Here’s A Trade In The Making
The FX story yesterday had to be the
Canadian Dollar (CAD). Both the
weekly and daily charts came together to offer an explosive pattern from deeply
oversold conditions. Based on the
action, it appears many players were pretty short the USD/CAD and may have been
forced to cover…simply an observation.
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Nonetheless, it was a good backdrop for a
long entry at 1.2940 with a stop loss at 1.2830, although if it continues to
meander higher, we will raise our stop loss and trail it higher.Â
Also watch EUR/CAD cross as it runs into some solid resistance at 1.6005,
any significant supply showing up here will likely force USD/CAD lower.
Another trade in the making is a long in
NZD. This is still the highest
yielding currency and with bond traders doubting the Fed’s firm stand regarding
the “sustained†recovery, 10-year yields continue to fall.Â
Recently, evidence supports the inverse relationship between 10-year
yields and the price of NZD/USD. The
chart below illustrates this well
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Technical Notes:
Possible Long Set-ups based on short-term
model:
AUD/USDÂ
+.7010 should allow for move towards .7040
NZD/USDÂ
+.6610 set stage for move towards .6635
Dollar Index needs to hold above
88.38. A weak pattern to begin
with, so this level will be key to preventing a re-test of Friday’s low at
88.11.
As always, feel free to send me your
comments and questions.
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