USD/CHF fell a bit on Thursday as traders sold off the USD in Asia and Europe. However, during the US session we saw USD strength, and this gave the pair a little bit of a lift. The CHF is no longer a safe haven currency, so when times are troubling, this pair will wise. The SNB is willing to intervene if the Franc appreciates too quickly, so selling isn’t an option. We like buying this pair on dips at this point.
USD/CAD rose above the highs placed on Monday to give another buy signal during the Thursday session. The resulting candle was a hammer at the top of a bullish run. This can be either supportive, or a “hanging man” if it gives way. The trade on something like this is quite simple really: Sell on a break of the bottom of the Thursday range as it would confirm a “hanging man”, and buy at the break of the top if it happens. We still think the oil markets look a bit weak, and the CAD is highly dependent on oil to gain.
NZD/USD had a large range on Thursday, eventually ending up down just slightly. However, it should be noted that it was the bullishness that gave way overall, and that we are approaching the bottom of the Monday candle that was so supportive this week. The hammer on Monday for us represents a massive area from which to sell this pair. The breaking of that level on a daily close gets us short for longer-term trading. We don’t buy this pair – there is simply too much global fear to buy a commodity currency at this point.
GBP/USD rose on Thursday, but fell towards the later hours of the session. The result was a shooting star candle for the third day in a row. This shows just how hard it is to rally this pair for any significant amount of time. There simply is no real conviction to the upside in the end. Because of this, we still think selling the rallies is the way to go in the cable pair for the foreseeable future.
EUR/USD rose again on Thursday, but as it has in the two previous sessions – gave up half of its gains. The pair looks weak at best, and the situation in the EU continues to be a drag on it. Even with the various governments approving the leveraged bailout fund one by one, the market simply doesn’t seem impressed. Because of this, we are selling any and all rallies in this pair. We don’t bother buying on support as we think the 1.35 level will eventually give way.
EUR/CHF continued to sit still on Thursday. The pair is almost impossible to trade as selling isn’t going to be allowed by the Swiss National Bank. This SNB is quite willing to intervene if the market dips below 1.20, and the EU is too messy right now to own the Euro. Because of this, we think this pair is the long-term trade candidate, but only after the EU settles down.
AUD/USD had a wild day as it soared initially, only to fall hard in the US session on Thursday. The pair then rebounded nicely at the close, and ended the day forming a shooting star-like candle. The bottom of the candle sits right at the 0.97 support level, and if that gives way – we would have a long-term sell signal in this pair. The pair has been sold off any time it has tried to rally, so because of this, we are sellers only. A daily close below the bottom of the Monday hammer has us aggressively short this pair.
Light Sweet Crude
CL fell on Wednesday as traders reacted to the $85 resistance area that we suggested could cause trouble. The global fears of a slowdown continue to haunt the markets, and as such – this market could be prone to violent movements. The oil markets are effectively a scalper’s market now, and longer-term positions are going to be hard to come by. The market looks weak, so we are not willing to buy at this point. We can’t sell yet; we need to see a sustained move below $80 to be convinced. In the meantime, we are sitting still.
There is a long-held belief in this market that the floor is set at $100. It appears that we are about to find out, as the bounce from Monday has all but vanished already. The market is looking weaker and weaker, and we cannot buy at this point. However, $100 is too close to think that selling is the proper thing to do either. Because of this – we are flat of this market unless we see a daily close below the $100 mark.
In a classic technical move, the natural gas markets fell on Wednesday as the shooting star we pointed out from the day before was broken to the downside. This should signal continued bearishness in this market, and the trend is certainly on the seller’s side. The final target that we are aiming for at this time is $3, but that won’t come overnight obviously. The market is to be sold every time it bounces, and a new low could entice even more selling in this market. The market cannot be bought at any cost.
The gold markets have been relentless in their unwinding lately, and Wednesday was no different. The market has the distinct issue of being a mainly profitable one, and as such, firms are selling off their winning positions to pay for losing positions elsewhere. Because of the extreme bearishness of the markets in general, we think gold could continue to fall for a short while longer. The bounce that should be coming is large enough you do not have to catch the entire move. We think that letting gold calm down until early next week is going to be the move you should consider, while waiting until there is a supportive candle between $1,500 and $1,600 again.
USD/JPY continued to bounce around in the 100-pip range we have been watching on Wednesday. The pair is being watched by the Bank of Japan, and it should be obvious and well-known by now that they are willing to intervene if the market falls too far. Because of this, the 76 handle has been a floor lately, and we continue to like to buy scalping opportunities at that level, or at least as close as we can get to it. We think this pair will be range bound for the foreseeable future at this point.
The USD/CHF pair rose on Wednesday, as the Dollar was bought in general during the session. The market is in a “safety trade” mode, and the CHF is no longer considered a decent proxy for safety as the Swiss National Bank is willing to devalue the currency by any means necessary. We like buying this pair on dips, as there seems to be a never-ending supply of bad news that sends traders looking for safety. We cannot sell – we don’t fight central banks.
USD/CAD rose drastically on Wednesday as traders sold off the oil markets. The 1.03 area was the most recent high in this pair, and proved to be resistive. Because of this, we want to buy – but must see a new high at this point. The pair seems intent on running higher, and looks very healthy at this point. However, there is no point in going long until we get confirmation as the totality of the move could see 1.10 before it is all said and done. We don’t sell this pair unless the oil markets break above the $90 mark in the Light Sweet Crude markets.
NZD/USD fell hard on Wednesday as traders sold off commodities in general. The Kiwi really suffers when the commodities lose, and the session wasn’t any different. The Monday hammer serves as a sell point now, as a breaking of the lows from that session would be massively bearish at this point. The pair could consolidate between 0.76 and 0.80, so we are waiting to see that happen before we sell. We cannot be buyers at this point as the global economic growth outlook is so bleak at this point in time, suggesting that demand for commodities will fall in the near future.
GBP/USD had a slightly bearish day on Wednesday, but it should be noted a lot of those losses came late in the session again. This shows that rallies cannot be trusted, and they are simply providing selling opportunities at this point. Because of this, we sell rallies, and we do not buy this market. The pair is bearish, and the recent downdraft isn’t the kind of violent and sudden move that happens in a vacuum. Because of this – selling is the order of the day.
The EUR/USD pair rose on Wednesday, but fell later in the day as traders sold off risk. The Euro still have massive uncertainty surrounding its prospects, so buying it doesn’t appeal to many. The market is massively bearish, and it seems that 1.35 is an area that needs to be “given” in order to continue to the downside. The fundamentals are screaming for safety trades at this point, and all rallies have been selling opportunities. We are selling the EUR/USD every time it rallies, and would be interested in selling a break of the Monday lows. We don’t buy at all.
EUR/CHF continues to dawdle around the current level as the Swiss National Bank is effectively protecting against the downward pressure in this market. The pair cannot be sold because of this, so buying is our only choice. However, we have issues buying the Euro at all because of the issues that are currently having a negative effect on the economy in the EU. Until Europe gets the solution to the debt crisis – we can’t buy this pair.
AUD/USD fell hard on Wednesday as traders sold off risk in later hours of the session. The pair still has significant support in the 0.97 area, and it appears that it is going to be tested soon. The breaking of the Monday hammer to the downside would be a massive sell signal as it shows not only a breaking of the parity level, but the entire support base that this pair enjoys. If that happens – selling the AUD/USD will suddenly be a long-term trade. Buying isn’t advised until we can close well above parity at this point, which looks unlikely given the failure on Wednesday.
Light Sweet Crude
CL rose rapidly during the Tuesday session as the risk on trade came back into vogue. There is now hope that Europe may do what is necessary to avoid a recession, and with that – there should be more demand for oil in the end. This is more of a trade than an investment, and if you listened to the video yesterday, you were aware of the very real possibility of a bounce in this market. It looks like the $85 level is slowing the progress of the market down, and with the overall bearish tone of the markets in general, if you are profitable at this point – your stops should be at least to the breakeven point. We see massive resistance ahead, up and until we see $90. Because of this, we don’t recommend buying at this point as the market is likely to remain stuck in the 80 -90 USD range.
Brent markets had a very similar day on Tuesday as the market broke the top of a hammer, signaling a buy trade. The Brent market seems to have a little more to go before it hits real resistance at $110, and as such we feel the bullishness still has a bit of legs at this point. We certainly couldn’t sell, but would like to buy on dips at this point in time.
The natural gas markets rose on Tuesday, only to fail in the later hours as the market approached the all-important $4 level. The resulting candle is a shooting star, which is a bearish signal in a bearish market. The sell signal would be a breaking of the lows on Tuesday, and with the heavy volume, we fell that this signal is a strong one. Buying isn’t possible under any circumstance as the supply is simply too large for the market to keep up.