USD/JPY Forecast August 28, 2012, Technical Analysis

The USD/JPY pair had a very quiet session on Monday, in order to form a very neutral candle. We are sitting on top of support though, and as such it looks like a break to the upside would be an excellent opportunity to buy this pair that looks so consolidative. With this being said, we think that the 78 handle will continue to be protected by the Bank of Japan, and as a result will buying this pair as opposed to sell it.

We do see the 80 handle as massive resistance though, and as such are looking this only as a range trade. We don’t think this pair breaks out anytime soon, but if he gets above the 80.60 level, we see a move to 84 happening. If for some reason the market breaks down below the 78 handle, we think that the first signs of support should be bought as the Bank of Japan will certainly intervened sooner or later.

GBP/USD Forecast August 28, 2012, Technical Analysis

The GBP/USD pair attempted to rally during the Monday session, but fell off and managed to break down well below the 1.58 level. This is a very bearish sign as the day is closing out the session forming a shooting star, and now we have to pay serious attention to the 1.57 level if this level gives way, this would become a false breakout of a massive triangle – which is a massively bearish sign.

We still see no reason to panic at this point in time, as this is more than likely just going to be a pullback. On a supportive candle between here and the 1.57 level, we are very comfortable going long. Again though, if we get a daily close sub 1.57, this could be a market that would be worth selling.

USD/CAD Forecast August 28, 2012, Technical Analysis

The USD/CAD pair fell during the session on Monday, but managed to bounce in order to form a hammer by the end of the trading day. Interestingly enough, the oil markets looked relatively weak on a day that a massive tropical storm was heading towards many of the major refineries in the Gulf of Mexico. In fact, the storm is expected to be a level I hurricane by the time it hits land, and this should have in fact on refinery capacity.

However, it looks like the market may be read pricing the idea of quantitative easing coming out on Friday from the United States. With the Jackson Hole, Wyoming meeting on Friday that features a statement by Federal Reserve Chairman Ben Bernanke still lurking in the background, the markets may actually start to put a bid in for the US dollar as many are starting to rethink whether or not quantitative easing will be announced this week.

This pair is highly sensitive to this kind of action, as the Canadian economy is so dependent on the United States for its exports. In fact, Canada exports over 85% of the goods it sends out of the country to the Americans, and of course what happens in America is massively important to Canada as a result. With this being said, if the Dollar starts to strengthen we could see a lot of momentum start back up.

Looking at the charts, we are actually at the bottom of a larger consolidation area that extends from 1.04 to the 0.98 level. If we bounce from here, we would simply be continuing the consolidation that the market has been in for several months. In fact, this has been the bottom of the range for the last year, and as not much has changed it is hard to think that the currency should be priced any differently.

On a break of the highs from last week, we are more than willing to go long as it would show a bit of a momentum shift in this market. Obviously we could have fairly tight stops as the 0.98 level must hold as support. As for selling, we will not do it until 0.98 gives way on a daily close.

USD/JPY Forecast August 24, 2012, Technical Analysis

USD/JPY fell during the session on Thursday as the “risk off trade” continued. The pair looks like it is trying to find some type of support in that general vicinity and this of course makes sense as the 78 handle has been so important. By the end of the Thursday session, we have printed a very neutral candle.

The candle is in the epicenter of a massive support area between 78 and 78.75 roughly. This area has been protected by the Bank of Japan from various reports, and as such we are willing to take a long position on the first supportive candle that we see. This means that a break of the Thursday highs would be good enough for us to go long, as would any type of hammer or bullish engulfing candle a little below where we are now.

As for selling this pair is concerned, the Bank of Japan would certainly get involved in this market if the price was the fall below 78. Because of this, we will not sell this market even if it breaks below this area. In fact, we are willing to buy supportive candles below with even more vigor than the ones in this general area.

Going forward, 80 should be significant milestone in this currency pair, followed by the 80.60 level. If we can get above both of those there’s a good chance that we end up in the 84 area before it is all said and done. Above that level and we are talking a long-term buy-and-hold type of situation.

It should also be said that this pair is ideal for the short term trader, as there is so much volatility in a tight range that we can perhaps pickoff 20 to 30 pips at a time. It isn’t exactly glamorous work, but in the end it all pays the same. Because of all of this, we are not selling this pair, but would rather buy the closer we get to the 78, as we think the consolidation should continue. In fact, there is a little bit of an argument to be made that we could be heading into consolidation between 78 and 80.

USD/CAD Forecast August 24, 2012, Technical Analysis

The USD/CAD pair rose during the session on Thursday, to test the top of the shooting star that was printed on Wednesday. The “risk off” trade seems to be back into play now, and the commodity currencies all got whacked during the session. However, we did not break the top of that shooting star, so there really wasn’t a signal at that moment in time. This would be a countertrend trade, so we will have to be very picky when it comes to buying this pair.

It looks to us that the parity level above will be very resistive anyway, so more than likely it’s going to be prudent to ignore any buy signals. Looking forward, we think that rallies are set up to be faded, and that may be what’s about to happen. We are currently flat of this market, and don’t necessarily feel the need to change that status right now.

GBP/USD Forecast August 24, 2012, Technical Analysis

The GBP/USD pair attempted to continue higher on Thursday, but got old back instead in order to form a hammer. This hammer is essentially anchored at the 1.59 level, and as such it looks like we may be pulling back to confirm the breakout. Because of this, we are looking for some type of supportive candle in the vicinity of the 1.58 handle.

If we do get that supportive candle, we are more than ready to go along of the cable pair, and as such right now we see absolutely no chance of selling this pair.

EUR/USD Forecast August 24, 2012, Technical Analysis

The EUR/USD pair continued to March higher on Thursday, but gave back about half of the gains in order to close near the 1.2550 level. The market looks a little overextended at this point in time, and we are right in the middle of the massive resistance area going to the 1.27 level. With this being said, we think that it is only a matter of time before this pair searched the pullback, but the real question will be whether or not it actually breaks down.

We have yet to determine what exactly has changed in the Euro’s favor, and as such we think there will be a selling opportunity soon. Once we get above the 1.27 level however, we have to change her thesis and start buying. Truth be known, we find is very difficult to believe, but you never know what can happen in the Forex markets. A break below 1.25 would also have a selling.

AUD/USD Forecast August 24, 2012, Technical Analysis

The AUD/USD pair initially rose during the Thursday session, but it must be said that it sold off rather drastically by the end of the day. Looking at this chart, it’s easy to see that there is an uptrend line that the market is banging against currently. The 1.05 level seems to be massive resistance, and as such it seems like we have a real fight on our hands. The candle looks really weak for the Thursday session, and as such there is a possibility of a trend line break. If we get that trend line break, we think that the market will run to the 1.03 level. At that point time, support could be expected.

We think that the gold markets rising should eventually give a lift to the Australian dollar as well, and we find it on that the gold markets did so well during the Thursday session, while the Australian dollar got absolutely pummeled. Sooner or later the correlation will return, and the markets will realign themselves. We think that even if the trend line breaks down, that the 1.03 level should offer enough support that we can serve buying the Australian dollar then. In the meantime, this is going to be a messy pair to trade.

EUR/USD Forecast August 14, 2012, Technical Analysis

          The EUR/USD pair had a bullish session for the Monday trading day, but it did manage to give up quite a bit of its gains in the end. The 1.2350 level continues to hold as resistance, and as such we think that selling this pair may be possible even in these prices.

          Should also be noted that the pair is forming a rising wedge, and that is normally a bearish sign. We would become aggressively short of this pair if we manage to break the lows from the Monday session, and especially so if we manage to break the lows of the Friday session as it would not only show a break of a rising wedge, but also the support that we found at the 1.2250 level area.

          As for buying the Euro, we see absolutely no reason to do so as the Europeans are still dawdling when it comes to the financial crisis. In fact, we think that 1.25 will simply be far too extremely resistive for the pair to rise above it. We are looking for rallies to sell, or even a breakdown as mentioned above to do so as well.

GBP/USD Forecast August 14, 2012, Technical Analysis

          The GBP/USD pair attempted to smash through the 1.57 level on Monday, but was turned around and form a shooting star. Normally, this would have us very bearish of a currency pair, but as you can see on this chart the lows keep getting higher. This suggests to us that there is a significant amount of pressure to the upside in this marketplace, and as such we don’t feel comfortable shorting it.

          Granted, it does look like a nice shorting opportunity at first glance. Perhaps we will see a fall to the 1.56 level, but in the end it just simply seems too difficult to sell the British pound at this moment in time. We still stand by the idea that the 1.58 level is the gateway to much higher prices, and as such that’s essentially what we are waiting for.

          We think the 1.55 will offer massive support, and if that level gives way then we are willing to think about selling the cable pair. Until then though, it looks like any move to the downside will be very choppy and very susceptible the spikes in price. Because of this, we just simply cannot be comfortable at this moment in time.

          It should be noted however, that the 1.58 level should give wait for a move to 1.6 without too much hassle. Once we get out there, we will more than likely see prices as high as 1.62 or even 1.63 and relatively short order. We are approaching the end of the summertime, so we could see that move relatively soon.

          Speaking of the summer, these moves do have to be taken with a bit of a grain of salt. The reason being is that the liquidity is low, and as such as a little easier to move the markets around at times. The main traders for trading desks around the world are more concerned about the beaches in Monaco or even the Seychelles instead of what’s going on in their offices in London. With this in mind, we are more than willing to be patient and give the market a couple of weeks to show it’s true colors.

AUD/USD Forecast August 14, 2012, Technical Analysis

          The AUD/USD pair fell during the Monday session and managed to bounce off of the 1.05 support level yet again. This doesn’t seem like much to us, and as such we treated more or less as consolidation of a market that is looking for some type of catalyst to move higher.

          In a world where central banks are firing up the printing presses, commodity currencies will get a bid going into the future and we think that without a doubt the Australian dollar is one of the most interesting currencies from this perspective. It does track well with the gold markets, and as such we think that the two will explode to the upside at the same time.

          What’s most impressive about this currency pair is that although we are in an up trending channel, and have even hit the resistance line, we haven’t fallen – we simply gone sideways. This shows that although there is a bit of exhaustion in the markets right now, there’s nobody willing to step in to start selling aggressively. With this in mind, we are buyers on a break above the 1.06 level.

USD/CAD Forecast August 14, 2012, Technical Analysis

           The USD/CAD pair attempted to rally on Monday, but fell short of anything that would impress us enough to get involved. The Friday shooting star suggested a continuation to the downside, and it does look like any rallies in this market are to be sold at this point in time. We think the pair will fall to the 0.97 level eventually, and at that point there will be a lot of questions asked.

          Obviously, you’re going to have to once the oil markets as well, as the Canadian dollar is heavily influence by them. We think that the oil markets look right for some type of rally in the relative near future, and this could be the catalyst that since this pair down to 0.97. If that level gives way, we could see 0.95 and relatively short order. As for buying this pair, we aren’t comfortable doing it anytime soon, and as such aren’t even thinking about it.