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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 15th to Monday the 16th of May 2011 and the week.
WEEK AHEAD: Last week’s flow of data yielded currencies trading weak against the USD. In addition, the Greece situation stood at the forefront of market attention. This week will offer more on that front with the Ecofin/Eurogroup meetings on Monday. In addition, important data with the Philly Fed on Thursday standing out as the key forward-looking indicator as well as trends in initial claims, which has been volatile recently. Finally, Fed Chairman Dudley’s speech will be interesting to follow, together with FOMC minutes. The Dollar now at 75.8 with the possibility of more U.S. Dollar strength is possible given concerns about the EU late last week. 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. 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 SELL signal against a daily SELL and are currently flat, as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD.
Last week a look at the CFTC's Commitment of Trader data (for speculative exposure), showed that EUR long spec positions surged to multi-year highs. As a result of this surge in exposure, we have seen a one way trade as the specs exit the trade en masse. Sure enough, a week later, the EUR/USD (and other EUR crosses) continues to tumble and appears poised to take out the 1.40 level. Looks at the current COT data and extrapolates that the main move has already been completed and from this point on it will be just the retails, the new specs and the robots if the EUR is to continue dropping. The EUR is the inverse of the USDX and with the backdrop of a PPO on a daily SELL signal against a new weekly SELL signal cutting through the 50-day moving average, and the bounce here looks less likely as a move to the 1.385 level in EUR/USD with resistance at 1.45 and 1.50 as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$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 and failed. New entries are possible but caution is advised as a new PPO daily SELL muddies the picture against the backdrop of a new weekly SELL signal while still in bullish alignment, makes cable playable on both sides but LONGER TERM THIS CHART STILL LOOKS BULLISH (unless the 200-day M.A. gives way below 159). 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 on a weekly PPO BUY rolling over into a SELL if more weakness continues but is really expected to consolidate here before the next move higher after the 1.05 gap has been now filled and more consolidation before 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 light and spread throughout the week. They are:
1. Mon. May 16, 2011 - (5:00am EST) EU CPI and (9:30pm EST) AUD Monetary Policy Meeting Minutes.
2. Tues. May 17, 2011 - (4:30am EST) GBP UK CPI; (5:00am EST) EU German ZEW Economic Sentiment and (8:30am EST) US Building Permits and Housing Starts.
3. Wed. May 18, 2011 - (4:30am EST) GBP UK Claimant Count Change and MPC Meeting Minutest and (2:00pm EST) US FOMC Meeting Minutes.
4. Thurs. May 19, 2011 - (4:30am EST) UK Retail Sales; (8:30am EST) US Unemployment Claims and (10:00am EST) US Philly Fed Manufacturing Index and Existing Home Sales.
5. Fri. May 20, 2011 - (7:00am EST) CAD CPI and (8:30am EST) CAD Retail Sales.
The swing trade for next two day Asian-London-U.S. sessions is to BUY the EUR/USD @ 1.4050 with a STOP @ 1.4025 and a TARGET of 1.4135 for 80 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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