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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 Sunday the 27th to Monday the 28th of March 2011 and the week.
WEEK AHEAD: It is no secret to those attuned to market action that the US Dollar's technical chart picture is horrendous. It had broken through a critical support level near 77 on the USDX last week and had further descended down towards the tremendously important 75 level. No matter what appeared to be happening in the world, the US Dollar could not get much if any of a safe haven bounce. Currency traders had been moving to the Swiss Franc as their choice of a safe haven. The Aussie has been making new highs and the Canadian Dollar has been very strong as well. Now, it is also obvious that the US would dearly love to see the Dollar stay weak to help it deal with its massive debt load but the ugly truth is that the Dollar was on course for a major crisis if it violated the 75 level. Enter the Fed officials Thursday and Friday to hit the airwaves talking about ending the QE program. Since it is QE that has been partly responsible for Dollar weakness - along with the abysmal fiscal condition of the nation - something had to be done to prevent a Dollar crash. This is the reason we are getting a sudden rash of Fed officials looking for microphones and venues to talk about ending QE. Result? Up goes the Dollar and down goes dollar denominated pairs except for the AUD and precious metals at the end of the day. As a kicker, they also manage to further knock down the Japanese Yen saving themselves and the rest of their pals at the G7 from having to actually pay to undergo another round of currency intervention. Witness a shrewd, hidden round of verbal intervention disguised as normal policy discussions. Most recently, they helped the US Bankers throw everything they could at the yen to hold it down. If the short-squeeze on yen carry-traders had grown any more intense than it did last week, it would have forced a massive unwinding out of US Treasury paper, derivatives and everything else that the banking minions have bought using yen borrowed for next to nothing.
All of this has put added strain on the US Dollar and will continue to do so for some time. With each subsequent bounce becoming smaller and smaller in the USDX, a fast move to 75 is in motion followed by a collapse to as low as 72 but beware that continuing the bounce is possible here as sentiment, again, has gotten a little ahead of 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 this level is possible before a decisive breakdown from symmetrical pennant to below 75.5 (USDX now at 76.3) would have serious implications regarding the potential downside.
Therefore, this week, I will be looking for continuation entries into U.S. Dollar denominated longs on any USDX strength this week 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?$USD.
The EUR is the inverse of the USDX and with the backdrop of a PPO that now has triggered a daily BUY signal against a weekly BUY signal extended from the 50-day moving average, and the bounce here looks to continue and now look for some bottom action on lesser time frames to enter and go long. Now look for 1.419, and with retrace to 1.405 expected, we can look for chop again in the 1.402-1.405 area and even 1.392 before 1.425, 1.45 and 1.50 can be seen in short order, as can be expected on future dollar weakness as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$XEU. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
The GBP has seen some serious choppy swings and a reversal upon reversal bar on the daily and we have been avoiding this on of late but still watching it with no bias as it becomes less stretched on the long side, but needs to reclaim the 50-day moving average. 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. Mon. Mar. 28, 2011 - (10:00am EST) USD Pending Home Sales and Banker speak throughout the day...be forewarned.
2. Tues. Mar. 29, 2011 - (4:30am EST) UK Current Account and (10:00am EST) US CB Consumer Confidence.
3. Wed. Mar. 30, 2011 - (5:30am EST) CHF KOH Economic Barometer and (8:15am EST) US ADP Non-Farm Employment Change and (8:30pm EST) AUD Retail Sales.
4. Thurs. Mar. 31, 2011 - (8:30am EST) CAD GDP and US Unemployment Claims and; (7:50pm EST) JPY Tankan Manufacturing Index.
5. Fri. Apr. 1, 2011 - (4:30am EST) UK Manufacturing PMI and (8:30am EST) US Unemployment Rate and (10:00am EST) ISM Manufacturing PMI.
There is no swing trade for today’s Asian-London-U.S. session.
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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