USD/CAD fell in the late hours of the session on Wednesday as the Federal Reserve has announced that interest rates would remain ultra-low until the end of 2014. The markets sold off the dollar in general, and the Canadian dollar gained against it as a result.
The triangle on our chart has been pierced, but the end of the supportive area is roughly parity, and as we didn’t close below that mark – we aren’t quite ready to sell yet. A move below the lows form the Wednesday session would be enough though. The triangle implies a move down to 0.95 before it is all said and done. We are not buying at this moment now.
NZD/USD originally had fallen during the Wednesday session as the markets were a bit weaker. However, the Federal Reserve promised to keep rates at current levels until late 2014, and this in turn punished the US dollar yet again. This of course had a run towards commodities, and the Kiwi will always gain in that situation.
The weakening dollar should only add fuel to the fire in this pair as the commodity trade just got a shot in the arm from the Fed. The Kiwi should continue to rise in value, and the pair will get stronger and stronger over time. However, the move has been a bit strong over the last few sessions, so we prefer buying dips going forward – as long as we are over the 0.80 level. We will not sell this market now.
The Light Sweet Crude contract fell for most of the session on Wednesday, but got a nice bounce as the Federal Reserve announced that interest rates were on hold until late 2014 at least. This should continue to put pressure on the US dollar, and as a result it will give a life to commodities. However, there will also come the question of whether or not they saw something that was much worse than originally thought, and because of this – we are still holding firm with our assessment that the $105 level needs to be broken on a daily close in order to buy. A daily close below $98 sends this market much lower, and has us selling. Until then, the oil markets will more than likely be very volatile.
Natural gas markets continued to rise during the Wednesday session as the short covering keeps going. The market broke above the shooting star that was formed on Tuesday, and with more companies talking of taking their drilling offline, the market only had one way to go. The market has been extremely oversold recently, and this bounce is exactly what was needed. We are still waiting, and will be very interested in selling in the $3 area if we get resistive candles. We are still leery of buying this contract as the supply will still be far too great.
Gold skyrocketed during the Wednesday session after first falling. The market retested the important $1,650 level and shot up from it. Hopefully, you watched the video yesterday and took advantage of this level from which to buy. From that point, gold has risen over $68 an ounce at the time of this writing.
The Federal Reserve has let it be known that the interest rates will be just as low as they are now until at least the end of 2014. This is very negative to the Dollar, and as a result the price of commodities will gain. Gold is a great protector of wealth when the value of currency falls. The central banks around the world are starting to warm up the printing presses for their currencies, and as a result the gold trade will again be the center of attention.
The pair has not only proven the supportive nature of the $1,650 level, but it also managed to smash through the $1,700 level without any struggle at all. This was the first hurdle we saw for the gold markets, and it has obviously given way quite easily. Because of this, we have to look forward from here now.
The $1,700 level should be supportive, and the next cluster that the gold markets will aim for should be the $1,750 level. The area has been resistive as well as supportive several times since the end of summer 2011, and if history is any indication – it should be again going forward. The gold markets are notorious for being overly technical, and this chart clearly has a “$50 bias” when it comes to support or resistance. Because of that, the market can be thought of as a series of fights to see if we rise or fall $50.
The market certainly is a screaming buy at this point, and we are willing to buy more on pullbacks on the short-term charts. The market will continue to be strong as long as we are above the $1,700 level. With this in mind, we are not willing to sell at this point.
EUR/USD rose overall during the Tuesday session as the pair initially fell in trading. The market fell to sub-1.30 level, and then turned around as support came back into the fold at the area. However, the area isn’t broken to the upside yet as long as we don’t see a daily close above the 1.31 level. The area is a wide band of interest in the markets, and this range could cause problems. The candle forming a hammer does look supportive and bullish, but we have to be patient as the area is still intact. The breaking of the bottom of this candle would be a massive sell signal while a post-1.31 level signals a buy. Until we get one or the other – we are flat.
USD/JPY shot straight up during the Tuesday session as traders took on a bit more risk in the Yen related markets. The pair is still in a massive downtrend, and the area it slammed into for the session is still massive resistance. The pair cannot be bought at this point as surely there will be sellers willing to come into the market at this point, and the trend is against you. The 78.25 level has been very resistive lately, and nothing in this chart suggests that it is about to give way. Because of this, we are willing to fade this rally unless the daily chart can somehow close above the 80 mark, which would mark a significant and long-term change.
GBP/USD initially fell for the session on Tuesday, but found its footing later on and rose overall. The resulting candle is shaped much like a hammer, and is sitting just above the 1.55 level. The area now looks as if it could be supportive, and the pair looks destined to march north to the 1.57 – 1.58 resistance level. The pair is still in a bearish market, so we are cautious about buying, but if we were to do it – we would buy on the break of the Tuesday range to the upside, and be willing to take profit at 1.57 or so. Or better trade is to sell from that area on weakness, and that is how we wish to play this pair…..selling between 1.57 and 1.58 on signs of weakness.
EUR/GBP attempted to rise during the session on Tuesday, but the zone we mentioned in the previous videos from 0.83 to 0.84 held firm. The failure looks as if it could send the pair lower, but the daily candle was a wild looking doji. The breaking of the lows from Tuesday would be a nice sell signal as we move back down to the 0.80 level. We will not buy this pair as the resistance level is clearly too close to the current price, and only would if we close well above the 0.84 level.
USD/CHF rose slightly in an otherwise quiet session on Tuesday. The pair is currently sitting on a massive support area in the form of the 0.92 – 0.93 handles. The candle for the session resulted in a doji, and this shows just how undecided the market is. The candle does however provide us with a binary and easy set up.
The breaking of the top of the candle would be a buy signal and perhaps hint that we would return to the top of the recent range which could see prices as high as 0.95 or so. A break below the bottom of the doji could signal a selling position, but we would feel more comfortable if the daily close was below the 0.92 level. In the meantime, we simply wait to see if the market gives us a clear sign.
EUR/CHF rose during the session on Tuesday from the lows that it has been sitting on for the last two weeks or so. The pair has the Swiss National Bank supporting it, so it isn’t a surprise that we saw a pop in this pair. After all, you simply cannot short this pair at this level as we aren’t that far from the 1.20 floor into the market.
We are willing to buy this pair now on short-term dips, but the pair will more than likely grind than run. The pair continues to be a buy only pair, and if we could ever close above the 1.25 level – this could be a nice long-term trade.
AUD/USD fell for the Tuesday session, but managed to bounce from the 1.04 level, confirming former resistance as support. This level was the top of a triangle we have been watching lately, and the retesting of it as support is normal. In fact, this is a very positive turn of events for the Aussie.
The triangle measures all the way to the 1.12 level, and because of this, we are willing to buy on dips as long as we are above 1.04. The pair yields positive swap, and this pair will make an attractive investment for investors that are searching for yield in a low-yield environment for trustworthy bonds. We are buying dips on the shorter time frames, and a break of the top of Tuesday’s candle.
USD/CAD rose during the session originally as the oil markets fell for the day. However, as time wore on, the pair gave up most of its gains, and the resulting candle is a shooting star at the bottom of a massive descending triangle.
The triangle hasn’t broken one way or the other yet, but the market shows us during the session that the pressure to the downside continues. The breaking of the bottom of this triangle has traders looking for the 0.95 level, and if we get a daily close below the parity level – we are short until we see that level.
The pair has a long history of grinding and then making sudden moves, and it looks as if the pair is trying to wind up for another shot in one direction or another. The pair will tend to follow oil, so the fact that the Canadian dollar looks strong while the oil markets look a bit weak is a bit of a conundrum. However, one can only play the hand dealt, and this chart currently looks like it could give a sell signal at any time. We won’t buy until the top trend line of the triangle gets closed above on the daily chart.
The Canadian dollar will often grind quite a bit because of the close proximity of the two economies, and the fact that Canada sends 80% of its exported goods to the US. If the US is doing well, so is Canada. However, it doesn’t work the same in reverse as Canada isn’t a huge market for the Americans. The flow of money across the borders is however, quite massive.
Although the oil market looks weak, we could see a breakdown in this market simply because the Dollar is weak. The last couple of sessions have been rough on the Greenback, and as a result a sudden drop down to 0.97 isn’t necessarily ruled out. Again, we would buy if we could get the close above the top line of the triangle, but it is looking more and more unlikely that we will see that happen. More than likely, a close below parity has us short of this pair.
NZD/USD fell for most of the Tuesday session as the stock markets around the world flashed red. However, there was a bit of a rebirth of bullishness in this market towards the end of the day that saw higher prices for the Kiwi dollar. The pair ended up forming a hammer by the end of the session, and this just confirms how significant the break of the 0.80 level a couple of sessions ago really was.
The pair has been going like gangbusters over the last several weeks, and this latest move simply puts an exclamation point on that. The pair should continue to show real strength as the commodities markets in general look fairly healthy. (Kiwi dollar always seems to follow the overall attitude towards commodity markets.) The fact that even during “risk off” days the currency has been able to appreciate lately shows just how strong the up move really is in this pair.
The strength of all commodity dollars is being played out at the moment, in a kind of “carry trade” as bond yields are low everywhere. (At least everywhere most traders are willing to be involved with.) The ability to collect a positive swap at the end of the day certainly has many traders interested in this pair lately, and as a result, we think this pair continues higher.
The breaking of the top of the Tuesday range is our buy signal, and we will not sell until we close well under the 0.80 level. The pair has been so bullish of late; we are not interested in trying to fight the sentiment at this point in time. The Kiwi is often sensitive to headline risks from around the world, but at the moment, it seems to be willing to ignore Europe.
With all of this in mind, we are buying on a break of the highs from Tuesday, or on dips that show supportive candles as long as we are above the 0.80 level going forward. The pair looks set for a bit of a correction, but again – we don’t believe that nay healthy correction will see sub-0.80 levels.
The Light Sweet Crude markets fell on Tuesday as the market continues to grind slightly lower overall. We have recently identified the $98 level as an area we want to see a close below in order to sell, and we still believe this is an excellent place to see selling come into the market. The overall tone of the market is deteriorating a bit, and this should facilitate this move in the near future. Until then, we can only wait for that close. We would consider buying, but only if we manage a daily close above the $105 level.
Natural gas markets gained again during the session on Tuesday, but pulled back in the US afternoon as the gap had been filled. The resulting candle is a shooting star, and with the severe downtrend, this should be a credible sell signal.
The bearish pressure will continue to be on this market, even with Chesapeake walking away from dry gas drilling. The abundance of natural gas should continue into the foreseeable future, and while the market cannot go down forever, the price of natural gas will be low going forward.
The gap that was filled is from the massive fall a week ago. The gap was filled, and then repelled prices in the $2.75 area. This is the first area we are looking for selling opportunities in this pair as we simply will not buy this market, but the reality is that is an oversold market. In a market like this, you simply have to expect some kind of bounce sooner or later. As long as that is the case, we are willing to sell, but only after rallies like we saw the previous session. With that in mind, we like the idea of selling the market if we manage to break the bottom of the Tuesday range.
Going forward, if this area gets broken to the upside, we would continue to look for weakness in the $3 area, as well as $3.25 and $3.50 levels. The market is a “sell only” one, no matter what kind of move we saw on Monday. The bearishness is a cyclical one, and one major driller stepping out of the situation while certainly bullish for price – isn’t nearly enough to push the overall market higher. There is simply far too much gas and the winter has been far too mild for demand to make up the slack in the market.
We are selling a break below the bottom of the Tuesday range, and would aim for at least the lows again, and if we do not get that breakdown, we are willing to be patient and wait for the resistance areas mentioned above from which to try to sell again later.
Gold markets pulled back on the Tuesday session as traders took profits and the stock markets sold off a bit. The move is measured and shallow, so those traders that are looking for gold to rise will hardly be concerned with this move. The $1,650 level should continue to offer support going forward, and we are willing to go long in the area when we see supportive candles.
We stated yesterday that the $1,650 level should be the gateway to $1,700 or so, but it could be a bit of a grind. This appears to still be the case, and as such – we are still long in this market. We are willing to add on minor dips, and will look for them on short-term charts. We are not willing to sell currently.