Archive for category: Technical Analysis

The Dow Jones 30 has fallen rather hard during the course of the trading week, and now that we have seen such an ugly turn of events when it comes to the jobs number, it’s not a huge surprise that we could continue to see more downward pressure. However, there is a massive amount of support underneath that will eventually come back into the picture, as we have seen a strong uptrend line. I suspect that we see a little bit of follow through, only to turn the market right back around again as traders start to focus on the idea that the Federal Reserve may get even more aggressive with interest rate cuts.

Silver markets continue to be very noisy, and did initially tried to rally for the week, but then collapsed as we are now starting to see a lot of negativity out there, and I think it’s probably only a matter of time before traders trying to find a bit of value in this market, but if we do see continued negativity, I think it’s probably a situation where we will have to pay close attention to the $26.50 level, because that is your next major support level. If we turn around and recapture the $28.50 level, then silver could recover. However, it’s becoming more and more likely that we may continue to see downward pressure.

The German index has seen quite a bit of negativity during the course of the week, sliding through the €18,650 level, and now it looks like it is heading toward the €18,000 level. This is a market that I think continues to see a lot of noisy behavior but given enough time I think we also will continue to see a lot of questions asked about global growth, and that of course has a direct effect on Germany itself. With this, I like the idea of waiting to see what happens at the €18,000 level with this market, because it could tell us where we are going for the longer term.

The euro initially rallied during the course of the trading week to break above the 1.11 level, but then turned around to show signs of extreme weakness. By doing so, the market is likely to continue to see a lot of volatility, and with the jobs number coming out as week as it did in the United States, it’ll be interesting to see where we go from here. I think you’ve got a situation where traders will have to pay close attention to what’s going on, but they also will have to pay close attention to whether or not risk appetite starts to disappear. If it does, that could turn this thing around and have the US dollar strengthening quite drastically. All things being equal, I expect a very choppy and noisy EUR/USD market.

The Australian dollar has plunged during the week on bad economic news around the world. Chinese demand has slowed down, and now the US jobs numbers came out weaker than anticipated. This suggests that perhaps the market might be looking at a global slowdown, and that will have a major influence on Australia itself. I do think at this point in time you need to pay close attention to the AUD/USD market, because it is more likely than not going to be a barometer of risk. If the Australian dollar starts to strengthen again, that would be good for other markets. The 0.6650 level is a significant support level.

The NASDAQ 100 has plunged during the week to crack below the 18,500 level, and now it looks like we are asking questions as to whether or not there is enough support here to turn the market back around. If it is going to continue to go lower, this could be the beginning of something rather ugly, and I think a lot of traders would start to bail on anything remotely close to risk appetite. In general, this is a very dangerous level, and we need to be very cautious about trying to get into the market at this point and are better off letting the market tell us which way it’s going to go.

Bitcoin has had a tough week, and I think at this point in time we are more likely than not going to go down to the $50,000 level, which of course is a large, round, psychologically significant figure, and an area where we have seen a lot of action in the past. If we were to break down below the $50,000 level, that would be a horrific turn of events for the bitcoin market, and I think we plunged much deeper to the downside. At this point, we need to recapture the $57,500 level to get bullish again.

The US dollar has initially tried to rally against the Japanese yen (USD/JPY currency pair) during the week but has turned around to show signs of life again as it looks like we are trying to determine whether or not the ¥142 level will continue to offer support, as well as the massive uptrend line that we had seen previously. As long as those hold, then things are probably somewhat okay in this pair, but if we were to break down below the ¥141 level, that is a major breach of support and could send this pair plunging.

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• In my daily analysis of the New Zealand dollar, the first thing that captures my attention is that we have had another day of positivity, which of course is a very bullish sign.
• However, we are currently dancing around the 0.62 level, an area that has been important than once.
• The market continues to be a situation where we are looking at risk appetite being all over the place, and therefore it does make a certain amount of sense that we would continue to see a lot of uncertainty and therefore choppy behavior.

At this point in time, it’s worth noting that the New Zealand dollar is highly sensitive to Asia and out what’s going on with the Asian economy, as well as the global economy as the New Zealand economy is so heavily influenced by commodities in general. Ultimately, this is a market that I think will continue to follow the overall sentiment of traders more than anything else, because quite frankly the New Zealand economy isn’t necessarily poor, but it doesn’t necessarily drive where we go. I believe that more likely than not we are going to continue to see the US dollar be the main driver of where we go next.

Federal Reserve

The Federal Reserve of course is front and center at the moment, and traders are worried about whether or not the Fed will cut rates enough to ease fears in the markets. While we certainly should see some type of interest rate cut, presumably 25 basis points, in September, the reality is that if we start to see the Federal Reserve cut rapidly, then it could cause a bit of a panic, and it would make a certain amount of sense that we would see the US dollar pickup strength, not because of interest rate differential, but the fact that people would be running toward the bond market in America for safety. That being said, at the moment it looks like we are still away from that possibility.

At this point in time, the market looks more or less positive but grinds higher than anything else. If we were to give up the 0.6150 level to the downside, that could cause a bit more selling pressure. That being said, I expect more volatility than anything else going forward.

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Potential Signal:

• Keep in mind that I want to trade in the same direction the risk appetite is going.
• I will watch the DAX, FTSE 100, ASX 200, and NASDAQ 100 to get a read on where risk appetite is going.
• If they are all rising at the same time, in this pair breaks the 0.88 level, then I will be a buyer with a stop loss at the 0.8750 level, and a target of 0.90 above.
• On the other hand, if those indices are all falling in this pair breaks below the 0.87 level, then I am going short with a target of 0.86 and a stop loss of 0.88 above.

In my daily analysis of exotic currency pairs, the Australian dollar/Singapore dollar currency pair has been of interest to me. The market seems as if it is an area that is rather important, because we are at a situation where there could be a bit of cross currents.

Ultimately, the market is one that is highly sensitive to risk appetite, with the Australian dollar being a currency that traders run to when there is a lot of risk appetite out there, while the Singapore dollar is considered to be more or less a safety currency for Asian traders. Because of this, it gives you a good read as to what the risk appetite is in general in that part of the world.

Technical Analysis

At this point in time, the market is at a major point of inflection due to the fact that the 0.88 level is an area that has shown itself to be both support and resistance in the past. Because of this, I think there’s a certain amount of market memory that could come into the market at that point. That being said, it’s also worth noting that we had initially tried to rally and break above the 200-Day EMA just a few days ago but failed quite drastically.

You will notice on the chart that I also have the 0.87 level underneath offering support, and if we break down below there then I think the market truly starts to fall apart. That being said, this is not a market you tend to trade in and of itself, which you look for is the overall attitude of markets including global indices in the stock market give you a bit of an idea as to which one of these currencies you want to own. If indices around the world start to fall drastically, then I will short this market as soon as it breaks down below the 0.87 level. On the other hand, if we get some type of recovery, then I will go long at the 0.88 level.

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• As you can see, the silver market rallied rather significantly during the course of the trading session on Thursday, breaking above the 50 day EMA before turning around and showing signs of hesitation.
• With this being the case, the market is likely to continue to see the market show a lot of noisy behavior, but I do think that given enough time, we have a situation where traders are probably going to try to find some type of value anytime, we drop.
• It is worth noting that the $28.50 level is an area that’s been important more than once.
• So, I do think that you have a situation where traders are going to continue to see this as maybe a midpoint or a fulcrum if you will.

Risk Appetite Drives Silver

So, with that, I think you’ve got to look at this through the prism of whether or not risk appetite is doing well or not. Remember, silver is not only a precious metal, but it’s also an industrial metal and therefore a lot of things can happen, and you have to pay attention to global growth.

I do recognize that if we break above the top of this candlestick, the $30 level has to be targeted. And that probably offers quite a bit of resistance. If we turn around and break down below the $28 50 cents level, then we could go to the $27 75 cents level, and then possibly the 200 day EMA level after that.

Keep in mind that it appears that industrial demand is starting to drop in general, so I think this will probably make silver much less reliable as far as an uptrend is concerned in comparison to gold. Retail traders tend to make the mistake that they believe silver is a precious metal, but in the last 10 years or so, we have seen more industrial demand coming out of green technologies. Because of this, the behavior of silver has fundamentally changed, and you should be aware of that.

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• The New Zealand dollar has rallied pretty significantly against the Canadian dollar during trading on Thursday as the crude oil market continues to drag the Canadian dollar down with it.
• In this particular currency pair, you do have two commodity currencies battling each other.
• But it’s also worth noting that New Zealand is more about soft commodities – food products, if you will.
• Therefore, it might be considered to be just a little safer as far as commodity trading is concerned. After all, you can consume less oil, but sooner or later, your population has to eat.

So, with that being said, there’s always a little bit of demand for the New Zealand dollar anyway. Now that we look at this pair bouncing so significantly from the 0.8350 level, it does look like we’re going to try to continue the overall uptrend. The 0.85 level above is a significant round figure. If we can break above that, then the market could really start to take off to the upside. Well, on the other hand, if the market were to break down below the 0.8350 level, then we start to look towards the 50 day EMA followed by the 200 day EMA indicators to offer some type of support.

The Market Will Remain Noisy

I do think this is a market that’s probably going to be noisy, regardless of what it typically is. But with all of the momentum that we have seen recently against the Canadian dollar and against oil, I suspect that going higher from here probably makes more sense than not.

Ultimately, I think we’ve got a situation where the momentum itself will probably eventually cause some type a breakout, but we will have to wait and see whether or not the lack of strength in Asia spreads to New Zealand, because it was certainly has spread to Canada in the form of lower oil prices which of course cause major issues for the Canadian economy.

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