We all know the dollar has accomplished quite a comeback on the heels of positive jobs, and retail a sales data, the question is will it continue? Looking at the EUR/USD this weekend the currency appears to be at a decision point. If the euro is going to find its footing technically and avoid a full blown assault by the dollar it needs to happen soon. Today’s EUR/USD chart shows the currency is clearly poking at a demand level which corresponds with a minor trend line on the daily chart. The top of this demand zone sits at $1.46 which provided support for the recent run to $1.51. If the euro has hope of a comeback, this is a demand zone of interest. If not, I think the euro could be vulnerable to fall further toward support at the bottom range near $1.4450.

I spent the morning scalping USD/CAD following the news Canadian building permits rose 18.0% in October versus an expected gain of only 1.1%. The increase accounts for $6.1 billion in permits, primarily in non-residential construction, although single-family dwellings grew as well. Overall, non-residential sector construction permits were up 42.4% after declining 9.2% in September. When I read this, I have to admit my first thought was “government projects”, but the report states non-commercial permits were primarily driven by construction intentions for office buildings, retail stores and warehouses. Perhaps a sign businesses are more interested in infrastructure investments, given the recent numbers in retail sales.

Bank of Canada Rate Decision

USD/CAD has ranged for nearly four weeks, and the larger picture paints tighter consolidation on the daily chart. Today’s price action ended decisively lower with a potentially bearish price action pattern. The pair needs a major fundamental kick in the pants to break from its current trading range; the rate statement may be just what the pair needs. Support is seen near the daily chart range low and again at $1.40, although I believe $1.40 is probably minor support by now. There are no major economic reports for the dollar tomorrow, so this currency pair is definitely one to watch. Anything can happen with a rate statement announcement, so be prepared for a long or short opportunity. I’ll be watching tomorrow morning for a fundamental bargain hunting opportunity.

Best of luck,

Ryan

Howdy Folks,

Another Sunday open, another week of trading begins. I’m a little bummed the market didn’t offer a juicy gap trade at the open tonight, but I’m looking forward to a great week of trading. I’m of the opinion trading will be dominated by risk this week. The news that Dubai is struggling to pay, and may default on $60 billion in debt is kindling for a risk aversion fire waiting to happen. Over the weekend it was reported the UAE Central Bank setup an emergency facility to support bank liquidity, fearing a run on deposits from customers afraid the banks will be unable to survive the potential massive losses. Even folks relaxing on a palm-shaped, man-made island without a care in the world, understand Dubai is in a very bad situation.

Fuel for a risk aversion fire may be provided by several key fundamental reports scheduled for release this week. The market will be sensitive to any poor retail news or rumors coming out of a Black Friday holiday shopping weekend. The media’s template for Black Friday appears to be “tepid, but mildly encouraging”, how predictable. We will see Canadian GDP data, an Australian and EU rate statement, and my personal favorite, United States employment data. I think it is worth pointing out the expected unemployment number for Friday’s report is 10.2%, which was reached last month. My prediction, 10.5% with another 150,000 jobs lost. That is based on nothing other than my icky, squishy guts.

Any return to risk aversion could be positive for Dollar. Technically speaking, the EUR/USD looks top heavy and desperate to make further gains. The weekly chart is flat and the monthly chart appears top heavy. On the daily chart, each push higher has been met with stiff selling. Clearly the supply zone between $1.5050 and $1.5150 is proving a tough nut to crack. Ironically, 5150 is the code used by the police over their radio to report a suicide; perhaps something to consider if your planning a sell at $1.5150 this week. Seriously though, the supply level at last week’s high price will be an important level for EUR/USD to mount. Any failure, combined with poor fundamentals may spark a stiff sell off. I still think a long term price target of $1.54 is valid as I wrote several weeks ago, but I’m not yet convinced it will happen this week.

Best of luck this week, more tomorrow.

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Howdy Folks,

In this week’s video we review two bargain day trades that occurred late in the week. Patience proved profitable for bargain hunters that waited for the market to pop following the U.S. holiday. Enjoy the video and have a great weekend!

Ryan

- Nice work on the EUR/USD long Charlie!

Howdy Folks,

EUR/USD continues to fight supply at $1.50 as I discussed in yesterday’s post. I’m sure this supply zone is even more tempting to “top pickers” itching to go short but I wouldn’t count this trend out yet. The fundamentals continue to be mixed. The ZEW Survey indicated weaker than expected confidence among German investors but the data out today wasn’t all bad news which remains a theme in EUR/USD, indecision.  IIn her daily column on FX360.com Kathy Lien points out:

“Price pressures continue to fall as evidenced by the downward revision of Germany’s harmonized CPI numbers and the drop in wholesale prices. However that has not stopped ECB officials from talking exit strategies. Monetary policy member Paramo said not all liquidity measures will be needed in the future and the central bank will phase them out in a timely and gradual manner. Data indicates that the global slowdown is bottoming and there are signs that the slowdown in lending has also halted. However Paramo was careful to say that just because the central bank is preparing an exit strategy doesn’t mean that they are ready to implement one.”

At the risk of sounding obvious, EUR/USD could go either way at this point. The supply level at $1.50 has been stubborn, without clear fundamentals the bulls may temporarily give up. On the other hand, paired with Dollar, you could be long a bucket of peanut oil and probably make money right now. Let’s look at the trade from a trend trading, bargain hunting perspective. The daily chart “trend” as measured by my trusty HMA indicator is still biased on the long side, but there is no bargain day. Dissecting price action on a lower time frame, we see that price is not in an overbought or oversold condition as measured by the CCI oscillator. I like extremes to be present before I hunt for a support or resistance based trade therefore I don’t see an opportunity this evening. I’m cheap, I like the edges and I like a good deal before I’ll trade.

Charts below….

More thoughts tomorrow evening, best of luck to you intraday freaks out there!

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Howdy Folks,

First some housekeeping items, over the last few weeks I’ve posted sporadically because I simply needed a break from writing. After finishing my book, I really needed to get away from blogging, trading and go have some fun, so I appreciate your patience. I also pondered exactly what I wanted to do with this blog. I had a lot of ideas but nothing that really took hold until about a week ago. I’m going to spruce this place up quite a bit over the next few weeks and bring on some of that video content I’ve been yapping about forever now. I really wanted to consider how best to help people trade around their day jobs and bring that content to the blog. I think you are going to like the changes, I’m looking forward to it as well.

One of the reasons I haven’t done a weekly video, every week is because often there is nothing to talk about. I’m a long term trader, sometimes it takes days or even weeks to find the right setup and I figured there was nothing to talk about. I’ve decided that regardless of what happens during the week I’ll make a video, if there are no trades to discuss then we will talk about technique.

Finally, I’m going to focus on EUR/USD trading with this public blog. I’ve talked about this before but starting with this post, I’m going to make good on that promise.

EUR/USD Approaching Supply

Let’s start with a look at classic supply and demand analysis. The daily chart is moving into a level of supply that initiated a large sell off last month. I’m willing to bet there are plenty of traders looking to short this level assuming a 1,2,3 top is building, but I’m not convinced yet. Fundamentally the dollar is effectively a punching bag at this point, folks in the media are even discussing it’s use as a carry trade funding currency now. I personally think this supply level is a stopping point for a move much higher.

Where Might EUR/USD Head Next?

Using some Fibonacci analysis we see the last turning point correlated with a 61.8 percent retracement. During a healthy trend, retracement ratios tend to correlate with extension ratios. In this case, 61.8 percent would correlate with 161.8 percent. If the Euro is able to break above supply I think a medium term target of $1.54 is possible. That price target happens to correspond with support that gave way during the financial meltdown of 2008. Take a look at where $1.54 falls on a weekly chart, you’ll be surprised to see where it lines up.

Best of luck,

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Howdy Folks,

Although the currency market trades twenty-four hours a day there is a short pause in trading between the New York close on Friday evening and the Asian open on Sunday night. When Asia opens it is really the only opportunity spot currency traders have to trade opening gaps. I think the best presentation I’ve seen on trading gaps in the spot market was done by Sam Seiden at FXStreet.com titled Professional Gaps vs. Novice Gaps in the Forex Market. Sam points out that after a period of heavy trading if the market gaps in the direction of the trend it should be thought of as a novice gap. Novice traders are often interested in jumping on a bandwagon at exactly the wrong time only to be run over by the forces of supply and demand. The correct action to take when a novice gap appears would be counter trend. Professional gaps on the other hand, gap against the previous trend and setup a continuation move.  I won’t go over the full details because Sam does it much better in his full presentation. If you want to see it, follow this link:

http://transcripts.fxstreet.com/2009/02/professional-gaps-vs-novice-gaps-in-the-forex-markets.html

Gaps do not happen very often but if Friday was a heavy trading day a gap may occur on Sunday. Watch out for gap opportunities, try using Fibonacci for a profit target and take advantage of this approach to trading on Sunday afternoon (in the U.S.) as Asia opens for business.

Best of luck this week!

Ryan

Howdy Folks!

I’m really pleased to be finished with my book and back to blogging. I thought we could bring back the weekly video to use as an educational tool each Friday. I used a higher resolution and changed some audio settings for a higher quality video. Let me know your thoughts by dropping me an email or commenting on this post. It was certainly an interesting trading week, I hope you caught some pips! The RBA suprised us with a rate hike fueling a rally that finished the week around 200 pips higher while earnings season left questions about whether an economic recovery is really underway. In the video, I call the AUD/USD long a “no brainer” trade although I personally wasn’t paying enough attention Monday night and missed out on the easy pips. I brought the trade up so hopefully you won’t miss out when something like this occurs in the future. Patience turned out to be profitable and I was able to sell GBP/USD after the BoE said nothing of interest Thursday morning, details are in the video.

Have a great weekend!

Ryan

Howdy Folks,

Tonight I’m pondering the future of kiwi / dollar. I’m confident kiwis are tasty and one of my favorite fruits, but I’m not as confident on the future of NZD/USD. The fruit flavored currency caught another rally today after better than expected business confidence data and a strong equity market. Unfortunately for Kiwi there are no further fundamental reports scheduled this week which could leave it open to event risk from the United States. The demand for kiwi has been impressive. The currency has gained nearly 2,500 pips over seven straight months without a pause. I’m curious to see if kiwi builds a quiet top around $0.74, breaks it quickly or is rejected quickly. The $0.74 handle looks like pretty decent resistance on the monthly chart.

I’m starting to become slightly bias that longs at this price level may not be the greatest idea in the world. Consider what might happen if the market sells off from either the $0.74 or $0.73 levels; do you really want to step in front of what could be a hefty amount of longs unwinding? It is something to consider when NZD/USD is sitting precariously on top of a 2,500 pip, seven month long rally. On the other hand last week closed with an inside day pattern on the weekly chart. This could be a sign NZD/USD is preparing a volatility break higher. Until I see $0.73 fall and provide support convincingly the inside day could be a break play in either direction.

Just my $0.02 for the night.

Best of luck,

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.

Howdy Folks,

I hope you had a great weekend! I spent my Sunday afternoon in a corn maze which was a hoot! The market open wasn’t terribly exciting. I didn’t see any interesting gaps or shocking weekend news that I’m aware of. Many of the major pairs are consolidating after their large runs over the last two weeks. NZD/USD printed an inside bar on it’s weekly chart which might be interesting to watch over the next week or so, I wonder if this pair is finally running out of steam. There is some interesting price action on EUR/USD and USD/CHF that is worth talking about.

USD/CHF

$1.06 finally gave up support four weeks ago after a long battle with sellers that lasted nearly the entire 3rd quarter. I think from a resistance perspective this level is now an interesting target for the market to test. I have no idea when it will reach $1.06 or if it even will but it is something to watch for over the next few trading weeks. If you measure Fibonacci ratios from the consolidation high of $1.1025 to the breakout low of $1.1090 you’ll see 50% falls right at $1.06. If we see a test of resistance and a turn lower this currency pair may be headed to the 150% extension of $0.9770. Only time will tell and price action will always lead the way. In the short term, I wouldn’t be surprised to see a bargain day opportunity bid this pair up to $1.06.

EUR/USD

Above $1.48 Euro has been held back by resistance, but I wonder how long that will last. The breakout above $1.44 has yet to be tested as support and I suspect that may happen soon. If we draw Fibonacci ratios using the low preceding the breakout to the high around $1.48 we see 61.8% fall just above $1.44. This corresponds with broken resistance on the daily chart which may become support as it is tested from above. The bias I have through the use of an HMA would potentially be to sell this pair if a bargain day opportunity appeared but only time will tell what is going to happen. These are rough Sunday thoughts and I’ll wait for Monday’s close to evaluate the market again.

Best of luck this week!

Ryan

IMPORTANT NOTICE: These comments are for information purposes only. My opinions or other information contained in this post do not constitute investment advice. It should not be understood as a direct recommendation to buy or sell any currency contract or other investment vehicle. Forex trading involves substantial risk of loss and is not suitable for all investors.