BOC Poloz tries to talk down the CAD as the USD/CAD hits major support

28. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: ,

Comments this morning from the Band of Canada came out this morning during a testimony in Ottawa, but the one comment resonating with traders is “a lower CAD is ‘absolutely’ a net benefit.” This comment (amongst others) has helped the USD/CAD bounce from a key support today. Take a look:

4-28-15USDCAD1

The 4 hour chart was showing a divergent relative strength ahead of the testimony as we approached the 161% extension of the recent range.

4-28-15USDCAD2

After the breathtaking move higher in the pair over the last year, and the lows from 2001, we have hit some major fib level confluence near the 1.2000 level.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I did initiate a long USD/CAD trade today ahead of the BOC Governor’s testimony

Looking for a bounce in the US Dollar Index – DXY

27. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The USD has been range bound the last 1+ months, and I am now starting to look for an area for a bounce, or strategic place to enter US Dollar longs. Here is what I see:

4-27-15DXY

The USD index is pushing channel lows, but the 23.6% Fibonacci retracement level comes in at the wedge breakout point (95.30) from the beginning of March. Also, it looks like a channel is forming that coincides with that breakout point near 95.30 level as well.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

GBP/USD at an Inflection Point

24. April 2015 · Write a comment · Categories: EDGE Chart of the Day

The GBP/USD has rallied sharply into some critical technical resistance. A break above 1.5200 would be bullish, but as long as we hold below, the channel is in play. See Below:

4-24-15GBPUSD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I just entered a GBP/USD short based on this chart. However, if it breaks 1.5200 on a sustained basis I will likely cover the short for a loss.

GBP/AUD set to rally if AUD CPI comes in weak

21. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

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:

4-21-15AUDCPI

 

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):

 

4-21-15GBPAUD

 

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

10 Yr Bull Flag Pattern, USD/JPY at Risk of a Fall

15. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

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.

4-15-1510yrJPY

Blake Morrow

Chief Currency Strategist

 

Disclaimer: I have been short USD/JPY for many weeks and may add to my existing position

EUR/USD Monthly Chart Approaching Critical Support

10. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: ,

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:

4-10-15EURUSD

There are a few key points about this chart I would like to point out:

  • We are approaching the 127% extension of the 2005 low to 2008/9 highs at 1.0434
  • We have a fairly clear down channel (yellow) and we are near channel support.
  • Uptrend (minor) line (yellow) also from lows in 2000 and 2001.
  • RSI (monthly) is reaching oversold levels not seen since 1997

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.

 

My US Dollar (DXY) Trading Plan in the Coming Weeks

09. April 2015 · Write a comment · Categories: Uncategorized · Tags: , ,

I have always learned (in trading) to “plan your work, then work your plan.” If you listen to my daily webinars, I spend 3.5 hours a day talking strategy on how I would like things to shape up in the markets before I take action. Does that mean that all my plans come to fruition? No, not at all. However, if I have some sort of template or plan of what I am trying to do, it helps me forge my intraday and swing trading strategies in the currency market.

Today, I talked about my trading plan the next couple weeks for the USD index. I am hoping the market plays out this way and helps guide me in my FX trades. Funny thing is I don’t even trade the DXY. I trade FX crosses like the EUR/USD, AUD/USD, USD/JPY, etc. But understanding the basic trajectory of the USD index can help shape my decisions in the crosses. By the way, the USD/JPY makes up about 13.6% of the USD index, however never is factored into my equation when trading USD pairs since the USD/JPY tends to be more sensitive to yields and risk trends than the USD index.

The DXY index broke higher following the FOMC minutes yesterday. This created a double bottom in the USD index, broke a “bearish wedge” (should have broke lower but instead broke higher) and looks to be on the way to testing range highs. However, the double bottom has a projected target above the recent trend highs. If we break higher, I am looking for a target of about 101.50 which is a 127% extension of the recent range:

4-9-15DXY1

If this rally does happen, it is likely to be viewed as a squeeze as there have been so many traders trying to call a “top” in the USD as of late. That type of behavior is very common when you see very explosive and strong trend like the one in the USD index in recent months. Frankly (I have to admit) I agree with that thesis, however have had a difficult time trading it lately. So, I have been buying the USD (mostly) on dips as of late instead of trying to short the USD.

If the DXY does move higher as planned and makes a brief new high, the monthly 61.8 retracement level is at about 102.00. I have felt the last couple weeks that the 61.8% Fibonacci level at 102.00 has been “unfinished business” for the USD bulls anyway.

4-9-15DXY2

If we hit the 101.50-102.00 I would be looking for a longer term reversal (or bigger consolidation) of the US Dollar Index.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

 

 

 

USD/CAD bouncing off support as Crude hits resistance

07. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

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:

4-7-15CADCL

 

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

AUD/JPY may be signaling something for the S&P 500

31. March 2015 · Write a comment · Categories: Uncategorized · Tags: ,

The AUD/JPY has always been a great correlation for the US equity market. The very popular “Carry Trade” has always been a great way to see strong correlation between stocks and the Forex market. Typically, the carry trade is a popular trade (for individuals or institutions looking to capture the difference in yield) in a rising market, but when risk aversion picks up (unwillingness to own assets) the carry trade tends to unwind and they fall precipitously.

Some traders or economists would argue that with so many central banks yielding such low rates, the carry trade is not as popular anymore. However, I disagree. If we are in a world where everyone is seeking yield, no matter how small. I think there is a good amount of money hiding out in carry trades these days. A great example is the AUD/JPY where the RBA has rates at 2.25% and the BOJ who is at .10%.

The first chart I would like to look at is the AUD/JPY weekly chart, which as you can see below, is approaching some critical trend line support. Also, please note we have made a “lower high” in 2014 vs the high in 2013:

 

3-31-15AUDJPY

 

 

Next is the SPX (yellow line) and the AUD/JPY:

 

3-31-15AUDJPYSPX

 

If you notice back in 2012 the AUD/JPY rallied sharply, that was when PM Abe was elected and implemented his three arrow approach of fiscal stimulus to the economy, dubbed “Abenomics.” That created a divergence between the SPX and the AUD/JPY (Nikkei followed a lot closer to the AUD/JPY at that time).

If you closely at the AUD/JPY now, we are developing a bear flag formation, which has targets set (technical) much lower. The question that one who owns stocks at current levels will be “will the SPX follow the AUD/JPY if it falls?”

 

3-31-15AUDJPYSPX2

 

The last couple days the AUD/JPY has been pointed lower, even when the stock market rallied 1.5% yesterday. Tonight we have Chinese Manufacturing PMI’s which could affect the AUD/JPY in the very near term.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I do own JPY, and have been long JPY against many currencies for many weeks including the AUD/JPY

 

 

 

 

 

 

EUR/NZD setting up and Inverted H&S pattern

30. March 2015 · Write a comment · Categories: EDGE Chart of the Day

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.

3-30-15EURNZD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

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