Wednesday, 16 March 2011

AUD Update

One of my major concerns currently is AUD and in particular AUDJPY. AUDJPY has been a benchmark for the carry trade over years and major turns in this pair have often coincided with major market tops. Currently, I think AUDJPY is breaking down through an ending wedge pattern and yesterday's close confirmed this pattern on the Daily. There is an interesting parallel scenario with the current setup and that in 2008. Please see the charts below.

Asian Morning Thoughts

Morning All,

Quick run down of the markets I follow this morning and my plan.

The SPI has bounced superbly off yesterdays lows at 4470 this morning but now is coming into some overhead resistance at 4550/4560. I am setting up a twitter account on this blog so I can quickly call out these trades as they materialise.

I think the easy money for today has been made and I think short term caution is warranted here for short term traders. Position traders once again need to see a strong close today to confirm a low. Note that today's low is just short of the 61.8 retracement on the Daily. I have been stressing that a climatic low is forming but we need confirmation first. Today looks like it could be that day.

US Market Summary

Morning All,

The S&P gapped down on the open, made its low in the first 5mins of trading, and grinded higher for the rest of the day closing just off its highs. I think we should be very careful to call any kind of low yet as we need to see more base building I believe but this was certainly good price action given the panic earlier in the day.

It is also important to highlight the breadth readings. Yesterday NYSE decliners closed at 2379 vs a high of 2833 registered in the morning- a very significant intraday reversal. This closing figure also shows important divergences with prior days in this current downtrend:
22/2/11: 2729 NYSE decliners
10/3/11: 2524 NYSE decliners
16/3/11: 2379 NYSE decliners