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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 22nd to Monday the 23rd of May 2011 and the week.
WEEK AHEAD: This week we will look to see if the US dollar will continue to gain strength against a weakening Euro and Yen. This week’s flow of data is very light and while I do not expect the New Home Sales report to be strong due to the housing market recovery to be heavily dependent on a positive employment outlook and vice versa coupled with last week’s existing housing sales data which was worse than expected. This should provide a window of currencies trading strong against the USD. This week will offer more on the data front with the UK and US GDP Reports later in the week. The Dollar now at 75.9 with the possibility of more U.S. Dollar strength is possible given more concerns about the EU late last week. Expect more chop (apparently, last week was not enough) 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. In addition, the Greece and Italian and now Spanish situations now stand at the forefront of market attention. The latest speculator data via the COT shows that traders are evenly split between long and short positions on the US Dollar and our majority stance is NEUTRAL. For short term trades I maintain a very slight bias at this point for further retrace to the 77-78 area before it is possible 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 and a falling trendline broken on the weekly charts and so a somewhat mixed picture longer term. The USDX is now under a weekly PPO BUY signal with an ongoing daily BUY and we are currently flat, as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD.
The EUR/USD (and other EUR crosses) continues to tumble after brief consolidation and appears poised to take out the 1.40 level and possibly target 1.375. The EUR is the inverse of the USDX and with the backdrop of a PPO on a daily SELL signal against a new weekly SELL signal cutting through the 50-day moving average, and the bounce here looks less likely as a move to the 1.385 level in EUR/USD with resistance at 1.45 and 1.50 as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$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 and looking like it wants to turn up from 161, 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 23, 2011 - (3:00-4:00am EST) EU French, German, and EU Flash PMI Reports.
2. Tues. May 24, 2011 - (4:00am EST) EU German Ifo Business Climate and (10:00am EST) US New Home Sales.
3. Wed. May 25, 2011 - (4:30am EST) GBP UK Revised GDP and (8:30am EST) US Core Durable Goods Orders.
4. Thurs. May 26, 2011 - (8:30am EST) US Preliminary GDP and Unemployment Claims.
5. Fri. May 27, 2011 - (2:00am EST) GBP UK Nationwide HPI; (5:30am EST) CHF KOF Economic Barometer and (10:00am EST) US Pending Home Sales.
The swing trade for next two day Asian-London-U.S. sessions is to SELL the EUR/USD @ 1.4148 with a STOP @ 1.4175 and a TARGET of 1.4005 for 140 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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