AUDUSD traded in a narrow range between 1.0389 and 1.0581. The price action in the range is likely consolidation of uptrend from 0.9704. As long as 1.0389 support holds, we’d expect uptrend to resume, and one more rise towards 1.1000 is still possible. However, a breakdown below 1.0389 will indicate that the upward movement from 0.9704 has completed at 1.0581 already, then the following downward move could bring price back to 1.0100-1.0200 area.
Putting your money into the shares of Southeast Asia Cement Holdings or CMT in the Philippine Stock Exchange is a bad idea for me as of the moment. Well, at least that’s what its chart is telling me.
CMT has actually performed so well during the past 6 weeks when it bounced from a low of around PHP 1.20 all the way up near PHP 1.80. But don’t get fooled by this price action as looking further will tell you that this recent run-up could be nothing more than a short term rally. As you can see from its chart above, CMT broke down from a head and shoulders pattern. Shortly after it did, it found its way to a low of PHP 1.20. It then rebounded into what appears to be a rising wedge pattern. Now, a rising wedge is generally a bearish pattern since it also represents a temporary bounce in prices. In any case, a fall below the wedge’s support could send it all the way back to PHP 1.20. Notice also that peak of the wedge coincides with the 50% Fibonacci retracement that I drew. This further indicate the possibility of a break down soon.
So beware and stay on your toes.
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If I listen to the market commentators on TV, they seem to tell me that things are going well…
However, when I look at the price of oil hitting $112 a barrel and gasoline prices heading back to $4 a gallon are we back to “good times”…when I look at unemployment level I see that the U.S. is at 8.8% still. Are those good times? I see that Obama is going to talk about raising taxes in a speech tomorrow. Are those good times? I see that if we don’t raise our debt ceiling before May 16th, then we’ll have utter chaos.
Now does all of that equal “good times”? I can’t see it.
When I drive through neighborhoods, I still see too many foreclosure signs in the yards. I still see over 44 million Americans on government assistance programs, etc.
That’s why I believe the Elliott Wave counts are correct. They count the recent rally as a correction upward in a larger bear market.That’s very different from the recent upswing being a new “bull market”. Big difference.
I also think the correction upward in stocks could be nearing its end now or may have even ended already. If the Dow, S&P 500 and Nasdaq can’t push through their former highs, then we’re probably looking at a double top on those charts. If you consider things like the huge MACD divergences on those charts, then it’s even more likely that a top could be forming.
When you look at all of this and then you consider that most of the G-7 nations can’t even grow at 1% right now on a year-over-year basis…you know that we’re on the bring of another recession. In fact, New Zealand, the U.K. and Japan all have negative GDP readings right now.
So if something doesn’t change drastically and quickly, then those tough times could be back.
If they do…this time we’d have tough times with higher debt levels than before. We’d have tough times but with weaker dollars due to all of the “money printing” from the Fed. We’d have tough times but still high inflation….again due to the money printing program of the Federal Reserve.
Okay, but here is the good part…even when there is a gloomy picture, there are still plenty of opportunities to make money trading currency pairs. You can trade successfully through both bull and bear markets in stocks. You can have success through high unemployment or low unemployment…high oil prices or low, etc. That’s the good news…and that’s why I love trading in the forex market. It gives me more control over my future in the midst of many things going on around me which are far out of my control.
Editor, Currency Cross Trader
John Gokongwei-led Robinson’s Land Corporation or RLC in the Philippine Stock Exchange had been trading on a downward slope since November 2010. Recently, though, it is showing some signs of a possible reversal.
Since peaking at above PHP 18.00 last year, RLC’s move south accelerated when it broke down from a head and shoulders pattern. Eventually, it found itself at a low of PHP 11.00. During the last two months, however, RLC has been showing some signs that the market could start to pick it up again. If you can see from the chart above, RLC appears to have been bottoming already as it has been forming a possible double bottom pattern. Also, it has already broken above its downtrend line. A bullish reversal, therefore, would be confirmed if RLC is able to move past the pattern’s neckline at around PHP 13.50. If it does, it’s minimum upside target (gauged by projecting the height of the pattern from the neckline) would be just below PHP 16.00.
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The stocks of publicly listed company, Rizal Commercial Banking Corporation or RCB in the Philippine Stock Exchange, went up by 2.9% to PHP28.75 during today’s trading session. This move was backed up with significant amount of volume that makes me consider this a convincing breakout from the 6-month descending channel pattern. If buying pressure follows through, the stocks could reach my conservative target price of PHP31.00 which I got by adding the height of the channel to the breakout point. A few days ago, RCB has also passed above the 100 and 200-day moving averages which tells us the bulls are still around. The MACD has just gone above the positive territory and the RSI is in a stable condition which even strengthens this stock. On the downside, the immediate support could be the 2-month uptrend. If the stocks further drop below that, the next support could be the 2-year uptrend.
In the bigger picture, what appears to be RCB’s resistance at PHP31.00 is actually the neckline of a possible 4-year cup and handle formation with the handle being the 6-month descending channel. If it is indeed one and the stocks breakout from this humongous pattern, my conservative target price would be the PHP45.50 all-time high. However, before it reaches that marker, it needs to surpass the PHP37.50 resistance.
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EURUSD At Major Fibonacci Level
EURUSD managed to move above yesterdays high before the bears pushed price down for a lower close today. The 1.4500 level has confluence with the longer term Fibonacci 61.8 retrace from major weekly swing high/low levels.
Price also touched an ascending trend line and any drop below todays move could see a breakout move and some form of corrective wave lower.
The order flow could well be inplace for a sustained move lower if this trend line breaks as it has had five perfect touches on the daily chart which will not have escaped the markets attention.
We will be looking for price action around this key level and will post any trades on our Forex trading blog.
See the video archive on our blog or leave a comment
Last March 25, I presented my stock picks as a guest speaker for the Absolute Traders event “BULL pa ba or BEAR na ba???” and one of them was DMCI Holdings Inc. or DMC as listed in the Philippine Stock Exchange (kindly check here). I mentioned that DMC’s uptrend is still intact and the possibility of a cup and handle pattern forming puts the stock in great shape. Well guess what, DMC is now at a better position given its current breakout!
DMC’s 3.4% gain today propelled the stocks to break above the 5-month cup and handle’s neckline and close at PHP41.30. It also marked an all-time high of PHP41.55 within the trading session. As a newly breakout, the buying pressure will more likely continue tomorrow which will bring the stocks an inch closer to my target price of PHP48.00 which I got by adding the size of the cup to the breakout point. However there is always uncertainty in the stock market so in case the DMC stocks descend, the immediate support could be the cup and handle’s neckline. If that breaks, the next support could be the 1-year uptrend.
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By Russell Glaser
The strengthening of the yen could prove to be only a knee jerk reaction to the downgrade of the Japanese nuclear plant that was damaged in the earthquake. This could bring an opportunity to enter long in the USD/JPY.
Traders may look to enter long on the USD/JPY near the 84 level with a stop below 83.50, a level that the pair failed to break below yesterday despite multiple attempts. An initial target should be the recent high at 85.50. This allows for a nice profit to risk ratio of 3:1.
On an extension, the pair would target the September intervention high at 85.90, followed by 88.00.
To the downside, multiple supports are found in the near term. 83.30 is an apparent support and the falling channel line off of the September high may also come into play, as could the 200-day moving average at 82.80. Traders can move their stop lower for the trade but would need to raise the take profit level to keep a preferred profit to risk ratio.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
