When we ask for advice, we are usually looking for an accomplice. ~ Marquis de la Grange
Good morning. Short-term trends of several currency pars have been derailed yesterday – or rather delayed – by the coordinated central banks intervention. For those of you who’ve been busy doing something else and missed the news, now wondering what happened – while looking at the huge moves on the charts: the Federal Reserve, European Central Bank, the Bank of Japan, the Swiss National Bank, the Bank of England and the Bank of Canada moved in a coordinated action to provide liquidity to the global financial system. Yes – these are the same type of actions that were being taken in 2008, during the financial crisis. And yes – their moves to keep money flowing were enough to trigger investors / speculators’ euphoria as they decided to take more riskier bets. One should ask whether this action was triggered by a pending failure which is not publicly known (yet). Well, central banks interventions are part of the game and we all know which is the most volatile market, so it should come at no surprise if you wake up and see a 3 figures rally in EURUSD or other major pair. Now let’s see how the charts look like today
USD Index
Resistance near 80 stays intact after yesterday’s pullback. Some are probably calling a double top, hence a reversal underway, so let’s keep an eye on 78 where near-term support resides. I, for one, am expecting more upside for the dollar
USD Index Chart Daily 12-01-2011
EURUSD
Resistance at 1.3430/50 has been taken out yesterday so we’re back into the range between 1.3430 and 1.36. Anyway, I don’t think that the key support is 1.3430 as yesterday’s 4-hrs bar is large enough to expect a correction towards up leg’s median value, somewhere around 1.3350/70 – so that is where I’ll be carefully watching how price reacts. Although some of my plans and positions discussed recently have been canceled or turned bad, I remain bearish on EURUSD and will look for more selling opportunities
Euro vs US Dollar Chart 4hrs 12-1-2011
AUDUSD
The Aussie dollar rallied almost 400 points yesterday but is pulling back right now, after reaching the 62% retracement value of last down leg. Bears should be careful – as there’s probably a big chunk of buying orders waiting around 1.0070/00
Australian Dollar Vs US Dollar Chart Daily 12-1-2011
USDCAD
Now that the US dollar is well below corrective levels which shouldn’t have affected the upward trend, it’s time to keep an eye on resistance around 1.0260 again. I’d prefer to buy on a new break above but on the other hand I suspect that current recovery could be corrective, so I’m not that confident about greenback’s renewed strength. Patience is golden
US Dollar Vs Canadian Dollar Chart 4hrs 12-1-2011
EURAUD
Euro’s decline highlighted in my Monday’s report reached the target at 1.3200 and it didn’t stop there. A recovery is underway but I don’t think it’s a good idea to be on buyers’ side, but rather wait for signs of weakness
Euro Vs Australian Dollar Chart Daily 12-1-2011
have a great day!
Hi there Liviu
You might be right about the eurusd but dont forget to watch the momentum divergence you have there on the chart..
Be cautious on the upside or either it blows exponentially or stay out of buying..
Regards http://www.4xforecasts.com