technical trading
Day Trading Course, S&P Back to the Top
After slow consolidated trading yesterday, the overnight session proceeded to turn things around and moved price up from the 1328 area back to the 1337 area of resistance. Today could see things move through this long time area of resistance if it gets the push it needs to continue on. However the 1337 area has been a difficult area to move through in the past, so watch the volume for the direction here. Also moving in on a long term double top on the daily chart if price does not move through this area of resistance. If price breaks out from here, looking to see 1342.00, then 1350.00 and 1365.00 as next area’s of resistance with 1420 as long term target. If resistance holds, looking for the 1328, 1322.50, and 1319.00 as area’s of support. See you at the starting line.
Day Trading Course, Dollar Continues to Crumble – Gold Shines on New Record High
| The macro data out of Europe this week was mixed but loose Fed policy coupled with expected policy normalization in most other G10 countries continues to put pressure on the dollar. In Europe, German’s April Ifo business sentiment came in in-line with expectations, reflecting the current state of global affairs and the modest degrees of cautiousness surrounding recent events. The German-US two year spread widened to a new record high of nearly 117 basis points and in turn prompted the euro the reach a new 16-month high of $1.465. The markets remain focused on the outlook for central bank policy with the ECB still in hiking mode, while the Fed is on hold for the foreseeable future. A restructuring of Greece’s debt could force the ECB to recalibrate its expected rate moves if haircuts stoke concern about the state of the European banking sector and in turn fears over debt contagion reemerge.
The Dollar Continues to Crumble
Sterling is the strongest performer on week versus the dollar driven in part by the magnitude of the upside surprise in retail sales, accelerated by the return of risk appetite. Retail Sales jumped .2% month over month compared to the -.5% expected. Although the probability of a May rate hike has fallen considerably (10%), the expected rate hikes have merely been pushed back, not diminished. Overall, the general tone heading into the holiday weekend remains the same: loose Fed policy remains dollar negative, while abundant liquidity and low real interest rates are good for risk appetite, prompting demand for higher-yielding, growth-linked currencies.
The week began with a market swoon after S&P announced that it was placing the US on negative watch. Standard & Poor’s Ratings Services Inc. cut its outlook on the U.S. to negative, increasing the likelihood of a potential downgrade from its triple-A rating, as the path from large budget deficits and rising government debt remains unclear. S&P stated that a downgrade is still unlikely, somewhere in the “1 to 3″ range.
The move comes amid continued hand-wringing over the balance sheet of the world’s largest economy and disagreement among politicians on how to address fiscal woes as economic growth remains sluggish. S&P said Monday it sees material risk that policymakers might not agree on how to address budgetary challenges by 2013, which would render the U.S. fiscal profile weaker than that of other triple-A-rated countries. This news initially helped the dollar, but as the risk on trade came back after solid equity earnings in the US, the dollar reverse course and sold off.
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The Pound Break Out on Dollar Decline
The Pound broke out toward the end of the week on better than expected retail sales. Support is seen at former resistance around 1.64, and then at the 20-day moving average near 1.63. Resistance is seen near 1.70.
 Gold Shines Brightly on New Record High
Gold prices hit a new all time high above 1508 before settling off the highs of the day. Support is seen near the breakout level at 1475, and then the 20-day moving average near 1460. Resistance is seen at a channel high near 1515, and then 1600.
 Next week the markets will be watching
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Broad weakness for the dollar as investors move to higher yeilding assets
The dollar tumbled to a three-year low against a basket of
currencies, with market players selling the greenback to buy buoyant risky
assets in a move that threatens to drive the dollar index towards its all-time
low. The dollar has taken a hit in the past few days as investors have
flocked back to higher-yielding currencies, commodities and equities after a
brief shake-out earlier in the week. The chart outlook for the greenback is
looking dire after it tumbled through the 74.17 trough touched in November 2009,
a move that may spark a run towards the 70.698 all-time low hit in 2008.
Investors have rushed into risky assets due to strong U.S. corporate
earnings and signs the global economy is chugging along even as the Federal
Reserve stays very cautious about when it will start to unwind its super-loose
policy. Traders said the move was being fueled in relatively illiquid
trade and there was a risk of a dollar rebound later in the day as market
players cover short positions before long Easter weekends in many parts of the
world. But the overall outlook was dim for the dollar as the Fed is still buying
bonds and the threat by ratings agency S&P to cut the United States’ prized
AAA rating reminded investors of the hurdles the world’s reserve currency
faces.
The euro has pushed to 15-month peaks but has lagged the broader move
due to the ongoing worries about the euro zone crisis, underscored this week by
reports that Greece may restructure its debt in coming months. A solid
auction of Spanish debt the previous day helped provide some reassurance that
the problems plaguing Greece, Ireland and Portugal would not spread to the
country seen as the next most vulnerable in the euro zone. The euro was up 0.4%
at $1.4570 after jumping to a 15-month peak of $1.4582 when an option barrier at
$1.4550, which had blocked its advance last week, was finally taken out. The
single currency also appears to be poised for further gains on the charts. A
break of the January 2010 high at $1.4583 would open the way for a run at the
2009 peak at $1.5145.
The dollar dipped 0.4% against the yen to 82.22 yen , falling back
towards the 82.00 level that is seen as a key level of chart support because it
marks the intraday high reached on March 18 when the G7 intervened to sell the
yen. The yen has also slid broadly with the dollar as the Bank of Japan
has loosened policy since the massive earthquake, tsunami and nuclear crisis,
making the low-yielding yen an attractive funding currency for carry trades
along with the dollar.
The Australian dollar climbed to a record after a government report
showed producer prices rose more than economists estimated in the first quarter,
providing additional evidence that growth is quickening. The Aussie
strengthened for a third day and New Zealand’s advanced for a second versus the
U.S. currency as stock gains boosted demand for the nations’ higher-yielding
assets. New Zealand’s dollar reached a three-year high versus the greenback as
traders added to bets the central bank will raise interest rates over the next
12 months. Australia’s dollar climbed to $1.0766 from $1.0714 yesterday, after
reaching $1.0772, the strongest since it was freely floated in 1983. The Aussie
was at 88.33 yen from 88.45 yen. New Zealand’s dollar rose 0.7% to 80.34 U.S.
cents after appreciating to 80.38 cents, the highest level since March 2008. The
currency was at 65.91 yen from 65.87 yen.
Trading activity may start to slow before the Easter
holidays. Trading desks in London and Hong Kong will be shut both
Friday and Monday, while Sydney markets will be closed until next Wednesday.
