Fundamentals versus Technicals…

Weekend Analysis 29Apr...

Fundamentals versus Technicals…
A break is only a break. Without the necessary follow through, momentum is absent. Without momentum, a break is insignificant.

Fundamentals are Not lining up with Technicals of late. Price action is generally back within familiar Ranges of the not so distant past. The recent rally in Risks, came on the back of the absence of QE3, though Fundamentally, QE3 is still very much on the table.

Negative Correlation between Risks & Dollar back in play…
Though the familiar USD safe haven play is back in focus I do not expect a full-blown Risk On move. Momentum is still lacking. As long as S&P500 does not break and close above 1425, Risks are within a familiar Range.

Though the predominant trend is Risk On for now, it is the Speculators that are keeping the market buoyant. Institutional investors and Long-Term Investors are clearly not participating in this rally, hence the lack of momentum. It is only a matter of time before we get a clear break and directional bias when momentum to the downside picks up.

Till then, Price Action could drift North until the tides carry them back South. Getting involved in this struggle now, will be a tough swim against the underlying currents and not an attractive Risk to Reward Ratio.

Technically the rally in S&P500 and Shanghai Composite, coincides with the rallies in the assets that I am watching. (See my watch list from previous posts).
This correlation further strengthens my Outlook as mentioned in earlier analysis. A convincing pullback in both the mentioned Indices would probably signal the much-awaited reversals in risky assets that bring with it momentum.

My in-depth analysis and the combination of Fundamentals with Technicals have kept me out of harms way in the recent directionless market swings. I intend to stay the course and watch from the sidelines till both Fundamentals and Technicals line up with the Multiple Time Frames.

Levels shown in my past weeks charts are still valid.
Having said that, for the short term, look higher...

S&P500

Shanghai Composite

Bank of Japan shocks the market!

BOJ stimulates the Financial Market with their asset purchase program. Japanese Yen weakens against the Dollar.
Rally may be short lived unless Usd/Jpy manages to break and hold above 82.00

Usd/Jpy Daily Chart

Where does Appetite for Risk go from here?

This week, I am taking a Technical look at the S&P500 & Shanghai Composite Index to see how the Euro and Aussie may perform, based on Risk Appetite.

The past week delivered the kind of activity that could support the theory that a large risk off trend is underway. Momentum, however, has failed to confirm that the bears are in control…not yet.

Will the S&P 500 align with Euro’s, Risk Off move? Or Will the Aussie align with the Shanghai Composite’s, Risk On move? Confirmation of a true risk unwinding is not yet seen. Neither do we have a convincing appetite for risk.

So, back to the sidelines I say. In the meantime, I am sticking with the underlying sentiment, which means following the Primary Fundamental Themes. No other pairs are better at representing true market sentiments and what matters to the market, other than...AUD/USD and EUR/USD

EuroDollar and SPX500

AussieDollar and Shanghai Composite

Bulls vs Bears... pre-Europe thoughts

Pockets of Battles are being fought at key levels. How the S&P500 closes tonight, after NY close, could decide which way this battle would proceed next week.

Chart Analysis

Aud/Usd - (Daily) the pair has cleared Resistance cluster around the 1.0380/1.04 area where we have the 200SMA, 100SMA, 20SMA, previous trend support and recent channel top. From here, expectations are for a move up. Probably towards 1.0560/1.06 where we have the 50SMA and previous range support now turned resistance.

Eur/Usd - (Daily) 1.32 is still the price to watch. The pair is still probing key resistance near 1.32 where we have the 50SMA, 20SMA and previous trend support now turned resistance. A break and close above is likely, which would be in line with the Aussie's break above resistance and the S&P500's overnight break above the 1380/1386 level. The underlying Euro weakness coupled with a lack of strong fundamental catalyst could be holding this pair down for now. If the break does happen, next key resistance would probably be 1.34 then the 200SMA which comes in around 1.3530

Gbp/Usd - (Daily) I have finally got an Elliott Wave count which I am comfortable with for this pair. Take note of the Rising Wedge and Confluence of Resistance in my chart. I expect a move up to at least close to 1.62 for this pair over the coming sessions. The Sterling is mirroring the Euro's price action and like the Euro, a move up from here is preferred.

Usd/Jpy - (Daily) I expect the Japanese Yen to strengthen, which mean Usd/Jpy is expected to retrace probably towards the 79.50 area for now. Wave count suggests a possible 2nd wave in progress. I am expecting a zig-zag correction down towards the levels shown in my chart.

and Last but not least, Eur/Chf - a raise of the 1.20 floor is expected. Question is when? My reason, the SNB will have to do something drastic to convince the speculators to look the other way instead of trying to test their(SNB's) resolve to maintain the 1.20 floor. The SNB is currently caught between a rock and a hard place and they need to create some breathing space for themselves for their own good. This is not a permanent solution but it looks necessary at this point. Even at 1.20 the Swiss Franc is overvalued.

Share your thoughts about this analysis if any... Happy Friday the 13th :)

End of Week rally ahead...?

technically, we could be in for a minor corrective rally ahead of us.
if this rally in FX were to materialize, it would be in line with both
S&P500's and Shanghai Composite Index's minor correction before continuation of bearish wave.

Levels for the next two days...

Aud/Usd: Daily Close above 1.0410 could target 1.06 resistance
(as I am writing this, price action is testing recent Daily channel resistance near 1.0380)
- view my Charts archives

Eur/Usd: Daily Close above 1.32 could take us to 1.33/1.34. Perhaps even 1.36
(failure to do so could put the pair back in range/consolidation)
- view my Charts archives

S&P500: yesterday's inability to close back above 1380 indicates weakness.
Shanghai Composite: watching 2,320 for resistance

Expecting the Unexpected...

Eur/Usd Technical Analysis

I mentioned yesterday that the Monthly Chart for Eur/Usd is still in a Bullish consolidation. That got me thinking… and I reviewed my analysis from yesterday. This is what I see...

Going by the theory that Correction not only occurs in Price but in Time as well, then we could be in a complex zig-zag, as shown in the Eur/Usd Daily Chart, in my Charts above.

If this view is to be true, the Eur/Usd still has scope for one more rally after current correction. Perhaps a final push up, before a true Trend change / reversal.

Weekly Technicals

Aussie, Euro…and Sterling Pound
click on 'my Charts' page to view Charts

Gonna keep things as simple as possible and just stick to what the wave patterns are hinting. Will stick to the mid term outlook. To view the Charts, go to ‘my Charts’ page.

Aud/Usd: my focus is now on 1.0145 and the mid-term channel support (see pink channel in chart). If 1.0145 is breached, we could be witnessing a new Impulse trend (wave 3) that could take us down towards the Long term Trend Support, just above 0.9860 (blue arrow in chart). 1.0385 is Resistance.

I have been calling for a meaningful correction in risk rallies and this might be it. As we watch 1.0145 keep an eye on the S&P500 or any of your favourite risk indicator. I will do a separate Technical Analysis on World Indices some time next week.

Conclusion for Aud/Usd: I do not like selling the Aussie. I am a buyer much lower from here.

Eur/Usd: my focus is now on 1.3080 / 1.30 / 1.2970 Supports, where I expect a bounce. Previous Support 1.32 is now Resistance.

Though I am still a Euro Bear, I am not in favour of doing anything at current levels. My preferred strategy is to wait for price to break higher before shorting. View ‘my Charts’ for technical levels.

As for the Wave Counts, if 1.2970 is breached the alternate count would be, that a 3rd Impulse is at work (similar to that of Aud/Usd). But we shall cross that bridge when we get there. For now, lets just look at the near term levels and see how it plays out.

It is crucial to take note that in the Monthly, the pair is still in consolidation above the 200MA and Long Term Trend Support. Which means the long term Bullish Trend is still unbroken.

Conclusion for Eur/Usd: I am a seller, higher.

Apart from these pairs, I am keeping a close eye on the price action for the Sterling Pound. No actionable trade at this point. Staying flat.

have a good week ahead.

thoughts for the weekend...

Friday, though bearish, generally was not a strong risk averse move, due to the extended weekend.
Can the losses extend into next week or will they be reversed?

We are yet to see a meaningful correction in risk trends, notably the S&P500. Looking at the World Indices, it appears that the S&P500 is trying to correct its extremely over extended rally. If it is indeed correcting, then, I would expect this late reaction to have a similar delayed move into recovery as well. The other indices were first in & therefore it is only natural that they would be first out.

On the flip side, these aren't natural conditions, so expect the unexpected.
I will be looking at the majors and will post the technicals in due time. (watch out for the charts in the "my Charts" page above)

Seems like a complex zig-zag is in progress in the Aussie and Shanghai Composite. Euro seems to be going through some form of a zig-zag too. Am also watching Sterling Pound.

I am still Long Eur/Chf and it appears that the SNB was very comfortable going into the long weekend, leaving the floor so close to being dangerously breached. I can't help but to believe that the SNB would want to let the pair momentarily dip towards the mid 1.19 figure so as too flush out "free loaders". Triggering Stop Losses placed in the high 1.19 area would clear out part of the massive Long Positions that are in place now. But is that really necessary?

Alternatively, could the SNB be simply confidant that the floor will hold on its own? Are they even planning anything? Could Monday hold a pleasant surprise? Questions, that only time can answer.

this blog is a work in progress...

I am building Blog...

The internet has been around for a long time. I am absolutely sure that you don't need me to tell you that. In fact, you probably even know more than I do, as far as the World Wide Web is concerned. Now, why am I saying this? and what might this new project be? Well I am going to build a blog. Yes a Blog.

I am so fascinated with having a really good blog associated with what I do on a daily basis. My brain cells are saying... "Now why didn't I think of this years ago?" - Well actually I did. I did think of the idea of creating a blog and in fact I did try my hand or should I say fingers, at a few. If one were to click on my profile on Blogger, it will be revealed that I have been at this since 2009. These age old blogs have since been abandoned, deleted & forgotten.

You see, those were the days where I was gainfully employed and at the same time was eager to leave the job that was gainfully paying me and create a business for myself. Which I actually did achieve but that is a different story all together. Let us stick to the current topic - which is, I am building a Blog!

So, after much research, I realized why my earlier blogs never had a life. I was simply trying too hard to write about what I thought people would like to read, on the world wide web. Or maybe I just wasn't creative enough. Anyway, to make life a little easier a brilliant lesson was learnt, build a blog about what I love to do. A blog about what I love to do and what I do everyday can't be difficult, right? Yeah... right!

Then you see, after having made up my mind about what my blog is going to be about, I was faced with another set of problems. How do I make it interesting? Because what is interesting to me may not be for the people who visit the world wide web. Great!

Alright, so now, not only do I blog about what I love to do, which I do everyday but I also have to make it interesting for a zillion people out there who I am absolutely sure will never ever meet in my life. Fantastic! I will do it. I shall start with the Design & Layout.

I am going to build a Blog...

Bullish week ahead...

China PMI catalyst - started the new trading week/month/quarter on a bullish note.
Expect a bullish April.
Important Event Risk on Wednesday & Friday still ahead.

Watch List:
my Weekend analysis on long term charts are also hinting a bullish outlook
for the Aussie, Euro & Pound. will watch for confirmation & post analysis later.

3 Beats to a New Rhythm...?

it appears the S&P500 & Nikkei-225 are of late, a little lagging.
question is, Is it lagging or Are we witnessing something New?

1 - the FTSE-100, DAX, Goldman Sachs Commodity Index, Hang Seng & Shanghai Composite
are all down showing signs of a possible 4th wave correction - in perfect harmony with the Aud/Usd.
which lines up well with my Short Term & Medium Term Risk Off outlook.

2 - on the other hand, we have the S&P500 & the Nikkei-225, doing their own little tap dance & carrying the Eur/Usd up with their rhythm.

3 - then, to add to this, we have the USD Index back where it was in the last Quarter of 2011.
the USD Index has basically gone nowhere since Dec'2011.

Could the New Quarter/New Month bring with it a New Trend?
Or will all of this fall back into perfect harmony after Friday's NFP-which also happens to be a Market Holiday?