Tagged "commodity correlation"

6-9-08

3:34a GMT – Part of being a successful trader is looking not only your own “comfort” chart time but also looking at the bigger picture as well. This week I chose to post my daily chart analysis for EUR/USD, USD/CAD, AUD/USD and USD/JPY. I do the analysis on all the pairs I trade, and recommend you do the same for the “big picture” but don’t have time to post them all.

Want to see a different pair next week? Post your comments below!

EUR/USD: Since late April the EUR/USD has been trading in a 1.58-1.53 range. If you back out for the year, however, you see that technically speaking the pair has only had a brief retracement on the Euro’s rise. A close below 1.53 would be necessary to open the door for more losses. The fundamentals support the Euro’s rise too with Trichet stating that the ECB may raise rates as soon as the end of the month (talk about a leading indicator). On the daily short, in the short term, we see the two-day rise that Trichet’s comments caused. The pair has yet to break the 1.5820 high necessary to open the door to a 1.59 and 1.60 test. In short, the daily charts are bullish and we will look to buy on dips.

USD/JPY: UJ looks poised for more gains as the pair continues to make higher highs and higher lows as many Elliot Wave theorists were calling for a run done after a possible third wave. On the daily chart the pair has the 10, 20, 30, 50 EMAs lined up in an uptrend and the price action has closed above the 100-day EMA several times in the past weeks. Also pair has just bounced off the trend line support (blue line below) and is again on the rise. A challenge of support at 106.00 looks likely with the break challenging 107.00 We will look to buy on dips.

AUD/USD: Pair gained ground last week for another test of .9640, which remains strong resistance for the pair. Though gold (red line on chart) has been dropping since its March high over 1000, general USD weakness has allowed the Aussie to continue to gain against the greenback. The MACD is just flipping to a buy signal but I will wait for a further dip to the .9500 or .9550 trend line support area for a buying opportunity.

CAD/USD: Pair is returning to the top of its .9830-1.0275 range as oil (red line on chart) continues to soar last week, signaling a possible return to the downside with any positive USD news at all. Oil and the loonie share a high correlation. Would look for selling opportunities around a bearish candlestick reversal signal above 1.0250, especially if oil continues to rise this week, however a bullish hidden divergence on the RSI gives me pause. I’m sitting on the sidelines of this one until a better direction is evident.

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