Print more money - that's the spirit!!

Hello traders, and happy Australia Day. Big news coming out of Wednesday is the Federal Reserves dovish stance on monetary policy. FOMC minutes highlighted significant headwinds for the US economy and will keep "easy money" on tap for a while. Translation? US Dollar hammering. I had gone with a short on the GBP/USD which was initially looking good until the report came out. Guess it was a surprise given the expectation leading up to the announcement was a bit on the side of "policy normalisation."

This suggests accelerated losses for the dollar in the near term unless the European situation deteriorates. At the moment, even with all the talk of technical default, the risk based assets seem to very well supported. The market is in "happy land" at the moment where it's nothing but sunflowers, butterflies, and blue skies (can you tell how pissed I am?!).

This has capped off a horrible January for me. Hopefully I can end on a good note. A couple of setups going into the end of the month.

Main one is a short setup on the AUD/NZD. Fundamentally, the low CPI figure, weaker economic indicators, and expectations of rate cut cycle has diminished the attractiveness of the AUD. New Zealand seems to be coming out on top in this respect given their central bank is still taking a wait and see approach.

Technicals illustrate the continued rejection of the 1.300 price area with price action constrained within a downward sub channel and within a larger descending channel. I shall be watching for a decent short setup on this one.

Second pair I am looking to trade is the GBP/USD. At the moment, it is simply surviving off risk sentiment and leeching off Euro strength. Economic indicators and BOE minutes have been horrible to say the least so can't see why else this pair is at where it's at. Certainly it has been fairing worse against all other cross currency pairs.

Any who, this pair is in a strong bull trend at the moment. Last night finished with a pin bar off previous 38.2% Fibonacci as well as prior trend channel resistance. This suggests more gains to come. Not too sure whether I should be aggressive about this one today given the remarkable run it has had. Will let you know if I do take the plunge on this one.

That's it from me today. Good luck trading out there guys and we'll proably chat again in the weekend wrap up.

Weekly Wrap Up 22/01/2012

Hello traders and welcome to this weeks trade wrap up. The past week has seen risk appetite continue to improve. I attempted a long position trade in the USD/CAD during the week. Didn't work out so well and it put me about 27 pips in the red. Not a good start to the year!

Still stalking the AUD/USD daily waiting for that reversal signal to hit. In the midst of all the risk-on sentiment, it has finally managed a small break of the upper downward sloping trendline from its historic highs.

Lost of room for a downside movement if this resistance holds.

Looking at the EUR/USD, the single currency had a nice corrective move this week. Early into the new week, there looks like a possibility of one more leg up. If I get a clear trading signal, I will go long in the Euro. Can't find the weakness in the USD at the moment.

Capital markets have tracked higher today on the back of good data coming out of China. Add to this, a successful Spanish bond auction and better than expected consumer confidence figures from Germany.

However, view this as only a short covering rally. With the recent credit downgrades as well as the spectre of GReek default looming once again, good news will need to continue to flow out regularly to keep this corrective rally going. Will try to take advantage of this, but the first sign of trouble means I'll be looking for that elusive short trade.

In focus today is the AUS/USD. I like the look of this technically on the daily chart. We have 2 scenarios being considered. The bullish scenario is that point D of the corrective 5 wave triangle may be set at the 1.045 area. Watching for point E to be set at the lower bound before we try to test the historic highs again.

The bearish scenario, which I have a bias towards, is that the downward sloping trend line joining the two previous tops will create a pivot point for what can be viewed as wave 2 of the C wave in an overall 5,3,5 zig zag pattern.

For either scenario, in the short term, if there is a nice candlestick confirmation, I will be trading this one to the short side. Good luck out there today traders, and welcom back for the US markets after their Monday holiday.

Happy Belated New Year

Hello traders. I'm a little late ringing in the New Year due to an issue I highlighted in the previous post. Who cares?! Time for the weekly update. Starting with a quick look at risk sentiment. SPX 500 made a charge for the end of October high of 1292.9, barely closing above it at 1293.6. In the process, creating a hanging man pin, as well as an inside day fake out. Suggests that we could see a reversal early in the week.

Especially since we had late breaking news from last week - Standard and Poors downgrading 9 countries including France late Friday trading. Not sure if the aftershocks have been fully absorbed by capital markets as yet. The next couple of days will tell.

EUR/USD made another low, but looks to still be consolidating in an expanding triangle pattern. If the current low holds, may move to the upper bound range test before proceeding lower.

AUD/USD: Two scenarios. Stronger data this week may push Aussie for an attempt at the 1.05 area and test the upper bound of what could be a larger 5 wave symmetrical triangle.

Weaker data may confirm 5 wave ascending triangle as a wave 2 of C suggesting a larger zig zag consolidation with further losses ahead.

Major event risk Monday and Tuesday. Watching for short setups @ 1.03789 and 1.048 areas. Not looking to trade the long side of this one.

I'M BACK!!!

Hi readers (if there are any). Apologies for the long absence, but I had messed up my login records and forgot what the credentials were to my blog spot. Stupid, but it happens. To start with, Happy New Year and hope you're all recharged for a restart of volatility in the fx markets. Lots happening and I will providing my weekly summary shortly ... stay tuned ...