to serve as massive resistance going forward. With this in mind, we look for rallies to sell until that level is overcome. We could see more runs to the USD in the short-term, and as a result, we think we can short from higher up if we are patient.
The USD/CHF pair rose on Friday as traders continue to worry about debt issues in the EU, and run to the Dollar. The pair has made a new high, and as a result should move much higher. The breaking of the 0.93 signals a trend change to the upside longer-term if it sticks, and suggests we will see 0.95 and maybe even parity before too long. We like buying the dips as long as we are worrying about the EU – which could be some time. The Swiss will certainly cheer the market along as this pair rises too – so no worries there. Selling isn’t even a thought at this point.
The USD/CAD had a volatile day on Friday as traders first attempted to sell it off, only to turn around and buy it back. The markets nature suggests that the run to safety will continue, which means this pair should continue to rise. The resulting candle is a doji, which suggests that we could see a pullback, but the 1.03 level should continue to be a floor in this pair – meaning that buying the dips should be the way to go going forward.
The NZD/USD pair rose initially during the Friday session only to fall in the end. The resulting candle was a shooting star for the second day in a row, and suggests that lower prices are on the way. With the failure of the rally to hold, we have only become even more convinced that the pair heads lower. The 0.75 should continue to be massively resistant, and we like selling rallies and a break lower of the Friday lows at this point. Buying the Kiwi isn’t even a thought at this point.
GBP/USD fell again on the Friday session after first attempting to rally above the 1.55 level. The pair is in a free fall at this point, although in the middle of a support zone. The 1.53 level is absolutely crucial to the upward bias to come back to this pair. If not, this pair falls much farther. The world’s economies are looking more and more like they are going to go back into recession, and with this in mind, the pair should continue to fall. The bounces in this pair should be treated with suspicion, and should provide selling opportunities. We won’t buy this pair as it is far too bearish at this point.
EUR/USD fell hard during the Friday session as the onslaught continued. The Euro simply has major issues now, with many starting to question its very existence in a few years. The markets are punishing the EU for failed debt auctions, and the close of the session was very close to the bottom of the daily range. With this in mind, the pair will have to break through the 1.31 level to continue downward, but at this point – that looks very possible. The pair could bounce, but that will only bring out more sellers at this point.
EUR/GBP continued to fall on Friday as traders run from the Euro in general. The Pound is also not very liked at the moment, so the down move in this pair is going to be much slower than you would see in other Euro or Pound related crosses. The 0.85 level looks like it will be visited soon, but to be honest – we would rather sell both of these currencies in other crosses until that level gets broken to the downside.
EUR/CHF initially rose during the Friday session as traders reacted to rumors of an SNB announcement of a higher floor in this pair at 16GMT. The announcement never came, and the pair gave back much of its gains for the session. The candle for the day looks a bit like a shooting star, which is quite remarkable as it is a bearish sign – even with the Swiss National Bank sitting below. It looks like the Euro is in massive trouble at this point, but this will not be the pair to get involved in if it falls hard. We would buy on daily closes above 1.25, but don’t see that coming anytime soon.
The AUD/USD pair attempted a rally on Friday only to fail and print a second shooting star in a row. Both of these are at the bottom of a fall, and this shows that the pair may continue its descent lower as the headlines continue to deteriorate in the EU. The run to the US Dollar will continue to fuel the push lower, and the commodities markets falling will help push it lower as well. We don’t but the riskier currencies at this point, including the Aussie.
Light Sweet Crude
The CL contract found support at the $95 level on a very light trading session for Thursday. The Americans were celebrating Thanksgiving, and as such the volume was very anemic. The $95 remains our support level to follow, and we are willing to be long of this market as long as we can hold above it. The $100 level above should be somewhat resistive, as well as the recent highs just above. We think of this market as a scalping one at the moment, due to the lack of room to move.
Brent was very quiet during the Thanksgiving holiday as traders pushed prices slightly higher. The $105 is our support level at the moment, and as long as we are above it, we prefer to be long of the market as the oil markets have indeed been bullish lately. Headline risks out of Europe could push the market lower as the Dollar gains momentum, and because of that – we consider most trades to be of the short-term variety at the moment.
The natural gas markets fell slightly during thin markets on Thursday. The candle shape is a hammer and shows possible support, although we don’t advise buying this market. The trend is decidedly down at the moment, and the recent string of trading sessions has been a bit overdone in our opinions. The bounce that looks to be coming could see higher prices in the area of $3.75 or even as high as $4, but we think this will simply be a selling opportunity going forward.
The gold markets had a very quiet session on holiday traffic as the support area in the $1,700 range. The support goes all the way down to $1,600 – which shows just how bullish the market really is. Because of this, we don’t sell, and look for buying opportunities. The last couple of sessions have been quiet, and this is exactly what we wanted to see. We are buying on bullish action going forward.
USD/JPY fell during the Thanksgiving session as traders continue to buy the Yen against all other major currencies. The pair has been intervened in a couple of times recently, and we think that it is probably going to happen again, but not in this area. The pair is decidedly bearish, but the move down will be very slow at this point as the easy pips from the intervention are already been collected. Selling on rallies is a viable strategy in this pair, and buying at a much lower price such as 75.50 is possible as well – knowing that the BoJ will step back into the markets if the pair falls too far.