Comdoll Trading Kit (August 20-24, 2012): Midweek Market Analysis

Midweek Market Analysis

To cap or not to cap?
Germany’s Der Spiegel magazine rocked the currency world last Monday by saying that the ECB is planning to put a cap on the euro zone’s peripheral bond yields. Unsurprisingly, high-yielding currencies shot up at the release of the report. Currencies even extended their move over the next trading sessions despite the ECB and Germany’s Bundesbank’s failure to confirm the rumors! And people say I act irrational during midnight sales. Ha!

Australia’s interest rate battle
Australia’s Treasury office provided mini heart attacks for the Aussie bulls last week when it hinted that interest rate cuts more preferable than currency interventions in battling the strong Aussie. Thankfully, the RBA dispelled rate cut speculations yesterday when its meeting minutes painted a more optimistic picture than what analysts were expecting. Phew!

Comdoll reports take center stage!
With barely any market-moving data from the major economies, comdoll traders are looking at economic reports of commodity-producing countries for direction. For example, Canada’s recent disappointment in CPI and manufacturing and wholesale sales is dragging the Loonie 0.26% lower against the Greenback so far this week.
Comdolls
The RBA’s optimism is keeping AUD/USD just under the water with only a 0.01% slip against the dollar, while its friendly neighbor NZD/USD is only dealing with a 0.02% intraweek loss. Of course, a lot could happen over the next couple of days as the Fed releases its FOMC minutes and the euro zone leaders meet, so we must keep our eyes peeled for good trade ideas!

Potential Trade Setups

AUD/USD: Rising Channel Holding!
AUD/USD Rising ChannelDo you think the rising channel on AUD/USD’s daily chart will hold? This pair has been at it for nearly three months now! The next support seems to be at the 1.0400 area, but is a breakdown possible anytime soon? Does stochastic signal that a potential bounce is in the works? See the setup

USD/CAD: Next Support at .9800?
USD/CAD .9800 Support If you’re a Loonie bear, then you might like this potential bounce setup on USD/CAD. It looks like the pair is currently approaching the next support level located at the .9800 major psychological level. Do you think it’ll hold? Make sure you wait for stochastic to turn if you’ll play the bounce!
See the setup

NZD/USD: Potential Retracement Play
NZD/USD Retracement SetupNow here’s a potential retracement play with the Kiwi. On the longer-term time frame, the pair appears to be retracing to the nearby support level around .8050. Note that this level acted as resistance in the past and is in line with the 38.2% Fib level. Let’s see if Kiwi bulls have what it takes to push NZD/USD back up! See the setup

Comdoll Event Highlights for August 20-24, 2012

Calendar

This week’s comdoll calendar might not be as full as the previous weeks’, but sure is chock-full of major economic reports! Aside from New Zealand’s quarterly inflation data, we’ll also see Canada’s wholesale and retail sales, not to mention the RBA minutes and the FOMC meeting minutes scheduled throughout the week.

And then there are China’s manufacturing reports, which I’m pretty sure will be closely watched by comdoll and non-comdoll traders alike. We’ll end the week on a relatively light load with only Australia’s CB leading index and the U.S. durable goods data on tap.

Now let’s take a look at the chart levels that you need to mark!

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0422
0.9893
0.8071
Previous Week High (PWH)
1.0574
0.9942
0.8135
Previous Week Low (PWL)
1.0411
0.9860
0.8037
Top Weekly ATR (tWATR)
1.0524
0.9960
0.8153
Bottom Weekly ATR (bWATR)
1.0321
0.9826
0.7989
Other significant levels
1.0457, 1.0385
0.9900, 0.9850
0.8120, 0.8050

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.

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Have fun and good luck trading this week, friends!

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