It appears we haven’t miss much starting our trading year on the 3rd of January with Monday turning out holiday hit with Japan, the UK and North American markets closed along with a good number of European countries. This has meant monday turned out to be a bore with spining tops and doji’s across the board though we expect trends from last year to continue. Financial currencies, i.e. the Euro and Cable are likely to remain weak going forward as monetary easing once more becomes a main theme particularly in the Eurozone. While all this money being pumped into the economies also mean commodity currencies will continue to strength though the game may be shifting from AUDUSD and USDCAD plays to EURAUD and EURCAD. Going forward we mostly have a blank slate for the days calendar though ISM Manufacturing Index figures would likely help drive the commodity currencies higher the main beneficiary likely to be loonie, ie USDCAD sell-off.
We closed December below the century mark pushing EURJPY to levels not seen for a decade. With the overall trend for the Euro weaker and the Japanese Yen strengthen we expect to see EURJPY staying below 100.00 for some time. At the moment daily indicators show a confluence of bears stochastic oversold and macd dropping. From the lower time frames we are currently seeing pullback signals with 4H charts getting a new confluence of buys as macd crosses up while hourly charts currently has stochastic overbought and macd rising. For now we are looking at any move to the 100 region as a possible sell on rallies though we prefer looking for a distribution first before jumping short.
Daily candles show indecision from the last two trading days of 2011 after a sharp sell-off Wednesday. It appears we are continuing a pattern of congestion a sell-off in a generally bearish market. From indicator we have macd’s flat though above the signal line while stochastic is heading higher. Note EMA lines continue to act as another level of resistances. In intraday charts we have a confluence of buys between 4H and hourly macd and stochastic. Immediate risk appears to call for a test of resistances, as such consider buys from just above 1.2958 for a test of the strong resistance at 1.3020. Look for possible shorts from just under 1.3020 later on going into the European session.
Kiwi at the moment looks set to push past a strong resistance at the 0.7837 region, early December’s key price point. Indicators show daily stochastic in overbought levels while macd is rising. In the lower time frames we see long tails in both hourly and 4H candlesticks suggesting the presence of bullish interest Indicators wise we have 4H macd and stochastic pushing higher, the latter reentering overbought areas. Hourly indicators also have macd pushing higher while stochastic appears set to push back to overbought levels. At this point we are looking for an hourly close above 0.7837 to suggest a further rally to 0.7878 then 0.7918. Note a daily close above 0.7837 should pave the way for the next up leg in Kiwi.
Daily candlesticks suggests an indecisive market in USDCAD while indicators for their part suggests a potential for a bearish breakout with prices currently testing a moderate support level at 1.0157.Note we have EMA lines acting as an additional set of resistances in multiple time frames. In the 4H picture we have both macd and stochastic suggesting a bear market while hourly indicators show stochastic oversold with macd dropping. From the calendars we apparently have very little to watch out for from Canada though US ISM Manufacturing numbers are up. A strong read beyond the 53.3 consensus should help strengthen the Lonnie. Look for shorts from just under 1.0210 or on a close below the 1.0157 threshold.
Aussy looks set to follow through its rally from the last trading days of 2011 with daily indicators looking bullish, macd and stochastic with a confluence of buys while EMA lines are showing golden crosses in the making. Note we have strong resistances at 1.0338 capping any technically driven rally. From the lower time frames we are seeing buy signals in both 4H and hourly macd and stochastic the latter overbought for both time frames. Given the overall bullish bias we would like to take the buy side for Aussy from just above 1.0235 with stops ideally under 1.0195. With a strong resistance at 1.0338 our objective would be for a test of the 61.8 Fib level partial profits to be taken just around 1.0302.
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