The Dollar Stages A Late Knock Out Punch

The Dollar pulled a nice little last minute punch at the end of the currency trading day today and nudged higher against the majors. As I am typing this, the buck is making further moves against the Yen once again. With inflation data coming out weak for Japan, it doesn’t look like the Yen can do anything but take a beating at this point. The interesting now is to wait and see what, if any, kind of catalyst it will take to help the Yen make a comeback.

Chart Analysis:

EUR/USD

The Euro is still stuck in that 2900-3000 range. On the daily chart you can see that the 50 EMA and 100 SMA are coming together around those levels to form a channel. To me, this indicates that whatever side the Euro breaks out on will be the direction it will continue to move. Yesterday, my trade idea never triggered because the Euro lost against the Dollar today, but I think it is still a good trade if the Euro happens to rally. For this reason, I’m going to recycle the trade idea and make sure I’m ready if the Euro comes back with a vengeance.

Trade Idea:

Buy at 3010; Stop Loss= 2990; Target= 3030; Target 2= 3050; Target 3= 3080

GBP/USD

The Cable looked like it would close higher than it did yesterday but at last minute, the Dollar surged and brought the Cable lower. Daily stochastics are trending down nicely and it shows plenty of room for selling power. My guess is that if the pair will move down toward its 61% Fib line. It probably won’t get there tomorrow, but over the next few days I don’t see any technical obstacles to keep it from getting there. Tomorrow the pair may fall to its 100 and 200 SMA on the 4hr chart which are currently around 9590 and 9573 respectively.

USD/CHF

Yesterday I said that I didn’t want to short the Swissy on a break of its 4hr. 50 EMA because the 100 SMA was right below it. Now that the price has risen, it has effectively drawn the 50 EMA and 100 SMA upwards which now gives me a good trading opportunity. We’ve seen the Swissy toying with 2500 for quite some time now and now I’m really thinking this pair will break it. However, if it doesn’t, then I think we’ll see another strong retracement. I’d like to short if the Swissy breaks below its 100 SMA and set my target for 2400. My stop will be above the 100 SMA. This will be a small trade but I think it’s a fairly safe trade because the pair would also have to break its 50 EMA before even getting to its 100 SMA. I figure that if the Swissy can break both of those barriers, then nothing will really stop it from dropping all the way to a 00 level, which in this case is 2400.

Trade Idea:

Short at 2420; Stop Loss= 2440; Target= 2400; Target 2= 2480; Target 3= 2450

USD/JPY

Well the Yen did get down to 120.50 like I thought it might when I wrote about it yesterday. In fact it went all the way down to its 100 SMA on the 4hr chart before bouncing back up. Now the Yen is getting another butt kicking from the dollar and as I write this, the pair is right back above 121.50. Poor Yen…it’s really going to need some fundamental fire power to make any gains in the near future.

Questions? Thoughts? Feel free to leave a comment below, or discuss the majors in our forex forum!

  • pinetree

    How does your analysis and approach to the currencies differ from Pippin Ain’t Easy to your Cowbunga system.

  • bigpippin

    The cowabunga is more systematic and mechanical. Pippin Aint Easy is based more on what I think is going to happen in the markets and trying to catch some pips if it goes the way I think it does. They are also meant for people who can’t watch the markets all day and who would rather set entry orders instead of waiting for a signal.

  • pinetree

    How does your analysis and approach to the currencies differ from Pippin Ain’t Easy to your Cowbunga system.

  • bigpippin

    The cowabunga is more systematic and mechanical. Pippin Aint Easy is based more on what I think is going to happen in the markets and trying to catch some pips if it goes the way I think it does. They are also meant for people who can’t watch the markets all day and who would rather set entry orders instead of waiting for a signal.