December 30, 2012
I am looking at the market a little bit earlier this week as we have New Years Day on Tuesday.
Best wishes from FMP. May your life be full of great happiness and may your journey through life be an adventure good luck for New Year 2013.
Happy New Year to you all.
Ok……..so what is happening in the market? http://youtu.be/ncVLMUTfC2M
If we have a look at the weekly charts we will notice big moves in the past that started in January on various pairs, can history repeat itself this year? I don’t know, to me it is not that clear cut.
We are expecting a bumpy ride until the holiday period is over with loads of news coming out this week, NFP included and by now you know this can really rock the market………but if you want to trade it will be in your best interest to look at the bigger time frames like from the Daily charts and up and to concentrate on Technical Big areas like the 1.6300 on the GBP/Dollar.
Looking back at the Aussie/Dollar over the last 6 months then the weekly fib levels played out every time, so till these levels break we can still trade them.
Euro Pairs:
If we look at the Euro/Dollar weekly chart then price has broken a bear trend line that came down from way back in May 2011. Look at the last two years, every January the Euro had some good rallies that lasted 3/5 months. Question can be asked – Will this be the same this year? Well this is forex and we know price is king. Looking at the Weekly chart then my first problem is at 1.3348. The mother in law 200 EMA is waiting there and if we look to the left of the chart then this is also previous resistance areas. So my thinking is that we need to be very careful in this area to long. We need a clear break and close above this 200 EMA before I will say the Euro/Dollar is long.
By now you know I also use the Euro Index for confirmation. Looking at the weekly chart, then we are still far out from the 200 mother in law but we are defiantly getting closer to a double top area at 105.80 if we move to a monthly chart we will notice that the 34 EMA is also waiting in this area.
Can you still remember what fall in the Euro Index Basket? The Euro/JPY had a massive clime from August this year and sit well over 2000 pips………However, remember how I LOOK AT ALL THE PAIRS IN THE BASKET PLUS THE EURO INDEX? Taking the above info regarding the Dollar Index and the Euro Dollar then the Euro/JPY is following the lead. Price is currently very close to that 200 EMA mother in law on the weekly at 114.58 with the monthly 34 EMA waiting just above this level. Stochastic is overbought so in my book, warning lights go on.
The last pair that falls in the basket is the Euro/GBP. We still have room on the weekly chart before we will get to the mother in law at 0.8273 however if we look to the left of the chart, we are already hitting resistance levels with 0.8200 being a big level. Drop to a monthly, we also see the monthly 55 EMA at this level that can form resistance.
So if we look at the above, then the Euro`s are definitely getting closer to very important levels. This will be making or break for the above pairs.
GBP/DOLLAR and GBP/JPY:
Looking at the weekly charts then over the last 2 years both these e pairs had BIG RALLIES in the month of January that lasted at least 3 months gaining thousands of pips. However, this year I am not so comfortable that we will see the same.
The GBP/Dollar is hitting the breaks every time at 1.6300 with same intrusting candle formation now forming at the mother in law at 1.6175. The 1.6300 level is big for me. I will only long this pair once we had a clear brake of this level. Will I short it? That is a tuff question, we have LOADS OF EMA`S to the down side that can give us the support. So we will have to see what happens at 1.6300 as the road to the upside has fewer roadblocks.
If we look at the GBP/JPY then it looks like this pair used drugs this year. We broke the 132.47 level and price took another dose of LSD and jumped to the weekly mother in law waiting at 139.56. This was an impressive clime of 2000 pips since July 2012.
Intrusting enough, if we look to the left of the chart, then this was the high of 2011, so in my book warning lights go on.
Aussie/Dollar and Aussie/ JPY:
If we look at the Aussie/Dollar pair weekly chart then we were trading in a band of about 400 pips with the top being at 1.0600 and the bottom at 1.0200 for more than 30 weeks. Dropping to the Daily chart then price is currently sitting on the 200 mother in law with an oversold stochastic. This is usually a big EMA that can make price stop in its tracks with a possible bounce back up
Remember, the Aussie/JPY is highly correlated but this picture looks a bit different if we look at the weekly chart. The 90.00 level is a very big level if we look to the left of a weekly chart, as we had a high at 90.00 in April 2011. Stochastic is also overbought so I will hold on to my horses before I long at these levels. In my books we need pullback to at least 85.90
USD/CHF:
This pair scares me at the moment. The Swiss bank intervened and pecked their currency with the Euro. However on the weekly chart of this pair, we have one mother of a Head and Shoulder pattern forming. The will be a potential of 1000 pips on the table when this plays out. This is not good news for the Euro Pairs. Remember we said we are hitting very important resistance areas on the Euro`s. Will the CHF is negative correlated to the Euro, so if this Head and Shoulder do play out then those levels on the Euro pairs can break to the upside…………so definitely something to keep in the back of our mind.
USD/JPY:
This is another par this year that used drugs. In March 2012 we reached the 84.00 level after an 800 pip rally in the beginning of the year. Price turned back to the 77.24 level and then the over dose, this pair got as high as a kite and broke the 84.00 like nothing….currently price is having a problem at the 86.00 level at the mother in law and if we look to the left of the chart…..resistance level a couple of years back. The monthly 55 EMA is also waiting at 87.59. Till we don’t have candle formation in this area showing us price is slowing down, I will sit on my hands a little bit.
USD/CAD:
If we look at the monthly chart, then this pair is flat if we look at the candles with price sitting on top of a hell of a lot of EMA`S on the smaller time frames. If I just have a manual look then 1.0040 will be the yearly main pivot point area for the year. Have a look how price had a love hate relationship this year with the 1.000 level. So, once again….this level can give possible entries on the smaller time frames.
Dollar Index:
Warning lights on the weekly chart goes on. Mary in the forum showed us before that there is a possible Head and Shoulder pattern on the weekly chart. We have loads of EMA`S on the smaller time frames that need to break to the upside before we can say the Dollar index is long……HOWEVER, saying that – the neckline is also not broken at 79.00…..so for me, price is currently in no man’s land.
Ok friends, we will just have to wait and see how this is going to pan out in the next couple of weeks when the big dogs are back from the holidays
I am taking some time out this week and will be going away, but don’t stress…..I will be back on Friday and remember, we have very competent traders in the forum if you need help.
I know, 2013 will be the best year for us all at FMP.
See you later http://youtu.be/ncVLMUTfC2M