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Daily Observations: April 11, 2013

Daily Observations: April 11, 2013

2013-04-11 13:40:00
Christopher Vecchio, CFA, Senior Strategist
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Current Positions:

- Long AUDUSD from 1.0535, Stop Loss at 1.0495 (-40-pips), TP1 at 1.0585 (+50-pips), TP2 at 1.0625 (+90-pips)

- Long EURUSD from 1.3080, Stop Loss at 1.3040 (-40-pips), TP1 at 1.3160 (+120-pips), TP2 at 1.3245 (+205-pips), TP3 at 1.3325 (+285-pips)

- Long GBPUSD from 1.5322, Stop Loss at 1.5290 (-32-pips), TP1 at 1.5440 (+118-pips)

Typical Time Frame: 1-day to 1-week

Are you new to FX or curious about your trading IQ?

Yesterday I expressed interest in getting long the AUDUSD, EURUSD, and GBPUSD, given the fact that the 4H and daily time frames were showing continuity; accordingly, a confirmed 1H move in the same direction (in this case, bullish) would have been the trigger, giving us full time frame continuity, ideal for a momentum play.

Overnight, these crossovers did indeed transpire, with long positions taken in the AUDUSD, EURUSD, and GBPUSD. At face value, I feel most comfortable with the long AUDUSD and GBPUSD positions, given recent fundamental developments that suggest the Aussie should benefit from a rebound in Chinese data, while the British Pound benefits from more neutral data and capital flows from the Euro-zone debt crisis - be they diversification away from the Euro or genuine safety concerns.

The US Dollar, overall, looks on soft technical footing, considering that the major propellant behind its most recent rally (as seen in the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR)) is the USDJPY. However, the USDJPY has recently hit topside resistance above 99.50/75, the same channel that contained prices on rallies in mid-February and early-March. Accordingly, if the USDJPY is due for a pullback, it is likely this is accompanied by a compression in the 2s10s Treasury spread, which undermines the US Dollar's appeal relative to other currencies. A soft greenback for the next several days - barring a major beat in tomorrow's USD Advance Retail Sales (MAR) report - is in the cards.

AUDUSD

Daily: (8-EMA > 21-EMA) > 200-DMA = BULLSH

4H: 8-EMA > 21-EMA = BULLISH

1H: 8-EMA > 21-EMA = BULLISH

Position: Long from 1.0535, SL at 1.0495 (see above)

EURUSD

Daily: (8-EMA > 21-EMA) > 200-DMA = BULLISH

4H: 8-EMA > 21-EMA = BULLISH

1H: 8-EMA > 21-EMA = BULLISH

Position: Long from 1.3080, SL at 1.3040 (see above)

GBPUSD

Daily: (8-EMA > 21-EMA) < 200-DMA = NEUTRAL

4H: 8-EMA > 21-EMA = BULLISH

1H: 8-EMA > 21-EMA = BULLISH

Position: Long from 1.5322, SL at 1.5290 (see above)

USDJPY

Daily: (8-EMA > 21-EMA) > 200-DMA = BULLISH

4H: 8-EMA > 21-EMA = BULLISH

1H: 8-EMA < 21-EMA = BEARISH

Position: Flat, waiting on 1H for a buy signal

As always, any other trade ideas and general macroeconomic musings can be found in the DailyFX Real Time News feed, or by following me on Stocktwits/Twitter @CVecchioFX.

I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 07:15 EST / 12:15 GMT, in which I delve deeper into my positions and thought processes behind my analyses.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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