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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 Tuesday the 10th to Wednesday the 11th of May 2011.
The Dollar stalled at the 50-day moving average at 75.2 and some resistance is expected here as the possibility of more U.S. Dollar strength is possible given concerns about the EU late last week. Last week I stated that I believed we were due for a rather strong bounce to scramble shorts and we got it on rumors of Greece leaving the EU and EU breakdown and expect chop on the back of whether more U.S. Dollar printing continues after QEII is set to end in June and will it or will not the money printing continue under a new QEIII, especially since I can think of no other good reason for a dollar bull market to emerge at this time. That does not mean there are not some strong technical reasons for a bear rally to begin, as indeed there are. For one, dollar sentiment is about as negative as it can get, implying that everyone is on the same side of the trade and also the previously mentioned “euro factor”. It’s one thing for the banks to print up occasional rallies in the dollar by seizing on Europe’s financial troubles at regular intervals, but one of these days those troubles are going take a fatal turn for the worse when Spain flames out. If and when this occurs, it is not hard to imagine a short squeeze on the dollar that will recoup months’ worth of bear-market declines in mere days. To get the jump on that move will require close attention to subtle details on the intraday charts. So new entries on defined zones as the fast move to the 74-75 area completes and some chop and consolidation before the next move begins. Even money at this point for further retrace to the 77-78 area as it is very possible just as it is possible that will be followed by a collapse to as low as 72 and 70 and 67. Finally, in the broader context, the monthly chart shows that the rising trend line that is now broken. Witness a new weekly PPO BUY signal against a recent daily BUY after the daily became extended >>> why we use stops and are currently flat, as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD.
The EUR is the inverse of the USDX and with the backdrop of a PPO that now has triggered a recent daily SELL signal against a new weekly SELL signal but is extended at the 50-day moving average and the bounce here looks probable as is a collapse to the 1.400 in EUR/USD with resistance at 1.45 and 1.50 as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$XEU. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
We are STILL in an expanding megaphone pattern on the GBP daily attempting to break out to get to 170. Good for some nice PIPS last week and has now fallen to the 164 area that should allow new long entries to play the bounce, but caution is advised as a new PPO daily SELL muddies the picture against the backdrop of a weekly BUY signal makes cable playable on these pullbacks, and LONGER TERM THIS CHART STILL LOOKS BULLISH. Make cable a long play on shallow pullbacks with defined stops, as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP.
The JPY was overbought as USD/JPY and a pullback has occurred as expected from these extreme levels to create another run in the opposite for another set of extreme levels which will be defended at all costs with newly printed yen from the BOJ and so a nimble sell(BUY for USD/JPY in the 80.0 area) as below in daily trade can be played as a return trade to near/between the 50 and 200 day moving averages is expected for the time being as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
The AUD is another daily PPO SELL with a weekly PPO BUY and is in bounce mode and expected to consolidate here before the next move higher after the 1.05 gap has been now filled and then it moves to possible 1.13 - 1.15 on a safe-haven/interest rate differential bid as a long entry as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XAD.
This weeks tradeable/impacting reports and events are spread throughout the week with more reports later in the week. They are:
1. Wed. May 11, 2011 - (5:30am EST) GBP UK BOE Inflation Report and Gov. King speaks; (8:30am EST) CAD Trade Balance; and (9:30pm EST) AUD Employment Change and Unemployment Rate.
2. Thurs. May 12, 2011 - (4:30am EST) UK Manufacturing Production; (8:30am EST) US Retail Sales and PPI.
3. Fri. May 13, 2011 - (8:30am EST) US CPI and (9:55am EST) US Preliminary Consumer Sentiment.
The swing trade for today's Asian-London-U.S. sessions is to BUY the GBP/JPY @ 132.30 with a STOP @ 132.15 and a TARGET of 132.91 for over 60 PIPS.
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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