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Currencies: 05Apr Haven’t we seen this before? European debt woes roil the FX, Equities, and sovereign debt markets as capital flows to safety. The USD benefits as the Euro suffers.
Countries without serious debt problems are performing much better as the flight to safety chiefly shows up as negative action in those major economies hat have debt woes; namely Europe and the UK.
Aussie: 05Apr Despite today’s positive action, the bias remains clearly and firmly negative. Today’s action classifies as an inside day, which speaks of consolidation. On a longer-term view, there are some signs of a gently bottoming in the negative Momentum. Stay tuned.
Action should be noticeably light as The Easter and Passover Holidays commence.
Seasonal Snapshot: The 5-year pattern is in a sustained rising seasonal trend until April 17th. It then trends generally higher until April 30th but with more day-to-day choppiness. The 15-year pattern is in a rising trend until May 4th with a 2 day downtrend from April 12-14th. The 30–Year pattern is in the same sustained rising trend bias until April 12th.
British: 05Apr The Sterling’s failure to sustain a breakout above 1.60 against the USD, keeps the market’s longer–term negative bias intact. This is currently validated in the Sterling’s inability to continue higher to test the late October highs and selling off below the still falling 200 DMA.
Tactically, Our Trend, Momentum, ROC, and RSI indicators have all turned negative. Today’s action is testing (and so far, violating) the 21 DMA.
The BOE is keeping monetary policy unchanged. While currently the asset purchase program remains set at GBP325M but is under review.
We still maintain a meaningful move above 1.60 would likely indicate a breakout as it is showing as a significant support and resistance level going back to late February’s peak. Additionally, during craziness of late October-early November, much of the action traded around this level.
Seasonal Snapshot: All three patterns are biased to rising action until April 30.
Canadian 05Apr With a several month longer-term consolidation in place, the Aussie’s analysis is really geared more for the shorter-term for now.
Our Trend has turned negative in direct conflict with the 21 DMA. Momentum, ROC, and RSI remain in negative territory. The ROC is moving higher, though, indicating a decelerating negative Momentum. Today’s higher low keeps the last 10 session’s modestly rising lows in place and the highs have been modestly falling since the early March peak. More consolidating action. Look for support at par (1.00) and resistance at just below 1.0080.
Our Volatility measure remains within our Average range.
Seasonal Snapshot: All three patterns are in a positive bias that lasts well into May. The 15yr takes a breather 05-14Apr, then rejoins its 5&30yr patterns again.
Dollar Index: 05Apr With European sovereign debt woes again the news of the day, the DX has been the beneficiary of negative Euro action.
A test this morning of the minor support area near 79.75. This level traces back to November and February action.
Trend, Momentum, ROC, and RSI all indicate a higher bias. RSI is close to Overbot. 80.50 is the next resistance but the more important 81.00 looms as the real test. That is the right shoulder of what could be construed to be a bearish Head and Shoulders pattern.
Volatility remains near the Low level. Good Volume validates today’s positive action.
Watch for any evidence the Dollar is not the safe haven under crisis market conditions. This would change existing assumptions dramatically.
Seasonal Snapshot: All 3 patterns exhibiting choppy conditions until about April 7th when all 3 start more sustained falling action seasonal patterns until April 30th.
Euro-FX: 05Apr Another round of European debt woes, this time focusing on Spain, has the Euro again on the run. Clearly, 1.30 is the support level. Trend, Momentum, ROC and RSI are all strongly focused on negative action. To give some context on how rapidly the Euro has fallen apart, as recently as last Wednesday, the Euro was Overbot. Today it is firmly Oversold. It was never able to materially breakout above the 21 DMA, which is now falling.
Back to the 1.30 support, we reiterate the fact there is effectively a double bottom around that psychological support.
With the Low and falling Volatility, either protection or new positions with options purchases are relatively cheap.
The 200-day Moving Average remains well above just below 136.10, but remains falling.
Seasonal Snapshot: All three patterns are trending higher until the end of April.
Yen: 05Apr Despite the day’s positive close, the action was negatively biased with all the day’s positive early action evaporating to settle essentially at the open and near the lows.
Daily Trend, Momentum, and ROC remain positive, but the RSI is now falling back to near the midpoint 50 level.
Since retesting and failing to make new lows on 3/21, the Yen has remained largely in a modestly rising Channel approximately 220 points wide. This is a possible developing bearish flag pattern. If that does prove out, the pattern projects a low below 110.00 (90.90 FX).
We reiterate several points from last week’s Comment:
Our Volatility measure has fallen from high levels.
We note a number of negative dynamics overhanging the Yen:
The “carry trade” dynamic (selling Yen to buy higher yielding currencies) is re-imposing itself.
BOJ announcement in early Feb of more asset purchases
Speculation about continued BOJ outright selling
The consolidation of steep losses since Feb, followed by a rally to the 21-day moving average,
The recently identified downward seasonal bias ends this weekend. See our note below.
Seasonal Snapshot: All 3 patterns are now poised to bottom and head higher until approximately April 20th.
Petroleum: 05Apr What may be a short covering pop higher ahead of a long holiday weekend keeps WTI inside the falling Trend for about a month and continues to lead the Petro sector’s weakness. Our technicals for all of our tracked Petro markets are pointing negative, turning our attention toward Overbought/Oversold measures: Crude 34; RBOB 49; Heating Oil 41. Bottom line: we aren’t there yet. Crude supplies are above the upper limit of its average range for this time of year, while RBOB and Heating Oil within the upper limit:
Volatility is rising off low/very-low levels. Explore option purchase strategies.
The pitch of the February rally in WTI Crude doesn’t offer much in the way of a stopping point on the way back down, now that the 61.8% retracement (101.80) has been breached.
This targets the psychological $100 level as a likely support level. A broader view shows a 38.2% retracement of the Oct-Mar rally at 97.80. The flattening 200-day moving average lies below this level at 96.85.
On the upside, the 200-day moving average (105.60) is a likely resistance level as WTI has traded around this level as both support and resistance for the last 6-7 weeks.
Seasonal Snapshot: After a brief pause, all three Petroleum contracts’ patterns are in an upward bias until the end of April.
Disclaimer: A commodity and currency report brought to you by Providio Trading Consultants, Inc. There is risk in trading futures and options. One's financial suitability should be considered carefully before placing any trades.
Past performance is not indicative of future results.