Tonight at 9:30PM ET Australia is set to report CPI data, and as you can see below inflation has consistently ticked lower the last few quarters:
The GBP/AUD has been in a tight consolidation recently, and as you can see (blue lines) we have have had some very consistent rallies while in this solid up channel (yellow):
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I do not have a position in the GBP/AUD currently, but may establish a trade after tonight’s data release
The 10 year bond is in rally mode. And although up against some key resistance, the flag pattern points much higher.
As a currency trader this matters to me since I am short USD/JPY and we are just 20 pips from critical support.
As you can see in this chart, if bonds rally and yields fall, the USD/JPY (yellow line) is likely to trade south as well. There is a very strong iverse relationship with the two instruments.
Blake Morrow
Chief Currency Strategist
Disclaimer: I have been short USD/JPY for many weeks and may add to my existing position
I am posting this monthly chart of the EUR/USD following “My DXY Trading Plan” from yesterday. While doing some in depth analysis earlier this session, I had realized that the monthly EUR/USD is quickly closing in on some major confluence of technical levels that could create a bounce. Let’s take a look:
There are a few key points about this chart I would like to point out:
Obviously, getting long the EUR/USD down here is a little dangerous. However, if you are in the camp that Greece will not leave the Eurozone and fall into the Agean Sea in the coming weeks (joke), perhaps you could catch a bounce near current levels after the DXY makes one last push higher!
Blake Morrow
Chief Currency Strategist
Disclaimer: I have no EUR/USD position, but can not guarantee I won’t in the next few trading sessions.
Today we have been closely watching the USD/CAD which has been basing over the last 2 days. Even as crude oil was rallying towards resistance, the USD/CAD (which is typically inverse) stalled at support. We call this “divergence.”
At this moment, crude is showing some weakness as the USD/CAD is 25 pips from the highs of the day. Here is the chart:
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I just went long the USD/CAD intraday today, and may hold it for the next few days
The EUR/NZD downside stalled at a daily/weekly 127% extension near the 1.4350 level. This 4 hour chart shows a inverted Head and Shoulder’s “setup” in the event that the 1.4575 level is broken.
Blake Morrow
Chief Currency Strategist, Wizetrade
Gold is sitting at critical support on the weekly chart. As you can see below, the 61.8% retracement of the 2008 lows to 2011 highs are being tested once again:
On the daily chart, you can see that gold has been well bid despite the recent bounce back in US Dollar overnight. However, if gold breaks above 1180 (or so) we may start to see traders looking at long gold trade from a favorable risk/reward point of view. And if the FED and ECB are correct, and the deflationary forces we are feeling are transitory, perhaps inflation will tick up in the coming months, and provide a tailwind for gold.
Personally, I don’t think this is the bottom in gold, but from a technical perspective I don’t think we can rule out a move back to 1250 or 1300.
Blake Morrow
Chief Currency Strategist, Wizetrade
As we head into the election season in the UK, the GBP has felt some jitters in a lot of cross rates recently. However, one currency that is trading firmer than the GBP surprisingly is the EUR.
As you can see in the weekly chart below, we had overshot a 161% extension to just around .7000 pence, then have bounced. The daily chart (not shown) have taken out a downtrend line and the pair looks set to recover back towards .7500 or above.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer, I have been building a long EUR/GBP trade as noted here.
When the Nikkei hits highs, typiclly the JPY will hit lows. What you will notice below is the Nikkei futures (yellow line) is breaking out higher, but the 6J JPY futures (candlestick chart) is developing a double bottom. I suspect one is going to give was soon.
The Nikkei is pushing the 161%v extension, RSI on the daily chart is divergent. With currencies like the EUR/JPY are looking very bearish on the weekly charts, there is quite a battle going on at the moment.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I am long some JPY in hopes that the Nikkei turns from this key resistance.
The break below 130.00 opens up a move towards 120.00 in the coming weeks. With the EUR/USD under strong pressure and the USD/JPY rejecting key resistance overnight at 122.00, the EUR/JPY could be primed for a move lower in the coming weeks. If you don’t recall, the EUR/JPY was developing this bear flag a couple weeks back here.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I am currently short the EUR/JPY and will be looking to add to position while below 130.00
There is a strong case for a bounce higher from current levels, as the market seems pretty oversold. H/T Steve F on the Lunch Money webinar for bringing this chart to my attention.
Current price at 1.0849, a downtrend line comes into play on the daily chart near 1.1000 which could be a better place for a short.
Blake Morrow
Chief Currency Strategist, Wizetrade
Disclaimer: I just established a long (counter trend) position myself today because of this chart and the overbought nature of the USD.
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