FX Outlook On Commodity Pairs

Hello Forex Traders,

Today the Euro Interest rate decision, the ADP figures, and speeches from both ECB president Draghi and FED chairman Bernanke will be dominating today’s trading. The Bank of Japan also has its spot in the sunlight tomorrow and on Friday with a Monetary Policy Statement and press conference. And on Friday there is a NFP release, which is still tentative. Add the U.S. budget talks to the mix, and the mixture of press conferences and news releases will impact the expected volatility. Take a look at the screenshot to see what weeks and days are least effected by such events for the month of October.

2- 10- 2013 risk

With that said, let us take a look at the Forex market today and analyze the opportunities. Here are some useful links for you already:

1)      EURUSD and GBPUSD analysis 

2)      USDJPY long-term trend continuing? 

3)      Short-term trading room opportunities 

CAD’S NEXT MOVE?

The USDCAD almost fell still to a grinding halt in intra-week trading. A pause for more downside or is it a sign of a potential reversal?

2- 10- 2013 uc w

When reviewing the weekly chart it is in fact very possible that the weekly uptrend channel is still in play. The last move down seems like a 3 wave (ABC) corrective pattern which fits the bill neatly in this weekly uptrend. And the weekly candle of 2 weeks ago certainly had a major wick at the bottom.

In this scenario we can expect a bounce off of the bottom of the channel, at least to retest the current weekly top of 1.0550. Any break above this level could have 1.06 and then 1.0770 in vision.

The GBPCAD is moving into unchartered territory. To be specific, the currency pair has broken above a weekly range that has lasted 3 years. The range was quite tight for a weekly chart, as the difference between the top and bottom was only 1,100 pips. A breakout scenario on the weekly chart is now occurring and the target of that break out is the -0.272 at 1.69. Depending on how price reacts to the target, the 2nd target at the -0.618 is at 1.7480.

2- 10- 2013 gc w

XAUUSD

Gold has not found any follow through after the FOMC rally. In fact price has already broken that FOMC daily low, which means:

1)      XAUUSD is now in a down trend 

2)      But be aware of the Fibonacci retracement levels of the entire move up.

3)      These levels could surely prove to be the bouncing spot for a move back to the weekly resistance zone at 1500-1550, which is roughly equal to the targets on this chart (-272 and -618) as well.

4)      I am keeping a close eye on the purple trend line which would be the best way to identify whether the downtrend continuation remains intact or whether the currency will in fact break out north.

2- 10- 2013 xu d

AUSSIE

The down trend on the AUDUSD developed over 5 months, from April to August, and dropped a whopping 1,800 pips after a snail paced range which put the Aussie to sleep for the 6 months prior to that.

The trading month of September, however, saw an aggressive retracement unfold. The price moved back up all the way to the confluence of 382 Fib (of the entire 5 month down move) and the long-term moving average. That area was indeed a resistance area and the minimum 3 wave (ABC) correction has been satisfied.

Is the 382 Fibonacci retracement level a potential wave 4 and the turning spot for more downside and a wave 5 continuation? Or will the wave 4 extend into bigger correction zone? Or, is the downside of the Aussie already finished and the upside is now taking over?

To answer these questions, we will need to keep an eye on our technical lines and review how price responds to those levels (corrective/impulse/patterns).

The rejection off of the 382 Fib caused the AUDUSD to move down but that down move found support and has bounced off of the medium term moving average. The AUDUSD then broke the resistance trend line (purple) and posted a bullish day yesterday.

This would qualify for a break and pullback scenario and the target is the 500 Fibonacci retracement at 0.97. Be careful of the top at 0.95 though. And if price were to break below the current bottom and the support level (green) at 0.9200 then the bullish vision quickly vanishes and transforms into a bearish stance, albeit with respect for any of the Fibs in the screenshot. These Fib levels a high percentage likelihood of acting as a support level and could create a reversal or pullback.

2- 10- 2013 au w

As always, thank you for sharing this article. I do appreciate it.

What is your opinion of the AUD? Do you agree with the above or are you more bullish/bearish?

Good Trading!

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