The market is still feeling the shock of the failed German debt auction on Wednesday. The implications for the eurozone are seismic after all, putting a complete fragmentation right at the top of the agenda. However the market has paused and drawn breath, aided by holidays in Japan and the US. What we can say is that December is going to be very busy yet and the euro may not exist by ealry 2012.
Here at FXMR we have had a really succesful time of it. Trading the ideas put forward in this daily report and in our fortnightly strategic outlook report, the demonstration account has now reached another major milestone. From $100,000 at the start of September, this week has seen us add $300,000 to over $2,000,000. Check it out here…..
| 0.9850?75 | 0.7480 | 1.3205?10 1.3130?40 | 1.3425 1.3383 | 77.58 77.30?35 | 1.5670 1.5500?10 |
| 0.9600 | 0.7375 | 1.3065 | 1.3240 | 76.80?85 | 1.5450 |
Key: PA = Price Action | LR = Linear Regression | MA = Moving Average.
The AUD has down better over the past 48 hours – see NZD commentary below. The waves of ‘risk off’ selling have moderated, at least for the present. A further correction could see us up to 0.9850?75. This would help reduce the over sold condition seen on the long?term charts. Near term trading opportunities look limited. To be honest the lion’s share of the profits were to be made at the start of the week. We prospered on the strategic tradebook but since then have been trickling points back to the market. And we don’t like that at all!
Evidence is gathering that Asia is detaching itself a little from the European debt woes. Well, we’ve had enough warnings after all. A look at the charts shows that currencies with a toe in the Pacific (USD, JPY, AUD and NZD) have been very stable against each other over the past 48 hours or so.
The charts show NZD has found support from the major target at 0.7375. Technical theory says that this should trigger a short covering rally to 0.7480. After that the flow should be back into USDs again as the European situation will spill contagion – even far?away NZ is not safe from that financial tsunami.
We’ve been following the cross lower and have got the new range spot on. Support has been consistent from the bullish and rising 22?day average. This is at 1.3065. Resistance is clear at 1.3130. Although the major trend remains bullish, the shorter and more immediate trend and signals point lower. Thus we target a move back to the centre of the previous range at 1.3040?45.
The fate of the euro continues to overshadow the global eco outlook and dictate the direction of currency markets. Thursday saw a retracement and consolidation. However the aftershocks of the failed German bond auction continue to weigh and we have traded down to a low at 1.3290.
A recovery of sorts is being attempted. In an ideal world we would get a rally to the resistance zone at 1.3383?1.3425. However we may not and the hourly and daily trends remain solidly bearish. Can we again go short at these lower levels? Fundamentals say, “Yes”, but money management says that we might have to weather a bounce. Hmmm. Small short with wide stop is has to be then.
Asia has pushed USD JPY higher. This is a little puzzling because, as a result, the yen has remained steady on the crosses and not strengthened on the predicted demand for the unit as a haven. This trend could re?emerge next week though.
On the charts the resistance at 77.30?35 now becomes a support. 77.50?60 could develop as a double top. The trends are conflicted, with the daily still bearish whilst the hourly is bullish.
We cannot unscramble these signals and are waiting on fresh inputs next week. If we were to trade simply off signals then an hourly close below 77.25 risks a run back down to 76.80?85 support.
The charts show that Cable thought about pausing for Thanksgiving but then decided to just keep slipping lower. Having taken our profit just above 1.5500 we have missed out, annoyingly. Sterling’s fate is decided in Europe where conditions keep worsening. Cable is moving in lock step with EUR USD as the key EUR GBP cross is set tight at 0.8600+. WE see this slipping to 0.8500 and then 0.8400 and suggest it is where the value trade lies. Cable looks to be short of a corrective bounce in which case we would prefer to sit and wait for a turn off resistance at 1.5600?10 or 1.5670 before establishing shorts again.
Source http://www.fxstreet.com/technical/analysis-reports/daily-strategic-report/2011-11-25.html
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