Midweek Market Analysis
Strong U.S. data to boost the Greenback?
Since we have a ton of U.S. reports due this week, it'll be helpful to figure out whether the U.S. dollar will react to fundamentals or risk sentiment. Based on the resulting price action from yesterday's better than expected U.S. retail sales figures, it seems that strong results provided support for the Greenback as this could push the Fed farther away from QE3. Don't forget that we still have the U.S. CPI, building permits & housing starts, Philly Fed index, and consumer sentiment data due later on!
Loonie trading on hawkish BOC sentiment
Is it just me or is the Canadian dollar simply ignoring weaker than expected economic data? It seems that nothing can stop the Loonie's rallies after USD/CAD dropped below parity, as BOC Governor Carney reiterated his upbeat outlook for the Canadian economy. At the end of the day, it really is mostly about interest rate expectations, isn't it?
That is probably why, out of all the three commodity currencies, only the Loonie is in the green against the U.S. dollar for this week so far. While CAD is enjoying close to a 1% gain, both Aussie and Kiwi are in the red as AUD/USD is currently down by 0.82% while NZD/USD is sitting with a 0.76% loss.
Do you think the tables will turn midweek though? As always, I'd love to know what you think!
Potential Trade Setups
AUD/USD: Will the Falling Channel Hold?
This one goes out to the Aussie bears! On the 1-hr chart is a nice falling channel, which has been holding since the start of the month. AUD/USD is having trouble dropping below the 1.0500 area near the bottom of the channel, but I bet we'll see some movement over the next couple of trading sessions! See the setup
After pausing just above the .9900 major psychological handle, it looks like USD/CAD is ready for a bounce! Those who are looking for an area to short can take a risk at parity, which is near the 50% Fib on the 4-hour chart.
See the setup
NZD/USD: Head and Shoulder in the Making?
Don't you just love it when NZD/USD pops up a possible head and shoulders pattern? The pair just tested the .8075 area, which is not only a former resistance area, but is also the neckline for our h&s pattern. Will the pair break below the support, or will it test the previous highs near the .8200 handle? See the setup
Comdoll Event Highlights for August 13-17, 2012
This week might be off to a slow start for the Aussie and the Loonie since only New Zealand has a top-tier report (quarterly retail sales) due. However, I'm expecting things to pick up on Tuesday as Uncle Sam will release its retail sales report, which could have a huge impact on risk sentiment.
U.S. building permits and housing starts, along with the Philly Fed index, could rock the comdolls on Thursday while the preliminary U.S. consumer sentiment figure could still make waves until the end of the week.
Aside from taking note of these upcoming events, make sure your charts are always ready for possible trade setups!
Significant Levels to Watch Out For
|Week Open (WO)|
|Previous Week High (PWH)|
|Previous Week Low (PWL)|
|Top Weekly ATR (tWATR)|
|Bottom Weekly ATR (bWATR)|
|Other significant levels|
In case you're wondering what ATRs are all about and how I computed those figures, make sure you check out my entry explaining my trading strategies.
If you've got any trade setups you'd like to share, you know where to reach me!
Have fun and good luck trading this week, friends!
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