Market Analysis for September 23 to 27, 2013

Fundamental Picture

With the Fed messing with our expectations last week, it’s not surprising that we’re seeing mixed price action this week. It also doesn’t help that we’re not seeing major news reports.

Right now USD’s price action is mixed as it looks like market players are still adjusting to the Fed’s taper timeline. The euro is taking a hit though, thanks to Draghi threatening to use more LTRO among other things. Meanwhile, the pound is still slowly gaining against the dollar but is losing out against the comdolls.

Speaking of the comdolls, demand for AUD, CAD, and NZD is currently supported by China’s strong manufacturing PMI. Even the yen is getting some love thanks to speculations of more stimulus from the Japanese government.

How long will these themes last though? Should we prepare for a mid-week reversal?

Potential Trades

EUR/USD: Cautiously Bullish

EUR/USD 1-hour Chart

I’m not really into the euro’s fundamentals right now, but I have to admit that the 1-hour chart is presenting a tempting case for a long. Aside from a possible support at the 38.2% Fib, the pair is also near a rising trend line as well as the 100 and 200 SMAs. Hmm, choices, choices…

USD/CHF: Neutral

USD/CHF Daily Chart

Is .9100 the new .9200? USD/CHF is still hesitating around the major psychological handle and the divergence and candlesticks that I’m seeing aren’t making the decision easy for the bulls and bears. I’ll also think of a downside breakout trade in case we see a strong USD-bearish environment over the next few days.

XOXO,

Huck

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