Silver: Contrarian trade possibility
- Despite comments from renowned Fed-watcher Hilsenrath that we may see some tapering sooner rather than later, Silver still managed to rally by 2.5%;
- I've heard some second-hand reports which put Silver shorts at quite severe levels heading into the holiday season;
- Trailing stops are reportedly large above $20.50.
I haven't been actively trading it recently and I don't have a strong feel for the important levels, but based on the charts alone, contrarians can surely consider playing this from the long side with stops below recent $18.95 lows, adding to the position through $20.50?
Important levels close-by in EUR/USD and USD/CHF
- Recent daily lows provide technical support for USD/CHF at .8880;
- Barrier options are reported at 1.3750 in EUR/USD.
If both of these levels break simultaneously then we could see a sharp stop-loss driven spike.
AUD intraday outlook, Tuesday December 10th
- AUD remains heavy on the crosses but bearish momentum in AUD/USD has stalled for now;
- EUR/AUD, GBP/AUD and AUD/CHF look to have plenty of scope for further moves;
- AUD/NZD consolidating near 1.10 but I do prefer to buy exhaustive dips in this pair;
- AUD/JPY is trading near the upper end of its recent consolidation range and I'm also in the buy-big-dip camp here.;
- AUD/USD is expected to trade inside a wide .9050/.9150 range with a neutral bias for now.
Recent bullish trends in EUR/JPY, GBP/AUD etc remain in place
- EUR, GBP and CHF still in high demand;
- AUD, JPY, and CAD are still out of favour;
- Liquidity remains decent but will start to thin out next week at the latest;
- Today's economic calendar http://www.fxstreet.com/economic-calendar/;
- I'd suggest buying dips in GBP/JPY today during Asian trade.
Quick wrap of the Asian session
- EUR/USD traded to highs at 1.3748 in very thin early interbank trade;
- EUR/JPY stops were triggered above technical resistance (61.8% retracement) at 141.00;
- CHF/JPY continued on its vertical path with no-one quite sure what's behind it;
- AUD continued to exhibit weakness on the crosses, led by AUD/NZD and EUR/AUD;
- AUD recovered for a short while after the USD/CNY was fixed at record lows but the sellers soon returned;
- WSJ Hilsenrath says that tapering is becoming an increasing possibility;
- NY Times disagreed, saying tapering still months away.
USD/CNY fixed at new record low
AUD/USD immediately gets a mild 20 pip bump, back to opening levels, after another record high fix for the Yuan.
AUD: Still soft on the crosses to start the week
- AUD/NZD is starting to spend a bit more time below 1.10 suggesting that more losses are possible;
- EUR/AUD is also consolidating above an important technical level at 1.5030 and more gains are favoured;
- AUD/JPY is trading sideways still and not following the lead from other JPY pairs;
- AUD/USD continually runs into solid selling interest during each Asian session for the past few weeks, and the downtrend whilst slowing, is showing no sign yet of reversing.
I'm leaving the AUD/USD alone. My tendency is to buy-big-dips and it feels for now as if there may be a few more big dips left in this pair.
JPY crosses make significant breaks
- NZD/JPY has broken up through its consolidation channel and buying dips back towards 84.50 looks like the obvious play;
- EUR/JPY is trying to consolidate above 141.00 and if it can, further gains should be swift;
- CHF/JPY has continued its vertical move of the last 3 weeks.
EUR/USD: Obvious target at 1.3830
EUR/USD traded to highs near 1.3750 in early interbank trade but has now settled back near 1.3710. The market always seems to get itself overly bearish on this pair and then get squeezed. There is an obvious technical target at October highs of 1.3830.
EUR/JPY: Trading at long-term technical resistance level
EUR/JPY has made more gains in early interbank trade and is currently trading near 141.20. The 61.8% retracement of the huge downmove from 169.50 to 94.00 has been marginally breached (see chart).
Elsewhere, EUR/USD is at 1.3700, cable is at 1.6350 and AUD/USD is trading near .9120.
Good luck this week.
A picture of an FX trader (caught short)
An absolute classic from Tony D in the chat-room; love your work mate :)
USD/JPY techs: Initial target at 100.80
- Market is caught long and is in retracement mode;
- NFP day is usually a big day for USD/JPY volatility;
- Resistance levels now start around 102.20/30;
- Strong technical support levels start near 100.80 (see chart).
EUR/USD: As always it's a matter of finding the 200-pip range (1.3575/1.3775)
- The EUR looks quite strong on the crosses with EUR/AUD consolidating gains and EUR/GBP rebounding sharply;
- The break above 1.3625 reinforces the medium-term bullish outlook for EUR/USD;
- Nevertheless, this pair has basically been sideways trading for the last year so don't get carried away. I'd look to trade a 1.3575/1.3775 range in coming days.
AUD: Sentiment still bearish but expect some choppy consolidation
- AUD/NZD support at 1.1000 continues to hold. One trader whose opinion I value highly thinks that we will see one last exhaustive sell-off to somewhere on 1.08 handle, or maybe even slightly lower, before common sense and normality returns for a relief rally towards 1.1500;
- GBP/AUD is seriously overbought on most shorter time-frames and will probably struggle to make any more impulsive gains;
- AUD/JPY was another nice pick earlier in the week but at some stage it will be a really sensible 'buy', probably towards strong technical support at 90.00.
I'd expect the AUD to stabilise on the crosses in the next week and for the AUD/USD to consolidate sideways.
Did I mention GBP/JPY looked toppy.....
One thing that will never change in the FX market is that erstwhile bears change their coats and become bulls at the top of the market. That's what's been happening recently with the Sterling; the market was bearish GBP/JPY at 135 and suddenly was getting all bulled up at 170. Yesterday's suggestion that GBP/JPY offered good contrarian value at 167.50 proved to be correct and we really only need to find two of these trades per month to have a very good year (even with the usual losses thrown in).
It will be very quiet today in Asia ahead of the NFP tonight and there is little or no regional economic data of note set for release.
But, there's still no harm in looking for another Gimme
Early European traders chasing stops in USD/JPY and EUR/USD
- Stops tripped above 1.3625 in EUR/USD with more reported above 1.3640;
- Stops tripped below 101.90 in USD/JPY;
- Asian real-money names noted selling AUD/USD rallies near .9050.
GBP/JPY: Good risk-reward for the contrarian bears
Looking for extremely over-bought or over-sold conditions can be a very profitable exercise in the FX market. Of course there are plenty of false alarms but if you trade them properly, these signals can be very profitable.
Even though I'm a medium term GBP bull, the short-term signals are looking increasingly bearish but as yet we don't know whether this means a period of consolidation or a retracement.
If it's 'bang-for-your-buck' that you're after, then GBP/JPY might be a good choice. It's risen almost vertically at times and if/when it turns south, the move is likely to be similarly sharp. Selling near present levels at 167.50 with stops above 168.50 and a target at 164.00 looks like a reasonable proposition to me.
GBP and EUR having a short vacation
- Very little movement in either overnight;
- I've reduced my long position in GBP/USD as the short-term signals feel slightly bearish to me;
- EUR/JPY rejected 140 pretty unequivocally and this cross could hold the key to short-term EUR moves.
I can't see much point in having any major risk on either GBP or EUR at the moment, best to wait for opportunities to emerge.