Comdoll Trading Kit (September 24-28, 2012): Midweek Market Analysis

Since we only have a few more days before we say goodbye to September, let me help you find your winning trades. Let’s take a look at the major themes that have been dominating the markets so far this week!

Midweek Market Analysis

Central Bank Stimulus Galore!
With no major report released early in the week, it was easy for traders to step back and analyze the recent stimulus efforts of the ECB, the Fed, and the BOJ. More specifically, they’re talking about how the BOJ needs to do more to combat the strong yen and stimulate domestic demand. The ECB and the Fed also have problems as many FOMC members have stepped up to show opposition to QE3 while the ECB can’t use its OMT since Spain hasn’t officially asked for a bailout package yet.

Euro Zone Woes are Back Under the Spotlight
Now that the central banks have presented their stimulus efforts, the markets are back to pricing in the euro zone’s problems. The region’s leaders are scrambling to reassure investors that they’re not strangling each other over their banking union proposals, while Spain is also under pressure to formally announce a bailout request. And did I mention that Madrid is being crowded by citizens opposing its current and future stimulus measures? This is no telenovela, folks!

Risk Sentiment Trumps Comdoll Economic Reports
So what if China’s leading index and Canada’s retail sales reports came in stronger than we had expected? Comdolls Risk sentiment is king! Well, at least so far this week. The Kiwi is the biggest loser with a 1.18% intraweek drop, which isn’t surprising since New Zealand’s trade numbers disappointed expectations. AUD/USD is also down by 0.98% so far this week, while Canada’s retail sales data limited its losses to only 0.59% this week.

Looking ahead, investors will most likely be on its toes for more reports about Spain. Not only are traders on the lookout for an official bailout request, but many are also on the lookout for the potential impact of the government’s new austerity measures.

How about you? What do you think are other potential market-moving themes this week?

Potential Trade Setups

AUD/USD: Double Top Forming?
AUD/USD Double TopAUD/USD might be headed down under, mates! The pair seems to be forming a double top pattern on its daily chart, suggesting that the long-term uptrend is due to reverse. At the same time, stochastic is pointing downwards, which means that Aussie bears are in control at the moment. Do you think this pair will fall soon? See the setup

USD/CAD: Still Retracing!
USD/CAD .9850 Resistance Heads up! It looks like USD/CAD is not done retracing yet! I zoomed out to the longer-term time frame and found out that the former support at the .9850 minor psychological level is close to the 61.8% Fib. Stochastic still has a long way to go before reaching the overbought zone though so I’ll definitely keep an eye out for that! See the setup

NZD/USD: Falling Channel Holding
NZD/USD Falling ChannelWill the Kiwi bounce back up this week? NZD/USD is currently moving inside a falling channel on it’s 4-hour time frame and it just bounced from the bottom. However, stochastic is in the overbought region, suggesting that Kiwi bears could push this pair lower later on. See the setup

Comdoll Event Highlights for September 24-28, 2012

Calendar

It looks like Australia is once again taking a breather as there are no major news due from the Land Down Under. It doesn’t mean that the comdoll calendar is empty though!

Canada will take the spotlight as it releases its retail sales and GDP reports throughout the week. New Zealand will also be releasing its trade figures, but you gotta keep a close eye on that one as Australia, Canada, China, and even Japan had already shown weak trade numbers.

China still have some firepower left this week as it’s scheduled to print its leading index and the HSBC final manufacturing number this week. Will China’s reports inspire risk aversion and drag the comdolls or will the Aussie, Loonie, and Kiwi catch a break against the Greenback and end the week in the green?

Let’s check the major weekly inflection points to see if we can spot trade setups that would complement our comdoll events!

Significant Levels to Watch Out For


AUD/USD USD/CAD NZD/USD
Week Open (WO)
1.0447
0.9766
0.8289
Previous Week High (PWH)
1.0564
0.9817
0.8338
Previous Week Low (PWL)
1.0367
0.9694
0.8208
Top Weekly ATR (tWATR)
1.0546
0.9830
0.8373
Bottom Weekly ATR (bWATR)
1.0346
0.9702
0.8206
Other significant levels
1.0375, 1.0500
0.9730, 0.9850
0.8220, 0.8350

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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