The day ahead in the FX market, Thursday November 29th
- AUD/USD should be interesting as we near important resistance near 1.0510:
- Sell orders reported above 1.0490 and heavier 1.0510/20, but large stops seen above 1.0525:
- EUR/JPY should again provide volatility although most of the close-by stops seem to have been triggered now:
- The economic calendar has Japanese retail trade, Australian new home sales and RBNZ business confidence:
- USD/JPY expected to trade 81.70/82.20 range, though downside still looks more 'magnetic' with large stops below 81.35:
- EUR/USD still consolidating after Greek-debt deal but I'm still firmly in buy-dip mode.
Good order information at this time of year is priceless
I've always found that the market trades differently as we get towards the end of the year. Perhaps it's that corporates and asset managers are less active and therefore the market is reliant more on speculative players? Whatever the reason, if you know where the real order clusters are then you have a huge advantage as they seem to have much more impact. Of course finding the good source of order information is the difficult part!
- Buy orders were reported yesterday in the cable at 1.5965/70 and this was basically the low before it bounced 50 pips:
- EUR/JPY stops and bids were reported around 105.35, and as I predicted the stops get done and then the market bounces (70 pips in this case):
EUR/JPY is the only game in town
If you want a bit of intraday volatility then EUR/JPY is definitely your best chance. We've probably seen 250 pips in total movement since this morning; the skilled swing trader is probably making a killing whilst having no view.
That's it for me for another day, I'll catch you all tomorrow++
EUR/JPY: Bouncing back after initial stop-loss driven sell-off
I'm still small long since yesterday on this pair but I think it will now struggle to get much above 106.20/25ish so I will probably look to take the small loss up there and hope to start rebuilding at lower levels, but lets wait and see how the price action develops first.
[Edit; can I see that 98 bid again please :( ]
AUD, NZD and CAD still finding plenty of buyers
Overall market positioning, based on CFTC and prime broker reports, would seem to suggest that general positioning is relatively neutral across these 3 commodity currencies; the speculative market is still slightly long of CAD but the big CAD and NZD longs of recent times have been heavily unwound. Real-money buyers and structural trades all seem to favour the commodity currencies over the USD, GBP and JPY and although amounts are not huge, they are generally all faced one way.
It will take a big swing in speculative sentiment to knock these currencies over and I'm not sure where that might come from.
EUR/JPY: Triggers trailing stops below 105.70
The next level to watch is 105.35/40 with stops and bids reported near same level. We might see the stops triggered and then a bounce?
Cable: Buy orders 1.5965/70
There's a bit of interest around in the cable just now with some very early Europeans leaning on the pair. I like it lower overall but I suspect that going will remain very slow for the next few weeks (although there is a rumour doing the rounds which I'll post in the members section, then I can't be accused of being a rumour mongerer :) ).
Bids reported at 1.5965/70 which should withstand any early selling interest I'm told.
EUR/USD: 40 pip range prediction was a bit optimistic
20 pips covers most of the action in Asia between 1.2925/45. EUR/JPY, as usual, was the main driver.
Some reports now of orders not too far away from the market, with sellers at 1.2965/70 and bids at 1.2900/05. That will probably be the European range barring any unexpected occurrences.
EUR/JPY gets close to testing support levels
Looks like the bears might have the better cards here in short term and it's probably only a matter of time before trailing stops below 105.70 get triggered. I'd now look to play a 105.70/106.20 s/t range with a bearish bias. Medium term I still prefer to buy dips.
USD/JPY: Take some time to reflect on the really big picture
We get so caught up in day-to-day trading that we often forget about the really big picture so I' taking a step back and reminiscing about what has happened to USD/JPY in the last 15 years.
- Firstly we started to fall off 140+ highs in the aftermath of the Asian currency crisis and a low was posted near 102 after the Long Term Credit hedge fund blew up (lets call this wave 1):
- From there we rallied back above 135 on Japanese banking worries(wave 2):
- Then we witnessed a huge move out of the USD when the Patriot Act was enacted and the US invaded Iraq, fall to 102 again (wave 3):
- The next phase was the 'carry trade build-up' which took USD/JPY back to 124 (wave 4):
- And finally we've had the big fall post GFC which has taken USD/JPY to record lows (wave 5).
This is a very mature move and I'm pretty confident in predicting a 2:1 risk/reward ratio for longer-term longs against shorts! In other words, we will see 110 again before we see 70. Of course timing is absolutely everything in the FX market and I'm certainly not the first trader to realise that USD/JPY is way oversold. Could it fall below 75, sure it could. Would it be the best buy of all time down there, well pretty close imho.
EUR/USD session outlook: Pick a 40 pip range
I can't see much happening during Asia today especially if the big hitters in Europe and the US could not generate any volatility post Greek debt deal. The main liklihood for momentum will come from EUR/JPY but with 'danger' levels near 105.70 quite far away, I can't see much happening there either.
I'd pick a 40 pip range like 1.2930/70 or 1.2910/50 and trade the edges of that. Even better, take a few hours off and get those chores done! I'll be offline for a few hours around lunchtime so I hope it stays quiet.
The day ahead in the FX market, Wednesday November 28th
- Economic calendar is almost totally bare:
- EUR/JPY has failed again near 107.00 so watch for trailing stops below 105.70:
- AUD/USD stalled at solid sell orders near 1.0480 but any dips below 1.0375 will run into Sovereign bids:
- EUR/USD will largely rely on EUR/JPY flows; initial bids in EUR/USD reported at 1.2900/05:
Picking the year-end trends in the FX market
Generally speaking we get a fair amount of volatility in December and patient traders can certainly take advantage of these conditions. Now all we need to figure out is what's going where?
- Is the current Yen weakening an 'across the board' move or primarily a strengthening in USD/JPY?
- Has the market sold enough Yen already or is there more firepower to come?
- Will the weekly down trend-line in AUD/USD hold firm, providing another pro-USD indicator?
- Can EUR/USD break out of range-trading mode?
- Will the EUR crosses see more short-covering in the lead up to Christmas or will the bears get more aggressive?
- Can cable remain below a double-top at 1.6300, yet another pro-USD indicator?
As always plenty of questions in my head as I wake up. My thoughts at this stage are that the most straightforward risk-reward trade is to be long of the USD whilst pairs like AUD/USD and cable remain below their resistance levels. Being short the EUR might be a dangerous play whilst the market is short and the bad news from the EZ dries up. In other words, I think it's buy-dips in EUR/USD and USD/JPY, and sell-rallies in cable and AUD/USD until proven wrong.
Market staying very slow into early Europe
My return to the intraday trading market has been greeted with stagnant markets and it may well stay that way until the UK GDP numbers a little later. Not hearing much at all on the orders front I'm afraid and dealers seem happy to sit quietly until some decent flows begin to emerge.
NZD/USD technicals: If you like inverse H&S formations?
This is from my old friend Jim Langlands who has been around dealing rooms even longer than I have. He likes the inverse H&S on the 4-hour NZD/USD chart and suggests buying near .8200 with a tight stop.
Personally I find that H&S formations really only work at major highs and lows on longer term charts but if it gives you a good risk-reward trade, then why not!
EUR/USD: Fancy playing intraday moves from long side
I've just bought some EUR/USD near 1.2990 as I fancy we could have an up session in Europe EUR/USD. Not sure yet what to expect so I'm trying my old intraday trading hat to see if it still fits :)
Shanghai shares at lowest level in over 3 years
This should be risk negative and affecting AUD/JPY etc but this particular correlation has been challenged in recent times.