Trade Strategy-USD-EUR-AUD
| 19 September 2011
The opening gap for the US Dollar showed its strength on the backdrop of the European crisis which also prompted the Euro and the Pound to open with a convincing gap that accelerated the continuation of the US dollar. The Aussie daily chart also shows the same formation on the opening as indicated on the chart below.
USDX 0919 Video Support: http://www.youtube.com/watch?v=FF6mj4CAyiE
In spite of the lower closing for the US Dollar Index last week at the 76.54 and opened at 77.16 on a weekly basis would seem to be a corrective move before a downturn would be made. However, the daily open would fill-in that particular gap but the bulls would be at the forefront as it looks on the European and American trading sessions.
Indeed, the third quarter of the the year would be identified as the price reversal phase for the USD with a mix of reports though constructive. As the established low is currently at the 72.90-73.85 basis point (S1-S2) trading range and the resistance levels would be at the 78.05-78.85 levels (R1-R2). The sideways consodlidation of the USDX from the past several months would be the length of its corrective move and a secondary leg higher is currently in the making. However, these formations which can only be established on a technical formation that may take some time to form. But the rally would continue after every lower price made before the upturn would re-establish its trend.
EURUSD DAILY
The cross EURGBP continues its lower direction as of this writing where the important psychological price of 0.8660 have already been penetrated with a registered low at 0.8525; that met some liquidation and led to a corrective move higher to the 0.8788/80 immediate resistance (R1). The subsequent market behavior for the cross rate would follow suite with the continuation of the Euro at 1.3550/80 levels would also be tested. The opening gap would weigh heavy, as the USD continues to move higher.
GBPUSD WEEKLY
The highlighted circle indicates the ' opening gap on the EURUSD and goes the same with the GBPUSD; which also corresponds with the USDX on a daily basis. The strategy of a follow-through for the European majors to continue its price direction lower should be followed with shorts on the daily correction. The figure shows the short position taken more mid-to-long term basis as to maximize the profit potential of an established trend since August. 28th, 2011. Volatility had made analysis of the market with extreme trading difficulty. However, it may be it has been well worth the wait depending on each individual risk tolerance levels, trading portfolio and applied trading strategies combined with arbitrary hedging.
Meanwhile, most traders have been reluctant to re-position to stay long the USDJPY, as they have been more impatient for the BoJ intervention after the Swiss National Bank decided to pegged the Swiss Franc versus the Euro. The continued strength of the Yen would still be intact compared with a steadier USDCHF which we anticipate would no longer be a currency choice to be traded at this time.
The AUDUSD have been a particular and an alternative choice instead. As it has more room to move lower considering the volatility of the USD rally have given impetus for the Aussie as its directional trend lower is well defined. Some support would emerge at the parity level between 0.9910-1.0110. This was registered last August 09, 2011 but retreated higher as buyers re-emerge at these prices which caused the AUDUSD to close higher for that particular week ending August 12, 2011. These prices would be retraced back within the weeks ahead as the USD rallies to its higher price levels. Expect some light buyers to meet profit-taking sellers at the 0.9925-30 by then.
AUDUSD DAILY
