Wednesday, August 08, 2007

How do you like them apples?

I said that the 100.75 to the 101.25 range was a good time to buy. The Aud/Jpy is playing well off of the support as the trend continues from prior. If you got in mid point you should be up about 240 pips as of today. Not too shabby for a few minutes of reading.

Now with the USD/CAD. I have been pro Canadian for months now and the pull back has played out well. We talked about selling off on August 1st, price was near 1.0600 but I didn't get any graphs posted. Now we have had a good move and a pull back. I think 1.05 is a good resistance and shorting point. 1.0630 is the next resistance level with some wiggle room to watch out for. We may see some consolidation and slowing near 1.0400 and again near 1.0350. If we can clear these levels, the 1.02 and even parity is possible. This graph is a 4 hour chart.

Gbp/Nzd is close.

Tuesday, August 07, 2007

Pivot Points and the Gbp/Nzd

I found a pivot point calculator as a widget I could install. What I like about pivots is the ability to take discretion out of support and resistance. Here pivots are calculated using the high, low and close of a specific time period. I have punched in the high, low and close of last week on the Gbp/Nzd. As you can see the values are:
Pivot 2.6638, R1 2.7037, and S1 2.6413 , where R1 = Resistance and S1 = Support.

Looking at these values and dropping down to the shorter term daily or 8 hour chart, you can start to see how these values apply to the chart pricing. The prices will not hit exactly the key points but if you have trouble defining support and resistance levels, give pivots a try.

At the bottom of this page you can input any values from any pair. It works well on monthly candles, weekly candles, daily candles and intra-day candles. The basic premise is to expect the price to be bullish above the pivot to the resistance levels above the pivot. The other side of the equation is to be bearish below the pivot and use the values below the pivot as potential support levels.

As those who have followed the blog know, I like to buy at support levels and sell at resistance levels. As i look at the GBP/NZD, I generally use my own support and resistance levels but looking at the pivot points they match very close to some of the key levels I am watching. It would have been great to sell of the 2.7037 level and a close below the 2.6638 level could be an indication of bearish sentiment to the next level.

The key with these levels, in my opinion, is use closed or completed time frames for the values to start the calculation and then remember to control your risk by selling off of resistance levels and buying up support levels. Add some of your own discretion and some fibs and I think you have a decent trading plan.


I typed all of this up an hour and half ago and hit post and then went into a meeting. Unfortunately, it didn't post. In the end I was right about the fed decision but the volatility could have given you some sort of a mean shake if you took the chance on the trade. The Aud/Jpy has benefited from the recent moves as well as the USD/CAD.

There is surprising amount of buzz about the Fed interest rate decision today. I have looked at the CBOT fed fund futures and it appears we have a rate cut priced in toward November or December. My first response based on what the futures show would be, we could hear dovish comments from the fed. My next response is, the fed is stuck between a rock and a hard place. We are finally seeing some slowing in the economy and the real estate market is being further hammered as well as a significant credit crunch. By lower rates that would definitely stimulate the economy and some spending but it could also spurn stagflation. Stagflation occurs when inflation is going up while economic growth is not. That is what we have setting up now. Commodities are still high, sure we have seen some pull back but it is still in a growth market. The best choice from the fed would be to leave things alone. Ben Bernanke has shown he is willing to stand his ground on

In case you missed them

The Aud/Jpy has pulled back again and all the prior analysis still stands. The buying range as I see it is somewhere between 100.75 and 101.25. We are at the top of this range but I don't know how deep into this area the price will go.

Usd/Cad has given a pull back and I like the idea of selling it.

Gbp/Nzd... not as convinced. It is stalling out at 2.6540 and has been within 50 pips either direction for the past 16 hours. 100 pips is a large "stuck area" for most pairs but not for this pair. That is hardly a shadow worth noting when the pair can move 600 pips or more in one day.

More on these developing events...