The USD/CAD pair rose drastically on Friday as the oil markets sold off. The trend most certainly looks like it has changed in this pair, and with the Light Sweet Crude oil markets falling through the $80 mark – the CAD is being “offered” at this point. Oil will continue to dictate the direction for this pair, but that break down below $80 is significant, and this should continue to put upward pressure on this pair. At this point we are buying dips, and not selling at all.
NZD/USD fell on Friday as investors around the world are dumping risky assets, including commodities. The futures markets all got hit, and as a result the Kiwi got sold off. We are selling this pair only now, and waiting for a rally to fade, or perhaps a breaking of the lows to get short as well. Buying simply would be far too dangerous at this point in time, as there are far too many economic dangers out there now.
EUR/USD continued its fall over the past week, after trying to rally. The highs keep getting lower, and it appears that the world is getting impatient about the debt crisis. Until the EU gets its act together, this pair will continue to be a “sell only” pair. We sell rallies, and if the 1.3350 area gives way to the downside – we become even more aggressive sellers. If that area falls by the wayside, the 1.30 level should be seen soon.
USD/JPY continues to drag across the bottom this past week as traders are simply not willing to test the mettle of the Bank of Japan. Because of this, we have formed a couple of supportive candles these past two weeks. Is this a buying opportunity? We don’t know yet, but we are keeping an eye out for it. A larger green daily candle could entice us into buying this pair, at least until we get to the 80 handle. We can’t sell – the BoJ will fight that.
GBP/USD had a positive week, but faded quite a bit in the end. The pair is still in a downdraft, and as such – we are sellers on rallies. The bottom of support can be found at 1.53, and if we can close on the daily chart below that – we would become very aggressive in our selling. We don’t buy this pair – it is too dependent on the global “animal spirits” at this point. We like the USD, and will continue to sell cable when we get chances.
The USD/CHF pair had a neutral week this past 5 days, but as it fell – the 0.90 level acted as support. Because of this, we feel that the way going forward is going to be up, and this makes sense as the USD is the ultimate “safe haven”, and the CHF cannot be bought as long as the Swiss National Bank is trying to sell off the Franc. As there is threat of intervention, we avoid selling this pair. We buy dips, and believe parity is in the cards before it is all said and done.
EUR/CHF continues to sit fairly quietly. The pair did pull back over the last week, but only mildly so. The pair is being lifted by the Swiss National Bank, and the pair looks like it doesn’t know what to do. To be honest – if Europe finally gets the debt crisis under control, this could be a great long-term buy. Until then though, we can’t sell – the SNB will intervene if this pair falls too far. The pair could be a great trade someday, with the key word being someday.
AUD/USD fell hard over the last several days as the trading world is now convinced of a recession. With the possible slowdown in China, this particular currency will get hit as Australia supplies that country with so much of its materials. The pair is decidedly bearish, and as such we only sell. The breaking of the weekly candle’s lows is our next sell signal in this pair, and it is a big one.
USD/CAD shot straight up over the past week. We have seen a few levels give way as resistance, and it appears that this market wants to go much higher. With oil prices falling, there will be pressure on this pair to continue to rise, and as such – we only buy at this point. We would buy dips as we believe this pair is a buy only pair now. It is a little overextended at this point, so we are waiting to see falls in order to buy at cheaper levels.
NZD/USD fell hard after initially rising this past week. The Kiwi is a highly sensitive currency when it comes to the commodity markets, and we think that this pair is a sell only pair now. The 0.75 area should be supportive, but if it gives way – look out! This pair is to be sold on rallies, and if we get below that 0.75 level – we would sell there as well.
Light Sweet Crude
CL fell hard this past week after initially rallying. For the first time in months, Friday saw a close below the $80 support level. Because of this, we are selling rallies now, and would be very interested in selling below the $75 mark as well. The market looks horribly weak, and there is significant concern of a slowdown globally at this point. If that happens – demand falls, and this market goes with it.
Brent markets didn’t fare much better than the CL contract. The market looks extraordinarily weak at this point, and $100 looks very vulnerable. There is talk that $100 is where OPEC wants this market, so expect a real fight there. However, with that being said – we are selling rallies now.
The natural gas market continued its fall this past week, and we are now significantly below the $4 support level. The area has repelled any attempts to rise, so it looks like we are heading down another leg in this market. We are selling any and all rallies at this point, and also willing to sell new lows. We can’t buy – it hasn’t worked in ages, and in fact as overweight short positions in this market.
Gold markets sold off hard during the week, but have sat still at the $1,600 level, an area that we consider significant support. The market looks like it is ready to bounce at this point, and the trend is still up – no matter what has happened over the last several days. Because of this, we are willing to buy on signs of strength from these levels. If the market falls further before we get a chance, we will simply revisit buying at lower support levels.
Light Sweet Crude
The CL contract fell hard on Friday as traders continue to sell anything risk-related at this point. The market looks very weak, and for the first time in ages, we actually closed below the $80 mark. Because of this, we are looking to sell at this point, assuming we can break below the bottom of the hammer made back in the beginning of this consolidation area, which is about $75 or so. If we break below that, we sell. We are also ready to sell rallies now as well.
Brent fell hard as well on Friday. The market hasn’t broken below the $100 mark yet, but it certainly appears that it wants to. Because of this, we are selling rallies now, and become aggressive sellers if we get below the $100 mark on a daily close.
Natural gas markets fell on Friday, and even managed to break the bottom of the hammer from Thursday. The move down shows real weakness, and we believe this is an even larger signal to sell than we have seen lately. The supply far outweighs demand at this point, and as such we can only sell. The trend is down, so that is going to be helping any shorts you may have at this point. We do not buy under any circumstances.
Gold markets continue to sit fairly still as the market was little changed on Friday. The recent action leads us to believe that we are in the middle of some kind of bottoming process around the $1,600 mark, and as a result, we want to buy once we see a larger green candle. We don’t sell as there are far too many reasons to own gold these days.
Light Sweet Crude
The CL contract rose a bit during the Thursday session, bouncing from the $80 support level, but it should be noted that the volume is starting to falter a bit. Also, the bounce wasn’t as high as the bounce from a few short days ago. Because of this, we think that the downward pressure is going to continue, and aren’t comfortable buying at this point. We can’t sell though – at least not until the $80 level is cleared on a daily close.
Brent markets had a positive day during Thursday, but the day ended up falling from the highs. The candle is still well below the recent highs, and looks like more of a “dead cat bounce” than anything else. We are not willing to buy Brent at this point, but would like to sell if the $100 level ever actually gives way.
Natural gas markets fell, but rallied later in the day on Thursday to form a perfect hammer at the end of a down move. However, buying this signal would more than likely be a mistake as the trend is massively bearish, and every time we have had a bounce like the one we think could come, it has simply been a chance to reload on short positions. Because of this, we are waiting to see this bounce, and are happy to sell once again.
Gold markets rose a bit on Thursday, but had a rather quiet day in general. The market needed a rest, and it appears that it is finally getting it. The gold trade is still to the upside at the moment, but each passing day has us questioning it for the short term. The bottom of the massive hammer on Monday simply must hold if we are to see a continued move up again. The bottom of it is roughly at $1,520 or so, and the $1,500 level should be considered as massive support. If it gives way, this market will fall quite a bit. Yesterday we said that you may want to wait until early next week, and we still feel the same way when it comes to this market.
USD/JPY continues to hover just below the 77 handle, and just above the 76. The pair actually touched 77 on Thursday, but failed to break out yet again. As we have been saying, this pair is well-suited at this point to be scalped, and not traded for anything more than a few dozen pips. We like buying as it gets closer to 76, but aren’t as keen selling in general, as the Bank of Japan is waiting to intervene if necessary to keep this pair afloat.