After Wednesday’s wild gyrations and big sell-off, Thursday turned out to be a more modest if still volatile market with limited ranges in the currencies and equities seeing a technical rebound even as bond Yield for Italy remain elevated. News coming out of the political arena for once is a welcome one with ‘market desirables’ slated to take over the helms in Greece and Italy. In the former after Papandreou’s attempts to hold on to power back fired, we now have Lucas Papademos set to be the interim Prime Minister until the next elections a former ECB Vice President he should be in better terms with his European partners and like to keep the boat steady. In Italy it apppears the President is grooming an economist and academician to replace the embattled Berlusconi naming Mario Monti a senator for life in a bid to get him eligble at forming a new government. Ahead we expect to see a quiet session for the day with the economic calendar mostly bare and Veteran’s Day holidays in the US and Canada though we do point out that equity markets will remain open so we may still get some action.
In the end Aussy’s attempts to push under the 1.0115 strong failed with a high wave spinning top at the close for Thursday. Daily indicators continue to suggest a bear market with stochastic poised to enter oversold levels while macd is dropping. In the lower time frames we are seeing mixed signals. From the 4H picture we have macd bottoming out while stochastic is heading up suggesting a possible bounce off 1.0115. Hourly indicators for their part is mixed with macd rising and stochastic pushing for oversold levels. For now we prefer remaining sidelined. Should prices stay above 1.0115 going to the European open look for buys to develop from the intraday indicators and bounce to 1.0208. A daily close under 1.0115 is needed in order to see the next big down leg for Aussy.
Thursday saw USDCAD pushing back inside the previous daily range play, from the 1.0065 floor to 1.0217 resistances. Daily indicators continue to show a confluence of buys with stochastic seeing new bullish crosses while macd remain bullish. Note we also have daily EMA’s acting as a floor around the congestion lows. In 4H charts we have stochastic pushing to oversold territory while macd has a new bear cross. Hourly indicators for their part has macd bottoming out and stochastic coming off oversold levels. Note we have a descending wedge in the hourly candles suggesting an upside breakout. Given that we are trying to get out of a congestion in the daily charts it should natural to see a sharp pullback. With all these we suggest focusing on the buyside consider longs as we trigger the descending wedge for 1.0217 then possible a break past this to yesterdays highs.
The Swiss Has been rallying for the last two weeks with a pattern of surge and pullback. At the moment we find USDCHF just under a strong resistances at 0.9117 while daily stochastic has pushed back above the 80 area and macd is still rising. From the 4H picture we also the pattern of higher lows and higher highs with the pre-New York dip to 0.9018 defining the latest higher low. Indicators for their part are mixed stochastic crossing while 4H macd has a new bear cross. Hourly indicators see stochastic just crossing up while macd is also poised to a move higher. Immediate risk calls for a push higher an hourly close above 0.9081 may be seen as the start for the next surge up.
Thursday saw Cable trading modest ranges with focus on the Euro and commodities keeping prices pinned, to see a spinning top at the close. Daily indicators continue to have a confluence of bears, stochastic dipping to oversold levels while macd has clearly crossed lower. Note we are just around the daily EMA lines while the trigger for our bi picture double top is close by at 1.5872. In the lower time frames we have a mixed market, 4H macd is bottoming out while stochastic has come out of oversold levels. Hourly indicators for their part has macd topping off while stochastic has crossed lower. We are looking forward to trigger our double top, a close under 1.5872. An alternative entry will be coming off the 1.5943 immediate resistance to test the 1.5872 threshold.
In the end all the toller coaster action in European and New York trade failed to see EURUSD back up above the key breakout point at 1.3651 with prices closing well under the price short even of the 38.2 Fib retracement for Wednesday’s sell-off. Daily indicators continue to have a confluence of bears with stochastic looking to push to oversold levels. From the 4H level we have mixed candles while stochastic is just crossing lower and macd has bottomed poised for a bullish cross for its part. Hourly charts for their part are seeing a bearish break of a symmetric triangle though this one at the tip suggesting risk of a sudden pullback. Indicators has stochastic just crossing lower while macd is flat above the signal line. For now we do not suggest joining the break out look for a quick pullback and possible shorts as long as we maintain our lower highs trend.
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