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. 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
Heads 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?
Take 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
If 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
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
|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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