Comdoll Trading Kit (January 28-February 1, 2013): Midweek Market Analysis

Before we trade the big economic reports in a couple of hours, let’s first have an overview of what’s been moving price action so far this week!

Market Themes

One Man, Two Central Banks
With BOC Governor Mark Carney scheduled to handle the BOE’s reigns in July, traders paid close attention to what he had to say in Davos last weekend. Unfortunately for the pound (and the Loonie), Carney believes that monetary policy hasn’t been “maxed out” yet and that the central banks can do more to stimulate the economy. Will this mean more stimulus for the BOE or the BOC in the near future?

Mixed performance from comdolls
Price action didn’t get interesting until yesterday when traders positioned themselves ahead of the big reports coming up. The dollar lost against its major counterparts thanks to anticipation of weak US GDP and more anti-QE sentiment from the new FOMC voters.
Comdolls
The comdolls in particular are doing pretty well against the dollar. AUD/USD is up by 0.56% this week thanks to a positive Australian report. Meanwhile, USD/CAD is down by 0.42% while the Kiwi is just above break-even with its 0.11% intraweek gain. But how long will the comdoll optimism last? Remember that we still have the RBNZ rate statement, Canada’s GDP, and China’s manufacturing PMI ahead of us!

A Word from Mr. Kid President
Here’s something to brighten up your day! In case you haven’t seen it yet, a “kid president” is tearing up the social media with a simple and funny pep talk. So if you’re having a bad trading day, just watch this video and you’ll be reminded that we are all made to be awesome.

That’s it for our review this week! What do you think are the major movers? Will the high-yielding currencies continue to strengthen against the dollar? Your two cents are more than welcome!

Potential Trade Setups

AUD/USD: Ready to Retrace?
AUD/USD RetracementIt looks like Aussie bears need to catch their breaths from all that diving they’ve been doing! AUD/USD is pulling up after bouncing from 1.0400. The pair could retrace to the 50% Fib, which is in line with a broken support level, or the 61.8% Fib near 1.0500. Wait for stochastic to turn from the overbought zone before shorting though! See the setup

USD/CAD: Rising Channel Forming
USD/CAD Rising ChannelIs that a rising channel that’s about to form on USD/CAD? On its 4-hour time frame, the pair has been making higher lows and higher lows, signaling that an uptrend is in place. The pair just reached the top of the channel though and stochastic is moving out of the overbought zone. Could a selloff be in the works? See the setup

NZD/USD: Another Retracement!
NZD/USD RetracementHere’s another retracement play! After making a strong break below the .8350 area, NZD/USD just pulled back up for a quick retracement. Will the former support level hold as resistance though? Stochastic is still moving up, which suggests that Kiwi bulls could have enough energy to push NZD/USD higher. Let’s see if the Fibs hold! See the setup

Comdoll Event Highlights for January 28 – February 1, 2013

Calendar

It looks like the U.S. is dominating the data spree with its durable goods, home sales, and even the FOMC decision scheduled early in the week. The Reserve Bank of New Zealand (RBNZ) isn’t one to be left behind either, as it’s expected to pop up its interest rate decision in the middle of the week.

Canada could get the comdoll bulls and bears more active in the middle of the week when it publishes its GDP numbers. Australia will then take the front seat as we see its PPI numbers, followed by China’s manufacturing PMI figures. And if those potential bombshells aren’t thrilling enough for you, then you should watch out for the big U.S. nonfarm payrolls (NFP) report by the end of the week!

We have a couple of big ticket economic reports this week, so you might want to be extra careful with your trades. As a good start, you could mark the important chart levels for AUD/USD, USD/CAD, and NZD/USD with me!

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0412
1.0062
0.8355
Previous Week High (PWH)
1.0580
1.0101
0.8447
Previous Week Low (PWL)
1.0402
0.9903
0.8334
Top Weekly ATR (tWATR)
1.0478
1.0114
0.8424
Bottom Weekly ATR (bWATR)
1.0346
1.0011
0.8287
Other significant levels
1.0485, 1.0400
1.0200, 1.0050
0.8430, 0.8300

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.

Chips, dips, and lots and lots of pips!

Happy time

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