It's that time of the week, folks! Let's take a look at the market themes that have been dominating price action this week:
Midweek Market Analysis
Disappointing NFP = QE3?
With no major data released from the U.S., traders have been obsessing on the disappointing NFP data out last Friday. Is it bad enough to push the Fed into launching QE3? The possibility that it might be sent the Greenback lower against the high-yielding currencies at the start of the week.
German court throws a roadblock on ESM plans
Though the EU finance ministers granted Spain more money and time to save its economy yesterday, traders continued to sell the euro. Apparently, they weren't happy with the way the German court could delay the passing of the ESM, a tool that's supposed to enable troubled EZ countries to borrow money easily. Some even say that the stall could last up to a couple of weeks! Unfortunately, time is one of the things that the region can't afford right now.
China keeps the comdolls afloat
Chinese reports have been both boon and bane for commodity-producing countries this week. And why not? Softer-than-expected inflation boosted comdolls as it raised expectations of more stimulus from the PBoC, while China's slowdown in imports seen yesterday suggested that the second largest economy is scaling back on its overseas purchases. Talk about tossups!
Over the next couple of days we'll see the BOJ monetary policy, as well as Australia's employment numbers and even China's GDP numbers. There's still a lot of room for volatility, so we better mark our charts carefully!
Hit me up on the boxes below if you have questions or something to share!
Potential Trade Setups
AUD/USD: Downtrend to Resume?
Has AUD/USD finally found resistance at the 1.0300 major psychological handle? By the looks of that bearish divergence and overbought signal on the daily chart, it sure seems so! On top of that, the 50% Fib coincides with a former support level, which could be holding as strong resistance now. See the setup
USD/CAD: Falling Channel Holding
Thanks to weaker than expected U.S. jobs data, risk aversion pushed USD/CAD up from the bottom of the channel last week. Of course it also helped that the channel support lined up with 1.0100 and was close to last week's bottom WATR. It looks like the pair is stalling right in the middle while a bearish divergence already formed. See the setup
NZD/USD: Rising Channel Forming?
This could be a make or break for the Kiwi! The pair just hit support at the bottom of the rising channel on the 4-hour chart while a bullish divergence seems to be hinting that Kiwi bulls could charge soon. But do fundamentals line up for a Kiwi bounce? Let me know what you think! See the setup
Comdoll Event Highlights for July 9-13, 2012
Looks like Australia, Canada, New Zealand, and even the U.S. are taking a back seat against China this week as the world's second largest economy releases its inflation, trade, and growth data. However, keep an eye out for Canada's trade balance report on Wednesday and Australia's employment figures on Thursday.
No major data is scheduled for release in the US, except perhaps the University of Michigan consumer index on Friday or Ben Bernanke's speech some time this week. But enough about fundamentals. Let's take a look at the important comdoll chart levels!
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!
Good luck in your trades this week, buddies!
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