Monday, December 14, 2009

weekly kickoff: forex views technical trade signals

usd/cad(neutral) - appears to be very flat / rangebound in daily timeframe. I'm watching the 1.0614 0 1.0491 area to give a better idea on the longer trend.

aud/usd (neutral) - has been trying to go up but not showing any follow through at the 93.00 handle.

gold - (neutral) - but expect the longer term uptrend to test higher highs after pull back. This view may change as there is great uncertainty of the US dollar. Would expect the USD to rally if equities retreat. I think longer term gold will go to 1300 area but would not jump in at this point.

gbp/usd (neutral) - i hate to say neutral so many times but this is what the market is giving. This is clearly above my pivot of 1.6048 so I have to still say it's in an uptrend but it is not making higher highs on daily timeframe. I'm looking for more information on this one. Short term has looked on the weak side so I would not be surprised a move lower to fibo level 1.6257 area but i'm not taking position in any of these hence the current view of neutral. Stay tuned for updates

dow (mildly bullish) - dow trades at the top of a multi-week channel testing key resistance at 10500. Bearish side of the channel is 10300 and below that i have major support at 10037 where there is a confluence of indicators I follow. There seems to be weak interest at this point or lack of follow through so I'm mildly bullish and expect that a pullback could occur if buying doesn't pick up soon.

crude oil WTI (neutral) - Yep neutral again. I'll explain... I have my pivot at 71.89 so I have to think this is a downtrend. But it's very oversold and could bounce to test that pivot. If not I see a possible test of 65.20. I have not kept up with the fundamentals in crude but I have to guess that there's more supply than demand at this point. If there's a bounce and it's strong it would be able to get over 71.89 in that case that would but the bulls back in control.

notes/news/perspective- heavy economic data week. fundamentals could sway the technicals. more of a reason for me to be neutral and trade short term ranges. The Dubai crisis is temporarily sealed, but not over as oil-rich Abu Dhabi bails out neighbor Dubai with $10 billion easing some concerns of the estimated $80 billion in debts. Very mild gains occurred in US equities and gold as tentative investors gauged the strength of the run up in US equities and dow jones trades near resistance with chance of going higher. Support is a long way away if the daily channel in the Dow turns south and breaks lower. However if new highs continue to occur it will bring more confidence to a sustained rally. All eyes will be on the US for additional confirmations in economic data to the recent string of positive data out of the US. Should the channel break higher it could provide later support at this 10500 handle that seems to be a key area of resistance. There is a mixture of sentiment on the street. Some believe the US economy is rebounding while others don't believe it will happen without more solid fundamentals. Meanwhile global uncertainties still rein from the surprise Dubai debts and banks of Europe and UK that were heavily exposed to Dubai which add to the loss of faith in the financial markets abroad and further burdens on the respected economies involved. Even Japanese contractors were exposed to the Dubai market shock. the Reserve Bank of Australia's December minutes concluded that the current 3.75% benchmark rate is "finely balanced" hinting that the RBA might hold rates steady in February. And finally a stream of back to back EUR and USD data should provide some market action throughout to week. My guess is that nervousness in the markets could last for a long time to come even all the way through Q1 of next year and maybe longer as corporations weigh the damage done on the economy and retrench for the road ahead. Unless stability is restored investors and corporations will likely error on the side of caution and play it safe.


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