Comdoll Trading Kit (September 10-14, 2012): Midweek Market Analysis

Let’s take a peek at the major themes that have been moving price action so far this week!

Midweek Market Analysis

Profit-taking from last week’s gains
High-yielding currencies started the week on the wrong side of the charts as market players took profit from the risk rally that we saw late last week. With no major data printed from the U.S. and the euro zone, it was easy for traders to book their profits and wait for other trade opportunities.

Optimism on German High Court Ruling and the FOMC Statement
The dollar took a tumble against its major counterparts yesterday as investors price in a favorable ESM decision by the German High Court. Not only that, but they’re also anticipating a QE3 from the Fed! Will the optimism make way for a “buy the rumor, sell the news” action tomorrow?

Aussie and Kiwi bulls strike back
Early this week Chinese Premier Wen Jiabao boosted investor sentiment when he hinted of the government’s options that would stimulate the economy. This is good news for Australia and New Zealand as both countries rely heavily on their exports to China.
Comdolls

Meanwhile, the Loonie is busy making new 2012 lows against the Greenback despite the weak trade balance data that we saw yesterday. It’s currently sitting with a 0.59% intraweek gain against the dollar, while AUD/USD is enjoying a nice 1.34% boost. NZD/USD is just ahead of the pack with a 1.35% gain so far this week.

What do you think will happen to the Greenback for the rest of the week? Will we see a midweek reversal or will the high-yielding currencies continue to make its way up in the charts? Don’t hesitate to share your thoughts!

Potential Trade Setups

AUD/USD: Head & Shoulders Forming?
AUD/USD Head & ShouldersBy the looks of its daily chart, AUD/USD looks poised to be headed down under! If those Fibonacci levels hold as resistance, the right shoulder might form and confirm that the Aussie’s uptrend is indeed over. Stochastic is still pointing up though, which suggest that Aussie bulls haven’t given up the fight. See the setup

USD/CAD at Yearly Lows
USD/CAD Yearly Lows Is there no end to the Loonie’s rallies? Last time I checked, USD/CAD already dipped to a new yearly low! The pair just broke below the long-term support around .9850 and looks ready to drop further as it formed another bearish pennant on the 4-hour time frame. See the setup

NZD/USD: Top of the Channel Resistance
NZD/USD Falling ChannelKiwi is currently perched at the top of the falling channel, which could hold as resistance for the pair. At the same time, stochastic is heading out of the overbought region, showing that Kiwi bears are currently in power. I’m seeing a slight bearish divergence from the previous high too, as stochastic made a higher high lately. See the setup

Comdoll Event Highlights for September 10-14, 2012

Calendar

Australia seems to have exhausted its major reports last week as only the home loans, MI inflation gauge, and Westpac consumer sentiment data are scheduled this week. Instead, China is stepping up as a potential AUD/USD mover as it’s scheduled to print its money supply, new home loans, and foreign direct investment numbers.

Canada could also make an impact on the comdoll traders as the country’s trade balance and manufacturing sales are due. Let’s hope we don’t get mixed results this time! Meanwhile, nothing major is coming up for New Zealand, except for the big RBNZ rate decision on Wednesday.

Last but definitely not the least is the U.S., which is slated to show its inflation, PPI, and retail sales numbers. And then there’s the FOMC statement, which could be the one event that traders are looking forward to this week. Will the Fed finally announce QE3? Hold on to your seats, friends!

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0365
0.9780
0.8107
Previous Week High (PWH)
1.0401
0.9920
0.8125
Previous Week Low (PWL)
1.0166
0.9765
0.8107
Top Weekly ATR (tWATR)
1.0464
0.9845
0.8188
Bottom Weekly ATR (bWATR)
1.0267
0.9716
0.8026
Other significant levels
1.0350, 1.0520
0.9750, 0.9850
0.8050, 0.8130

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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