Category: US & Canada

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Forex: Euro, Pound Sterling, Canadian Loonie, Australian Dollar and Japanese Yen

The Euro is testing short-term support at $1.2250 on the daily chart. Recovery above $1.2400 would indicate another rally, while failure of support would test primary support at $1.2050. The primary trend is still downwards, but breach of the descending trendline means the primary down-trend is losing momentum and a bottom is forming. Failure of primary support is unlikely but would warn of another down-swing, with a target of $1.185.

Euro/USD

* Target calculation: 1.215 – ( 1.245 – 1.215 ) = 1.185

Pound Sterling found support at €1.255 against the Euro before rallying to €1.28. Narrow consolidation between €1.27 and €1.28 suggests continuation of the rally. Breach of resistance at €1.29 would signal an advance to €1.315*. Rising 63-day Twiggs Momentum reflects a strong primary up-trend.

Pound Sterling/Euro

* Target calculation: 1.285 + ( 1.285 – 1.255 ) = 1.315

Canada’s Loonie is headed for a test of resistance against the greenback at $1.02.  Bullish divergence on 63-day Twiggs Momentum on the weekly chart suggests a primary up-trend; confirmed if resistance at $1.02 is broken.

Canadian Loonie/Aussie Dollar

Shallow retracement of the Aussie Dollar against the greenback suggests trend strength. Recovery above $1.06 would indicate an advance to $1.075. Breakout above $1.075/$1.08 would offer a long-term target of $1.20* but RBA intervention, to protect local industry, could be a factor.

Aussie Dollar/USD

* Target calculation: 1.045 + ( 1.045 – 1.015 ) = 1.075

The greenback found support at ¥78 against the Japanese Yen. Rising Twiggs Momentum and penetration of the descending trendline both warn that a bottom is forming. Recovery above ¥80.50 would complete a double bottom reversal, suggesting an advance to ¥84.

US Dollar/Japanese Yen

* Target calculation: 81 + ( 81 – 78 ) = 84

The Aussie Dollar broke medium-term resistance at ¥82 against the Japanese Yen, headed for a test of the upper range border at ¥88/¥90. Rising 63-Day Twiggs Momentum and recovery above zero suggest a primary up-trend as the Aussie Dollar attracts capital inflows.

Aussie Dollar/Japanese Yen

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How High Frequency Trading Robots Are Creating a Bumpy Ride for Main Street – NASDAQ.com

By Barbara Cohen

While HFTs may argue that they bring liquidity to the Market, they cannot dispel the concerns that liquidity comes at a very high price to investors – increased volatility. In a report issued in September 2011, associate professor Frank Zhang of Yale University stated that once an instrument’s share volume exceeds 50%, trading becomes basically a “hot potato,” as HFTs trade the same positions, passing them back and forth amongst themselves. Inter-firm trading all but eliminates “Price Discovery,” determining share price by normal supply and demand factors, such as news events or positive/negative earnings releases.

Inter-firm high frequency trading also wreaks havoc for Main Street investors because of “cross spreading.” So many liquid stocks, such as BAC and MSFT, now execute in milliseconds, resulting in extreme “competition” for Main street investors. Queues to enter and exit are significantly longer, with hundreds of shares waiting to execute. Long queues force Main Street investors into the vulnerable position of having to buy at the offer or sell at the bid, a trading method known as “crossing the spread.”

via How High Frequency Trading Robots Are Creating a Bumpy Ride for Main Street – NASDAQ.com.

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Gary Shilling: Global Slowdown, Only Time Can Heal the Economy

Gary Shilling: If we have a consumer-led recession it will be very different to previous post-WWII recessions which were always led by the Fed.

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Canada: TSX60 rising broadening wedge

The TSX 60 continues in a rising broadening wedge on the daily chart. Thomas Bulkowski warns these are bearish formations, ending with a downward breakout almost 3 out of 4 times. That would threaten primary support at 640 and a decline to 600*. Bearish divergence on 21-day Twiggs Money Flow warns of short-term selling pressure. Respect of support at 640, however, would suggest a rally to 720.

TSX 60 Index

* Target calculation: 640 – ( 680 – 640 ) = 600

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S&P 500 and Nasdaq

Bearish divergence on the S&P 500 Index (21-day Twiggs Money Flow) warns of increasing resistance as the index approaches 1420. Expect retracement to 1360/1380 followed by another attempt at 1420. Breakout would signal another primary advance. Reversal below the trend channel is unlikely but would warn of a correction to test primary support at 1280.

S&P 500 Index

* Target calculation: 1420 + ( 1420 – 1280 ) = 1560

The Nasdaq 100 is headed for 2800 on the weekly chart. A 63-day Twiggs Momentum trough above zero indicates a healthy primary up-trend.

Nasdaq 100 Index

* Target calculation: 2800 + ( 2800 – 2450 ) = 3150

Bellwether transport stock Fedex, however, is edging lower. Reversal of 63-day Twiggs Momentum below zero warns of a primary down-trend. Failure of primary support at $84 would confirm the primary down trend signaled by the March-April double-top. That would warn of an economic down-turn.

Fedex

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Romney’s VP: Paul Ryan—A Bold Choice, a Big Risk

By JOSH BOAK, The Fiscal Times

August 11, 2012

Bowing to pressure from the conservative wing of his party, Republican Mitt Romney has picked House Budget Committee Chairman Paul Ryan as his vice presidential running mate, and ensured that the congressman’s controversial plan to transform Medicare into a voucher-type program will become a central issue in the presidential race.

via Romney’s VP: Paul Ryan—A Bold Choice, a Big Risk.

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Forex: Euro, Pound Sterling, Canadian Loonie, Australian Dollar, South African Rand and Japanese Yen

The Euro retreated after encountering resistance at $1.2400/1.2450. Respect of the rising trendline, however, would confirm that the primary down-trend is losing momentum and a bottom is forming. Recovery above $1.2450 would strengthen the signal. Reversal below $1.2150 would warn of another down-swing — confirmed if primary support at $1.2050 is broken — with a target of $1.185.

Euro/USD

* Target calculation: 1.215 – ( 1.245 – 1.215 ) = 1.185

Pound Sterling’s up-trend against the Euro continues on the Weekly chart. Respect of support at €1.255 would indicate an advance to €1.315*. Rising 63-day Twiggs Momentum is evidence of a strong primary up-trend.

Pound Sterling/Euro

* Target calculation: 1.285 + ( 1.285 – 1.255 ) = 1.315

Canada’s Loonie broke above parity, headed for a test of resistance against the greenback at $1.02.  Long-term bullish divergence on 63-day Twiggs Momentum and recovery above zero suggest a primary up-trend.

Canadian Loonie/Aussie Dollar

The Aussie Dollar is similarly headed for a test of resistance at $1.08 against the greenback. Breakout would offer a long-term target of $1.20* but calls for RBA intervention to prevent further appreciation are growing. Professor Warwick McKibbin told The Australian Financial Review:

When a portfolio shift into Australian currency is observed, the exchange rate change should be completely offset so the shock only affects the money markets rather than the real economy. If the shock cannot be observed precisely then the central bank should “lean against the wind”, that is intervene to slow down the extent of appreciation of the exchange rate.

 

Aussie Dollar/USD

* Target calculation: 1.08 + ( 1.08 – 0.96 ) = 1.20

The Aussie retreated from resistance at R8.75 against the South African Rand and is testing support at R8.50. Failure of support would signal a primary down-trend with an initial target of $8.25*.

Aussie Dollar/South African Rand

* Target calculation: 8.50 – ( 8.75 – 8.50 ) = 8.25

The Aussie broke medium-term resistance at ¥82.50 against the Japanese Yen, heading for a test of the upper range border at ¥88/¥90. The Australian Dollar/Japanese Yen has been a good reflection of global risk tolerance since 2009, oscillating between ¥72 and ¥90 as risk tolerance rises or falls. Rising 63-Day Twiggs Momentum and recovery above zero suggest a primary up-trend as the Aussie Dollar’s status as a reserve currency grows, attracting capital inflows.

Aussie Dollar/Japanese Yen

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Treasury yields rising — good for stocks

10-Year Treasury yields are headed for a test of resistance at 1.70 percent after recovery above the descending trendline warned of a “bear trap” — actually a bull trap because yields are the inverse of price. Follow-through above 1.60 percent has confirmed, and breakout above 1.70 would signal an advance to 2.0 percent* — a bullish sign for stocks.

10-Year Treasury Yields

* Target calculation: 1.70 + ( 1.70 – 1.40 ) = 2.00

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Poll: Do you trust High Frequency Trading to improve stock market pricing??

Please share this via Facebook or Twitter. The more responses we get the more pressure there is on regulators.

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Canada: TSX60 rising broadening wedge

The TSX 60 continues in a rising broadening wedge consolidation rather than a trend channel. Thomas Bulkowski observes that these formations end with a downward breakout 73 per cent of the time. That would threaten primary support at 640 and a decline to 600*. A 13-week Twiggs Money Flow trough above zero, however, indicates buying pressure. Respect of support at 640 would suggest a rally to 720. And breakout above 720 would offer a target of 800*.

TSX 60 Index

* Target calculation: 640 – ( 680 – 640 ) = 600

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