USD/CAD…98.80-99.00 continues to be the hurdle level ( Dollar support). This runs up to 101.37 in the (H) Futures. Simply put, don’t buy Futures strength/ sell Dollar weakness into this level. The Canada will need more than one attempt at this area to penetrate it.
OIL…hit the short term profit level of 105.(This was a level to lighten your load…we will retain a small core long) The qtrly charts show 106.75-95 to be next resistance. Looking at the very long term Fibs, the mid 108’s are next (this is an area that shows up on 2 distinct swings). With Iran being the wild card, $116 WTI prints are possible. Therefore, we’ll continue to trade around a small long position via the Etf’s and/or the futures. We want to buy breaks against the 103.40 level with a tight stop in the very near term.
AUD/USD…108.00-108.25 continues to cap rallies. New closing strength over this level is needed for more upside. This is the same static level we have been writing about for a while. Sell stops lie around 106.30 ( Futures are currently trading @ a 33 pip discount)
YEN…80.00 USD/JPY ( 125 ish (H) Futures) proved to be formidable Dollar resistance Sunday night after China eased. The Yen futures are down around 600 points this month. There is room for more downside, however selling strength, not weakness, should continue to reward the patient trader.
AUD/JPY…Sunday’s high of 86.40 is also the high qtrly close for the past 3 years. This should prove to be a tough level matching 80 USD/JPY. You need proof through these levels for more follow through. These are not levels to press direction, you’re better off waiting until the level is given (violated) to look for more follow through.
EUR/USD…132.80 ish has to be monitored for a potential double top on the weekly charts. Price action and closes above will lead to further Euro strength.
The Currency Crosses, in general, have been a much better trade off the levels than the straight Dollar ( Individual Currencies). You must keep your eyes on the big macro levels in the crosses to see if you can do an individual straight Dollar trade and get rewarded.
Just a little side bar for all you “Mega Euro Bears”…Empirical observation form my China trip screams Euro strength. The place is oozing with European luxury goods, not American made products! If you sell Euro, choose your level wisely, make sure you’re the right way on the crosses utilizing tight risk parameters.
Model Trading Portfolio…Current Holdings
……………… Stop Close Profit Points
Long XLE 71.60 80
Long OXY 102.40 110/117
Long USO 37.80 44
Long Oil 100.50 intra-day 105
Long Canada Dollar Futures 99.54
Short USD/CAD 100.50
Short Term View
Location ,Location,Location….if you have a good trad able pattern “Good Risk reward!” You just have to seize the opportunity and see what develops!
Trade to Make Money!
Medium Term View…
30 Yr. Bonds …147 is the all time high in the front month futures. We will watch price action off this level for any potential surrogate moves in the currencies or stock indices. 144.20 ish now becomes our macro pivot. All new closing strength over 145.20 would have us looking for more upside in the Bonds. Closing above this level would be short term positive the Bonds and negative the Equities.
Equities…We will continue to strategically buy hard breaks in Etf’s and individual instruments we feel have the best risk profiles going into the end of the first qtr.
Currencies…Our view is the Aussie Dollar remains a most attractive investment. The Bonds are high yielding making this currency desirable on breaks. It also has the benefit of the underlying commodity and Asian growth story to support buying the dips.
The Aussie typically mirrors the S&P 500 which also makes it an easy surrogate to trade, whether Risk On or Risk off. It’s liquidity makes it easy to hedge currency risk if you’ve the underlying Bonds, which makes you Long Aussie by default.