Friday’s attempt to generate a folow through to the reversal signal from Thursday for the most part ended up with limited success. While new highs were seen among many of the majors against the greenback we were unable to hold on to those gains. In the end a late sell-off in Europe and an inability to hold on to opening gains from US equity indices saw the currencies giving up most of the gains. For now we are seeing a poor start to the trading week with risk aversion beginning to happen across the boartd as Asian equity indices drop putting. Our focus for the week will be on commodity currencies and the Euro. Note we have a busy week ahead with a slew of data from Tuesday on to Friday much of them about the US. We continue to view gains in the US economy to be good for the commodity currnecies though Euro for its part will likely attract mostly bearish interest with prices in position for a move down to the years lows from January, 1.2971.
At the close Friday’s candle remained under the 0.9983 level, 23.6 Fib of the sell-off the previous week. For now we have had a bearish start to the week with prices opening lower and indicators showing mixed direction, stochastic coming off oversold levels while macd is heading down. Intraday we 4H charts seeing mixed views macd’s pushing higher while stochastic is heading for the 20 level. Hourly indicators for their part see a confluence of bears, stochastic poised to move to oversold territory. Given the bearish sentiment we prefer looking for a sell on rallies to the 0.9983 immediate resistance level, 23.6 Fib of the prior weeks sell-off.
Friday saw USDCAD with a big white candle ending up in close proximity to the strong resistance at 1.0422(37). Among indicators we have daily macd rising and stochastic pushing back into the overbought levels. From the lower time frames we also have a confluence of buys in 4H charts macd’s in the process of crossing higher while stochastic has pushed to overbought levels. In the hourly levels we have a confluence of buys as well stochastic just pushing to overbought levels. At this point immediate risk is for further gains in USDCAD through we prefer going long from just above 1.0368 with tight stops below it.
Attempts to generate a follow through to Thursday’s bullish engulfing appears to have been a limited success with new highs generated though market failed to hold near the highs to close with a high wave spinning top. From indicators we have daily macd heading lower while stochastic has come-out of oversold levels. In the 4H picture we are seeing mixed signals macd’ still heading up while stochastic is dropping, candlesticks themselves suggests indecision. From the hourly picture we have a confluence of bears. Immediate reisk calls for a push to the previous weeks lows with shorts ideally taken from just under the 1.3043 region with stops ideally just over 1.3085. Note were are looking to test the key support at 1.2872 this week break of which will likely see us with an inverted hammer for the year.
Kiwi saw a follow through to Thursday’s bullish engulfing pattern gapping higher at the open only to end up with a belt hold from the wellington market. Daily indicators has macd’s flat though under the signal line while stochastic is pointing up. Note we have pulled back to the daily EMA’s with prices now set for a rejection. In the 4H level we have a double top among the candles with 0.7591 as our breakout point, stochastic has come off the overbought area while macd is topping out. Hourly charts already has a confluence of bears with stochastic poised to go oversold while price action has us in the process of triggering the double top pattern. Given the extent of price action already seen we suggest shorts at a close under 0.7591 only for those who can hold on to the trade with stops ideally above 0.7645.
©2011 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.