Weekly Market Research July 13th, 2009
Market Analysis July 13th, 2009
The daily charts on this pair are starting to look horrible considering we are now between the 1 STD Bollingers, a flip-flopping CCI and a flat momentum. The pair has not been able to muster a string of more than 2 buying/selling days since mid June and price action is getting more constrictive by the day. At this stage in the game, we would not touch this pair on any swing term basis and would only trade it hyper-intraday trading with targets less than 30pips. If you like being positive one moment and then turning your head, only to look back and find you are negative, then this is the pair to trade. Playing the wider Bollinger Bands on the dailies could offer some interesting plays if the volatility remains subdued. We are neither bullish nor bearish on this pair but are recommending a ‘wait and see’ approach for now.
Staging an impressive rally in lockstep with the DOW, the pair has rallied strongly off the 91.78 lows forming a triple bottom of sorts (better would be to say a triple touch as triple bottoms characteristically are much farther apart in their touches and rebounds). Its obvious in the short term there is a rejection zone between 91.78 and 92.33 where we have yet to close below since our first visit here last week. Daily CCI is coming off its weakest levels for this entire year but has almost reversed 50% of the -195 printing 5 bars ago suggesting the pair is aggressively fighting the downtrend its in. Price has still yet to form two bullish daily closes in a row and if the Nikkei or DOW posts a negative day on a closing basis, we expect this pair to retest the lows or at least the rejection zone mentioned before. The most key level to watch on the upside is the 93.51 level which was the March 19th low but also the July 9th spike high before it sold off 180 pips. We feel this and the 93.84 level which is the low for May 22nd are the most crucial upside lines in the sand. Any closes above there suggest an attack on the daily Tenkan posting up at 94.30.
On the intraday charts, this pair has put in a workman-like performance, similar to a running back taking the team downfield over 15+carries in one drive as the pair for the last 13.5hrs has climbed steadily from 1.6030 to current price of 1.6260 (230pips) and been above the 30m Tenkan line since the London close. Daily charts are awful with the Tenkan below the 20EMA and the Kijun which is ironically climbing. There is a kumo below which suggests the pair has build a solid support zone over the last uptrend. The 20EMA is flat and just above at 1.6272 clearly communicating we are not in any trend of any kind. There is a solid resistance zone at 1.66 above and a decent support zone forming at the 1.6000 big figure. Daily Momentum is dreadful suggesting upside gains will be hard fought but CCI is making a case for a possible reversal. However, the nature of it in lieu of price action since June suggests trading in the middle of the larger range will be frustrating. Thus taking hyper-intraday trades is preferred until the pair can break free of the larger range.
The Aussie has spent the last 5 days below the daily 20EMA but has been mixing between red and blue candles for the last 15 so swing trading has not been the method of choice for this pair. Daily Momentum is cat-fish bottom feeding right now and cannot muster any upside angle but CCI is also making a solid case for short term upside posting its highest reading over the last 5 bars. Because the oscillators are not inspiring in any fashion for bulls, we feel to wait for a rally up to the 20EMA on the daily chart to look for a sell there. Now that the pair is inside the cloud, it’s a hands off mentality but the top of the kumo or Senkou Span A is clocking in right where the 20EMA is giving two points to reject any upside gains. If we had to say anything about this pair, we are cautiously bearish on it.
For the first time since June 19th, the CAD has posted its first daily close below the 20EMA on the daily charts which should give some technical traders a reason to sell the pair. For the last 14 days, the USDCAD has been pressing up against the 38.2% fib retracement of the yearly highs to the yearly lows
but has failed to make any daily closes above it. If that was the line in the sand for the pair, then we have a good upside rejection play at 1.1660 but that also means bears have two nice downside targets with the 100% of the original move being the first logical target (1.0790) and the 1.382% projection being .9930 which is over 1500 pips south. The upcoming flat Kumo top could magnetize price towards if it makes little upside gains this week or next but with all the earnings reports coming out, I think we are going to see traders in the equities markets place their bets. Any aggressive selling seen in the DOW or Nikkei would likely translate into a USD bullish scenario with this pair retesting the recent swing highs.
Like all the JPY pairs as of late, the EURJPY has failed to post 2 bullish daily closes since mid-june. If it does, it would make a case for the pundits saying the JPY is well overbought in the medium term. 130.90 is going to be the first real upside resistance but a close above there suggests an attack on the flat Kumo bottom which lurks above at 131.79. The daily Tenkan also sits there and the 20EMA is getting closer to it every day so if the pair works really hard to find the kumo bottom, it could offer a fantastic rejection play to sell the pair back down towards the lows. 128 and 126 become support zones and downside targets. It should be noted the 38.2 of the most recent downmove sits at 130.90 and the 50fib just above the flat kumo bottom.
The GBPJPY flirted with closes below the daily Kumo but after 3 attempts failed to do so. It is attempting to make and upside attack but the daily Tenkan at 153.17 and the 20EMA at 154.30 offer some stiff tests for the pair. If price breaks the first level with gusto, then expect the 2nd level to come under attack quickly. A daily close above the kumo will re-invigorate bulls but the flat bottom coming this Friday may want the pair to remain close to it and more range bound for the remainder of the summer. The pair did complete a pseudo-head-and-shoulder pattern and the 1.618 fib projection at 148.95 so it may be time to head back north.
Analysis provided by 2ndSkies. No copy or reproduction without permission.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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