Month: March 2012

AUD/USD Weekly outlook 19 March – 23 March

The Aussie last week initially fell off against the Dollar, before finding strength once again and pushing higher. The weekly chart closed as a bullish pin bar suggesting the bulls may take back control in the coming week.

Last week’s bullish candle, found support at the 1.0400 area which in the past has proven a strong support level.

With the strong bullish pin bar seen last week rejecting a good support area we’ll be looking to long the pair with initial targets at the 1.0800 area which is the next level of resistance the pair may face.

We’ll look to enter at a 50% retracement of last week’s candle placing our stops just below last week’s lows giving us a good R:R trade.

Article by vantage-fx.com

By MoneyMorning.com.au

There is a big geopolitical game of chess going on. The US generally stands behind Israel, even when it goes out on its own. But who stands behind Iran?

Iran counts China as an ally.

So an Israel vs Iran conflict would essentially be a proxy fight between US and China. I think we can expect to see more conflicts fought indirectly between the world’s two superpowers.

The growing power of China’s military compared to America’s brings us back to what I talked about at the ‘After America’ conference on Friday.

Chinese defence spending to double in four years

This first thing to jump out from this chart is that China’s military budget is already more than all of its neighbours’ budgets combined.

The other important point is that it will double in the next four years – to $240 billion.

People often make the comment that China’s military budget is large but is still a fraction of America’s. True.

But America’s is forecast to fall at the same time that China’s is rising.

So although China’s budget is just 15% the size of America’s NOW, in four years’ time it will have grown to be about 40% the size of America’s.

That gap is closing, and fast.

Our conference was called After America.

And I don’t think anything says After America better than that.

Dr. Alex Cowie
Editor, Diggers & Drillers

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After America: US vs China by Proxy

By MoneyMorning.com.au

There is plenty to say about oil right now.

After falling for 10 months, Brent Crude Oil has jumped 15% in the last few months.

The ‘Iran situation’ has been the tipping point, sending oil prices soaring. Iran was threatening to close the busiest oil-shipping waterway in the world, which would send oil prices above $200. But the real reason prices has climbed is that sanctions on Iran are biting, and they are exporting less oil. This leaves a gap in the market – which no one else can fill.

It hasn’t just been Iran’s exports falling. Oil production from other mid-significant exporters, like Yemen, Syria, and Sudan, have their own problems too. The resulting drop in oil production just makes that gap in the oil market even bigger, and it is sending oil prices still higher.

Israel vs Iran?

Now the oil market has real problems.

Israel seems to be readying to attack Iran:

‘Israeli political sources believe that Prime Minister Benjamin Netanyahu a majority Cabinet support Israeli military action against Iran without American approval.’

Let’s just say Israel and Iran don’t see eye to eye.

In particular, Iran would like a nuclear weapon. Israel would prefer that it didn’t have one.

Years of sanctions to limit Iran’s progress towards building a nuke have failed. Israel thinks Iran is close, and is getting nervous. Obama recently politely suggested Israel holds off on attacking Iran until at least after the US elections.

Reason being he knows that conflict in the Middle East will send oil, and petroleum prices, soaring – and therefore Obama’s chance of re-election plummeting with it.

A conflict around Israel and Iran would cripple oil exports from Iran, leaving a truly unfillable hole in the oil market. If conflict also affected passage of ships through the Persian Gulf, exports from Saudi Arabia, Bahrain, Kuwait and the Emirates would drop overnight. Then the oil market – and hundreds of millions of innocent people in the region – would have real problems.

The oil market was already at a tipping point. Israel’s majority vote to strike Iran is all it takes to tip this over the edge, and trigger the next leg in oil’s rally.

The world’s economy runs on oil. These events would be disastrous to any economic recovery, and cast a serious threat to the market right now.

I’m surprised to see the ASX200 up today. The risk level of the market has jumped, but you wouldn’t know it from stock prices. Investors would be smart to be wary right now.

Dr. Alex Cowie
Editor, Diggers & Drillers

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Oil Getting Ready For Its Next Rally

By MoneyMorning.com.au

We are back at work today after holding our ‘After America’ conference up in Sydney last week.

It was a big success. The venue was full – and right up to stumps on the last day too. We got great feedback from those that made it. But, it takes two to tango – and the quality of the questions from the audience was just as excellent.

I took over an hour of questions in all, and they kept me on my toes!

I started on Chinese gold demand and why it spells both good news and bad news for gold investors.

I was arguing why the surge in Chinese gold purchasing could only be the People’s Bank of China buying. And that this is the foundation of launching their currency, the Renminbi, as a gold-backed currency this decade. This will take thousands of tonnes more gold – good news for gold investors.

Not All Good News for Gold

Aussie-listed mining companies are active in over 180 countries worldwide. And when I tip stocks, the location of the country is everything. It takes time to get your return from mining projects, so you want to feel safe about where the project is over the long term. It’s no good if the country is on the verge of civil war.

Or as one old hand told me – ‘you wouldn’t plant your veggie patch on a footy pitch, would ya?’

So I use all the information I can get to measure a country’s risk level. There are many professional risk assessors, but the acid-test is ‘The Nikki Test’. If my wife won’t let me fly to a particular country then it’s probably a good sign to leave stocks operating in those countries on the watch list!

So, as China is buying thousands of tonnes of gold, but its neighbours could be off limits, I talked about some exciting, and probably safer, gold camps in the world as alternatives.

The good news for readers who couldn’t get to the conference is we recorded the whole thing. This will be available on DVD soon. Click here to order your copy. With two days of speeches it is brimming with food for thought for investors who want to take control of their financial destiny.

Dr. Alex Cowie
Editor, Diggers & Drillers

P.S My talk stirred up some great questions from the audience. We started on gold. But over the next hour or so, we had covered most of the commodity spectrum … I was hoping someone would ask about oil, and was glad when they did. You can read more about it here.

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After America: China and Gold Demand

NZD/USD Weekly outlook 19 March – 23 March

The Kiwi initially fell off against the greenback last week, however was able to claw back early losses closing the week modestly higher. The weekly chart produced a bullish pin bar; suggesting further gains could be expected.

As seen in the chart above, 0.8200 has proven a strong support and resistance level in previous trading. Last week’s initial fall and subsequent close above 0.8200 may prove a significant event for the pair.

With the bullish price action and the weakening Dollar, we’ll be looking to long the pair. Placing a limit order at a 50% retracement of last week’s pin, we’ll aim to initially target the 0.8450 area which is the next level of resistance, placing our stops just below last week’s lows.

Article by vantage-fx.com

USD/CHF Weekly outlook 19 March – 23 March

The USD/CHF closed last week with a long tailed bearish pin bar suggesting a continuation of the greenbacks decline against the Swiss Franc.

The bearish pin seen last week showed a clear rejection and almost perfect bounce of a 61.8% Fib retracement from the markets most recent downswing.

The bearish pin bar also retested and rejected a strong support and resistance area at 0.9300 as seen in the chart below, which further confirms our bearish outlook at this time.

With the strong price action seen on the weekly timeframe we’ll be looking to short the pair at a 50% retracement of last week’s price. Initially we’ll be targeting 0.9140 which is last week’s lows, placing our stops just above the pins high.

The strength of both the Fibonacci retracement and support/resistance level, signal the market should continue its bearish decline which could make for an excellent longer term trade if managed well.

Article by vantage-fx.com

AUDUSD broke above the downward trend line on 4-hour chart, suggesting that lengthier consolidation of the downtrend from 1.0855 is underway. Range trading between 1.0421 and 1.0665 would likely be seen. As long as 1.0665 key resistance holds, we’d expect downtrend to resume, and another fall towards 1.0200 is still possible.

Forex Signals

AUD/CAD Weekly outlook – 19 March – 23 March

Despite an initial loss early in the week, the Aussie found strength against the Canadian Dollar as the trading week drew to an end. With the bears losing the battle against the bulls, the weekly charts closed the week with a strong bullish pin bar suggesting a continuation of bullish momentum may be seen in the coming week.

The weekly pin was supported by a rejection of the 61.8% Fibonacci retracement level on the markets most recent and relevant upswing.

Price action signals towards further gains for the pair, however traders should be cautious of the resistance area at 1.0500, which in the past has proven a difficult obstacle for the market to break through.

Last weeks candle closed at the resistance level which may hold of any further bullish moves.

The markets strong price action pattern and overall uptrend since 2008, suggests the pair may continue to rise for the foreseeable future.

We’ll be looking to long the pair with initial targets in mind at 1.0750 (the next relevant area of resistance). Our entry will be a 50% retracement of last week’s pin with our stops being just below last week’s low giving a good R:R trade and keeping in mind the strong resistance at 1.0500.

Article by vantage-fx.com

Amazon.com (NASDAQ:AMZN) has made a deal with Discovery (NASDAQ:DISCA) to stream its content, according to a NY Post report.The deal will connect Amazon Prime’s instant video service with Discovery’s 13 cable channels including TLC, Animal Planet and banner Discovery channel.On their website, amazon issued a special announcement to their faithful customers. It says: Dear Customers,Today we’re announcing our biggest addition yet, bringing nearly 3,000 more titles to Prime Instant Video. We’ve struck a deal with Discovery Networks to bring some of the highest quality, non-fiction, informative and entertaining content about the world to our Amazon Prime customers. Rolling out over the next few weeks are TV shows from Discovery, TLC, Animal Planet, and Science. Prime members, at no additional cost, can now stream more than 17,000 titles.Amazon prime will still remain at a cost point of $79 a year.