8.9.13
Before the week analysis and game plan:
Uncle Sam
The USDX reached a HTF resistance at 82.80 level and broke down with the NFP. This was also a banking level and an OTE from the daily charts and an anticipated stop run. The 4hr market flow now changed to bearish.
In the COT report the commercials started to reverse longs (-1138) to shorts (+1218). A net change of overall -2.3k contracts to an overall bearish stance (-20k).I classify the COT as bearish.
The bond yields (2,5,10,30) been going straight up, and then reversed. The 30 yr t-note yield diverged and failed to post a higher high.
Also bearish.
No premiums present at this time, and OI is flat. The daily stochastic is reached overbought levels, and a bearish divergence from the recent high of 7/8 to nowadays.
Seasonal tendencies also pointing for the dollar to trade softer in the near future.
Conclusion:
It's going down baby.
Expectancy:
The dx is tanking right now a bit below the 82.20 level, what's also a weekly support level. I'm expecting it either to bounce to the 82.50 resistance level(daily resistance level and a bank level) ,what would be a nice 4hr OTE fractal(more likely), or a turtle soup setup at 82.80-90(less likely ) .
Contingency:
a) if the dx will fall out of bed immediately and will breach the 82 level without stopping, then will need to reevaluate about when to join.
If the dollar would breach the 83 fig(unlikely), in my opinion it will reach for the 83.50-80 levels(my original target from a month ago) and then probably will head down.
Queen and Country
The recently bullish pound is dancing around the weekly support level of 1.56 . The 4hr market flow is bullish and the daily chart also.
The COT data for the pair is suggesting overall bullishness. The commercial traders increased their long positions(11k) and also added a bit of short contracts(5k) overall a 6.8k positive change in contracts to the long side, with an overall long position(+48k).Overall bullish.
The recent bullishness seems to suggest that the correlation with the euro has been nearly fixed (HTF daily 3yr period smt).
The daily stochastic at mid levels a bit tipped to the positive side, also strong bullish divergence present between the low of 23/7 to the low of 2/9.Open interest is flat. And a premium is present at the September contract.
Seasonals also pointing for an up move .
Conclusion:
The pound is showing underlying power and willingness to go higher. With the soft USDX the conclusion is pretty obvious for a bull pound.
Expectancy: The pound bounced down from the 1.5680 daily resistance level (also a stop raid, and banking level) optimally it would retrace to the 1.56 full figure level, what's also a weekly support level and lot of pivot and trinity confluence, plus an ote entry from the last fractal.
Strategy: Will have a limit buy at 1.56 level with 2% risk and 30 pip stoploss. Will add on retracements and scale out according to my plan. Need to be with an open eye on the 1.575 monthly resistance level where I'm expecting a stop raid, and its also a yearly 0.79 fib level. Will have a resting hedge order according to the open trade size with 30 pip stoploss, or a 2% risk hedge trade with tp of around 1.565 and aggressive 40 pip traling stop or manual stop adjusting.
Contingency: If the pound will decide to break down I will be looking for longs at the 1.55 level (daily ote with strong s/r). This scenario only likely in my opinion if the DX will reach for 83.50.
The Union
The euro been stalling since the 1.345 resistance level,and been showing weakness.
The COT data is showing rapid increase of longs(20K) and lessening of shorts(-6k) an overall increase of 26k contracts to the long side, although commercials still on the short side by a bit. Reversal is pretty close in my opinion, although not imminent.
The daily stochastic is touching the oversold level. There is also a strong bullish divergence from 8/7 to nowadays.The O/I is flat and no premiums present. Seasonals also pointing at a bullish scenario.
Conclusion:
Overall bullish, but not yet. I think the euro near a turning point.
Expectancy: Reversal likely to happen around the 1.3 full figure, a strong support level and a daily OTE.
Strategy:
Will hold the current short and add to that until the 1.3 level will be reached, or the market flow on 4hr will change to bullish. Will add on retracements and scale out respectively.
A buy of 2% waiting at the 1.298 level, with 30 pip stoploss. If the Trade will stop out, then I'll reassess the expected low.
Contingecy:
If the 1.295 level breached, I will need to reassess the market. Then the low should be expected in my opinion around the 1.288-5 level. This scenario only likely I think, if the dollar will breach the 83 figure.
Thats all for now, when i'll get home i'll also post some charts along.
And critics welcome of course
Cheers,
Piper
