Tuesday’s Forex Levels
FX Levels and Commentary for Tuesday
Dollar Index:
The lack of any follow through on last
week’s dollar decline (if you can call it that) sets the stage for further gains
back towards the highs from early July. However, over the next several hours
price action may be somewhat subdued as minor overbought conditions work
themselves out. Pull-backs should be well contained by 90.06
GBP/USD:
Cable is one weak currency, as no support
levels seem keen on holding – the result will likely be another test of the
capitulation low of 1.7310 from a July 8th. We will look to re-establish shorts
over the next few hours/days as conditions become more favorable. Our short from
last night was well timed, but perhaps just to conservative in terms of taking
profits  :)
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AUD/USD:
Aussie is once again testing key support at
.7480 – and yet again we are tempted to short into this level, however, this
time we will wait to short the break versus anticpating the break. While it
seems likely that this level will give way with dollar strength and base metal
prices under pressure, until we see .7465 cleared, we will pass on shorts
NZD/USD:
Like Aussie, we are not convinced that lower
levels are in order currently. A complex head and shoulders pattern on the
60-min chart puts neckline support right at .6715, a level that has proven tough
since early July. While the trend is clearly down, we are keenly aware that a
sharp move higher could easily develop off such a well formed base. As a result,
we will wait to short the break, rather than anticipate the break. We do reserve
the right to override this observation if conditions change
 :) Â
USD/NOK:
Yesterday’s sharp rally on the heels of the
EUR/NOK break-out as put USD/NOK well into overbought territory – as a result,
we have no opinion for the next several hours until some hint of a pull-back
materializes. For those that are ‘reversal’ traders, this pair ranks right up
there in the ‘ripe to fall’ category especially since EUR/NOK has begun to sell
off as well.
As always, feel free to send me your
comments and questions.