EUR/CHF inexorably heading for another test of 1.2000
The Russian central bank has just announced that it is widening the range of the Rouble basket to 9 Roubles, from 7.
No reaction from the EUR/CHF market thus far but with regional tensions staying very fraught, the CHF is likely to stay well bid. The market will tend towards big levels, and there is none bigger than the SNB-defended 1.2000.
Buying any decent dips looking for a quick 30/50 pip scalp is certainly one potential strategy from these levels but the overall trend remains bearish for EUR/CHF.
NZD/USD: Happy to stick with long position, initial target .8570
I bought this pair last week and had an initial profit target at .8520, which just failed to get filled. I'm not too disappointed as the short-term price action feels constructively bullish, and I'm adjusting my expectations.
I expect prices to be contained inside of a wide .8450/.8575 range with a definite bullish bias. I'm hoping to reduce on any decent 60/70 pip rallies and then look to re-enter on dips.
USD/CAD: Shorts reduced on Friday, look to sell rallies
I don't like having large positions heading into weekends and thankfully my interim profit target at 1.0870 was reached. I reduced my position there and will now look to re-sell on rallies towards 1.0940. If 1.0860 breaks first, then I will need to re-assess and most likely sell shallower rallies, but of course we need to see how the market develops first.
GBP higher in early Asian trade after Carney comments
Cable closed last Friday around 1.6695 and has traded to 1.6730 in early interbank trade. Newspaper articles are quoting Mark Carney as saying that the BOE doesn't need wage growth to start raising rates. Wage growth has been seen as the main drag on higher rates so these comments, if confirmed, are very relevant.
Looks like it might soon be time to start looking for dip-buying opportunities in GBP/USD. It's August, so I'll stay patient.
Welcome to the new-look FXWW website
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Few range trade suggestions in NZD/USD, USD/CAD and Cable
- The GBP still looks suspect on the crosses especially with pairs like GBP/CAD nearing very important support levels. We can expect further volatility and plenty of two-way action. I'm still in buy-big-dip mode in cable but will have to wait until the bearish bias in the crosses eases. 1.65/1.68 will cover most eventualities with a short-term bearish bias.
- USD/CAD is heading much lower I think and I suspect that there will be plenty of stops now below 1.0860. Tonight's revision of the most recent jobs data will certainly have an impact. Timing is everything of course in FX trading and I cannot be sure that my timing is spot on here. I'm looking to trade a 1.0870/1.0940 range in the short-term with a bearish m/t bias.
- NZD/USD should continue to track higher, barring a big move higher in AUD/NZD. Any dips towards .8450 are now buying opportunities imho and I'll be patient now waiting for intraday profit opportunities as I think we will see .8600 again early next week. .8470/.8520 should cover this pair for the European session.
Still liking the look of CAD and NZD
- NZD/USD has bounced nicely of important technical support levels at .8400 and the bulls are threatening to re-take control. Stops were triggered above .8500 and now we've settled back near .8490. Talking my position as usual, but I like the buy-dip strategy both intraday and medium-term although I'd be surprised if we trade outside of .8460/.8530 during Asian trade.
- AUD/NZD has been interesting recently, with plenty of talk in the professional marketplace about large stops below 1.0920. Yet, every time we got close to that level, we saw a healthy bounce! Sounds like somebody might have been playing games, talking about stops and actually trying to buy? Just a guess on my part but 1.0920 is still the crucial level here.
- I'm still bearish on USD/CAD and I suspect that there will be plenty of stops sub-1.0860. It won't move during Asian trade but maybe these levels get tested pre-w/e during North American trade?
NZD/USD: Looking to play .8450/.8530 range in short term
AUD/NZD bids are now being reported on the approach to 1.0950 and they should slow down any intraday NZD rallies. Any NZD/USD shorts out there will be getting worried that .8400 might indeed prove too big a hurdle for now, so I'd expect to see plenty of bids now emerge near .8440/50. On the topside, dip-buyers like myself will happily off-load into any sort of decent rally, and I'm looking at .8520/30 as first stop.
NZD/USD: Longs looking little safer this morning
My long position is looking a little more secure this morning and hopefully a base starts to form now above .8400 and I can start building from here.
- Prices poked back above the 200-dma again but just marginally failed to close above there;
- AUD/NZD has again failed to convincingly re-take 1.1000.
Definitely not out of the woods yet and a I suspect that there will be a few more downside tests but all-in-all I'm starting to feel quite confident about this trade. I will also use any 70/80 pip intraday rallies to book partial profits and then slip into dip-buying mode.
Focus now turning to the GBP crosses
Like we mentioned a couple of days ago, pairs like GBP/CAD are heavily over-positioned and ripe for some sharp reversals. The BOE quarterly inflation report sent the GBP bulls scurrying for cover and there could be more pain in store if big support levels (like 1.8100 in GBP/CAD) are broken.
That said, the up-trend in cable has been very strong and I remain a committed USD bear so I expect any big losses in the crosses to come from the 'legs' ie if EUR/GBP is to have a big rally, then it will be primarily driven from here by a higher EUR/USD and similarly any big fall in GBP/CAD will come mainly through a lower USD/CAD.
Talking my position as always, but that's what traders do.
AUD/NZD again main focus during early Asian trade
Short-term resistance at 1.1005 has been breached and bullish technicians are pointing to the golden cross (50-dma over 200-dma) which does not look at all compelling to me (but then again I'm on the other side of this trade with my long NZD/USD position).
Obviously the really big level to watch in the cross is at 1.1050 and in NZD/USD it's .8400.
Cable: Prefer to buy any intraday dips
The GBP looks a bit suspect overall on some of the crosses so I wouldn't be getting carried away with bullish strategies just yet. That said, the cable up-trend is very strong and we will see sharp bullish retracements from time to time whilst these medium term consolidation phases are on going.
I'm looking to buy intraday dips now towards 1.6770, keeping stops fairly tight and looking for a re-test of 1.6900 before the week is out.
More intraday range trading likely in AUD and NZD
- NZD support levels held yesterday with the EUR/NZD bearish resistance line, a short-term AUD/NZD Fibo retracement and major NZD/USD support all holding after exacting tests;
- The AUD got a boost after decent housing and business conditions data but all local banks are reporting sell-rally interest in AUD/USD particularly.
The NZD/USD will probably struggle to break above .8450 intraday and support will again be strong near .8410. Much will depend as always on what happens in the AUD/NZD cross.
AUD/USD order books are firm both sides, with bids at .9230 and offers .9290/00, and this range will hold today in Asia barring unexpected announcements.
NZD/USD: Taking small long position .8420
- EUR/NZD sitting on bearish trendline;
- AUD/NZD has short-term Fibo resistance at 1.1005 and major highs at 1.1050;
- NZD/USD has strong technical support at .8400.
I'm edging into a long position at current .8420 levels, let's see how it develops.
GBP/CAD: Here's one for the risk-reward contrarians
Ask yourself a question- were you short and bearish GBP/CAD at 1.55? Are you now long and bullish at 1.85?
The chances are you are not alone as this has been an extremely popular trade with professional traders over the last few months. Prime broker reports suggest that there are still some very large long positions in the market.
The technical picture certainly does look bullish, with a continuation flag/pennant on the weekly chart with edges at 1.81/1.86.
But, if this pair breaks below 1.81, we will see an extremely sharp sell-off driven by heavy positional liquidation.
I like the idea of being short this pair on any rally towards 1.8500 with a relatively tight stop above recent highs.
NZD/USD: Orders reports suggest 'buy-dip' intraday strategy
- AUD/NZD: There are still reports of large stops below 1.0920 and a quick look at your charts will explain why they are there;
- AUD/USD: Solid corporate bids are reported near .9230/35 with more optionality at .9200.
Sounds like a 'buy-dip' intraday strategy could pay dividends in NZD/USD and strong technical support at .8400 should attract plenty of defence.
USD setting up for bearish turn
- GBP/USD: After a healthy retracement, cable will find a base somewhere near the mid-1.60s and re-commence its bull run towards 1.80 as the year progresses. I'd be very surprised if we see levels below 1.6400 so any 150/200 pip dips from here will offer perfect entry levels imho.
- AUD/USD: There is a whole industry out there made up of bearish AUD/USD analysts! Pretty much the same analysts who were super bullish at 1.06! I'm quite sure that the USD will turn bearish again and that we will not see levels sub-.9000 for some time to come.
- USD/CAD: Another market that simply smells over-bought and there are too many getting long and bullish at levels close to 1.10. We'll get these cheaper in coming months.
I simply cannot buy into the argument that US rates will rise faster than UK, AUD or CAD and I've yet to see any signs that the US economy can thrive without the constant stimulus.
EUR crosses likely for further short-term squeezes
- EUR/GBP has been one of the trades of choice for professional traders over the last few months and there is still heavy bearish sentiment and positioning. With some mixed signals coming from the UK labour market, we could see any indecision turn into a stop-loss chase. Selling rallies still preferred but it looks as though we will get some.
- EUR/CAD and EUR/AUD have also joined in the short-squeeze and will likely take their main lead from EUR/GBP.
All of these markets should offer some good two-way trading opportunities.