There was a distinct flavour of ‘risk appetite’ in the last market session. European and US stocks rallied, the US$ and Yen$ traded a bit lower and FX risk pairs have been bid. There was a spectacular sunrise over our beach this morning and I couldn’t help but wonder whether this beautiful dawn might be about to parallel another on the markets, that is, a new dawn for risk appetite? This may well prove temporary but it sure is shaping up to be an exciting end of month!
Bondi Beach was pretty spectacular morning:
USDX 4hr: I noted last w/e that the failure of the US$ to rally on upbeat CPI might prove to be a rather telling event. Well, the failure to rally after last night’s upbeat Core Durable Goods must have the US$ Bulls a bit worried, if not,at least perplexed:
OIl daily: still consolidating around the GFC low. This rallied on the last of last month to close above the Feb ’09 low of $33.55 and I’ll be keen to see where it closes for February!
S&P500 30 min: buying into the close:
Gold and Silver: both are consolidating within 4hr triangles. I urge caution here. These have been bid lately out of more ‘Flight to Safety’ than US$ weakness. If stocks remain bid then this could weaken demand for the metals despite any potential US$ weakness:
TC Signals: I have a new TC LONG signal on the NZD/USD but it is trading under a wedge trend line for now. There is a new SHORT on the USD/CAD but it is trading above support! Caution is needed here though as my TC signals have struggled during this period of FX Index Divergence. Signals are trying to form on the A/U and A/J as well. I keep getting signals on the ‘risk pairs’ although with little follow-through of late.
NZD/USD 4hr: might be best to wait for it to clear the recent wedge although it has broken up through the 19-month bear trend line which is a huge feat!
USD/CAD: there is a new SHORT signal here but note how price is above the 1.35 S/R region. Any break and hold below this level though might see the 1.30 previous S/R level tested:
USD/CAD 4hr: maybe wait for any break and hold below 1.35?
Forex: Data items to watch for include GBP BoE Gov Carney to speak, USD Prelim GDP and spending/income data, a couple of Fed speeches and day 1 of G20 Meetings. Also, watch for any developing Yen weakness: it may not last but trends don’t travel in straight lines so some reprieve, even if only temporary, could be in store:
E/U 4hr: still within a daily triangle and near the 61.8% fib:
E/J: this has bounced up off the major 50% fib and any bullish continuation might test the 126 level so this remains the key S/R level to watch in coming sessions AND especially as the month closes after next Monday.
A/U 4hr: A new signal is trying to form. I keep getting TC signals here which is a signal in itself!
A/J 4hr: holding up off 80 and trying to form a new TC signal to LONG:
U/J 4hr: no new TC signal BUT this has broken up though a 3 week+ bear trend line:
GBP/USD 4hr: this is trying to get back to the major 1.40 S/R level:
GBP/JPY: this is an exciting set up for sure! Price action is trying to bounce up off the 50% fib of the weekly chart’s major swing high move. BUT, note how any retrace to the 61.8% fib of the recent 4hr chart’s swing low move would dovetail in the 4hr 200 EMA AND the major 167 S/R level. Confluence maximus!
G/J weekly: price is trying to bounce up off the 50% fib from the major swing high move:
G/J 4hr: even if this latest down-trend is to continue it may not go in a straight line. Thus, a pullback of sorts could be in order here, if not a reversal. Thus, watch for any test of the 61.8% fib of this most recent swing low move as this also ties in with the 4hr 200 EMA and key 167 S/R level. Any continuation up past this 167 region would suggest that the weekly chart’s bull run might be about to resume:
EUR/AUD 4hr: ho hum.