AUD/USD: Tokyo squeeze but still looking soft
AUD/USD touched 1.0400 before Tokyo went to lunch but then we got the usual squeeze higher in thin market conditions, taking it to 1.0440. I'm still bearish but will cover some of my shorts on a bounce out of 1.0385 and I expect 1.0460 to now cap intraday rallies.
Cable: Looking to build shorts inside 1.6160/1.6270 s/t range
I'm short already after the renewed failure at 1.6300 and I'm looking to build a substantial short position inside of a 1.6160/1.6270 short term range (https://www.tradingview.com/x/jzXBGW4K/). Let's see how this one develops.
AUD/USD: Price action says "lower" to me
I went short on Friday night and I added to this position after the unconvincing price action above 1.0500. This is something which is hard to explain, but when you follow the market very closely there are times when it just feels wrong and that's what I think the case is at the moment. Interest rates are falling, China's economy is stuttering and the US QE is already written into the market; surely a strong case to be selling AUD/USD. A lot will of course depend on what the Sovereigns and real money funds do; if they keep buying then the AUD will struggle to fall.
If I'm right, then I think we should see a test of 1.0270 this week (https://www.tradingview.com/x/Ed4tRWzp/) where a 61.8% retracement sits. This level has operated as a pivot on many occasions over the past 2 years and I think it will do so again. Resistance should now be very solid at 1.0520.
EUR/USD: Expect plenty of stop-loss orders below 1.2915; bear target 1.2755
Monday's can often be a bit volatile as order boards are cleaned out before the weekend ensuring less liquidity, normally until well into the US session. As last week's Deutsche Bank research showed, this volatility has tended to result in heavy risk-off plays over the last 3 months.
Technical support is solid in EUR/USD near 1.2915/20 (https://www.tradingview.com/x/Q8w7rOwW/) but if/when that breaks, we should see moves lower towards 1.2855, 1.2815 and ultimately 1.2755. The double-top on the hourly chart is a dominating factor and until the bulls can re-take 1.3080 convincingly I will remain in the sell-rally camp. [Disclaimer: I'm short and therefore biased].
"Short the screen" to start the week
I sold AUD/USD, cable and EUR/USD on Friday and although I was a bit nervous over the weekend that we could see news out of Spain driving risk trades higher, this didn't eventuate and I think these trades are looking promising.
I will be looking to build both the cable and AUD/USD short positions over the next few days but I'm less bearish on the EUR/USD and am only looking for a quick 100 pip profit there. If cable tops out near 1.6300 then we will see 1.58ish very quickly in my view. The AUD/USD wedge that I mentioned earlier also gives me quite a bit of confidence and I think we'll see 1.0250 later this week with the RBA meeting looming into view.
AUD/USD: Building fresh short position
I went short on Friday night and I will be looking to build a strong position over the coming weeks.
AUD/USD: The wedge on the weekly chart is the relevant pattern here in my view and if a top forms now below 1.0620 I feel there is scope for a sharp move lower as we near the end of the year. The RBA will lower rates by 50bps in this period, the Chinese economy continues to stutter, and the RBA has shown that it's willing to sell AUD/USD (albeit on the quiet).
Putting technical and fundamental reasoning together gives me an excellent risk-reward trade. I've entered with a medium-sized position and will look to build this over the coming weeks. If I'm right, we will trade a 1.0250/1.0550 in coming days but the bearish pressure should start to take over control. I still feel that .9000 is achievable if some panic selling sets in in thinner Christmas markets (but I'll settle for a bit less :) ).
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AUD/USD stalling near yesterday's highs
This 1.0470 level was the high yesterday morning so we may see some weak stops going off above here. Not much going on generally, looks like all the Asian traders are tired after yesterday's exertions.
AUD/USD moves higher alongside equity markets
The Nikkei is +0.3%, the Kospi is +0.4% and the AUD/USD has gotten a lift and is now back at yesterday's opening levels. (What did we say yesterday about the Asian market!). Yesterday's highs around 1.0470 are the first level to watch and there are sell orders reported near 1.0500 with stop-loss buy orders through 1.0510.
USD/JPY: Trading in a 5 pip range
Not much to get excited about there! I still like the idea of buying a dip towards technical support (prior highs and 61.8%) at 77.90 with a tight stop below the previous pivot at 77.70. I don't expect that the pair will break much above 78.50 today but at least there is some risk-reward in that trade strategy.
EUR/USD outlook: Range trading favoured; crosses nearing support levels
EUR/GBP has very solid support at .7960/70 and buying dips towards there certainly makes sense whilst EUR/JPY also has solid technical support through 101.00 down to 100.50.
EUR/USD itself stalled at a 38.2% retracement level near 1.2915 which will give the bulls some hope. There is of course still very solid resistance at 1.3080.
I have no idea which way Asia will go from the current 1.2970 level but if it moves 50 pips either way then I'd be tempted to enter the market.
AUD/USD intraday outlook: Range-trading likely between 1.0370/1.0470
Yesterday mornings highs just above 1.0470 are the first obvious resistance level and risk-sentiment will determine whether we test these or not today. There was some heavy AUD/JPY selling out of Tokyo yesterday and if this is repeated then we will fall back to test yesterdays lows at 1.0370. In other words, more range trading expected. In the bigger picture, I still like the wedge formation on the weekly chart and more especially so after the RBA yesterday confirmed that they've been selling AUD on the quiet.
Real money funds have been persistent buyers over the last 4 sessions and AUD/USD will have trouble falling whilst this continues.
Summary: Play 1.0330/1.0580 range in medium term but with a definite sell-rally bias at these levels as long as weekly wedge is relevant. Shorter-term ranges will depend on prevailing risk sentiment, with 1.0370/1.0470 likely to contain prices.
Asian market open
You can read my full opening commentary on FX Street.
Summary: EUR/USD range trade 1.2930/1.3000; USD/JPY could have buy opportunity at 77.90 with tight stops; EUR/JPY play edges of wide 100.50/102.20; and important EUR/GBP support nearby.
EUR/GBP: Buying dips to .7965 looks like an excellent proposition
The 50% retracement of .7810/.8110 comes in at .7960 which is close to where the previous spike high was at .7965. This level has become quite pivotal and buying any sharp dips towards there with a tight-ish stop-loss order looks like an excellent risk-reward proposition.
EUR/USD technicals: Support at 1.2915
The EUR/USD has copped it from all sides today, firstly it was EUR/JPY selling and then some very poor French PMI data (42.7 Vs 46.4).
There is solid technical support looming between 1.2915/35, the latter being a previous spike high and the former is a 38.2% retracement level.
EUR/JPY slicing through technical support levels
There is a 61.8% retracement level at 101.15 which has already been breached and previous highs near 100.50 offer the next level of support.
EUR/USD: Investment banks report bids nearby
- Solid bids reported at 1.2970.