10-19-09
5:39a GMT – Welcome back to PipHut for another week of pips, trading and discussion! So what has changed over the weekend. Well, for starters, just like that I am now looking to short the EUR/USD. Last week on the 15th and 16th we saw to peaks around around 1.4966. The second peak on the 16th was just a fraction of a pip lower but, more than that, it does (somewhat poorly, I know), resemble a bearish double-top on the 60M chart. US stocks, which have been very closely tied with the dollar performance are overbought and traders are looking for a reason to take some profits – Bernanke’s 2 speeches on Monday might give them the perfect chance to do that. On top of that, early Sunday we’ve already seen our first lower daily low of the past 7 days – all signs pointing to a possible bearish day. Therefore, my trading strategies will be to fade rallies (e.g. sell rallies in the EUR/USD, especially on bearish candlestick signals and near resistance).
Trading Idea: We do have some resistance between 1.4900-1.4920 where I will especially look for some bearish reversal signals with short targets at 1.4870, 1.4840 and 1.4805.
(click to enlarge)
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October 19, 2009 at 07:49
Resistances 1.4950/55 and 1.4969.
October 19, 2009 at 08:32
Euro Bull has got some strength today. Equities market also on the upside. i think Euro may do a triple top at 1.4965 region, if it succeed to break through, target will be 1.5025 region. I am waiting for a failure or a breakthrough. Sitting tight now. Mark, what’s your opinion? Thanks
October 19, 2009 at 09:56
0814 GMT [Dow Jones] If EUR/USD breaks above 1.50 it’s unlikely further gains will be seen immediately, says UniCredit. Risks of intervention will loom and profit taking is likely to emerge once this key level has traded, resulting in a 1.5060-1.4780 trading range, says the bank. EUR/USD now at 1.4929. (GST)
0944 GMT [Dow Jones] UBS has entered a long USD/JPY recommendation at around current levels [now 90.57] to target 92.50, then 95. Place a stop at 87.80, the bank says. In its reasons for the trade, the bank notes that Japan is now calling for the US, Japan and China to stabilize the greenback, and that a rise in US Treasury yields would be supportive to the pair. The pair is at 90.63 from the last close at 90.89. (KJM)
October 19, 2009 at 11:40
(This article was originally published Friday.)
By Bradley Davis
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–The dollar’s drubbing will resume next week as yield-chasing investors focus on interest rate differentials and abandon the low-yielding buck for its higher-paying counterparts.
After hitting a series of 14-month highs this week against the dollar, the euro took a breather from its run on Friday, but there’s not much in the way of the euro hitting $1.50 next week.
“The momentum seems to be with the euro,” said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. “It still doesn’t feel as if the dollar really has got the legs at the moment to reverse its current path.”
Continued positive U.S. corporate earnings and global economic data should support the euro, but most important will be comments from Federal Reserve and other central bank officials, said Camilla Sutton, currency strategist at Scotia Capital in Toronto.
If Fed officials continue to espouse loose U.S. monetary policy, as is expected, the dollar will continue to lose against higher-yielding currencies. Investors take advantage of ultra-low interest rates to borrow low-yielding dollars to fund bets in riskier currencies, such as the euro and commodity-backed counterparts.
Fed Chairman Ben Bernanke speaks twice next week and a number of regional presidents and Washington-based governors also make public appearances. Investors will be listening for hints as to the timing of exit strategies from accommodative policies and extraordinary measures.
The Bank of Canada announces its interest rate decision Tuesday and its Monetary Policy Report is due Thursday. Any comments relating to the recent strength of the Canadian dollar will be scrutinized closely.
The only thing that could stem the dollar’s decline – aside from an all-out global crisis – is a sustained decline in equities, which could cause a flight to the safety of the greenback, said Marc Chandler, global head of foreign exchange at Brown Brothers Harriman in New York.
“The wild card would be if we get a serious correction in the stock markets, which would cause the unwinding of the so-called risk trades,” Chandler said.
Investors using a risk-based strategy typically buy the euro and other high-yielding currencies as stock markets rise and economic conditions improve, but the correlation between risk and the euro has loosened recently as traders become focused in their drive to bid the euro to $1.50, analysts said.
The euro is likely to trade next week in a range between $1.4840 and $1.50, analysts said. The dollar is likely to trade between Y88.5 to Y91.5, and the U.K. pound is likely to trade between $1.635 to $1.645, analysts said.
Friday afternoon, the euro was at $1.4898, from $1.4920 late Thursday, according to EBS via CQG. The dollar was at Y90.92 from Y90.70. The euro was at Y135.47 from Y135.32. The U.K. pound was at $1.6349 from $1.6267, while the dollar is at CHF1.0180 from CHF1.0163.
The dollar should also continue next week to establish itself against the yen, after recovering this week from reaching Y88.01 in early October, its lowest level since January.
But the rally of the much-beleaguered U.K. pound could run out of steam next week, stalling the sterling within a new trading range around $1.63 to $1.64, analysts said.
So many people had bet against the pound in recent weeks that a wave of investors rushing into the British unit caused it to spike, squeezing those low-priced bettors out of the pound and pushing its price higher, Chandler said.
Investors also will be watching the Bank of Canada, which meets Tuesday to announce any change to its key interest rates. Rates are not expected to change, but any signal from Canadian central bankers that interest rates will remain low for an extended period of time could blunt recent strength in the Canadian dollar, Sutton said.
-By Bradley Davis, Dow Jones Newswires; 212-416-2654; bradley.davis@dowjones.com
October 19, 2009 at 12:03
Hi Mark,
Im using Your sgnals for a while and Im rally satisfy.
I have one question about stop loss. What are You thinking, how many pips it should be?
Thanks for sharing Your signals.
Good luck!
October 19, 2009 at 12:18
As far as i understand, Mark always recommends trading with your potential reward at least twice the size of your potential loss. Then, just divide by two your profit target, and this would be your stop loss. As for me, I personally use this method, and it works quite well. Additionally, look for support/resistance levels near your potential stop loss. Place it some pips above resistance (for short order) or below support (for a long one); this way, your stop will only be activated in case of a breach.
October 19, 2009 at 12:33
Hi anyone tell me whether Mark signal is valid today?
October 19, 2009 at 13:07
I don’t think that this particular signal is valid anymore, since it broke through and consolidated beyond since, what do you think Mark?
October 19, 2009 at 13:39
Well I’m still looking to sell beneath 1.4470, but the signal around the 1.4920 area never happened. See how it just charged through (1 long candlestick) on the 60M? Not much of a failure/resistance seen there for our entry.
October 19, 2009 at 13:54
Well I’m still looking to sell beneath 1.4470,
Mark at where ur looking to sell can u clarify its 1.4470? or 1.4970
October 19, 2009 at 14:01
Sorry, should be looking for selling opps below 1.4970. As long as that resistance holds on bearish in the short-term
October 19, 2009 at 13:57
i would assume he meant 1.4870, thats wat he said in the opening of this day
October 19, 2009 at 14:14
Mark,
If it reaches 1.5000 do u think the rally will still continues upto 1.6000
October 19, 2009 at 14:29
What are the targets from 14970?
October 19, 2009 at 14:35
POP QUIZ: What do you think they should be?
October 19, 2009 at 14:41
Well, i think it should be around 1.4800…
October 19, 2009 at 14:57
The most recent support is now clearly 1.4900, so that should be intraday target down from 1.4970 (if reverse confirmed, what i doubt…), isn’t it, Mark?
October 19, 2009 at 15:22
If fail at 1.4970, target is 1.4920.
If breakout at 1.4970, target 1.5020.
October 19, 2009 at 15:36
“What are the targets from 14970?”
at least 14900?
October 19, 2009 at 16:05
1.4920, 1.4900
October 19, 2009 at 16:11
Hi Mark, by selling euro, are you trying to go against the trend. Every chart shows an uptrend or consolidation. I see the reasons why you are going shorts , but is it still against the trend?
October 19, 2009 at 16:27
ami wrong or is this BULLISH?
November 16, 2009 at 19:13
Hi. Im Mahesh from INDIA doing forex trdaing in demo account. But still i dint get the confident to open a real account. I heard about signals and hope that it ll be useful to gain profit. So pls anyone guide me accordingly.