With the NFP report out of the way, the markets’ focus returned to the euro zone woes. Here are 3 major themes that are influencing the markets so far this week:
Midweek Market Analysis
Euro-wide banking regulator?
Is there a need for a banking regulator that would oversee individual euro zone banks too? Judging from the rise in high-yielding currencies, investors are all for it. Unfortunately, Merkel thinks that it’s a mid to long-term solution and not something that would save the banks that need funds as soon as possible. Yikes!
G7 pledges support for Greece and Spain
Cooperation is always a good sign for markets, but traders especially liked it when finance ministers and central bank governors from the G7 economies pledged that they will coordinate their responses to support Greece and Spain. Too bad they didn’t have a group hug then. The market’s probably would’ve gone wild.
Good week for the comdolls (so far)
The comdolls started the month on the right side of the charts as profit-taking, risk appetite, and dollar weakness boosted commodities and commodity-related currencies. AUD/USD, in particular, gained ground despite the RBA’s recent 25-basis-point interest rate cut.
Right now the comdolls are the strongest among the major currencies against the dollar with AUD/USD up by 1.22%. USD/CAD is also down by 0.59% for the week, while NZD/USD is up by 0.70%. Is it time to buy the comdolls, or are we merely seeing retracements?
That’s it for our midweek review this week! Did I miss anything? As always, feel free to chat me up here or on one of my accounts below!
Potential Trade Setups
AUD/USD: Falling Channel
Looks like Big Pippin was on to something when he pointed out AUD/USD’s falling channel. Thing is, the .9800 handle is right near the top WATR level that we marked yesterday! Will the major psychological handle provide a strong resistance this week? See the setup
If you’re short on the Greenback, then this setup is for you! USD/CAD is sporting a cool doji on the daily chart, and it looks like a bearish divergence is also in the works. Are we seeing a retracement, or the start of a reversal?
Another snap for Big Pippin for spotting my third setup! Just I thought that the pair would break above .7600, the falling trend line actually provided enough resistance! Anyone planning on trading a breakout? I’m watching this pair too!
Comdoll Event Highlights for May 28-June 1, 2012
It looks like the Aussie and Loonie will take center stage this week as both Australia and Canada have a bunch of red flags on deck, and with central bank decisions to boot! This could play a huge factor in risk sentiment, especially if we don’t hear of new updates from the euro zone.
Do you think I should grab the opportunity to play the news this week? These comdoll levels could guide us in spotting setups and making trade decisions in the coming days so make sure you mark ‘em on your charts!
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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