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GreenForexTrading.com
ForeX forX-tra Gr€€n
Hi everyone,
In this e-mail I am going to give you my view on the markets for Wednesday the 30th to Thursday the 31st of March 2011.
The Dollar in chop mode has been stopped near 76.5 on the USDX with a daily bearish gravestone doji bar. It has been drawing a bit of recent strength from the verbal intervention campaign being engaged by several FOMC governors who talked hawkishly about ending QE. One pontificator went as far as saying that the last $100 billion of the scheduled $600 billion might not be needed. That was enough to tank the bond market yesterday so it is hard to believe that we will see too much more of that sort of talk if the Fed wishes to keep bond speculators from dumping the long bond and sending rates higher in the process. If they attempt to talk the Dollar up by sounding hawkish, they will send the long bond into the toilet and if they try to talk the long bond back up again by expressing reservations about the strength of the US recovery, they will send the Dollar into the toilet. No way out. I will be taking the “into the toilet” bet, thank you. Lot of chop lately, but I suspect that that will soon change. So another repeat from yesterday. With each subsequent bounce becoming smaller and smaller in the USDX, a fast move to 75 is now set to resume followed by a collapse to as low as 72 as the USDX is in a zone of weekly support at 75.5-76.5. Finally, in the broader context, the monthly chart shows that the rising trend line that forms the bottom of a reverse pennant formation is now at 76.7 and a retest of that level looks completed and a decisive breakdown from symmetrical pennant to below 75.5 (USDX now at 76.0) is now expected.
Therefore, I am still looking for continuation entries into U.S. Dollar denominated longs on any USDX strength for both scalp and longer term positions. Witness a weekly PPO SELL signal with a new daily SELL in conflict. So look to scale back until to go long U.S. Dollar denominated pairs on any weakness (USDX strength) into some retracement zones anytime this week, although I expect this USDX rally early this week to weaken as the USDX runs into these retracement zones, as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD.
For the EUR, you can definitely signify that price is in an up-trend, however that was true at the start of 2011 when price was at 130. It is said so many times that the trend is your friend but if you buy the Euro at 142 and another 1000 point drop occurs then what will happen to the trend if your friend. This is why it's important to use some common sense in terms of risk/reward. Over the next week we will have to acknowledge the highs and also acknowledge moves below 140. The EUR is the inverse of the USDX and with the backdrop of a PPO that now has triggered a daily BUY signal against a weekly BUY signal extended from the 50-day moving average, and the bounce here looks to continue and now look for some bottom action on lesser time frames to enter and go long. Still look for 1.419, and with retrace to 1.405 expected, we can look for chop again in the 1.402-1.405 area (this was especially true yesterday) and even 1.392 before 1.425, 1.45 and 1.50 can be seen in short order, as can be expected on future dollar weakness as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$XEU. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
The GBP is being held at lofty levels and the question is are we head higher and move towards 170 or is 150 on the cards again? We are in an expanding megaphone pattern on the GBP daily. It now looks like 170 will be on the cards first. Holding 160 and the 50-day moving average is next. The GBP has seen some serious choppy swings and a a clear pattern has emerged with a megaphone upper trendline resistance currently at 165 and rising. A new PPO daily SELL against the backdrop of a weekly BUY signal makes cable choppy as of late. All these cross-currents still make cable a cautious play either way, as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP.
The JPY caught the “safe-haven” BID and intervention is again in the cards and the USD/JPY 80.0 level is where some nimble BUYS can be set as that area will be defended at all costs with newly printed yen. No other recommendations on JPY that can be played as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
The AUD ended up catching the “safe-haven” BID and was shaken out of a trade only to see it again making new highs. No other recommendations on AUD yet but still watching for a pullback to enter as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XAD.
This week’s activities and reports of consequence are:
1. Thurs. Mar. 31, 2011 - (8:30am EST) CAD GDP and US Unemployment Claims and; (7:50pm EST) JPY Tankan Manufacturing Index.
2. Fri. Apr. 1, 2011 - (4:30am EST) UK Manufacturing PMI and (8:30am EST) US Unemployment Rate and (10:00am EST) ISM Manufacturing PMI.
The swing trade for today and tomorrow’s Asian-London-U.S. sessions is to BUY the EUR/USD @1.4150 with a STOP @ 1.4115 and a TARGET of 1.4330 for 180 PIPS over the next two days.
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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