Asian market open
Bit late today but I really needed to get away from the screens so here's the link to this morning's opening commentary on FX Street.
I'm going to get back to basics, do a full analysis on all of the major pairs and see if that helps to clear the fog. It's going to be very quiet anyway for Labour Day celebrations in many centres.
I wish I knew what was going where!
- I'm still sitting with a core long position in USD/CHF but I haven't been able to get into the rhythm of the market at all and am getting close to pulling the pin on this one.
- I'm also still long of EUR/AUD with an excellent average on the trade, so this is one trade I'm comfortable with.
- I've been struggling to get into the swings on the Yen crosses, and although there is plenty of movement I'm having a lot of trouble in picking the turns.
- The EUR is in pure stop-loss hunting mode and I also can't pick this one. What I will say, is that the market is short and bearish of EUR/USD yet China was seen buying again near 1.2975 last week!
- Even technicals are pretty much a waste of time in range-bound stop-hunting markets. They work the first time and then trigger stops through the level second time around.
- AUD/USD broke through technical resistance at 1.0360 (on 2nd time of asking) and trying to pick a top in the NZD/USD is looking too risky yet again.
China and Europe closed today for Labour Day, and Japan is still in holiday mode, so I'm not expecting any inspiration from today's markets.
EUR/USD: More stops reported below 1.3040
Dealers report that more EUR/USD longs have headed for the sidelines below 1.3065 and there are more stops directly below 1.3040. Don't expect any massive sell-off just yet as some of the other big German banks are reporting buying interest at 1.3025/30 which should be tough to break.
Looking at the crosses, EUR/JPY is also likely to have trailing stops below 127.00.
EUR/USD: Plenty of selling interest above 1.3120
I'm hearing names like the BIS being mentioned so it looks like the EUR/USD might be trying to form some sort of top near 1.3120, pre-ECB at least.
Very quiet ranges today in Asia
Chinese markets are closed until Thursday and Japan is open, albeit many players are taking this week off due to the public holidays. Add all of this together with the central bank meetings later in the week, and you have a recipe for doing nothing. Which is exactly what happened today in Asia.
All of the major pairs have traded quietly in 20 pip ranges and are still at NY closing levels.
Levels to watch in the major pairs
- USD/JPY: Obvious range edges at 96.00/100.00 and inside of that at 97.20/98.80 (chart in members). I'd suggest range-trading mode for next few weeks.
- EUR/USD: Sovereign sellers reportedly heavy 1.3125/50.
- Cable: Strong technical resistance at 1.5580 (see members).
- AUD/USD: Decent technical resistance at 1.0360, stops above 1.0370, more sellers 1.0390/00.
- Gold: Watch the $1515 breakdown level!
NZD/USD trade idea for the stout hearted
- AUD/USD has run into solid technical resistance at 1.0360 (see members).
- AUD/NZD seems to have run out of bearish momentum after a sharp fall and is trying to form a base above 1.2050.
- Ergo, sell NZD/USD at .8560 with stop-loss above .8615 looking for .8410.
I will add that I do not trade the NZD as it nearly always costs me, so maybe this idea should be taken as a reverse indicator? :)
Prefer to look for USD buying opportunities from current levels
USD/JPY should find some decent support in the low 97's I feel, cable should be toppy near 1.5580 technical resistance and EUR/USD has already rallied 100 pips from last week's lows (in a tight ranging market).
My preferred pairs to look at for bullish intraday opportunities are AUD/USD and USD/CHF. The Aussie will run into decent technical resistance near 1.0360, but my preferred trade is to buy dips in USD/CHF, starting at .9390 down through .9360 (edit). I wouldn't look for anything more ambitious than a 100 pip rally, but 100 pips a day keeps the bank manager away :)
GBP: Feels as if the market is still quite short
Option barriers at 1.5500 are well and truly broken and the GBP has a definite bullish feel to it. I'd prefer to trade this view on the crosses, perhaps long GBP/CHF or long GBP/AUD, rather than straight cable which will run into strong technical resistance at 1.5580. The market has been almost unanimously bearish GBP over the last 6 months and it could definitely rise by another 5-7% before all the shorts get squeezed out.
Holidays in Japan and China ensure very quiet trading conditions
USD/JPY has edged a bit lower during the morning but there really is nothing going on. Dealers are again sniffing around the optionality in cable at 1.5500 but otherwise it's a case of waiting until Europe comes in so the week can get properly started.
Asian market open
You can click through here and read my full opening commentary on FX Street.
The market is staying very quiet thus far and is likely to stay that way until early afternoon.
EUR crosses: I still prefer the buy-dip strategy
- EUR/JPY obviously led the way and I feel some of the other crosses have catching up to do.
- EUR/AUD has formed a nice technical base and remember that we are trading close to historical lows. With EUR sentiment bouncing off catastrophically low levels, and with AUD sentiment waning amid falling commodity prices and worsening Chinese data, this remains the stand-out trade for me. I'm long, looking to add on dips for moves to 1.32+.
- EUR/CHF is also not far away from historic lows and the SNB is putting a base in! Why fight them? The market is very long of the safe-haven Swiss asset trade, and if even 50% of this is unwound EUR/CHF will be back above 1.30 very quickly.
- EUR/GBP is less clear-cut and best left along imho.
EUR/USD: Still lacking direction between 1.29/1.33
Seems like the big Sovereigns are still keen to buy below 1.3000 but market sentiment is still tilted toward EUR-bearish/USD-bullish so rallies are also finding plenty of supply. We had a very long period of range trading at the end of last year, basically between 1.27/1.31, and I suspect that we will get something similar over the next few months, although on a slightly higher plane between 1.29/1.33.
Cable capped by option selling at 1.5500
The obvious technical target for this pair is a 50% Fibo retracement near 1.5580 (chart in members) but in the meantime we have some option plays going on which are capping the pair at 1.5500.
Good night for the patient swingers I feel
There are stops aplenty in virtually all the major pairs and in lots of the exotic crosses as well so I have a feeling that we will see plenty of sharp moves and reversals.
The good thing about being a personal account trader, is that we don't have to take on positions if we don't want to and we can simply wait for our opportunities to arise. I have a feeling that the patient trader might get plenty of trading opportunities if we are patient enough.
I'm still running my long USD/CHF and long EUR/AUD positions and will be able to handle any 150 pip pullbacks. I'm leaving the swing trading alone.
Have a great weekend and I may look in a bit later.
AUD/USD: Solid technical resistance at 1.0360
The problem with this trade at the moment is that it's Friday afternoon already and having swing positions over the weekend is not an attractive proposition. Nevertheless, it's worth noting the prior highs and Fibonacci resistance at 1.0360 (chart in members). I'd say it's best to be very patient, if the level is tested and holds then sell with a very tight stop but take the trade off anyway before close of business tonight.
It's one thing to have positional trades open over the weekend but I think it's usually a mistake to leave swing trades open.
EUR/JPY: Stops being targeted below 128.65
Dealers report some sizeable stop-loss sell orders below 128.65 and it looks like the market is currently targeting that level.
The low so far has been 128.90 after opening around 129.20.