Quote of the day:“The difference between the right word and the almost right word is the difference between lightning and a lightning bug.” ~ Mark Twain
Good morning. Dollar strengthened across the board as a reaction to Fed being pessimistic about the U.S. economy. The Fed aims to lower long-term lending rates by swapping $400 billion in short-term bonds for long-term bonds of maturity from 6 to 30 years: action called Operation Twist II as it is similar to a move in the 1960s named after the popular dance craze.
EURUSD
Monday’s opening gap was finally filled yesterday as the market rallied ahead of FOMC but found resistance around 1.3800. As noted in my report yesterday and earlier this week, the potential gap fill level could have been a good entry for bears – and it was. As seen on the chart below, 61.8% retracement value of last leg down was in the same region and the more technical/key levels are clustered together – the stronger that support/resistance level is. There is no magic about reversing around 1.38 after filling the gap: it was just good timing.
Last week’s lower zone is being tested and there is no sign of bottoming yet. In case of a pullback to the upside, 1.3630-1.3660 is where to look for next selling opportunity.
Euro Vs US Dollar Chart 4hrs 9-22-2011
EURAUD
The bullish breakout above 1.3430, which I’ve been waiting for, finally occurred yesterday. Current rally confirms that last test of 1.3275 was corrective and we’re heading North – 1.3650-1.3700 being next target. If price pulls back from here, I think it’s worth buying dips around 1.3450
Euro Vs Australian Dollar Chart Daily 9-22-2011
EURGBP
The potential bear flag formation highlighted in my report yesterday was invalidated when the EUR exited the range, breaking above .8750. Therefore, buying on strength as an alternative plan was the best thing to do. Next resistance is around .8800 where an interim double top is formed – keep an eye on this upside barrier
Euro Vs British Pound Chart 4hrs 9-22-2011
USDNOK
Small update here: a possible nice setup was canceled as a result to yesterday’s market reaction to Fed’s announcement. 5.600 was the support level to keep an eye on, and since it wasn’t even reached – the selling scenario is on hold for now.
US Dollar Vs Norwegian Krone Chart Daily 9-22-2011
GBPNZD
Here’s a nice setup as the NZD is weakening on risk-off trade / dollar strengthening against it, therefor GBPNZD following. Important resistance around 1.9450 has been tested a few times recently and the market is not far below right now. I think it’s worth keeping an eye on the said level, maybe it breaks – thus providing a buying opportunity to consider.
British Pound Vs New Zealand Dollar Chart Daily 9-22-2011
have a great day!
Do you think the £ / Aud follows the same pattern as € / Aud???
Do you mean GBPNZD Vs. EURAUD?
if so, then yes – they are highly correlated: daily charts 90%, hourly charts 95% – weekly only 50% but it's the daily more important in this case
Regarding GBPAUD Vs. EURAUD – they are highly correlated too: here http://bit.ly/qMatS0
I meant GBP / AUD vs EUR / AUD. The spread of GBP/NZD is far too wide with all 3 of my brokers so I do NOT trade that pair.
Thanks for the advice. ;)
the spread is wide but the thing moves a lot!
Daily Average range is over 200 pips
Okay; I'll reconsider. :)
514 points range today on GBPNZD – who cares about the spread with such range? xD
Liviu owes me a Ferrari. AUD/USD reached my 0.98 target before it reached the 1.10 target.
You have my address, so just send it through, I want the traditional red color, model 458 Italia.
Thanks
right. Hmm, I guess I have to live with only 4 in my garage after I send you the 458 Italia B)
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