Aversion to risk dominated the day after Labor Day, so all but the safety currencies closed down, the US stock markets ended down at least 1%, but the gold/oil spread reversed gains. Please notice that sharp gains in the US indexes are not really sustained. The decline was spearheaded by the euro on fresh concerns that the European stress tests of major banks understated some holdings of sovereign debt following Greece’s budget crisis (The Wall Street Journal article).
The short-term outlook remains bearish for the euro, pound and the commodity currencies and sideways to slightly bullish for the yen and Swiss franc. The medium-term outlook is sideways for most of the European and commodity currencies. My model is long on the Dow Jones CME FX$INDEX and all of the foreign currency futures except for the euro and pound.
This analysis is based on my books, as follows:
“Trading in the Global Currency Markets” - Prentice Hall Press, 3rd edition 2007
“Technical Analysis Applications” - McGraw-Hill, 2004
Overnight:
- US: No data
- Canada: No data
Today’s economic calendar:
- Australia: Home loans for July
- Japan: Machine orders for July
- Japan: Current account for July
EUR- September
Luca Model: Short since September 6 (reversing long since September 1)
The September euro plunged from a three-week high on the Eurozone debt crisis fears and erased most of last week’s gains. The short-term outlook is bearish. The medium-term outlook is sideways and my model went short. My model also went short euro/yen and euro/pound. The long-term outlook remains bearish.
Immediate support is at 1.2655. A pivot low is at 1.2587. The bottom of the Ichimoku cloud is 1.2540.
Initial resistance is at 1.2740. The 21-day moving average resists at 1.2794. Further resistance is at 1.2876 and 1.2919.
INDICATORS
Fast stochastics: Bearish
MACD: Sideways
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
JPY - September
Luca Model: Long since August 31
The September Japanese yen advanced on Tuesday to counterbalance the decline of most of the European and commodity currencies and reached a new high for the uptrend. The short-term outlook is sideways to slightly bullish. The medium-term outlook is bullish and my model is long.
The new high of the uptrend is 119.76. Further resistance is at 120.14, 120.57 and 120.84.
Initial support is at 118.99. The next floors are 118.38, 118.03 and 117.64 from the 21-day moving average.
INDICATORS
Fast stochastics: Bullish
MACD: Sideways
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Slightly bullish
LONG-TERM: Sideways
GBP - September
Luca Model: Short since August 10
The September pound sank to a 1 ½-month low and closed below the 200-day moving average on Tuesday but off its intraday lows. The pound has been alternating up and down days for five days. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is short.
Tuesday’s low is 1.5295. Further support is at 1.5225. Distant support is at 1.5160.
Immediate resistance is at 1.5394 from the 55-day moving average. The 21-day moving average resists at 1.5488.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Bearish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Bearish
CHF - September
Luca Model: Long since August 16
The September Swiss franc, the strongest the European and commodity currency, challenged the top of the uptrend on Tuesday. The short-term outlook remains sideways to slightly bullish. The medium-term outlook is sideways and my model is long again.
The high of the uptrend is .9937. Further resistance is at 1.0028.
Initial support is at .9820. The next floor is .9779. The 21-day moving average supports at a distant .9712.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Sideways to slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Sideways
CAD – September
Luca Model: Long since September 1
The September Canadian dollar spiked up briefly in Asia but reversed later on and closed down on Tuesday – just below the 21-day moving average. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is long.
Initial support is at .9514. Below .9473, there is additional support at .9425, .9385 and .9329.
The 55-day moving average resists at .9588. Tuesday ‘s high is .9670.
INDICATORS
Fast stochastics: Slightly bullish
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways
LONG-TERM: Sideways
AUD – September
Luca Model: Long since August 27
The overbought September Australian dollar fell from the second high of the uptrend on Tuesday and reversed most of Friday’s gains. It remains glued the median of the channel rising since June 8. The short-term outlook is slightly bearish. The medium-term outlook is sideways and my model is long.
Immediate support is at .9073. Below .9010, the 21-day moving average supports at .8974.
Resistance comes from two pivot highs at .9183 and .9230.
INDICATORS
Fast stochastics: Sideways
MACD: Slightly bullish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Sideways?
LONG-TERM: Sideways
