Forex Analyst Picks & Strategies
August 3, 2015
My Picks: Bearish AUDUSD
Bias: Bearish Toward Channel Low & Fibonacci Target of 0.6932
Point to Establish Short Exposure: Close below last week's low of 0.7234
Invalidation Level: Channel Resistance & July 21 High of 0.7450
Commodities remain under pressure and many economies directly related to Australian's economic health continue to show depreciation. Fundamentally, the US Dollar is also seeing a strong round of economic announcements most notably in the jobs market. Ironically, or maybe on purpose, the Federal Reserve mentioned the employment market needs to show more health before a hike is likely.
This week we have both the RBA & US Non-Farm Payroll. Each will provide a good deal of volatility to AUDUSD however, the Reserve Bank of Australia Monetary Policy Announcement is likely to keep rates on hold though the RBA will likely say they would like to see a weaker AUD. Furthermore, the NFP announcement on Friday is expected to affirm the Fed's desire for an increasingly healthy economy. As we get closer to a rate hike, we could see AUDUSD continue to move lower in line with the technicals and fundamentals.
July closed at lowest since April 2009
2nd resistance: 0.7450 July 21 high
1st resistance: 0.7367/76 July 31 high, 21-DMA
Support (Unlikely to hold): 0.7206 76.4% Fibo of 2008-2011 rally
AUDUSD - The ratio of long to short positions in the AUDUSD stands at 2.60 as 72% of traders are long. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the AUDUSD may continue lower.
July 31, 2015
My Picks: Short USDMXN
Yesterday, Banco de Mexico (Mexico’s central bank) announced a commitment to sell 200 million USD daily, if needed without a minimum price movement. The bank is looking to keep the exchange rate from spiraling out of control.
With the Fed watchers speculating on a rate lift off, possibly in September 2015, emerging markets like Mexico are under pressure because those capital flows for yield investment get re-routed to the USD. As a result, the bank is playing defense on controlling significant outflows is looking to curb the rapidly increasing exchange rate.
I’m not convinced the Fed rate hike will take place in 2015. Therefore, this story may be exaggerating the price. The COT report suggests net sellers of MXN are at extreme 10 year levels.
Therefore, this presents an opportunity to short the pair using this week’s high as the stop loss level. Wave relationship show up in the 15.00-15.20 area so we are able to lock in a reasonable risk to reward ratio for short USDMXN.
Click here to view a chart with levels noted. (You can also press the play button to see the market in motion since the post was made.)
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July 31, 2015
My Picks: Pending Long EURNZD
Market Condition: Breakout
Target 1: 50% Range Extension 1.7046
Target 2: 100% Range Extension 1.7281
EURNZD 1Day Chart
(Created using Marketscope 2.0 Charts)
The EURNZD has advanced as much as 2938 pips from its 2015 low at 1.3881. However, over the last four trading weeks, the pair has been trading in a 469 pip range. If resistance breaks, this could create new breakout trading opportunities back in the direction of the pair’s primary daily trend. Possible targets for a breakout include a 50% extension of the trading range at 1.0746 and a 100% extension at 1.7281.
Alternatively if prices fail to breakout, this suggests the continuation of the current range bound market conditions. This would open up the possibility of prices retracing to the range support at 1.6343.
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July 31, 2015
My Picks: Long USDCAD at 1.2649
I bought USDCAD at 1.2649 and have since booked profit on half of the position. The rest of the trade will remain open to take advantage of any further gains ahead. The stop-loss has been moved to the breakeven level.
Near-term resistance is at 1.3002, the 14.6% Fibonacci expansion, with a break above that on a daily closing basis exposing the 23.6% level at 1.3090. Alternatively, a reversal below the 23.6% Fib retracement at 1.2872 clears the way for a test of the 38.2% threshold at 1.2729.
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July 30, 2015
My Picks: Short EUR/USD, Pending long USDOLLAR
The FXCM US Dollar Index (equally weighted basket of USD versus EUR, JPY, GBP & AUD) failed again last week near the 78.6% retracement of the April – May decline in the 12,050 area. There is some vulnerability in the index the longer it stays below this pivot. However, I would need to see last week’s low around 11,975 give way to trigger a double top on the daily and prime the market for any sort of serious correction lower. Traction over 12,050 would alleviate concerns of a more immediate correction and set the stage for a re-test of the April high.
Still short EUR/USD with a trailing stop now over 1.1100 (closing basis). Will look to add to position on a daily settlement below 1.0800.
July 28, 2015
My Picks: long Yen
June’s USDJPY trade produced a monthly key reversal. The rate has snapped back but a break above the long term resistance confluence (uptrend resistance and the line from the 1995 and 2005 highs) is still needed in order to minimize downside risk. For more, visit SB Trade Desk.
July 15, 2015
My Picks: Sell gold on close below 1150
Gold is testing a key trendline as it's remained in 'neutral' territory for its longest stretch since 2010. A breakdown targets a much larger decline and a resumption in the multi-year downtrend. I like getting short on a daily close below $1150 with initial targets at March, 2010 lows of $1040. Max risk on the position would be a daily close back above key trendline support at $1150.
Comment and view the chart live update here at this link: http://www.dailyfx.com/charts/tradingview/view?id=kuPrcaGM
June 23, 2015
My Picks: Pending: EURUSD, EURJPY, GBPUSD, USDJPY, NZDJPY
Looking across the Dollar, Euro and Yen majors; there are plenty of pairs that look well positioned from a technical perspective. Yet, once again the fundamentals may act as a barrier for follow through. With uncertainty or the focus pushed forward, expectations could pump the break on what looks like otherwise clean technical setups.
For the Euro setups, there are good looking setups; but resolution on Greece - for better or worse - is necessary. EURUSD in particular is in a diminishing wedge below 1.1500, but needs a decisive outcome from the debt standoff to have a fighting chance for follow through. A clear fundamental outcome would be good for either direction, but I prefer a scenario where the deal falls through and it clear 1.1250. The same is true of EURJPY, which could easily clear 138 congestion floor if a Greek crisis proved contagious.
For a Euro long view scenario, one of the better positioned pairs is EURCAD which puts a listless Canadian Dollar against a theoretically motivated counterpart. Clearing a 16-month channel resistance around 1.40 would be the key technical move, but fundamentals are crucial here.
For the Yen crosses, a clear risk view is necessary and we are as lacking of conviction there as anywhere else. A USDJPY move towards 125 on a clear risk appetite drive could be an opportunity but it has a narrow window and dubious support. I'd prefer seeing risk aversion pull down equities and the Yen crosses. USDJPY below 122.50, 121.50 and then 120 are the key stages. I am also partial to NZDJPY given it broke a major neckline on a six-year rise and head-and-shoulder pattern. A staging from a retest at 85.50 or projection below 84 may prove viable levels to work with.
From the Dollar crosses, focus on rate forecasts is still strong but the wait-and-see mentality is not as magnetized to the future as it was last week leading into the FOMC decision. That may ease trend development on pairs that aren't 'distracted' by upcoming event risk. I'm watching GBPUSD as it turns from its 50% Fib of the July 2014 to April 2015 bear phase around 1.5900. Without something to hold it back, perhaps this pair finds follow through more readily.
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