USD/CAD Trading at 1.0250 Support

The weekly and daily USD/CAD chart show the support (Oct 09, Jan 09) - former resistance (2008) - at 1.0250. See Chaty below.

The pair is currently trading at this level. A breakthrough would open up a further decline to parity. However, the support has been tested twice during the last 6 months and was holding up.

Therefore I would favour a long trade with an attractive Risk-Reward-Ratio:

• Price: 1.0250
• SL: 1.0100
• TP: first target 1.0550 (possible up to 1.07)

USD/CAD, weekly



USD/CAD, daily

AUD/NZD Top: Can't break 1.30

The long term chart (weekly) indicates that there is a very strong resistance in the AUD/NZD at 1.30.

AUD/NZD, weekly:

During the last 2 years the AUD bounced back 4 times, reaching a max of 1.2960 in Jul 2008. Each time the price fall back significantly

Date                 Top                   Fall Back
Jul 2008            1.2960              1.0700, Oct 2008
Mar 2009           1.2940              1.2050, Apr 2009
May 2009          1.2940               1.2000, Oct 2009

Feb 2010          1.2925 (?)           ???

The current prices could offer a good short opportunity with a stop-loss placed a few pips above either the last swing high (1.2925) or above the Jul 08 high (1.2960). Based on the historic price action, this trade could offer an attractive risk-reward ratio.

AUD/USD: Lower Top at 50% Retracement Possible

Looking at the daily chart, it seems likely that a lower top is forming just above the psychological resistance at 0.9000. This level falls very close together with the 50% Fibonacci retracement level (0.8970) of the 0.9320 to 0.8620 decline.

Daily Chart





During the opening of Tuesday’s London session the price went up to 0.9060. That’s above the former highs at 0.9020. Everybody who speculated at a lower top “around” 0.90 and had a tight stop in place got stopped out. Price reversed sharply on risk aversion during the US session when the “USD Consumer Confidence (FEB)” got released and came in below expectations.

If the AUD/USD keeps declining over the coming days the lower top will form out. Price targets/ support levels are at 0.8810 and 0.8650.

GBP/USD Short Opportunity - Trendline Hit In 4hr Chart

The GBP/USD is in a downtrend since late Nov 2009. With the strong gains (+240 pips) during today's US session (30.12.09), the pair has reached the upper trendline of the of the downtrend channel.

Applying a trend following strategy this is an opportunity for a short entry.

• P: 1.6080
• SL: 1.6200
• First target 1.5800

Please consider that liquidity is relatively low during holiday trade, which can lead to price spikes in either direction.

EUR/USD Ready For Explosive Break-Out?

The EUR/USD is trading in a narrow range along the 1.4730 support area since the steep fall initiated by the NFP release on Fri 04.12.09. The longer the pair stays range-bound, the more likely a strong breakout becomes.

The daily chart (see below) clearly shows the 1.4730 area as support/ resistance zone (Sep swing high / Oct-Nov swing low). The daily long-term uptrend is still intact. Positive economic news could trigger risk appetite leading to investments in growth assets / currencies, resulting in a lower USD/ higher EUR.

However, the fall under the 20 day simple moving average and the fall initiated by the NFP data created a short-term downtrend (see 1hr chart below). Also the mantra of the past months “better economy > more risk appetite -> lower USD” might not continue indefinitely. The US NFP results (-10k jobs instead of the predicted -100k) were a first indication of that change. More positive US data could trigger a market opinion that US interest rates might rise earlier than currently expected. That would lead to higher USD -> lower EUR/USD.

Currently the direction is not clear. But the longer the EUR/USD stays within the 1.4730 range, the stronger the breakout will be. In which ever direction it will go. I will stay sidelined for now and go with the trend if a strong breakout moves prices out of the 1.4690 – 1.4760 range. Don’t get caught on the wrong foot!

EUR/USD - daily

EUR/USD - 1hr

GBP Panic

Now that was stress. I got caught on the wrong side today. Was long EUR GBP and hell broke loose ;-) Within 2 hrs -110. Luckily I had a stop at 0.9270. Due to the strong move I went aggressively short and closed the position 0.9225. That way I got out with a little gain.

Will stand aside for now.

GBP outlook vs USD and EUR

Fundamentally I am still bearish on GBP. And as long as GBP USD is lower than 1.6130 the downtrend stays intact as well.

However, with equities and gold going higher almost every day, the USD is weak. Can this continue forever? Most likely not, but I am not the one trying to catch the reversal. Too expensive!

Therefore I entered long EUR GBP yesterday @0.9320. SL 0.9270.