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GreenForexTrading.com
ForeX forX-tra Gr€€n
Hi everyone,
In this e-mail I am going to give you my review for the month past and view on the market for Wednesday the 8th to Thursday the 9th of December.
This newsletter is early due to below!!!
ALERT: THE LONG BOND IS SELLING OFF HARD AND THE DOLLAR HAS PUT IN A FEEBLE RALLY THAT LOOKS TO HAVE REVERSED...WE ARE ON A DOLLAR SELL-OFF ALERT.
The is swing trade for today’s Asian-London-U.S. session is to BUY the AUD/USD @ 0.9850 and a STOP @ 0.9820 for a TARGET of 1.0184 for over 300 PIPS!!! Note: If the AUD does not tag 0.9850 on a retest of this key support level and 0.9890 is exceeded (the AUD/USD is at 0.986 as I write this) then a smaller entry is recommended with a 30 PIP trailing stop to get to breakeven as soon as possible. There is no guarantee in trading but the daily chart shows a continuation in the AUD/USD. Please watch the USDX and read below before taking this trade!!!
The USDX has carved out a very choppy wedge that looks to have broken the lower support line of the last two days of trading at 79.90. I have stated for weeks that the dollar was carving out a short term bottom; and projected an upside target of near 80. Now the period of serious chop with the USDX oscillating between 79.9 and 80.3 for most of the Asian-London-U.S. Sessions the last couple of days looks to have been broken to the downside and created a USDX reversal bar. This as the long bond is being dumped in mass. This should lend strength to all U.S. dollar denominated pairs if this is the real move that I have been expecting. A move of the USDX back above the wedge breakdown level of 79.9 - 80.0 area will negate the trade as a fake-out move and more dollar strength should be expected (and the corresponding stop will be taken out in the AUD/USD)... and then the following will still apply...”The dollar topped off at 81.48, which remains to be seen if it is bested or retested. Going forward, the dollar has room to move higher here, but prices need to follow through higher, and two possibilities still now exist. The first being the underside neckline test which is where the USDX is now poised to bump into the 81 area with further wash and rinse (chop) and would need to see some confirmation of topping action to confirm with the 82.5 area being the limit of upside if this case is to be valid. The second is if the 82.5 area is exceeded then a larger consolidation pattern (a triangle wedge) would be in play with the 86 region as the target. This month should tell us where we will go. We may have to endure some serious price swings to see which plays out first.” The daily close-up shows once again how important the 200-day moving average (DMA) is in flagging the next major direction for the dollar as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD. The EUR pairs were expected to be overall weaker than the corresponding correlated GBP pairs however there still appears to be rotation of relative strength between the two currencies from day to day. Overall, economic data continues to be abysmal from a strong dollar currency standpoint but given EUR problems of late, it is a case of pick your poison.
For the EUR/USD a retest of the 1.340 level has occurred and the market has since backed away. Holding above the 1.330 – 1.334 area leaves possible retests of 1.340 open over the short term. The 1.325 area is the level that needs to give way on the downside for markets to test last week's lows and the EUR/USD is seriously testing that area with the aforementioned chop. At this moment in time it is hard to say which way the currency will be pumped but the declining red channel from the highs needs to be respected and that is where we are at currently. We ultimately need to remain under the 1.340-1.345 resistance area so that downward action can materialize. We are in no position to get ahead of the trade and state a turn in direction at this point although I am leaning to the BUY bias. We are 250-300 PIPS off of the lows from a 1200+ point decline. I am not casting this in concrete but just simply giving my unbiased take on it. An argument can be made that the EUR is a bit overvalued and think that GBP is more attractive currency. This decline could just as easily retest here at the 200-day moving average as the EUR moves higher to test the underside of the 50-day moving average at 1.37 now that another pullback to 1.32 area has happened. The key 1.442, 1.495 and 1.600 areas are expected to be seen longer term (should Ireland, Portugal and Spain hold it together). The EUR chart seen here, http://www.stockcharts.com/charts/gallery.html?$XEU, shows that these areas are now on a sell signal but is close to new PPO daily BUY signal after 38.2% retrace level has been tested. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
Recent sterling strength has given way to weakness on Dollar strength. The GBP is still in bullish alignment with the 200-day moving average and a bounce has started and a PPO daily BUY signal is expected soon as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP, and traders should be ready to jump on if it moves.
For the JPY intervention look to have been put on the back-burner as recent Dollar strength has mitigated the need for such action and any trades taken on the JPY would be as a buyer so as not to inadvertently fight the Bank of Japan. Be wary of the wash and rinse instead of a fast move in either direction that would normally be expected before the turns but looks to be rolling over longer term. Traders should continue to use caution should the JPY pairs be traded for the time being as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
On the commodity currency front, the Aussie looked on the verge of collapse but then reversed the reversal and looked like it wanted to make a head and shoulder top on the daily but was invalid ... this is the currency to watch. Note the daily trade above. Like the EUR, heavy, choppy consolidation, could be over as the range is broken, most likely to the upside. The AUD is seen here, http://www.stockcharts.com/charts/gallery.html?$XAD.
Most of this week’s key reports are data light and rate policy heavy. They are:
1. Thurs. Dec. 9, 2010 - (7:00am EST) UK Official Bank Rate and (8:30am EST) US Unemployment Claims.
2. Fri. Dec. 9, 2010 - (4:30am EST) UK PPI Input and (9:55am EST) Prelim UoM Consumer Sentiment.
That's it for today. Remember that I trade in the Live Forex Trading Room between 1am-6am Eastern Time. I will be hosting my regular 3-4 hour session and assessing and exploiting PIP opportunities as they arise.
Enjoy trading and good luck everyone!
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