One Notable Pattern That Deserves Attention
While the big news yesterday was
the break lower in the dollar during the London session, given the
lack of range and pent up frustration levels of most traders, the follow through
was less than many might have expected. Perhaps entries above 1.2500 seemed a
bit too rich, or perhaps lingering fears of more knee jerk reactions on data
release. We see the break as valid, but understand why it has been less
impressive than many would have preferred. We too laid low during the recent
period of range trading, seeking opportunities in the crosses which played out
well, and will now seek entries in the dollar based pairs that meet our
parameters. For now, levels are a bit extended.
Meanwhile, the Red Sox trouncing of the Yankees seemed to
coincide with some decent bids for the Yen in early Asian trading as the 108
level gave way. Regardless, traders are concerned that the BoJ could be lurking
and it might limit any significant move lower.Â
If there was one notable patter that deserves attention, it
was on Tuesday in the EUR/AUD. A bearish hanging man candle was formed and it
coincided with failure at the 50 day ema and stochastics rolling over.
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Technical Notes:
AUD/CAD:Â our current short in this cross looks as though
it will be an exercise in patience. .7175 and .7140 are battling it out. If
.7140 gives way, this will put us on solid footing for a re-test of .7090. We
will evaluate at that point. For now we are maintaining our original stop loss.
EUR/AUD:Â as mentioned above, possible short setting up
here on break of 1.7050
AUD/USD:Â .7400 is in sight, but underlying technicals do
not confirm recent rally
USD/JPY:Â for now the 108 level remains key resistance and
no BoJ buying has been seen. Next support is seen at 107.07. Comments from
Japan Vice Finance Minister Hosokawa shed little light.
“It’s desirable that foreign exchange rates move in a
stable manner, reflecting fundamentals of the economy,” Hosokawa said. “It’s
important to closely monitor their moves. We will take appropriate action as
needed.”
AUD/JPY:Â deep pull-back on daily to the 50 and 200 day ema
as well as a 38% retracement of recent Sep-Oct move. Consolidation in this area
may offer long set-up.
GBP/USD:Â 1.8275 area should serve as near term top, look
for consolidation or minor pull-back towards 1.8200-40 area for continuation
long.
EUR/USD:Â similar pattern here, higher levels are likely,
however, consolidation or pull-back needed for long continuations.
As always, feel free to send me your comments and
questions.
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