Comdoll Trading Kit (May 28 – June 1, 2012): Midweek Market Analysis

After marking the important chart levels and identifying trade setups, it’s time to concentrate on fundamental analysis! What economic themes have been dominating markets so far this week? Here’s my list:

Midweek Market Analysis

New Democracy takes back the lead in Greek polls
Last Monday was one of those days when the word “bailout” actually encouraged risk appetite. New Democracy, a pro-bailout political party in Greece, took the lead back from anti-bailout party Syriza in opinion polls last Sunday. Since a win by ND increases the chances of Greece staying in the euro zone, traders were quick to buy high-risk assets.

Pain in Spain
As if the probability of Spain’s fourth largest bank going bankrupt wasn’t enough, credit rating agency Egan-Jones also decided to downgrade Spain’s rating from BB- to B yesterday. And with Spain’s bond yields slowly inching towards the 7% mark where other countries also asked for bailouts, it’s no wonder traders are back to shorting the euro and other high-yielding currencies.

Comdolls enjoying a breather?
Comdoll traders have largely shrugged off economic reports and are trading on risk sentiment instead. Comdolls Improvement in risk appetite boosted AUD/USD to an intraweek high of .9899 early this week, but contagion concerns in the euro zone and weak economic reports are dragging it back to its open price. We can see the same stories with USD/CAD and NZD/USD where both pairs have tested major psychological levels before going back to their respective open price areas.

Potential Trade Setups

NZD/USD: Rising Channel
NZD/USD ChannelHeads up, folks! NZD/USD seems to be in an uptrend these days as a rising channel formed on its 1-hour time frame. The pair just bounced from the bottom of the channel and appears headed for the top, which is around the .7700 major psychological mark. Do think this this uptrend will continue? See the setup

AUD/USD: Downtrend Over?
AUDUSD Inverse Head and ShouldersTake a look at this inverse head and shoulders pattern that seems to be forming on AUD/USD’s 4-hour chart. Could it mean that the pair’s downtrend is over? After all, we did hear some rumors that China could be mulling further rate cuts, which could eventually provide a boost for Australia’s export sector. See the setup

USD/CAD: Potential Retracement Play
USD/CAD RetracementIf you think the trend is your friend, then you might like this potential retracement play with USD/CAD. There’s a rising trend line connecting the lows of the price on the 4-hour chart, so I used my handy-dandy Fibonacci retracement tool to pinpoint potential entry levels. See the setup.

Comdoll Event Highlights for May 28-June 1, 2012

Calendar

NFP weeks have always been promising and this week is no exception! Aside from employment reports from the U.S., we’ll also see a couple of manufacturing reports from China as well as retail sales and building approvals report from Australia. Meanwhile, Canada is scheduled to release its GDP and current account numbers. Anybody plannin’ on trading any of these comdoll events?

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
0.9788
1.0280
0.7577
Previous Week High (PWH)
0.9936
1.0306
0.7677
Previous Week Low (PWL)
0.9690
1.0152
0.7458
Top Weekly ATR (tWATR)
0.9952
1.0357
0.7677
Bottom Weekly ATR (bWATR)
0.9673
1.0203
0.7478
Other significant levels
0.9940, 0.9700
1.0250, 1.0300
0.7470, 0.7675

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!

@Happy_pip Twitter
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Good luck in your trades this week, buddies!

Happy time

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  • Berek Dollinger

    Might want to be careful on the AUD/USD looks like you also have a hidden bearish divergence there as well.

  • Adrian Taylor

    I’m Long AUD at .9860 aiming to try take profit around .9885 with stop loss at .9840

    Still very much a noob but I could see it was hitting wall at .9860

    • happypip

      Awesome! Looks like the inverse head and shoulders pattern I pointed out could be helpful to your long trade. Good luck!

      • just the pip

        Looks like that H/S didn’t play out with AUD/USD now at 0.97.
        I was short at 0.988 and made some nice pips on the way down. 
        Anyone think we’ll see a second bounce at the 0.969 – 0.97 support area? Might look to go long if indicators show some support here

        • Adrian Taylor

           yeah that trade didn’t play out very well at all. I decided to go go back to my old game plan. The way I see it there are more factors weighing down the AUD rather than driving it up so I waited for the week to pan out a bit more and see if the Greek and Chinese Factors would turn it around again.

          Paid off though, bought USD at .9790 on Wednesday and closed the deal at .9650 making some nice profits in the process.

          I think I’ll stick with the same game plan for next week. No trades open for the weekend, assess Monday/Tuesday, Act later in the week

  • ML

    Happy Pip -> Can I find out how often do you give a trade recommendation? Is it every Thursday?

    • happypip

      Woah, hold up a minute. It’s not exactly a trade recommendation, but more of just an idea of mine. No guarantees on how it could turn out! But yeah, I usually come up with one during the latter half of the week since I like looking at how things go for the first half before taking any setups. Thanks for checking out my blog!