Comdoll Trading Kit (December 10-14, 2012): Midweek Market Analysis

It’s time to take a look at how the comdolls are faring this week. Will they be able to hold on to their gains or will we see a midweek reversal?

Midweek Market Analysis

Santa Claus Rally starting early
It seems that the markets just can’t seem to get enough of the good stuff these days as strong U.S. jobs data, combined with progress in the euro zone debt solution, sparked an early start to the much-awaited Santa Claus Rally this year. Although there are still plenty of uncertainties both in the U.S. and euro zone, it appears that traders would rather focus on the positive side of things as they buy up riskier assets these days.

Weak Chinese data hint at PBOC stimulus
During the weekend, China printed weaker than expected inflation reports, prompting market watchers to speculate that the PBOC might implement further stimulus soon. This was followed by weak Chinese trade balance figures on Tuesday. As it turns out, weak demand from all over the globe is weighing on China’s growth prospects, which could be enough to set off another rate cut or decrease in RRR before the end of the year.

Taking advantage of dollar weakness?Comdolls
The comdoll gang seems to be enjoying the anti-dollar sentiment leading up to the FOMC statement as AUD, CAD, and NZD are all in the green so far this week. The Aussie is currently enjoying a 0.41% gain against the Greenback while NZD has the biggest lead at nearly 1%. Let’s see if these higher-yielders will be able to keep it up until the end of the week!

Potential Trade Setups

AUD/USD: Tight Intraday Range
AUD/USD RangeThe Aussie bulls and bears seem to be at a stalemate near the 1.0500 handle as both try to break the tight 30-pip range on the 1-hour chart. Unfortunately, even Stochastic is in the middle ground on this battle. The pair is currently at the middle of the range, but stick close to your charts for a breakout! See the setup

USD/CAD: Falling Wedge?
USD/CAD Falling WedgeHere’s one for the Loonie bears! After dropping below the .9900 handle last week, USD/CAD looks like it’s consolidating just above the .9850 handle. Okay, I still have my short USD/CAD trade ready, but hey, we can’t discount that a falling wedge sometimes signals a reversal, right? See the setup

NZD/USD: Next Resistance at .8400
NZD/USD ResistanceNZD/USD is on a roll above its previous highs! But for those who are absolutely bearish on the Kiwi or if you’re looking for a target for your longs, then you should take a look at the .8400 major psychological handle, which has served as a strong resistance level early in the year.See the setup

Comdoll Event Highlights for December 10-14, 2012

Calendar

It looks like it could be a slow week for the comdolls since there are hardly any top-tier reports from Australia, Canada, and New Zealand for the next few days. The only economic releases from the comdoll economies are Australia’s NAB business confidence and Westpac consumer sentiment data then Canada’s trade balance report. Don’t forget that China is set to print its HSBC flash manufacturing PMI later on, too!

Perhaps the biggest event on this week’s docket is the FOMC statement. After all, this is the Fed’s last hurrah for the year! Brace yourselves for an extra dose of volatility among all dollar pairs on Wednesday.

Now let’s check out the important chart levels for AUD/USD, USD/CAD, and NZD/USD:

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0488
0.9879
0.8318
Previous Week High (PWH)
1.0516
0.9956
0.8350
Previous Week Low (PWL)
1.0393
0.9876
0.8171
Top Weekly ATR (tWATR)
1.0566
0.9933
0.8390
Bottom Weekly ATR (bWATR)
1.0410
0.9825
0.8246
Other significant levels
1.0450, 1.0500
0.9850, 0.9900
0.8250, 0.8315

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!

Happy time

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