Monday, July 18, 2011

Dollar Index (DX) Analysis 7/18

(Chart 1 - Dollar Index Daily)

Globally, the USD is in an uptrend (orange channel). However, we are right in the middle right now.

75.75-76.00 is strong resistance.
We got above it last night/this morning, but are now almost back under it (currently 75.80)

If we close here or a bit lower, I think we retest 75 or possibly even 74.50. Long term I am a dollar bull as eventually I think we will test the highs of this orange channel... However with the recent price action, I think we get another 75 test before we break out to new recent highs.

EUR/USD Approaching key resistance 7/18

To the left is the hourly chart of the EUR/USD pair. A while ago I posted about the triangle it was forming and while I thought we might get one more bounce before breaking to the downside, it appears it chose to just break it and kickstart a downtrend. We saw a nice retracement in the middle of last week to just break back in and then out of the previous triangle (shown in purple) and also hold the deep retracement at 1.43 (shown in yellow). We now have pulled back out of the yellow retracement but are looking to head back to the lower level. We also see this 38% level corresponds almost exactly with the 61.8% level of the most recent up moves retracement @1.4115-1.412. This level seems like it will be key to ensuring this downtrend continues, and any good divergence or candlestick formation off this level should be a good selling opportunity.

S&P (ES) Breaks 1 support, 1 to go 7/18

To the left is the hourly chart of the s&p. This morning it looks like we have finally broken the 1300-1303 level which had been providing a major support (except the brief break last week). I posted a couple weeks ago that I thought a nice head and shoulder formation on the weekly chart was in progress and have been short since then. So far so good, but it will be important to see how the S&P reacts to breaking this support and see if it can hold when it gets retested from below. We can also see we held the deep retracement at 1291 shown in red, and will need to eventually break this last retracement and previous high peak in order for this to continue to our eventual neckline around 1255-1260.

Crude Oil (CL) Lower end of channel

To the left is a 4 hour chart of crude oil. As you can see, we have been in a little bit of a channel for the last week or two (shown by the yellow trendlines on chart). It seems like currenlty we are at the lower end of this channel, which also lines up with the 38% retracement of the prior down move (shown in green). We also see a little bit of divergence between the two recent low peaks as we dont quite take out the previous low and our MACD has gone further than the previous down peak. It also looks like we are somewhat holding these green retracements, so I would look to take off at least half of this position at the 61.8% or about 98$ range.

Daily and Weekly Gold Chart Analysis 7/18

(Chart 1 - Gold Daily)
(Chart 2 - Gold Weekly)

1600 has fallen, like so many psychological resistances of the past in gold.
We are currently trading 1601.

Here is my "intelligent" commentary:

The orange daily/weekly uptrend is very well defined.
We are at the upper 1/4 of it currently (high is 1629 today)
Gold faces significant resistance at 1620-1640.
Although I think it is still very bullish, it doesn't present trading value as a buy for me.
1620-1640 can be sold if hit today or tomorrow, but i would use low leverage/risk if at all.

Regardless if you look to enter a sell, or a pullback buy, wait for 60 min candle confirmation before entering a trade!!!

Daily and Weekly Silver Chart Analysis 7/18

(Chart 1 - Daily Silver)
(Chart 2 - Weekly Silver)

Silver has shown tremendous strength as of late.
The daily chart is starting to look parabolic again.
I expect some selling to occur if we get higher, into the 42-44 area.
However, as strong as this rally looks, we could rip right past it.

From a trading standpoint:
I feel good about buying dips into the 38 area. I would target 42 initially, but would keep some on for 43.75, or 45.30 if you are feeling lucky ;)

Much less confidently, I would also look to sell the 42-43.5 area if we hit it in the next 2 days.

For both of these though, I would first look for 60 min candle confirmations, (hammers/shooting star or engulfing patterns) before entering a position.