By Mercaforex
USD:
A classic pre-holiday trading session took place in the U.S. markets on Tuesday. There was plenty of economic data to examine for investors but little in the way of direction on Wall Street and this produced a rather choppy day for the USD. The Prelim GDP figure turned in a result of 2.8%, only a smidgeon below the expected gain of 2.9%. The HPI index from the S&P/CS also came in below expectations with a drop of -9.4% compared to the estimated decline of -9.1%. The CB Consumer Confidence readings did turn in a positive increase. However, judging from the scope and range within the broad markets it has to be questioned if any investors sitting Stateside were paying attention to the data or thinking instead to their long holiday weekend.
The U.S. will release significant numbers today including the weekly Unemployment Claims, New Home Sales, and the Revised Consumer Sentiment reading from the University of Michigan. The USD is definitely trading within the lower realms of its domain against many currencies and this has not gone unnoticed. Today’s trading could prove a whirlwind if volume decreases because of investors leaving early for the holiday and a surprise number should infiltrate the data. There are many questions regarding the U.S. economy and they are certainly going to be asked with greater magnitude in the weeks to come. Consumers are being counted on to show up to the shopping malls on Friday to kick start the official holiday season. Just how much the public is going to spend remains a large area of concern for many companies. The USD finds itself in an uncomfortable position as it lingers near the low end of its value. Traders who are active the next couple of days will have to decipher how much of a defense the greenback can muster with many participants thinking about holiday meals instead of the marketplace.
EUR:
As the trading day came to a close on Tuesday the EUR found itself trading near its very highs against the USD. The German Final GDP figure was released yesterday and met expectations with a 0.7% gain. Also the German Ifo Business Climate survey did show an improvement. Today the GfK German Consumer Climate reading and Italian Retail Sales figures will be published from the continent. The EUR continues to demonstrate that it is finding an influx of takers even at these high water marks. This has occurred in an atmosphere that still finds Europe with significant questions that must be answered regarding its banking sector and ability to create genuine growth. Yesterday’s GDP numbers from Germany while in the ‘black’ will not ignite any speeches of jubilation quite yet. The EUR is at its highs for the year against the greenback and with the American holiday coming into play the next few days, the European currency could find itself making a bold move.
GBP:
The Sterling managed a gain on Tuesday against the USD even as the BBA Mortgage Approvals release turned in a lackluster result. The BoE did hold their hearings within Parliament on Tuesday and comments from its members stating that they believe the U.K. economy is showing improvement certainly may have helped inspire investor confidence. Today the Revised GDP statistics will be published and it carries an estimate of minus -0.3% and tomorrow the CBI Realized Sales will be brought forth. The GDP numbers could prove critical for the GBP today considering the amount of discomfort investors have exhibited per the various pronouncements from the U.K. government on the health of the economy. The Sterling has been within a well practiced trading range for months and it starting to push near its highs once again.
JPY:
The JPY picked up additional ground versus the USD on Tuesday and this came in the midst of continued fallout from rather volatile price action in the Asian bourses as a whole. The JPY finds itself knocking up against the highs of its range against the greenback and this will not be a happy event for many Japanese export companies if this situation does not change. Gold broke through to additional new highs and finished the trading day near 1180.00 USD per ounce as its run continues to flourish within a strong tide of speculation.
Written by: Robert Petrucci, Chief Commodity Expert and Forex Analyst.
Technical Analysis
Are We Running Out Of Steam In The Gold Rally?
SPX/USD:
I am happy to be standing aside and not trading this market. Monday’s trading signaled indecision, and Tuesday only confirmed that. Trading will probably be on the lighter side by this afternoon (Eastern Standard Time) as many American investors will start the thanksgiving holiday as early as possible. The dollar was weak, and if it breaks here we could be in for another large down move, pushing other markets like the SPX higher. However yesterday’s recommendation still holds true. “I constantly hint at the strength in this market. Yesterday at the end of my short recommendation I wrote “However, be cautious as we know that there are serious buyers slinking in the background who are waiting to snatch up the shorts”. Well, these buyers picked up all the sells in the market like a black hole sucking in the surrounding stars. The market gapped up 20 points on the open and traded all the way up to 1 point off resistance of 1113.4. Interestingly enough, like a 15 year old boy on his first date, the market failed to live up to the hype it created with this gap, and formed a nice selling tail. I want to be a seller here but can’t. At this point, I recommend standing aside. Resistance of 1113.4 held well, suggesting a potential down move unless you consider the gap up over support of 1101.3 which was bullish. Keep an eye on the dollar as any weakness could send the American equity market much higher. With a shortened trading week because of the thanksgiving holiday, trading could continue to be very volatile, and I will probably wait until things settle down somewhat before jumping back in. Unless of course things start to fall apart completely!” Support 1101.3, 1094.9, 1091.7, 1085.3, 1077, 1068.9 Resistance 1113.45, 1132.2, 1153.8
XAU/USD:
Gold continues to be an integral part of this blog because I believe it to be a great teaching tool for traders. Why is it such a great tool? Simply put, Gold has been acting in such a way that traders are really able to identify great trading opportunities. Consolidation followed by breakouts on the one hour chart, the “trend is your friend” principle, etc. Today we will return to the Weekly head and shoulders formation we discussed a couple of months ago, and see how that is developing. Obviously it has developed very well and it is obvious that gold is flying. The original recommendation was that we would see gold trade over $1100 with a strong probability of it hitting $1200 before year end. Today I want to point out two key elements of this trade. I would be cautious about getting long at these levels on a long term basis. In terms of the head and shoulders formation, the trade is basically the length of the neckline. The neckline takes us to about $1220. We are only about $40 from that target. Considering the sharp angle we have been trading over the last few weeks, I do not believe that this particular move can sustain itself much longer. Gold will have to slow down and people will begin to take profits on this trade. Furthermore we have traded most of the move, even if we do trade another $40 higher, my recommendation is to hold onto the long position, not to enter the trade at these levels. It’s just too risky. Support 1173.75, 1155.7, 1151, 1121.9, 1100.3, 1070.6, 1024. Resistance 1179.95…
GBP/USD:
The Sterling was able to reverse itself towards the end of the day after bouncing of 1.6500. Today we are already seeing strength on the back of dollar weakness. With a shortened trading week in the United States, this currency could have some interesting moves. It continues to trade within a channel but I am uncertain as to how it will act once American investors are out of the equation. I think this currency has potential to sell off, if the USD is able to hold these levels. Today the greenback is acting weak and this may be the beginning of another decline. If that is really the case the pound should push higher and trade the higher end of its range. However, I think that within a week’s time, the dollar will truly bottom, and send the markets in the opposite direction. At the moment I am going to stand aside coming into the holiday. Support 1.668, 1.6609, 1.6460, 1.6249, 1.6125, 1.5769 Resistance 1.6741, 1.6876, 1.7042
EUR/USD:
The Euro is maintaining its uptrend on the weekly chart. However, I am recommending a sell. Once we formed resistance of 1.5062 we seem to have found a plateau and are consolidating around these levels. However, considering my beliefs with the dollar, how we keep bouncing off resistance and the previous two candles (one having a selling tail, and the other just being weak) I think that the Euro is looking at a selloff with a potential target of 1.3747. The first target will be 1.4449, once we break below the trend line. This week will lend to some interesting moves and I will be looking for the selling opportunity which we are nearing today. Stop will be about 25 pips over resistance and if we do hold over resistance this market is going to 1.5284. Support 1.4999, 1.4800, 1.4683, 1.4613, 1.4480 Resistance 1.5062, 1.5144, 1.5284, 1.5343, 1.5460.
USD:
A classic pre-holiday trading session took place in the U.S. markets on Tuesday. There was plenty of economic data to examine for investors but little in the way of direction on Wall Street and this produced a rather choppy day for the USD. The Prelim GDP figure turned in a result of 2.8%, only a smidgeon below the expected gain of 2.9%. The HPI index from the S&P/CS also came in below expectations with a drop of -9.4% compared to the estimated decline of -9.1%. The CB Consumer Confidence readings did turn in a positive increase. However, judging from the scope and range within the broad markets it has to be questioned if any investors sitting Stateside were paying attention to the data or thinking instead to their long holiday weekend.
The U.S. will release significant numbers today including the weekly Unemployment Claims, New Home Sales, and the Revised Consumer Sentiment reading from the University of Michigan. The USD is definitely trading within the lower realms of its domain against many currencies and this has not gone unnoticed. Today’s trading could prove a whirlwind if volume decreases because of investors leaving early for the holiday and a surprise number should infiltrate the data. There are many questions regarding the U.S. economy and they are certainly going to be asked with greater magnitude in the weeks to come. Consumers are being counted on to show up to the shopping malls on Friday to kick start the official holiday season. Just how much the public is going to spend remains a large area of concern for many companies. The USD finds itself in an uncomfortable position as it lingers near the low end of its value. Traders who are active the next couple of days will have to decipher how much of a defense the greenback can muster with many participants thinking about holiday meals instead of the marketplace.
EUR:
As the trading day came to a close on Tuesday the EUR found itself trading near its very highs against the USD. The German Final GDP figure was released yesterday and met expectations with a 0.7% gain. Also the German Ifo Business Climate survey did show an improvement. Today the GfK German Consumer Climate reading and Italian Retail Sales figures will be published from the continent. The EUR continues to demonstrate that it is finding an influx of takers even at these high water marks. This has occurred in an atmosphere that still finds Europe with significant questions that must be answered regarding its banking sector and ability to create genuine growth. Yesterday’s GDP numbers from Germany while in the ‘black’ will not ignite any speeches of jubilation quite yet. The EUR is at its highs for the year against the greenback and with the American holiday coming into play the next few days, the European currency could find itself making a bold move.
GBP:
The Sterling managed a gain on Tuesday against the USD even as the BBA Mortgage Approvals release turned in a lackluster result. The BoE did hold their hearings within Parliament on Tuesday and comments from its members stating that they believe the U.K. economy is showing improvement certainly may have helped inspire investor confidence. Today the Revised GDP statistics will be published and it carries an estimate of minus -0.3% and tomorrow the CBI Realized Sales will be brought forth. The GDP numbers could prove critical for the GBP today considering the amount of discomfort investors have exhibited per the various pronouncements from the U.K. government on the health of the economy. The Sterling has been within a well practiced trading range for months and it starting to push near its highs once again.
JPY:
The JPY picked up additional ground versus the USD on Tuesday and this came in the midst of continued fallout from rather volatile price action in the Asian bourses as a whole. The JPY finds itself knocking up against the highs of its range against the greenback and this will not be a happy event for many Japanese export companies if this situation does not change. Gold broke through to additional new highs and finished the trading day near 1180.00 USD per ounce as its run continues to flourish within a strong tide of speculation.
Written by: Robert Petrucci, Chief Commodity Expert and Forex Analyst.
Technical Analysis
Are We Running Out Of Steam In The Gold Rally?
SPX/USD:
I am happy to be standing aside and not trading this market. Monday’s trading signaled indecision, and Tuesday only confirmed that. Trading will probably be on the lighter side by this afternoon (Eastern Standard Time) as many American investors will start the thanksgiving holiday as early as possible. The dollar was weak, and if it breaks here we could be in for another large down move, pushing other markets like the SPX higher. However yesterday’s recommendation still holds true. “I constantly hint at the strength in this market. Yesterday at the end of my short recommendation I wrote “However, be cautious as we know that there are serious buyers slinking in the background who are waiting to snatch up the shorts”. Well, these buyers picked up all the sells in the market like a black hole sucking in the surrounding stars. The market gapped up 20 points on the open and traded all the way up to 1 point off resistance of 1113.4. Interestingly enough, like a 15 year old boy on his first date, the market failed to live up to the hype it created with this gap, and formed a nice selling tail. I want to be a seller here but can’t. At this point, I recommend standing aside. Resistance of 1113.4 held well, suggesting a potential down move unless you consider the gap up over support of 1101.3 which was bullish. Keep an eye on the dollar as any weakness could send the American equity market much higher. With a shortened trading week because of the thanksgiving holiday, trading could continue to be very volatile, and I will probably wait until things settle down somewhat before jumping back in. Unless of course things start to fall apart completely!” Support 1101.3, 1094.9, 1091.7, 1085.3, 1077, 1068.9 Resistance 1113.45, 1132.2, 1153.8
XAU/USD:
Gold continues to be an integral part of this blog because I believe it to be a great teaching tool for traders. Why is it such a great tool? Simply put, Gold has been acting in such a way that traders are really able to identify great trading opportunities. Consolidation followed by breakouts on the one hour chart, the “trend is your friend” principle, etc. Today we will return to the Weekly head and shoulders formation we discussed a couple of months ago, and see how that is developing. Obviously it has developed very well and it is obvious that gold is flying. The original recommendation was that we would see gold trade over $1100 with a strong probability of it hitting $1200 before year end. Today I want to point out two key elements of this trade. I would be cautious about getting long at these levels on a long term basis. In terms of the head and shoulders formation, the trade is basically the length of the neckline. The neckline takes us to about $1220. We are only about $40 from that target. Considering the sharp angle we have been trading over the last few weeks, I do not believe that this particular move can sustain itself much longer. Gold will have to slow down and people will begin to take profits on this trade. Furthermore we have traded most of the move, even if we do trade another $40 higher, my recommendation is to hold onto the long position, not to enter the trade at these levels. It’s just too risky. Support 1173.75, 1155.7, 1151, 1121.9, 1100.3, 1070.6, 1024. Resistance 1179.95…
GBP/USD:
The Sterling was able to reverse itself towards the end of the day after bouncing of 1.6500. Today we are already seeing strength on the back of dollar weakness. With a shortened trading week in the United States, this currency could have some interesting moves. It continues to trade within a channel but I am uncertain as to how it will act once American investors are out of the equation. I think this currency has potential to sell off, if the USD is able to hold these levels. Today the greenback is acting weak and this may be the beginning of another decline. If that is really the case the pound should push higher and trade the higher end of its range. However, I think that within a week’s time, the dollar will truly bottom, and send the markets in the opposite direction. At the moment I am going to stand aside coming into the holiday. Support 1.668, 1.6609, 1.6460, 1.6249, 1.6125, 1.5769 Resistance 1.6741, 1.6876, 1.7042
EUR/USD:
The Euro is maintaining its uptrend on the weekly chart. However, I am recommending a sell. Once we formed resistance of 1.5062 we seem to have found a plateau and are consolidating around these levels. However, considering my beliefs with the dollar, how we keep bouncing off resistance and the previous two candles (one having a selling tail, and the other just being weak) I think that the Euro is looking at a selloff with a potential target of 1.3747. The first target will be 1.4449, once we break below the trend line. This week will lend to some interesting moves and I will be looking for the selling opportunity which we are nearing today. Stop will be about 25 pips over resistance and if we do hold over resistance this market is going to 1.5284. Support 1.4999, 1.4800, 1.4683, 1.4613, 1.4480 Resistance 1.5062, 1.5144, 1.5284, 1.5343, 1.5460.