Global markets remain on a risk averse theme with the sell-off in US markets leading to another round of losses in Asia. At the close we saw DJIA at -1.20%, S&P 500 at -1.81% and Nasdaq Composite -2.00% though currencies for the most part spent the New York trade in a congestion following the close of European markets. We should point out however that typically changes in sentiment occur not in Asian trade but in Europe with Asian traders often times looking at US and European performance before taking action.
Kiwi started out with a downside gap Monday then saw a sustained sell-off following the broad based risk averse market. Daily indicators are showing a new bear cross in macd while stochastic is heading for oversold levels. In intraday charts we have stochastic oversold in both hourly and the 4H picture with our latest surge down coming out at the open of Japanese markets. Macd for both time frames are also bearish. With the overall risk averse environment we prefer taking the short side from just under 0.8240.
With the combination of a Euro sell-off and Yen strength we saw EURJPY with a 241 pip sell-off with much of the losses occurring in European midday trade when USDJPY also started dropping. Daily indicators show stochastic in oversold levels while macd is opening lower. Note we have prices beginning to stray far from the EMA lines. In 4H charts we have a confluence of bears stochastic seeing a new bear cross after crawling in oversold levels. Hourly indicators see a new bear cross for stochastic while macd has just crossed up though failing to get a follow through. For now we are not in a position to take any immediate action though shorts from just under 112.84 may be taken, ideal entry just below 113.41 a strong resistance area.
With the contagion issue again hitting the Eurozone we had Euro among the weakest of the majors, EURUSD seeing a 241 pip sell-off managing to test our two day target of 1.4000. Indicators show new dead crosses from the EMA lines to suggest a new downtrend with stochastic pushing further to oversold levels and macd opening lower. Intraday we appear to have some indecision as 4H stochastic tries to come out of oversold levels while macd remains pointed lower. Hourly indicators also show mixed signals. Given the bigger picture we continue to look at Euro as defensive and prefer taking the short side from just under 1.4062 for a limited push under the key support at 1.4000.
Given the sell-off in EURGBP Cable’s decline was relatively more limited than Euro though we still managed to see new lows to continue a classic break out pull-back and continuation of our weekly SHS pattern. Daily indicators see stochastic pushing for oversold levels while macd is has just crossed lower. EMA lines continue to provide an immediate resistance from the daily picture. In intraday charts we have stochastic just entering oversold levels in both the 4H and hourly picture ad macd lines remain bearish. With all the bearish signals we would like to jump shorts preferably from just under 1.5932 but a break of 1.5880 may also be seen as an entry.
At the close we saw Aussy triggering a daily double top pattern with prices just around the 55D EMA at this point while daily indicators show stochastic heading for oversold levels and macd poised to cross lower. Looking at other markets it appears that a rally in precious metals is providing a modicum of support for Aussy. Looking at lower time frames we have 4H and hourly indicators bearish with macd’s heading lower and stochastic in oversold levels for the 4H picture and at brink of going oversold in hourly charts. Consider shorts from just under 1.0664 with stops at 1.0680 for 1.0590 then 1.0543.
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