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Midweek Market Analysis

Downgrade Extravaganza
Moody’s was the first to strike at risk sentiment when it downgraded 28 Spanish banks and put 16 more on downgrade watch. Then, budding credit rating agency Egan-Jones made the spotlight yesterday when it downgraded Germany from AA- to A+ citing Germany’s exposure to troubled eurozone economies.

Meanwhile, Cyprus officially became the fifth EZ country to ask for a bailout package. Good thing there’s still Euro 2012 to keep the good vibes coming! Which team are y’all supporting, by the way?

Snoozefest. Snoozefest Everywhere.
With major market players on wait-and-see mode before the EU Summit this weekend, the forex junkies were left to trade the few lower-tier reports on tap. This resulted to tight ranges and choppy trading for our favorite currency pairs.

Of course, it didn’t help that the big U.S. data printed mixed results. New home sales rose to a 2-year high in May, but consumer confidence dropped to its lowest level since January.

Seesaw Trading for the Comdolls
ComdollsThe comdolls started the week on the wrong side of the charts as the downgrades in the eurozone sparked risk aversion. Luckily, the Aussie, Loonie, and Kiwi snuck a couple of pips against the Greenback yesterday when China‘s leading index showed a 1.1% gain in May after rising by 0.9% in April.

The comdolls are slightly up today with AUD/USD sporting a 0.48% gain while USD/CAD is also up by 0.45%. Meanwhile, NZD/USD is tagging along with a 0.29% uptick despite the release of New Zealand’s trade deficit figures a couple of hours ago.

Okay, that’s it for me today! Did I miss anything? Don’t be shy to remind me! Oh, and while you’re at it, why don’t you tell us which team you think will win the Euro World Cup this year?

Potential Trade Setups

AUD/USD: Will Parity Hold?
AUD/USD Parity DivergenceAUD/USD made such a strong drop last week, but does it still have more room to fall? Several technical signals (bullish divergence, resistance-turned-support, and the 61.8% Fib) are lining up at parity and it seems to be holding like a boss… for now. See the setup

USD/CAD: Uptrend Still Intact
USDCAD Rising Trend LineThanks to the risk-off environment and falling oil prices, USD/CAD has been on a steady uptrend for more than a week and counting. The pair seems to have found support at the rising trend line again while stochastic just turned after hitting the oversold zone. The question is: How much higher can these pair go? See the setup

NZD/USD: New Range Forming?
NZD/USD Intraweek RangeAfter bouncing a few times off the .7850 minor psychological support and finding resistance near .7900, NZD/USD seems to be stuck inside a new range for the week. Stochastic is pointing down, which means that another test of .7850 might be in the cards. Will it still hold this time? See the setup

Comdoll Event Highlights for June 25 to 29, 2012


As we can see on the calendar, this week is light on comdoll data as most of the economic reports will come from the U.S. But, we might still see some movement from China’s leading index and New Zealand’s trade balance data out tomorrow, Australia’s new home sales on Thursday, and Canada’s monthly GDP release on Friday.

Got any trade setups in mind already? Don’t be shy to share with us! We don’t bite! For those who are still stretching their trading muscles, you can start by marking the important levels on AUD/USD, USD/CAD, and NZD/USD!

Significant Levels to Watch Out For

Week Open (WO)
Previous Week High (PWH)
Previous Week Low (PWL)
Top Weekly ATR (tWATR)
Bottom Weekly ATR (bWATR)
Other significant levels
1.0200, 0.9930
1.0300, 1.0225
0.7980, 0.7850

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.

If you’ve got any trade setups you’d like to share, you know where to reach me!

Good luck in your trades this week, buddies!

Happy time

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.