Natural gas first rose during the Thursday session, only to get repelled at the top of the range. As a result, we saw a shooting star print for the day. This very bearish candlestick only confirms that anytime this market rises, it will only fail, and fall. The bearishness should continue, and we are still advocating selling this market every time is rallies. The $3.75 should continue to be resistance, and above that is the $4 level as well. We are selling rallies at this point, and would also sell a break of the bottom of the Thursday shooting star.
Gold markets fell on Thursday as traders continue to shed risk. The move sometimes can be a result of falling prices in other markets as traders have to “cover” other positions. The latest action has been bearish, but always seems to pick up late in the session. The $1,600 level is still paramount for the market, and until we can close below there – we cannot sell. The market has fallen, but it has also been “less bad” than many other commodities. To us, this shows us underlying strength in the gold market. We are still willing to buy dips in general, but we also feel that waiting for the $1,600 level to get retested again and holding after a fall would be the safest play to go long.
The USD/JPY pair continues to hover around the 77 handle during the Thursday session, and looks very likely to on Friday as well. The range it has been stuck in between 76 and 77.50 looks likely to hold as the Bank of Japan will not let the pair fall, and the risk of shorting the Yen isn’t appealing to readers either. With this in mind, we like scalping this pair for 50 pip runs from the bottom of the range, near the 76.25 mark.
The USD/CHF pair had a bearish day on Thursday as traders sold off the Dollar in favor of the Franc. The pair is currently difficult to sell, as the Swiss National Bank is working against the rise of the Franc in general, but specifically to the Euro. Even though this pair isn’t the SNB’s focus, it certainly will be affected by what happens in that pair. Because of this, we don’t sell. We are waiting for supportive candles in the present area, and are willing to buy from them, as it is very likely to turn into a longer-term trade.
The USD/CAD pair had a back and forth session on Thursday as traders first sold off risk, only to buy it back in the later hours of the session. This has been a bit of a trend lately: Americans trying to reverse the bearishness out of Europe. The pair will be greatly influenced by oil, and the massive support expected at the parity level. Because of this, we are hesitant to sell it until we close below that parity level. We are looking to see if it holds as support, and would be willing to buy a bullish candle form that area, as the headline risks out there are great, and the Dollar is always king in uncertainty.
The NZD/USD pair produced a doji on Thursday, which is the third in a row. Obviously, the market isn’t quite sure what to do with it. The recent range is just below the 0.8000 mark, and could make a massive move in one direction or another after the weekend as the EU meeting gets underway. The market will make its intentions well-known after the weekend as these talks are the main focus of the entire forex world currently. If the outcome isn’t’ good – this pair will meltdown. The fact that it cannot rise over 0.8000 might be showing us that it is already leaning to the downside. We would wait until Monday to put on a new position, unless of course some concrete action of headline comes out on Friday that sends this pair in a velocity that breaks out of the recent consolidation.
The GBP/USD pair fell on Thursday for the early hours of the session, only to bounce back upwards form the 1.57 level yet again. This shows just how resilient this area is as support, and that it should be respected. However, it is difficult to be aware of any major reason to buy this pair for a long-term trade at the moment. After all, it is a “risk on” trade, and the headline risks are far too great to put much faith in the markets at the moment. We think it is probably more likely that the 1.5850 area holds as resistance, and the 1.57 level holds as support. With this in mind, we are range trading it for quick scalps at this point.
EUR/USD had a wild day on Thursday as one would expect, given the nature of the financial crisis in European. The markets aren’t really sure what to do at the moment, and with the EU meeting over the weekend – one has to think the markets will simply wait until the outcome of those meeting in order to make a decision. For the Friday session, it is very likely that we see a range again, and probably a fairly small one as traders will not want to be in the wrong position on Monday when they wake up. The outcome of the meetings will more than likely set the tone for the Euro’s next move. We advise staying flat on Friday, unless the meetings are cancelled, or some other massive shock hits the news wires.
EUR/CHF fell on Thursday in a rare show of movement. The pair is still hovering above the 1.23 area, and is likely to only have limited downside potential as the Swiss National Bank is willing to intervene if we get too close or below the 1.20 level. The market is one-way because of this, and quite frankly – we would love to see it fall down towards that area. The reality is that we can only buy this pair because of the SNB, and will have to wait to see what Europe does about its financial mess. The plan that could come out over the weekend is possibly the catalyst for a move up finally. Because of this, we hesitate to put a position on until Monday.
The AUD/USD pair had a wide range during the Thursday session as the global markets continue to go back and forth on headline news and general fears of European debt issues. The candle is another doji, suggesting that the pair isn’t ready to move much for the Friday session. This isn’t a surprise as so much of the world is focusing on the upcoming summits out of the EU during the weekend, and the markets will more than likely be somewhat tame, barring any headlines. (Hardly something that can be promised.) Because of this, we are neutral on this pair, and suspect it will fluctuate between 1.01 and 1.03 at the most.
The CL market fell on Wednesday as traders began to be concerned about global growth yet again. The $90 mark continues to hold this market back, and should keep it in a range bound scenario for the near-term. The bottom seems to be as low as $70, and the top $90. This is a very wide band in this market, and shows just how jittery the market is. In this particular market, we are willing to range trade it. We are at the upper end of the range, so selling is an option – but buying isn’t.
The Brent markets were pointed out after the Tuesday session as having formed a hammer on the daily chart, but just below the $115 level. We mentioned that a breaking to the up side would be limited because of the massive resistance. The breaking on the bottom end of the candle was in fact a bearish sign, and something we saw during the session. In fact, if we get follow through, it would then be classified as a “hanging man”, which is massively bearish.
The natural gas markets rose during the Wednesday session as the market pulled back from the fall on Tuesday. The bounce was slight, and shouldn’t be considered to mean anything other than some simple profit taking. The market is in a bearish trend, and should continue the overall direction. The market shows absolutely no signs of turning around, and as such – we are shorting after every rally on signs of weakness.
After printing a bullish hammer on Tuesday, the gold markets promptly fell on Wednesday. The candle was bearish, and fairly solid, but short on length. Because of this, we feel the analysis hasn’t changed: We are willing to buy on a break of the Monday candle, as it shows a breakthrough on the resistance area that has been keeping this market down. We are not willing to sell gold at any price, simply because the uptrend is over 10 years old. We simply wait for signs of support and buy on dips at this point.
USD/JPY continues to sit in a tight range, and barely budged during the volatile Wednesday trading session. The market is currently being manipulated by the Bank of Japan as they want a lower valued Yen. The range has been between 76.25 and 77.50, and should continue to be in that area for the foreseeable future, as there is no real reason to sell the Yen, but no real reason to work against a central bank either.
We like selling close to the top of the range in the 77.50 area, and of course buying when the market dips down to the 76.25 level. The trading range has seemed to be oblivious to the wild swing in other markets, and as a result – we expect more quiet trading ahead.
USD/CHF had a bullish day on Wednesday, and even popped above the 0.9000 mark. This was an area that we said we needed to see hold and get broken to the upside in order to buy this pair. Selling was never an option as the Swiss National Bank is threatening to sell Francs, so we are looking for buying opportunities. A breaking of the Tuesday doji would be a good sign that we are ready to continue the up move in this pair. It makes sense – as the Franc can’t be held for safety anymore, and basically makes the USD the only choice out there now for safety.
The USD/CAD continued to respect the parity support area on Wednesday, as not only the demand for “riskier” currencies fell, but the demand for oil did as well. This was a double-whammy for the Canadian currency, and it showed in this market. The resulting candle is a hammer, and it looks like the market is ready to jump back up on any signs of bad news. If the oil markets move to the downside from here, we expect this up move to continue. Watch oil for the bias, and then trade the Canadian dollar accordingly.
The NZD/USD pair rose to the all-important 0.8000 number and promptly fell. The 0.8000 level is in our opinion a massive resistance area, and will have to be overtaken in order to get long the Kiwi for any real length of time. The fall was quite rapid, and the snap back does go in line with the overall trend, which is also down. This gets us selling rallies, or a break of the Wednesday lows.
The GBP/USD pair rose quite a bit during the first part of the Wednesday session, only to pull back in the later hours of the session. The 1.57 level held as support, and this is bullish for this pair, but with the global markets constantly working against worry, any longs in this pair will be overly dependent on the global risk appetite. The headline driven markets are sure to make this pair very volatile over the longer-term, and as such we are very careful about entries. The 1.57 simply must hold if you are to buy this pair on dips. If it gives way – this will become a very bearish market quickly.
EUR/USD rose during the session as traders piled back into the Euro again on hopes of some kind of deal being worked out between Germany and France. (There was a Guardian report out of the UK that said as much.) However, that story was quickly denied, and the move got faded. The fall was pretty impressive, and the 50% Fibonacci retracement has held the price down. The daily candle is a long shooting star, and looks quite bearish. The failure of the bullish move has us thinking that the 1.38 – 1.40 levels should continue to be resistive in the short-term. We feel that selling rallies is the way to go at this point.
The EUR/CHF is a heavily manipulated market currently. The Swiss National Bank has declared the 1.20 level a “floor “in this pair, and as such – it doesn’t dare test it. The Wednesday session saw the EUR/CHF rise for a while though, and this would be the only direction we could take since the other direction has a central bank in the way. However, this market rose, and then fell back forming a shooting star. This doesn’t look overly bearish, rather like a market that simply isn’t ready to move yet. We will be looking for a long-term buy on a bullish candle, but until Europe gets its collective act together, this market will struggle to rise.