Comdoll Trading Kit (October 29-November 2, 2012): Midweek Market Analysis

It might be the end of the month but it’s only the middle of the week! Let’s take a look at the three major economic themes that have been dominating currency price action so far this week.

Midweek Market Analysis

Sandy Holidays
I usually get ridiculously excited when you put the words sandy and holiday together, but unfortunately, we’re not talking about beaches this time. No thanks to Hurricane Sandy, our equity-trading friends in the U.S. had to stop trading for a while, which also affected the currency trading volume in the U.S. session.

Euro takes center stage
With no major economic report from the U.S., it was up to the euro to provide some action. And provide action it did! Thanks to a positive Italian bond auctions and an increased possibility of a Spanish bailout, the euro and other high-yielding currencies scored gains against its low-yielding counterparts.

CAD gets left behind the comdoll rally
ComdollsWhile the Aussie and the Kiwi benefited from the risk appetite, additional BOJ easing, and lessening of RBA and RBNZ interest rate cut bets, the Loonie was left behind thanks to lower oil prices. Will CAD catch up to its comdoll buddies?

Thanks to positive Australian data late last night, the Aussie is the only comdoll above the red zone this week with a 0.03% gain on AUD/USD. NZD/USD is a bit behind with a 0.18% intraweek loss. USD/CAD is the biggest loser though, as it’s 0.35% above its open price against the dollar.

How do you think will the currencies fare against the Greenback for the rest of the week? I’m still trying to look for a trade setup this week so if you have any suggestions, you know where to reach me!

Potential Trade Setups

AUD/USD: Watch out for a Breakout!
AUD/USD Divergence on a FibAUD/USD is forming a symmetrical triangle on the 1-hour chart and it looks like it’s about to test the pattern’s resistance. What’s more, stochastic is in the overbought territory! Will the bears come in at the weekly open price (1.0365) or will the bulls dominate for the rest of the week? See the setup

USD/CAD: Resistance at 1.0050?
USD/CAD Potential PullbackI know parity is a major level for USD/CAD, but we can’t discount that 1.0050 was also a former resistance area for the pair. Not only that, but the level is also in line with the 50% Fib retracement on the daily chart. Is this something that you would trade? See the setup

NZD/USD: Bullish pennant in the works!
NZD/USD Falling Channel

After bouncing from the .8100 handle last week, NZD/USD looks like it’s forming a bullish pennant on the 4-hour chart. According to the School of Pipsology, pennants are usually continuation signals. Will it hold true for Kiwi this time around? See the setup

Comdoll Event Highlights for October 29 to November 2, 2012

Calendar

One look at the comdoll calendar will tell us that we’re in for an eventful week. Australia is set to release its building approvals and new home sales reports while New Zealand will also publish its business confidence and building consents. Canada isn’t one to be left behind though as it’s due to release its GDP and employment numbers.

Even China is joining the party! On Thursday it will print its manufacturing PMI numbers. Last but not the least, the U.S. is due to announce some major reports including the big NFP report at the end of the week. I don’t know about you, but I’m sensing a lot of good trade ideas coming our way!

Now that we have taken note of the important comdoll events, it’s time to mark the potential inflection points on your comdoll charts!

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0365
0.9977
0.8222
Previous Week High (PWH)
1.0398
0.9995
0.8244
Previous Week Low (PWL)
1.0236
0.9889
0.8101
Top Weekly ATR (tWATR)
1.0459
1.0039
0.8299
Bottom Weekly ATR (bWATR)
1.0271
0.9915
0.8146
Other significant levels
1.0270, 1.0315
0.9920, 1.0000
0.8180 0.8220

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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