Comdoll Trading Kit (November 19-23, 2012): Midweek Market Analysis

Midweek Market Analysis

Relief Rally After the Weekend
When expectations are so low, it doesn’t take much to spur a relief rally. Last Monday we saw a risk rally simply because some key U.S. officials expressed their optimism in solving the fiscal cliff, the Greek debt drama didn’t escalate, and the Israeli conflict didn’t blow up. This is probably why it was easy for the sellers to step up over the last trading sessions.

Tick Tock for the Euro Zone Leaders
A few days ago investors were optimistic that the euro zone leaders would finally come up with something good for Greece. But when they delayed their decision, even the bulls are starting to have doubts. Right now we’re seeing price action head south on speculations that the leaders are finding a hard time saving Greece.

Comdolls are Just Above Break Even
Since price action is pretty choppy while we wait for the verdict on Greece, the comdolls are having a hard time sustaining a direction. AUD/USD is only up by 0.19% while NZD/USD is a bit stronger with a 0.23% intraweek gain. Meanwhile, the Loonie is up 0.28% against USD thanks to rising oil prices early in the week. Comdolls

For the rest of the week I have a feeling that much of the price action will depend on the euro leaders’ decision on Greece. Many are already betting that they will disappoint, so it probably won’t take much to inspire a risk rally once again. The leaders could beat the odds and still disappoint though, which might result in a broad selloff in high-yielding assets.

What do you think?

Potential Trade Setups

AUD/USD: Break and Retest?
AUD/USD Break and RetestAUD/USD just broke below the rising trend line last week but it seems to be pulling up for a quick retest. The 61.8% Fibonacci retracement level is right in line with the 1.0400 major psychological resistance and the broken trend line. Stochastic has already reached the overbought mark, which suggests that bears could pounce. See the setup

USD/CAD: Bearish Divergence on a Fib
USD/CAD Bearish DivergenceIs USD/CAD’s rally over? On its daily chart, it appears as though the rally is losing steam as the pair made a bearish divergence right on the 50% Fibonacci retracement level. The divergence seems to be playing out as stochastic is currently crawling out of the overbought zone. Do you think it’s safe to jump in? See the setup

NZD/USD: Still Stuck in the Channel!
NZD/USD ChannelHere’s an update on NZD/USD’s falling channel. It’s still holding like a boss! Well, at least for now. The pair is in the middle of the channel and appears ready to test the resistance again. However, stochastic is already in the overbought region, suggesting that Kiwi bears are itching to push this pair down. See the setup

Comdoll Event Highlights for November 19-23, 2012

Calendar

It might only be three days before the Thanksgiving holidays, but that doesn’t mean that we shouldn’t pay attention to potential market movers! The U.S. will start the week with housing reports, but Australia will up the ante with the RBA meeting minutes and RBA Governor Steven’s speech. Bernanke will also take center stage at 6pm.

On Wednesday we’ll see New Zealand’s credit card spending report as well as the U.S. manufacturing index. Then, while the U.S. traders are eating Thanksgiving meals, Canada will be busy printing its retail sales data on Thursday and CPI numbers on Friday.

How about you? Which reports are you watching this week? Don’t forget to drop your two cents!

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0341
1.0011
0.8120
Previous Week High (PWH)
1.0459
1.0057
0.8204
Previous Week Low (PWL)
1.0287
0.9985
0.8052
Top Weekly ATR (tWATR)
1.0427
1.0070
0.8168
Bottom Weekly ATR (bWATR)
1.0255
0.9953
0.8020
Other significant levels
1.0400, 1.0330
0.9850, 1.0000
0.8270, 0.8200

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.

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Have fun and good luck trading this week, friends!

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