Comdoll Trading Kit (October 15-19, 2012): Midweek Market Analysis

Midweek Market Analysis

Spanish bailout: No or go?
Higher-yielding currencies such as the comdolls have been tossed this way and that for the past few days, as speculations of a potential Spanish bailout drove risk sentiment. On the one hand, talks of Germany providing a credit line for Spain spurred expectations of a full-scale bailout down the line. On the other hand, interviews with Spanish government officials revealed that the country is far from requesting for an actual bailout package.

AUD lifted by Chinese data
As Forex Gump mentioned, strong Chinese exports gains posted over the weekend allowed AUD/USD to open higher for the week. This was followed up by China’s annual CPI which came in line with expectations at 1.9% for September. Although this was enough to push AUD/USD above 1.0300 and put my long trade in the green, the upcoming Chinese GDP report could determine whether this rally will last or not.

Interest rate talks & comdoll price action
ComdollsCentral banks of the comdoll economies haven’t been in such a good mood lately as they’ve started talking about further easing measures down the line. After all, several major economies already started the ball rolling with further stimulus and Australia, Canada, and New Zealand might join the bandwagon soon.

Right now, however, the Aussie seems to be indifferent about the RBA’s downbeat outlook as it got a boost from Chinese data. The Loonie doesn’t seem to be faring as well since it’s currently down , with the BOC’s shift to a more dovish tone weighing on the Canadian currency. Lastly, the Kiwi is enjoying a slight gain but the low inflation in New Zealand signals that there is enough room for a rate cut if necessary.

Potential Trade Setups

AUD/USD: Mid-Channel Divergence
AUD/USD DivergenceIf you want to short the comdolls this week, then look no further than the potential mid-channel resistance on AUD/USD’s 4-hour chart! Not only is there a bearish divergence at the level, but stochastic also looks like it’s about to go down. Is this a sign for me to close my AUD/USD trade? See the setup

USD/CAD: Pennant in the Making?
USD/CAD Bearish PennantDon’t look now, but there’s another Loonie bullish setup on USD/CAD! A symmetrical triangle has been forming since early September, which could easily become a bearish pennant if the Loonie bulls decide that they’re not done buying the comdoll just yet. The .9700 area is a good target if you think that USD/CAD is about to fall. See the setup

NZD/USD: 60-Pip Range Play
NZD/USD Range PlayWhat do you get when you combine a range and an oscillator? Easy trade setups, of course! NZD/USD has been bouncing along a 60-pip range on the 1-hour chart and this time it looks like there’s room for an upside move. Will stochastic skip the oversold region and take the Kiwi on a ride to top of the range? See the setup

Comdoll Event Highlights for October 15-19, 2012

Calendar

This isn’t exactly the busiest of weeks when it comes to economic releases from the comdoll economies, namely Australia, Canada, and New Zealand, although we have a few medium-tier reports from each of these countries.

The bigger events for this week are those top-tier reports from the U.S., such as the retail sales and CPI figures set for release during the first half of the week. Towards the latter half, markets might focus on Chinese data, particularly the third quarter GDP figure due on Thursday.

But before you start coming up with trade setups for these events, better mark these potential inflection points on your comdoll charts!

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0253
0.9785
0.8170
Previous Week High (PWH)
1.0294
0.9835
0.8238
Previous Week Low (PWL)
1.0149
0.9744
0.8146
Top Weekly ATR (tWATR)
1.0351
0.9847
0.8251
Bottom Weekly ATR (bWATR)
1.0156
0.9847
0.8090
Other significant levels
1.0100, 1.0300
0.9750, 0.9850
0.8100, 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!

Happy time

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