EURUSD Bounces After Breakdown

I was taking a look at this chart this morning. The EURUSD was falling and a break of its trend looked like it could lead to another fall for it to test the 1.2750 level.

As can be seen we had that break below the trend.  But what we never had is a consolidation period where the currency pair trades below the trend, tries to trade above and then fails.  Without the consolidation phase, such a move is simply momentum dump but doesn't qualify as a breakout play.  

Worth watching though to see where it closes for the day.

Still Short Gold – Wathcing Head & Shoulder Pattern

It’s been way too long since I posted a trade update.  With the storm and election I wasn’t really seeing too many ideas worth trading playing out.  In the meantime, I was continuing to stay short Gold which I sold at 1740 last month as it was about to break below its 50 day moving average (Selling Gold As It Hugs 50 Day Moving Average).  After bobbling for a bit, Gold broker down and hit a low of around 1675 before the US elections.  With the lack of clarity from the US eclections, it made sense to cover around that time.  But, I gave it a few more days, only to see a surprise squeeze occur and gold jumped back above 1725.  Since then its stayed below its 50 day moving average (important), found support at 1700, and formed a Head and Shoulders pattern (see chart for all of this). 

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Where Is the AUDUSD Headed This Week?

The AUDUSD briefly cracked the 1.0400 barrier again last week, matching its 1.0410 highs of October.  However like much of the rest of the market, the pair dropped to close at 1.0335 after the US’s Non Farm Payrolls beat expectations and triggered dollar strength.  This was followed by a late selloff on Friday in US equities which caused an overall risk decline.  Coming up this week the AUDUSD will be in focus as a bunch of economic announces are coming out.  The fun starts on Monday morning with Retail Sales and Trade Balance figures, followed by the RBA’s Interest Rate Meeting on Tuesday, and then on Thursday we get Australian Employment Change numbers.

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BoJ Stimulates More Than Expected, USDJPY Falls Anyway

If you ever needed a reason why not to trade on news, the chart below provides a pretty good example of why its completely hit or miss.  Coming into the Bank of Japan’s Monetary Policy Meeting, the USDJPY had been trading steadily higher as forex traders were expecting the BoJ to provide 10 trillion yen of stimulus.  At the end, they came through for traders and even upped the ante to 11 trillion.  But, as you can see from this chart, other than that tiny uptick as the news was announced, the USDJPY tanked on the news.

 

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Buying AUDUSD On Possible Further Breakout

Yesterday I mentioned how I wasn’t excited about the AUDUSD’s move above 1.0300 and wanted to short it if it fell back below its previous resistance level of 1.0285.  That didn’t happen as it had a day long breakout and has moved to just below 1.0400. 

The strength brought out lots of talk in twitterville about shorting it as it looked overbought and RSI’s were hitting 80 etc.  However, as often happens, just because something has moved higher doesn’t mean it can’t keep moving.

Taking a look at the AUDUSD since yesterday afternoon it has been creating a support base just above 1.0360 and unlike other currencies that rallied yesterday, never really had much of profit taking hit the pair.  As such, with a rotation occurring back into the Aussie, and demand stepping up to support it at 1.0360, I am taking a long this morning at 1.0394, right around its highs and just below 1.0400 resistance. 

While the 1.0400 figure is an important barrier, based on the amount of skeptical traders shorting it as it went ‘overbought’ we could see another upside breakout if it trades above 1.0400 and triggers stop losses.

Target on long of 1.0475 on the trade with stops below support at 1.0355.