Shiny metals and black gold

Commodities have been in a strong uptrend but every now and then short term counter-trend oportunities come along and they are worth taking. For now, it is wait and see.

Gold

It looks as though a short set up is developing coming days and I am waiting for things fall into place. We have weekly & daily RSI and MACD divergences. There is also weekly bearish shooting star but downside follow through this week is needed for shooting star to be valid.

A daily close up shows gold within what appears to be a rising triangle. Only a close below rising trendline approximately at 1410 will serve as an invitation to short targeting its major uptrendline from Nov 2008 currently around 1380. Till then, we will keep an eye on that daily uptrend.

Silver

An amazing trend so far but a potential short trade is brewing here as well. It is within a rising wedge. At this point it is mostly about playing the wedge boundaries but the real deal will be a potential fall from the wedge in April.

Oil (WTI)

It looks like a cup & handle and the target is 105.5+8=113.5 (105.5-97.5=8). But what I do not like is the RSI & MACD divergence and a possibility of pattern failure. Then oil should fall through the steep uptrendline and head to the top of the failed wedge channel as shown with red arrow. So, wait and see approach looks very reasonable to me.  

Usually there is not much to do but today the plate is full

AFTERNOON UPDATE

EURJPY

See the commentary in the previous post. Anyhow, I have two scenarios (details in the chart) and so far I think scenario A may work. However, as you are aware equity markets are tumbling as I write so 1) JPY may catch a risk bid and 2) EUR is likely to tank further below current levels (need to see daily close). Then scenario b would be at play to buy at the bottom of the channel. If both fail, I am wrong and I am out.


AUD - bye bye my friend

A trendline of medium importance (medium term trend) has been broken and right at the top Ozzie makes symmetrical triangle, then makes a fake close above it for a day just to fall back in the next day and out of it today. Such fakeouts are good trading opportunities in themselves because everyone is caught on the opposite side of the move. Most importantly, triangles come as reversals patterns at the end of the long trend in ¾ of cases. The only thing I do not like about this chart is that Ozzie broke out very close to the apex of the triangle and breakouts close to the apex usually fail.  Trading Plan is this:

Short: 1.0040 and above. Stop: 1.0140 Target: 0.9550/60 (Nov 29^th swing low)

Triangle implied target: 0.9500 (approximately)

NIGHT UPDATE

EUR - short confirmed today

As i wrote previously my scenario B was to play on the short side on rejection of the weekly downtrendline. It appears scenario B is in play as the Euro closed today below an uptrendline from Jan 10th that was part of the rising wedge.  So, a further move down to 1.3725/35 support area is what i would expect coming sessions. That level should then produce a short term bounce. In the mean time, any throwback to 1.3845/70 area is an invitation to build additional shorts. Stop is above 1.3924

GBP -another short

This pair also closed below an uptrend from Jan 25th. A move down to 1.5985/95 where it will face Feb 11 swing low and 50MA resistance is what i would expect coming session. If cable closes below 1.5995, then we will be targeting the top of the downtrendline from Nov 4th and Jan 18th which is currently at 1.5885. A bounce to 1.6120 or above is a short opportunity. Stop is at 1.6220.

EURGBP

Today swing high at 0.8550 and a downtrendline at 0.8535 were tested which gave an opprotunity to long. Stop loss is just below 0.8455. 

 Charts to follow tomorrow....

I wonder whether USD rally will take a breather tomorrow and continue next week instead. 

Good luck trading.

EURJPY - it seems to be getting ready for the upside

EURJPY made double bottom & finally closed above the entire consolidation pattern on a weekly basis. Does it signify a Major Reversal  pattern? IMHO, it can. Since last 4 days it is testing previous swing high of 134.45. I have seen many breakouts whereby currency pair makes 2 to 4 days of dojis at a previous swing high range like EURJPY is doing now and then woosh and there is no turning back. If it happens, I am ready for it. But stochastics are pointing down: daily stochastics has rolled over and weekly is rolling over. Then, a very short term short can be attempted on the breakdown of the current range at 113.40 will be in play to target 113.97 & reverse to long at 113.93.

Charts to follow...

Review of Trades

EURUSD
Sometimes trading this pair was a bit difficult but trading strategy so far seems sound. Buy opportunities were at the breakout from bullish flag on Feb 17. A test of the flag on 2nd was another opportunity to long the pairFirst sell at 1.3850 worked to bring. First resistance at 1.3745/70 put up negligible fight while 2nd resistance at 1.3850 put up a fight worth slightly over 100pips. Daily close above & successful test of 1.3850 gave a target of 1.3946/66. Initial short at 1.3966 level failed after EUR closed above weekly trendline. But the next day provided another short opportunity when MACD & Stochastics diverged on 4 hourly charts & Euro spike was quickly reversed. Short target at 1.3870 has now been reached. It is now sitting at 50MA on 4H chart and a trendline on daily chart. Below 1.3850 is a sell & above 1.3950 is a buy to 1.4150 and if it is reached then 1.4270/80

EURAUD
Not much to say here yet & I am still bullish on this pair for following reasons:
a) monthly stochastics is above zero for the first time since Mar 2009 & weekly stochastics is rolling up again
b) weekly downtrendline that was part of the downtrend channel or a wedge (depending on how you draw it) has been broken and left behind
c) weekly candle is bullish
d) daily 50MA is now below and has started to trend up. Admittedly it happened before (Jun 2010) but even then it was much less steep. It has also spent the most number of days above 50MA since Jan 2009.

It appears to be forming cup & handle pattern on dailies (stochastics also rolled down) and on 4H charts the price is within small downtrend channel or wedge again depending on how you draw it. A test of buy area at 1.3720/30 took place today and up to a swing high of 1.37 is a buy. Daily close below 1.3670 would be a cause for concern on a short term basis. A daily close below 1.3490 will indicate a test of 1.3320 is under way.

EURCAD
Was waiting for a buy confirmation but it is testing the bottom of the triangle instead. It looks like it is ready to surprise to the downside instead. Daily close beneath triangle and in particular 1.3380 does not bode well for Euro.

EURGBP

Nothing has happened so far. Long position in place, still waiting for the move.

NZDUSD
Sold the pair back in Feb 10th, posted trade ideas on this pair on 12th. NZDUSD provided ample opportunities to sell short on 18th & 21st when it tested the level of its triangle breakdown approximately at 0.7630-50 area. Then on 21st NZD made doji & the next day it collapsed on the back of an unfortunate event - eathquake - in New Zealand. But doji before eathquake?! Coincidence or not but it is simply incredible!!! Anyhow very strong support at 0.7355 is still holding and i expect a bounce to 0.7430 or above which should be shorted. Original target at 0.7170 based on triangle measuring implications is still achievable

GBPAUD
Plan did not work and i was out in a jiffy on this one with a small loss thanks to continuous stop loss adjustment.

GBPJPY
Another trade gone sour. The amusing thing is that it is back where i bought it and still looks bullish to me.

JPY
Out with a tiny loss but this beast still looks bullish to me. It is now within a multi-week triangle. My adventurous side tells me a long to 0.8370 looks feasible while classical TA tells me to wait for JPY to close above it.

CHF
Minor target at 0.9750 reached but from there it was downhill.

Overall, not too bad but need some improvement on timing the trades & profit taking.

EURO pairs & flip flops

EURUSD  - short now
My Resistance 2 (R2=1.3850) held for two days and it was starting to look like double top on 4H chart till it did not & was successfully broken with bullish engulfing candle & retested. Now Euro reached R3 (1.3946/66) target courtesy of Trichet & is now hitting on another weekly downtrendline. This is a very good point to play short according to scenario B. Euro should at least test the daily uptrendline or 1.3870 area as a target. One way i will know scenario b is not valid anymore is when it closes above this weekly trendline. Then, the  target will be R4 area of 1.4140/50. By the way, NFP is today so exercise care.

EURCAD - wait
This one was a tough cooky & i found myself flip flopping & plain wrong: it rallied out of the bullish flag turning me bullish, then came back right into it turning me bearish. But now it is sitting almost above the downtrendline of a falling wedge (very bullish on a close above), is in the process of approaching the neckline of inverted head & shoulders pattern (bullish on a breakout of the neckline) but it is still within a triangle (waiting mode) on dailies. Anyhow, i want to see a close above 1.3600 to get tentatively bullish again & above triangle to be totally bull. On weekly charts, we have bullish engulfing candle in formation as long as it keeps around its current level of 1.3575.

EURAUD - buy the downtrendline test
On weeklies this pair closed above weekly downtrendline & it makes me at least medium term bull as mentioned in the earlier post. Short term it was within a symmetrical triangle & i felt it was going down to test the weekly downtrendline first. Instead, it closed above triangle & says it is in the up only mood. The triangle gives me a target of 570 pips to 1.4330 from current 1.3760 level. Expect resistance (i.e. quick short term short plays) at previous 1.3870-1.3900 areas. Tradewise, stop loss is difficult to pinpoint but I am happy as long as it does not close below 1.36700. A test of 1.3720/30 is a buy.

EURGBP - buy
Bullish Case:
1. It closed above daily triangle which gives a target of 710 pips to 0.9288 from 0.8578.
2. On a 2nd look i noticed weekly inverted H&S and a weekly close above 0.8585 gives a target of almost 300 pips to 0.8885
3. Also this H&S pattern is so far 16 week consolidation formation which i call boxes. Previous such consolidation formation (but not H&S) broke out of the range in week 16 and exceeded the 300pips target by approximately 80pips
4. Finally, it broke above the first weekly downtrendline at 0.8533

Bearish Case:
However, the pair is still within a weekly downtrend channel which comes currently at 0.8750

How do i reconcile these opposite views? The obvious play is to long to target 0.8750 area first and if it behaves well afterwards, then aim for 0.8885 if not much higher.So, buy now or anywhere up to 0.8550 level  (downtrendline & previous swing high support) based on the current close above daily triangle. If it manages to close above 0.8585 on a weekly basis, it is even better. When it comes to stop loss i would be worried if it closes below 0.8527 on a daily basis.