Traders expecting the USD/MXN to trade like the USD/CAD may be disappointed

30. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

Wen you take 2 North American currencies like the CAD and MXN, you can see the tight correlation. But what has happened in the USD/CAD is we have seen a strong depreciation of the pair as crude oil prices have rebounded. On the other hand, the USD/MXN has barely pulled back as the USD/CAD has corrected. Matter of fact, the USD/MXN is within striking distance of it’s multi-year highs.

Banxico meets today, and the market doesn’t expect much change from the CB. Last week, Governor Carstens said the central bank is weighing the weak economy’s need for low interest rates and to divert pressures if the Fed decides to hike rates. Those types of dovish comments could push the USD/MXN higher in the near term. Or, if the USD starts to bounce against other major currencies, that could be the catalyst to drive the USD/MXN back to the highs as well.

4-30-15MXNCAD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

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BOC Poloz tries to talk down the CAD as the USD/CAD hits major support

28. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: ,

Comments this morning from the Band of Canada came out this morning during a testimony in Ottawa, but the one comment resonating with traders is “a lower CAD is ‘absolutely’ a net benefit.” This comment (amongst others) has helped the USD/CAD bounce from a key support today. Take a look:

4-28-15USDCAD1

The 4 hour chart was showing a divergent relative strength ahead of the testimony as we approached the 161% extension of the recent range.

4-28-15USDCAD2

After the breathtaking move higher in the pair over the last year, and the lows from 2001, we have hit some major fib level confluence near the 1.2000 level.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I did initiate a long USD/CAD trade today ahead of the BOC Governor’s testimony

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Looking for a bounce in the US Dollar Index – DXY

27. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The USD has been range bound the last 1+ months, and I am now starting to look for an area for a bounce, or strategic place to enter US Dollar longs. Here is what I see:

4-27-15DXY

The USD index is pushing channel lows, but the 23.6% Fibonacci retracement level comes in at the wedge breakout point (95.30) from the beginning of March. Also, it looks like a channel is forming that coincides with that breakout point near 95.30 level as well.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

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GBP/USD at an Inflection Point

24. April 2015 · Write a comment · Categories: EDGE Chart of the Day

The GBP/USD has rallied sharply into some critical technical resistance. A break above 1.5200 would be bullish, but as long as we hold below, the channel is in play. See Below:

4-24-15GBPUSD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I just entered a GBP/USD short based on this chart. However, if it breaks 1.5200 on a sustained basis I will likely cover the short for a loss.

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GBP/AUD set to rally if AUD CPI comes in weak

21. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

Tonight at 9:30PM ET Australia is set to report CPI data, and as you can see below inflation has consistently ticked lower the last few quarters:

4-21-15AUDCPI

 

The GBP/AUD has been in a tight consolidation recently, and as you can see (blue lines) we have have had some very consistent rallies while in this solid up channel (yellow):

 

4-21-15GBPAUD

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I do not have a position in the GBP/AUD currently, but may establish a trade after tonight’s data release

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10 Yr Bull Flag Pattern, USD/JPY at Risk of a Fall

15. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

The 10 year bond is in rally mode. And although up against some key resistance, the flag pattern points much higher.

As a currency trader this matters to me since I am short USD/JPY and we are just 20 pips from critical support.

As you can see in this chart, if bonds rally and yields fall, the USD/JPY (yellow line) is likely to trade south as well. There is a very strong iverse relationship with the two instruments.

4-15-1510yrJPY

Blake Morrow

Chief Currency Strategist

 

Disclaimer: I have been short USD/JPY for many weeks and may add to my existing position

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EUR/USD Monthly Chart Approaching Critical Support

10. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: ,

I am posting this monthly chart of the EUR/USD following “My DXY Trading Plan” from yesterday. While doing some in depth analysis earlier this session, I had realized that the monthly EUR/USD is quickly closing in on some major confluence of technical levels that could create a bounce. Let’s take a look:

4-10-15EURUSD

There are a few key points about this chart I would like to point out:

  • We are approaching the 127% extension of the 2005 low to 2008/9 highs at 1.0434
  • We have a fairly clear down channel (yellow) and we are near channel support.
  • Uptrend (minor) line (yellow) also from lows in 2000 and 2001.
  • RSI (monthly) is reaching oversold levels not seen since 1997

Obviously, getting long the EUR/USD down here is a little dangerous. However, if you are in the camp that Greece will not leave the Eurozone and fall into the Agean Sea in the coming weeks (joke), perhaps you could catch a bounce near current levels after the DXY makes one last push higher!

 

Blake Morrow

Chief Currency Strategist

 

Disclaimer: I have no EUR/USD position, but can not guarantee I won’t in the next few trading sessions.

 

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My US Dollar (DXY) Trading Plan in the Coming Weeks

09. April 2015 · Write a comment · Categories: Uncategorized · Tags: , ,

I have always learned (in trading) to “plan your work, then work your plan.” If you listen to my daily webinars, I spend 3.5 hours a day talking strategy on how I would like things to shape up in the markets before I take action. Does that mean that all my plans come to fruition? No, not at all. However, if I have some sort of template or plan of what I am trying to do, it helps me forge my intraday and swing trading strategies in the currency market.

Today, I talked about my trading plan the next couple weeks for the USD index. I am hoping the market plays out this way and helps guide me in my FX trades. Funny thing is I don’t even trade the DXY. I trade FX crosses like the EUR/USD, AUD/USD, USD/JPY, etc. But understanding the basic trajectory of the USD index can help shape my decisions in the crosses. By the way, the USD/JPY makes up about 13.6% of the USD index, however never is factored into my equation when trading USD pairs since the USD/JPY tends to be more sensitive to yields and risk trends than the USD index.

The DXY index broke higher following the FOMC minutes yesterday. This created a double bottom in the USD index, broke a “bearish wedge” (should have broke lower but instead broke higher) and looks to be on the way to testing range highs. However, the double bottom has a projected target above the recent trend highs. If we break higher, I am looking for a target of about 101.50 which is a 127% extension of the recent range:

4-9-15DXY1

If this rally does happen, it is likely to be viewed as a squeeze as there have been so many traders trying to call a “top” in the USD as of late. That type of behavior is very common when you see very explosive and strong trend like the one in the USD index in recent months. Frankly (I have to admit) I agree with that thesis, however have had a difficult time trading it lately. So, I have been buying the USD (mostly) on dips as of late instead of trying to short the USD.

If the DXY does move higher as planned and makes a brief new high, the monthly 61.8 retracement level is at about 102.00. I have felt the last couple weeks that the 61.8% Fibonacci level at 102.00 has been “unfinished business” for the USD bulls anyway.

4-9-15DXY2

If we hit the 101.50-102.00 I would be looking for a longer term reversal (or bigger consolidation) of the US Dollar Index.

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

 

 

 

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USD/CAD bouncing off support as Crude hits resistance

07. April 2015 · Write a comment · Categories: EDGE Chart of the Day · Tags: , ,

Today we have been closely watching the USD/CAD which has been basing over the last 2 days. Even as crude oil was rallying towards resistance, the USD/CAD (which is typically inverse) stalled at support. We call this “divergence.”

At this moment, crude is showing some weakness as the USD/CAD is 25 pips from the highs of the day. Here is the chart:

4-7-15CADCL

 

Blake Morrow

Chief Currency Strategist, Wizetrade

 

Disclaimer: I just went long the USD/CAD intraday today, and may hold it for the next few days

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