Cable continues to remain very weak for the time being, and is now approaching the tipping point of a potential deeper move once we have a strong close below the psychological 1.50 price point, which is clearly marked on the weekly chart by the support and resistance indicator.
At the same time the VPOC (volume point of control) is also weighing heavily on the pair, and should the above level be breached then a further cluster of support awaits below in the 1.48 region. Any failure here will see cable move into a low volume node in the 1.46 region, last seen in March this year from which cable managed to stage a sustained recovery.
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Eurodollar continues to frustrate traders, and it's easy to see why. Since the failure to breach 1.1713 the pair has retreated back into the range of the VPOC (volume point of control) in the 1.1170 region where it continues to remain waterlogged.
With end of month and end of quarter position squaring we will have to wait to see whether eurodollar can finally break away from this region. From a technical perspective the heavy selling of 6 weeks ago is self evident with the extreme volume and deep upper wick to the candle telling their own story. Since then the pivots have helped to define the floor and ceiling of the congestion zone, and with volume now building on the VPOC histogram any move away is likely to be extreme and accompanied with strong participation.
The key level to any move to the downside is 1.1128 where strong support awaits.
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Of the three commodity dollars, namely the Aussie, Kiwi and Loonie it is perhaps the Aussie which finally appears to be showing signs of a potential reversal from its oversold state on the slower time frames of our currency strength indicatort (the blue line). And of the Aussie pairs it is perhaps the AUD/USD and AUD/CAD which appear the most interesting.
Starting with the AUD/USD it was the failure in May to break through the resistance at 0.8160 which was the start of the its downards descent which saw the pair finally find some support at 0.6906 on the Friday before the Labor Day Holiday in the US. And whilst this level was tested once again last Monday, since then the AUD/USD has managed to claw its way back to 0.7138 at time of writing.
Such positive sentiment and similar price action can also be found on the daily chart of the AUD/CAD where the test of support at 0.9149 on the...
At last Thursday's ECB press conference it was enough for Mario Draghi to hint at further QE for the eurodollar to sell off sharply, taking the pair from a high of 1.1243 before coming to rest at the support platform at in the 1.1087/96 region. This support platform was tested again on Friday as a degree of buying for the pair stepped in ahead of the Labor Day holiday in the US and Canada.
And whilst the start of this week has seen relatively muted price action for eurodollar given Monday's holiday, the tone of this action has been overall bullish with each session threatening to take the pair through and away the volume point of control in the 1.1200 price region. This has materialised in today's trading session which has seen eurodollar move from a low of 1.1171 to trade, at time of writing at 1.1278. The 1.1171 low also coincided with the `100 ma which has also added its...
Following longest fall since 2008 no surprise to see British pound and the 6B move higher in this morning's trading, on the back of profit taking and closure of US and Canadian markets for the Labor Day holiday.
From a VPA (volume price analysis) perspective the recent move lower has also been associated with falling volume suggesting the downwards pressure is, for now, running out of steam, with the platform of support at 1.5160 providing the reason for the pullback. Longer term, however, the outlook remains bearish for Cable, and should the 1.5160 price point fall to hold we may see a move towards 1.50 and even a possible re-test of the 1.46 region in due course.
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Last Tuesday's failure by cable to take out the 1.5818 resistance resulted in a down candle on high volume, which when it was combined with the previous day's bullish candle on very high volume gave us a two bar reversal (aka a shooting star), and the first signal that cable's preceding move away from the volume point of control region was likely to fail. This view was also validated by the volume which accompanied the shooting star, and a further clear signal of weakness to come.
Against this backdrop Wednesday's sharp 267 pip sell off in cable came as no surprise with the pair also moving firmly below the VPOC to close out at 1.5463 on the session.
The bearish sentiment was cable continued for the remainder of the week, as the pair closed out August 1.5390.
The start of the new trading week saw cable once again come under pressure, on relatively low volume, but this is easily explained as Monday was...
During yesterday's overall market volatility the forex market posted some very interesting and intriguing price action and candle patterns, particularly with regard to the major pairs.
As a general rule of thumb whenever the market becomes agitated and adopts a 'risk off' mood traders and investors can expect a strong move into safe havens such as the US dollar and gold. However, as has been the case recently where we have seen a breakdown of correlations and traditional market relationships, the USD did not react as many would have expected.
A look across the daily charts of our 7 major pairs not only reveals this divergence, but also highlights the importance of understanding volatility, particularly with respect to its affect on the ATR of an instrument.
As we can see from the charts only three pairs escaped triggering a volatility candle, and these were the USD/CAD, the USD/CHF and Cable with the USD rising strongly in the first two pairs, but falling in...
Ahead of the release of the Monetary Policy Minutes from the RBA, and tomorrow's CPI number for the UK, it's been interesting to see how the Aussie and British pound have been behaving in today's trading session. And of the two currencies it has been the British pound which has seen some heavy selling against both the USD and the Aussie.
The hourly chart of the CSI (currency strength indicator) highlighted the extent to which the British pound was overbought, and Cable's failure to take out the resistance at 1.5688 signaled the start of a reversal in fortune for the pair and a move lower of over 100 pips. And it has only been a combination of the VPOC at 1.5585 and support at 1.5578 that has prevented any further move lower for Cable.
Moving to the GBP/AUD here too we have seen a move lower for the British pound with the pair eventually finding support at 2.1094 from which we have...
In the current media speculation surrounding the impact of the PBOC decision to revalue/devalue the yuan, particularly on how this may (or may not) affect the FED's decision about raising interest rates, it is easy to forget two things. First, the fundamental news releases which too will add their own layer of volatility, and second Greece, which today is back centre stage as the Greek parliament meets today in emergency session to ratify the latest bail out deal.
Today's key releases are primarily in the US with retail sales, core retail sales and the unemployment claims due. And of these it is the retail sales numbers which the market will be focused on primarily because they may give some guidance as to the FED's thinking about interest rates.
Meantime in this morning's trading the USD has been broadly higher against all the major currencies except the British pound, but with the US session due to start shortly, Cable too may simply fall...
Have been reading that carnage is expected and word is EUR/USD has already dropped to 1.1029 - although my MT4 hasn't started as yet, so we will have to wait & see. Meantime here are some levels for some of the euro pairs :
EUR/USD - was already bearish & shorts at CFTC increased last week. Putting the 1.1029 aside for the time being - 1.1052 is the first level of support & if breached 1.0819 comes into play where a high volume node on the VPOC awaits.
EUR/JPY - Has been in congestion for a number of days having failed to breach the 140.78 price point & now looking to turn bearish. The immediate level below is at 137.57 with any move through here then likely to test the 136.69 region. The VPOC continues to remain in the 134.94 region for the time being and should this be taken out then a longer term bearish trend will ensue.
EUR/AUD - The interest rate...
