Monday 30 March 2009

Will update soon

Apologies to all readers of this blog, I have been very busy organising various issues but hope to be in a position to update soon. Please be patient some commentary should follow in due course. I have an NZDUSD trade brewing all I can say right now is that .5820 looks like a great short entry point, will update with a chart if I get the chance...

Sunday 15 March 2009

AUDNZD - Bollard talks up the Kiwi


In a recent Bloomberg interview with RBNZ governor Bollard, he hinted at there being an expected further 50 basis points of easing in the pipeline. He also spoke about the Kiwi being sufficiently weak to make New Zealands exports competitive again, suggesting that it was commodity prices that needed to fall. This has weakened the technical picture following trade on Thursday/Friday last week.
I Have cut my AUDNZD position in half with a stop for half of the remainder under 1.2395 due to this level leading to a breach of the rising trend line since 1.0630. There are likely to be stops both above 1.2970 and below 1.2395. It is clear which one's are most in danger. I thus take the view that it is safer to buy the top if AUDNZD finds strength, rather then holding onto longs. In any case I feel that fundamentally the pair should continue to trade above the 200 day moving average, and that 1.3600 is much more likely than 1.0630.

If you managed to get long AUDNZD when it was first recommended on this blog you should have made a tidy profit. There will be more opportunties, and it could yet break higher, you just have to protect what you have in the bag to a degree, but stay in the game, albeit to a lesser degree. Good luck

Tuesday 10 March 2009

USDSEK - Diamond top warns of further losses


USDSEK peaked at 9.3325, extremely close to a major extension target at 9.3335. In the process a diamond top has been formed. I can assure those of you that cannot quite see the formation that on a 4 hour chart it is clear. Typically when these patterns are triggered, which this one has been on the push under 8.9990, they lead to substantial losses. If USDSEK does follow through with more losses this would fit in with general USD weakness which implies increased global liquidity and a likely return to risk, i.e higher equity markets. The fact that this pattern has formed so close to a major extension target just makes it more potent. Losses could potentially extend down to the 7.3800 region. I would suggest selling on pullbacks with a stop above today's high at 9.2360.


I appreciate that the Swedish economy is exposed to the baltic states via the Swedish banking system, but then which banking system isn't exposed to regions or elements that weaken their respsective balance sheets . USDSEK is technically easy to read for me that is why I have chosen it. Ultimately this one is driven by the technicals.

Sunday 8 March 2009

GBPJPY - Extension higher favoured


As mentioned in my post http://you-buy-the-high-i-sell-the-low.blogspot.com/2009/02/gbpjpy-does-major-exporting-nation.html GBPJPY has indeed shown strength. The break above the neckline as shown in the above chart now targets our initial level near 158.00, however the recent structure is also typical of a substantial extension higher and could wind up targeting the 159.00 region.
This may tie in with USDJPY reaching it's double bottom target near 102.00. In any case both USDJPY and GBJPY look positive short term.

USD Index - Possible false break higher; but too early to tell


Recent price action has broken out of the rising wedge that was mentioned in last weeks post. To confirm this as a false break higher will require a push below the trend line shown on the weekly chart above (Please click on image for a larger chart). Some individual currency pairs are showing signs of having met extension targets, namely USDSEK and possibly GBPUSD. A fall under this trend-line will trigger a decent correction lower. As mentioned below I am focusing on the USD Index as i see it as the key to movement in so many other markets, and until this resolves there remains uncertainty in initiating too many new positions.

Monday 2 March 2009

USD Index - A rising wedge?


Are we forming an ending diagonal in the USD Index? As can be seen in the daily chart above (Click on chart for larger image), there appears to be a rising wedge formation in the USD Index. If this wedge breaks to the upside, look for a false break and then the USD should weaken. However without the false break it is just a continuation pattern. This is important as the S&P 500 has hit a major extension target at 700 according to the structure that I see in the market. If this coincides with a false break higher as described above, this could be a very useful indicator to near term movement. Watch that Dollar!

Sunday 1 March 2009

AUDNZD - A new monthly candle


Here is an update of the big picture view of AUDNZD. I have little to add on my stance. I contine to be bullish for all the reasons highlighted in previous posts on this blog. Recent economic statistics continue to be more positive for AUD than for NZD. If the combined technical and fundamental evidence does not manage to force a break of the wedge, then it is unlikey to ever happen. There is currently no reason to see why the favoured scenario should not pan out, but as always stay vigilant. A break of 1.2970 will target the 1.3600 region close to the old 2000 high.

USD index - key to direction


Above is an update of the USD index following on from my post http://you-buy-the-high-i-sell-the-low.blogspot.com/2009/01/usd-index-chart-will-reversal-pattern.html. Technically the reversal pattern has been triggered as both the neckline and last November's high have been broken. However, I cannot help but think about analogies with the Japanese Yen. The Yen is currently being sold off as it is realised that a strong currency is inconsistent with the economic statistics. Also Japanese investors are not repatriating in anywhere near the volume that they have been recently. This leads me to conclude that deleveraging is perhaps slowing down. Thus, can we assume that real flows due to deleveraging are likely to diminish in other currencies. It is my opinion, that if we make this assumption, then it is hard to justify that the pattern described above will meet its objectives, in the sense of a clean technical projection (although it may happen over a prolonged period when the pattern may no longer be valid). I personally favour a period of USD weakness before further strength may resume.
I highlight the USD index here as I feel that so much in the markets are reliant on the movement here. Further USD strength will most likely trigger more losses in the S&P 500, due to the effect on repatriated cash flows by US companies. This will probably drag down other equity markets. So Dollar bulls, like Yen bulls, should be careful what they wish for, as excessive dollar strength is inconsistent with a realignment of the US economy to net exports. I do however appreciate that someone must have a strong currency if counties like Japan and Germany have weak ones. The global economy is still dominated by the US, although not as it was say 10 years ago, so recovery there is still paramount if any place else is to see stability.