Forex Technical Analysis for October 11, 2011

EUR/USD Technical Analysis for October 11, 2011

The Euro skyrocketed against the US Dollarduring the Monday session as it was announced that the German and French leaders had agreed to decide something and come up with a plan for the debt crisis, and to recapitalize the EU’s banks. The biggest problem with this: There are no concrete plans being announced. Even with this being said, the Euro shot straight up, and the move was impressive. The real question is whether or not there was a real move during the session. The 1.37 resistance level was retested, but continued to hold the price down. The candle is massive and green, so a move up wouldn’t be overly surprising. The move looks like one that could be faded, but we have not seen a negative candle from which to do so. The pair is still decidedly bearish, and we think that this short-covering move is going to set up for a sell soon. The easiest direction is to the downside, and we still think this is the long-term direction. We will continue to sell rallies, and are currently waiting to see an exhaustive candle or a long red one.

AUD/USD Technical Analysis for October 11, 2011

The Aussiecontinued to power forward during the Monday session as traders continue to take on the “risk on” trade globally. The Aussie is very sensitive to global risk, so this move is to be expected. When the stock markets and futures market rise, so does this pair – most of the time that is. However, we approached the “parity” level during the late hours of the day, and it did stop right at that level. Parity levels are special because they represent the “biggest of the big numbers”. This large psychological number normally produces some kind of reaction, and we expect this time to be more of the same. As the economic headwinds out there are too many to count, we think this pair has an easier time going down than up over the longer-term. Because of this, we are selling rallies that show signs of exhaustion on smaller time frames. This area we find ourselves in at the moment is a perfect place to look for that. Unfortunately, we have not seen that yet. We will be looking for 4 hour bars, and perhaps daily ones if we get them that suggest selling the pair. We are not going to buy as the dangers are too numerous at the moment. We are sellers, but are still waiting for our signal.

EUR/CHF Technical Analysis for October 11, 2011

EUR/CHFfell during the Monday session as traders ran to the Franc against several other currencies. While the stock markets and commodity markets all had a “risk on” bias, this is very concerting as the Franc generally isn’t thought of as a “risk on” currency. Because of this, the pair seems to warrant keeping an eye on at the moment. The pair can’t be shorted, as the Swiss National Bank has stated very publicly that is going to defend the 1.20 level as being too low in this pair and this should continue to keep an upward bias in the pair over the long-term. We are buyers only because of this, and welcome any dips as buying opportunities, and especially so if the Europeans can work out some kind of fix for their debt crisis. Technically speaking, the pair seems to have significant support from 1.23 down to 1.20 or so, and should remain supportive in this general area. We would buy supportive candles in this zone, and think that it should remain to be a bit of a floor in this market. Selling isn’t agreeable as the SNB is more than likely going to work against the falling prices if they get too low.

NZD/USD Technical Analysis for October 11, 2011

The Kiwi dollar found itself being bid up during the Monday session as traders expressed relief that the Europeans have decided to agree on some unknown plan in the future to bail out banks. The absurdity of this statement is exactly what gets us so suspicious of any rally at this point, as there really hasn’t been anything fixed, yet the markets have reacted as such. The NZD/USDis highly sensitive to economic conditions, and as a result rallied hard during the session. However, until there is some kind of concrete deal, it is going to be very hard to get overly bullish on the riskier assets as well as currencies like the Kiwi. The pair simply has too many things waiting to ambush it out there for us to be comfortable buying it. The bounce from the 0.75 level has been impressive so far, and we even could see a continuation of the run up to the 0.80 level in the short-term. However, there really isn’t anything pushing this pair forward, other than some potential short-covering. Because of this, we are waiting to see if some kind of shooting star or bearish candle forms between the current level and 0.80 from which to sell.

USD/JPY Technical Analysis for October 11, 2011

USD/JPYcontinued to sit still on Monday as traders play “ping pong” with the 76 – 77 range. The Bank of Japan is currently working against appreciation of the Yen, and the USD/JPY pair is the main one that the central bank will focus on. The recent trend is to buy when the pair gets lower, around the 76 to 76.50 level, and to sell it off as we approach the 77 to 77.50 level. The market seems fairly content to sit still and trade in this extremely tight trading range. While we are not sure which way it will break in the long run, we do know the Bank of Japan has made it clear that they will intervene if the pair falls too quickly. Because of this, we are buyers, but only down near the 76.25 level and taking short-term gains, mainly of the 50 pip variety as this seem to be the limit of the current trading range. Selling is tricky, as the threat of intervention still remains.

GBP/USD Technical Analysis for October 11, 2011

The GBP/USDpair rose on Monday as traders piled into the “risk on” trade. The market finished the New York session at the top of its recent trading range, and is now at a crossroads of sorts. The 1.57 level has been significant, and we feel there is no reason for this to change. The trend is most certainly to the downside, and this should also continue to be the case as the headwinds out there for the global economy continue to push the markets around. It was a nice rally, but the fact that we bounced shouldn’t be a big surprise as it had sold off so hard. The market looks set to consolidate between the 1.57 and 1.53 levels for the time being, assuming that the 1.57 holds as resistance. The breaking of that level to the upside would be very bullish, but we still think there are far too many resistive points on this chart to get bullish overall. The 1.59 – 1.60 levels would come into play as possible sell points if the area gave way as well, and the fundamentals around the world still suggest a run to the Dollar is the more likely of scenarios. If we can break below the 1.53 level, this would be a massively bearish signal and show that this pair has much farther to go to the downside. For the time being, we think that any signs of weakness at the 1.57 level should be sold.

USD/CAD Technical Analysis for October 11, 2011

The Canadian dollar appreciated against the Greenback on Monday as trader bought risk around the globe. One of the most heavily bought areas was in the energy sector, especially the oil markets. With this in mind, it is no surprise that the Canadian dollar rose against the Dollar. The market did fall just down to the support level in the same range we have been watching as a potential buy area. The daily candle does look very bearish though, so we feel that a continuation of the dip could be coming. However, we feel that there are simply far too many reasons to sell the Loonie at this point, and that the pair will likely continue its climb over the next several days. We are currently looking for a hammer or other such bullish candle in the neighbourhood of 1.03 to 1.02, and think this could be a good launching point for more strength. We think that the “bottom” area is the parity level, and a break below that signals continued selling. The overall trend is still down, but we also feel that a massive bounce could be coming as well. We like buying supportive candles at this point.

USD/CHF Technical Analysis for October 11, 2011

The Swiss Franc appreciated quite strongly during the Monday session as traders sold off the Dollar against almost all currencies worldwide. The move might not have been so much a nod to the Franc, rather a snub to the Dollar. It should be noted however, that the pair only fell to support, and did not break below the important psychological number of 0.90. The Swiss National Bankhas been actively working against the appreciation of the Franc, especially against the Euro. With this in mind, we are not willing to buy it. In fact, we see this move as a potential set up to go long this pair, as the US Dollar is the ultimate safe haven trade, and there is plenty out there that could go wrong presently. Until we break below the 0.88 level, we feel this pair should still continue to climb as traders dare not risk a fight with the Swiss National Bank. Any supportive candles at the 0.90 level would be very interesting to us, and we wouldn’t hesitate to buy them, and even as a long-term trade as the SNB should continue to work against its currency for the next several months.


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