With the US quantitaive easing programs officially ending market appears to have a bias for a stronger greenback as we no longer expect to get flooded with newly printed 60 billion dollars in the financial system every month. This reinforces our previous views of retrurning to text book theory when it comes to data interpretation and the currency markets, whats good for the US economy would be good for the dollar whats bad for the US economy would be bad for the greenback. For now we are looking for a pullback to the previous weeks rally in Euro, Cable, and in Aussy.
Despite a generally slow start for currencies Monday, Kiwi managed to nudge historical highs just a little bit higher to 0.8330 while daily indicators continue to show stochastic in overbought levels and macd’s rising. Earlier releases turned out a plus for the currency as Business Confidence came out in positive territory at 27 against the prior read of -27. In intraday charts we have bear signals developing from both the 4H and hourly macd’s and stochastic. Immediate risk is for further losses on a break of the 0.8283 support for 0.8241.
Just as in AUDUSD we have a dark cloud cover from Monday candles with daily indicators seeing an overbought stochastic and macd’s heading higher. Note daily EMA’s are poised at generating golden crosses. From the 4H picture we have mixed signals from the indicators as macd’s drop and stochastic cross higher. Hourly indicators show macd’s opening lower and stochastic coming off overbought territory. We have data coming out of Australia at 0130GMT we prefer remaining sidelined before then. Consider shorts from just under 86.79 on weak Trade figures. While seeing consensus or beating it, Aussy $1.91 billion, would suggest a break of resistances and a surge to 87.24 possibly 87.72.
Monday’s black candle gives us a dark cloud cover in Aussy daily charts though indicators still see an overbought stochastic and rising macd. Note we have the daily EMA lines around the 38.2 Fib retracement of the previous weeks rally at 1.0637. In intraday charts we have a confluence sell from the 4H macd and stochastic. Hourly indicators show a confluence of bears as well. Immediate risk calls for a push below the 1.0712 region for key support at the 1.0637, 38.2 Fib. Note we face an event risk at 0130GMT it would be best to remain sidelined given the possibility of May Trade figures turning out better than expected.
If we were to merge the brief Sunday trade for Wellington’s open with the Monday candle from Tokyo’s open daily candle for Euro would be a high wave spinning top for Monday. Daily indicators continue to show a rising macd and an overbought stochastic. In intraday charts we have a double top just getting triggered with the break of our 1.4495 support while 4H indicators show stochastic poised at a bearish crossover following the macd. Hourly charts are even more bearish with macd’s just crossing lower and stochastic pushing for oversold levels. For now look for shorts from just under the 1.4495 breakout point for a move to 1.4396 with tight stops at 1.4508.
©2011 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.