Chifbaw Technical analysis and trade recommendations

[Chifbaw]

Math models daily update
November 30, 2012

While we were preparing this note, the EURUSD finally broke to the upside as we expected. It’s probabilities are now again getting closer to the reversal/saturation area. This suggests that some key levels will hold. From technical analysis, we recommended looking into the area of 1.3090 to short. From our Propareos models, the area of 1.3110-1.3130 should be a solid resistance for the day (90% reversal/saturation) and can be used either as a stop loss level or if it is reached as a short entry level. If the EURUSD reaches 1.318 today (historical barrier), then we would very strongly recommend shorting it.

Recommendations:

Best: short EURUSD at 1.317/1.318, SL.1.3220, targets 1.3150, 1.3100, 1.3050.
Medium: short EURUSD in between 1.3110-1.3130, SL 1.3145, targets 1.3100, 1.3080, 1.3050.
Risky: short EURUSD in between 1.3085/1.3095, SL. 1.3130, targets 1.3070, 1.3040, 1.30.
Propareos levels (90% probabilities of price action reversal or saturation in the coming 2 hours):

- EURUSD: 1.3065-1.3080 on the upside, 1.2940-1.2955 on the downside (close).
- AUDUSD: 1.04850-1.0500 on the upside, 1.0385-1.0400 on the downside.
- GBPUSD: 1.6080-1.6095 on the upside, 1.5975-1.5990 on the downside.
- USDJPY: 82.90-83.05 on the upside, 81.25-81.40 on the downside.
- EURJPY: 108.55-108.70 on the upside, 105.80-105.95 on the downside.
- USDCAD: 1.0015-1.0030 on the upside, 0.9860-0.9880 on the downside.

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[Chifbaw]

London open: analysis and trade signals
December 3, 2012

Recommendations:

Medium: Buy the EURUSD at 1.2950/1.2960, SL. 1.2935, targets 1.30, 1.3045, 1.3090, 1.3170, 1.335, 1.348
Medium: Short the EURUSD in between 1.3085 and 1.3095, SL 1.3105, targets 1.3070, 1.3050, 1.30.
Risky: Short the EURUSD in between 1.3065 and 1.3075 if these levels are reached during the first hours of European session, SL 1.3105, targets 1.3050, 1.30.
Paradigms:

The market will have a moderately bearish bias until further clarity emerges on the US Fiscal Cliff issue.
Analysis:

On Friday, our recommendation to trade the break out (risky trade) did not work. The head and shoulders pattern did not provide for an immediate acceleration to the upside as we were expecting. The choppy price action in EURUSD reflects a process of momentum saturation with a slight upward bias (see our math models). Today, this choppiness will most likely continue. And we would look for new long entry points if there are significant dips. The hourly trend line support could be a nice entry area at 1.2950 (see first chart). On the upside, the same trend line resistance mentioned on Friday should be key at around 1.3090, and we might short there. Also, the up trending channel on the 4H chart could block any further moves up at around 1.3070 but this is a more risky trade.

From a fundamental point of view, this week might provide the needed background for a stronger move up in EURUSD. However, the looming ECB interest rate decision should keep us careful and on Thursday, we would tighten our SL on our long positions.

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[Chifbaw]

Math models daily update
December 3, 2012
Our recommendation on Friday to short EURGBP had a too tight stop loss which did not allow us to collect the small correction that occurred. This night, during the Asian session, the euro pairs have again entered the area of high probabilities of reversal/saturation, especially EURUSD. At the current levels the EURUSD is very vulnerable, and further moves up will continue to meet strong resistance. The situation is similar in EURJPY. We therefore recommend taking the short side on these two pairs and shorting them on further advances up. The probabilities that they would fall back to their current levels (1.3035, 107.20) are very high. We would avoid EURAUD and EURGBP for now, but they can also be traded on the short side.

Recommendations:

Short EURUSD starting from 1.3050 and above for a return to 1.3050 and below, SL 1.3130.
Short EURJPY starting from 1o7.40 and above for a return to 107.40 and below, SL 108.40.
Propareos levels (90% probabilities of price action reversal or saturation in the coming 2 hours):

EURUSD: 1.3065-1.3080 on the upside, 1.2930-1.2945 on the downside (getting close).
AUDUSD: 1.0465-1.0480 on the upside, 1.0365-1.0380 on the downside (getting close).
GBPUSD: 1.6080-1.6095 on the upside, 1.5965-1.5980 on the downside.
USDJPY: 82.85-83.00 on the upside, 81.55-81.70 on the downside.
EURJPY: 108.20-108.35 on the upside, 104.90-105.05 on the downside.
USDCAD: 1.0035-1.0050 on the upside, 0.9825-0.9840

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[Chifbaw]

London open: analysis and trade signals
December 4, 2012

Recommendations:

Medium: Short the EURUSD at 1.3090-1.3100, SL 1.3125, targets 1.3070, 1.3050, 1.30.
Risky: Buy the EURUSD at 1.2970-1.2975, SL. 1.2950, targets 1.30, 1.3045, 1.3090, 1.3170, 1.335, 1.348
Paradigms:

The market will have a moderately bearish bias until further clarity emerges on the US Fiscal Cliff issue.
Analysis:

Yesterday, our recommendation to short the EURUSD at 1.3075 has worked (risky trade). The euro pairs continue to saturate while making new highs. Today, we expect further downside below 1.3050 to go closer to 1.30. If you still have shorts from yesterday make sure to tighten your SL or book some profits when the move down starts. It is highly unlikely that the EURUSD makes a new high today, but if this would happen, shorting would be recommended. We still see the area around 1.3090 as a key area of resistance. On the downside, the same hourly trend line support should help, but at 1.2975 it is more risky now than it was yesterday at 1.2950.

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[Chifbaw]

Math models daily update
December 4, 2012

Our recommendations to short EURUSD and EURJPY have worked, and both pairs are still displaying typical saturation characteristics (inability to consolidate newer highs). Although we still expect at least a small reversal to happen in both pairs (EURUSD back to 1.30, EURJPY to 106.80), it is possible that we only get saturation. Today, sentiment has normalized in most currency pairs except EURUSD and EURAUD. The probabilities of momentum reversal or saturation for EURUSD are still very high, which should bring us down today. We would very strongly recommend entering short if we make new highs, starting from our technical level at 1.3090. If you have shorts from yesterday, make sure to tighten your SL and start booking profits when the move below 1.3050 comes. Regarding EURAUD, we would still avoid trading this pair since the fate of the Australian dollar is so unclear at the moment.

Recommendations:

Short EURUSD starting from 1.3090 and above for a return to 1.309o, 1.3050 and below, SL 1.3130.
Propareos levels (90% probabilities of price action reversal or saturation in the coming 2 hours):

EURUSD: 1.3095-1.3110 on the upside, 1.2990-1.3005 on the downside.
AUDUSD: 1.0480-1.0495 on the upside, 1.0380-1.0395 on the downside.
GBPUSD: 1.6135-1.6150 on the upside, 1.6000-1.6015 on the downside.
USDJPY: 82.70-82.85 on the upside, 81.60-81.75 on the downside.
EURJPY: 107.85-108.00 on the upside, 106.60-106.75 on the downside.

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[Chifbaw]

London open: analysis and trade signals
December 5, 2012

Recommendations:

Risky: Short the EURUSD at 1.3135, SL 1.3150, targets 1.3120, 1.3090, 1.3050.
Paradigms:

The market will have a moderately bearish bias until further clarity emerges on the US Fiscal Cliff issue.
Analysis:

Yesterday, our recommendation to short the EURUSD in between 1.3090/1.3100 has not worked (correction to 1.3078 but not to 1.3070) although our stop loss was not touched. We would move our SL by 5 pip up to 1.3130 since we still believe that this trade is valid. The Asian session has showed another push in the EURJPY, taking with it the EURUSD up. Spanish bond yields have broken below 5.3% and have provided good support to this rally in EURUSD. This morning however, with the failure of the meeting on the banking union, coupled with the services PMIs that are typically lagging and therefore most probably below or equal to expectations, we expect a 50pip correction down back to at least 1.3070. In our view today there is only one side to take: the short side. Our mathematical models strongly favor this too. The only technical level that we see to enter short is the previous top at 1.3138. Shorting at the current levels ~1.3110 can be considered. On the downside, there should be solid support in the area of 1.30/1.3010 (horizontal resistance), but we doubt that we will see these levels today.

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[Chifbaw]

Math models daily update
December 5, 2012

Yesterday our recommendation to short everything above 1.3090 in EURUSD for a return below 1.3090 worked twice. This morning, the bullishness during the Asian session in the EURJPY currency pair has provided a push in EURUSD up to 1.3124. We still expect a return back to 1.3090, 1.3050 and possibly below, and we expect the EURUSD to close today below 1.31. Of course, there might be some new bullish fundamental development that would still push the EURUSD higher, like yesterday’s potential start for reverse CHF flows, but it is statistically unlikely. We would continue shorting further advances, and we would tighten our SL on our short positions on dips. Our Propareos levels yesterday afternoon worked perfectly. This morning probabilities strongly favor shorting EURUSD, possibly from the current levels. EURJPY can be shorted on further advances, for instance at the 2H-Propareos levels. GBPUSD can also be shorted on further advances.

Recommendations:

Short EURUSD starting from 1.3150 and above for a return to 1.315o, 1.31 and below, SL 1.3190.
Short EURJPY starting from 108.25 and above for a return to 108.25 and below, SL 108.50.
Short GBPUSD starting from 1.6190 and above for a return to 1.6190 and below, SL. 1.6250.
Propareos levels (90% probabilities of price action reversal or saturation in the coming 2 hours):

EURUSD: 1.3150-1.3165 on the upside, 1.3005-1.3020 on the downside.
AUDUSD: 1.0525-1.0540 on the upside, 1.0410-1.0425 on the downside.
GBPUSD: 1.6155-1.6170 on the upside, 1.6035-1.6050 on the downside.
USDJPY: 82.75-82.90 on the upside, 81.50-81.65 on the downside.
EURJPY: 108.25-108.45 on the upside, 105.50-105.70 on the downside (getting close).
USDCAD: 1.0035-1.0050 on the upside, 0.9815-0.9830 on the downside.

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[Chifbaw]

London open: analysis and trade signals
December 6, 2012

Recommendations: Provided there is no rate cut today:

Medium: Buy the EURUSD in between 1.30/1.3010, SL.1.2985, targets 1.3020, 1.3050, 1.3120, 1.318, 1.335, 1.3480.
Best: Buy the EURUSD in between 1.2945/1.2950, SL.1.2930, targets 1.2970, 1.30, 1.3050, 1.3120, 1.318, 1.335, 1.3480.
Paradigms:

The market will have a moderately bearish bias until further clarity emerges on the US Fiscal Cliff issue.
Analysis:

After two three days of saturation in its upward movement, reversal has occurred and the EURUSD has now fallen during the Asian session back towards 1.3050. It is unclear if there will be further downside below 1.3050, and we would close the bigger part of our short position here, leaving the smaller part for 1.30 and 1.2950. We remain bullish on EURUSD and also on EURJPY, and we still think that the targets on the upside are 1.3480 in EURUSD and 111.00 in EURJPY. We therefore should look for new entries to add to our long positions. There are three key support areas on the downside path:

Around 1.3030, we have the hourly trend line support (from bottoms at 1.2735, 1.2879) together with the 150-hour MA. In our view, this is a weak support area and entering long here is risky or requires setting a very distant stop loss, which is bad from risk reward point of view. We therefore don’t recommend it.
In between 1.30 and 1.3010, we have an area of horizontal resistance (previous highs, head and shoulder patter). Plus, 1.30 is round number, thus a psychological resistance. This is a better area of support in our view. There is good chance we at least get a 10-30 pips rebound from this area.
In between 1.2945-1.2950, we have the 61.8% Fibonacci retrace of the move up (from 1.266x to 1.312x). If reached today, this would be a great area for a new long entry, and should provide for a solid rebound and possible uptrend continuation.
All of these areas are only relevant if there is no rate cut today by the ECB. Given the improvement in investor sentiment particularly visible in the bond market, we think along with consensus that a rate cut today is rather unlikely. Should a surprise rate cut happen, then we would simply avoid trading.

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[Chifbaw]

Math models daily update
December 6, 2012

The situation continues to normalize through all currency pairs and there are no trade opportunities today based on our models.

Regarding the weekly very bullish sentiment in AUDJPY, we think that interesting developments are coming in this currency pair. From our previous writings, you know that the market is bullish on the USDJPY with as targets 83-84.20. This bullishness should stay at least till the Japanese election (16th December). On the other hand, the price action in AUDUSD has showed very bullish reaction to a 0.25% rate cut by the RBA. This night, very encouraging unemployment statistics were published. This could provide a constructive sentiment background for the AUDUSD to break to the upside from its weekly wedge (resistance in the 1.05x) area. From these remarks, one would think that further upside is guaranteed. However, there are also the following very important elements we should note:

On the weekly charts, AUDJPY has formed a doji candlestick last week, and is also forming a similar candlestick this week (see chart below).
On the monthly charts, the SP500 has formed last month a perfect doji, and the two months before if combined give us also a doji (see chart below).
These doji candlesticks suggest that a possible major reversal could be underway in the SP500 and the AUDJPY (risk barometer). Why is the SP500 showing sign of such a big indecision? This is clearly related to the fiscal cliff issue and a positive outcome on the budget negotiations should provide the necessary impulse to break above the range whereas a negative outcome could cause the SP500 to crumble to 1000-1100 (AUDUSD – 0.95, AUDJPY – 75). This fiscal cliff uncertainty is probably also withholding the AUDUSD from convincingly moving above 1.050. From our point of view, a correction in the SP500 would be natural and part of the investors are just looking for a good reason to start selling off their stocks. For now there are no clear trade opportunities since the fundamental event has not happened yet, but we expect to month of December to generate the initial upward or downward impulse.

Recommendations:

No trade recommendation.
Propareos levels (90% probabilities of price action reversal or saturation in the coming 2 hours):

EURUSD: 1.3130-1.3145 on the upside, 1.2995-1.3010 on the downside.
AUDUSD: 1.0545-1.0560 on the upside, 1.0380-1.0395 on the downside.
GBPUSD: 1.6165-1.6180 on the upside, 1.5945-1.5960 on the downside.
USDJPY: 82.85-83.00 on the upside, 81.65-81.80 on the downside.
EURJPY: 108.35-108.50 on the upside, 106.60-106.75 on the downside.
USDCAD: 1.0030-1.0045 on the upside, 0.9820-0.9835 on the downside.

If you have any comments, please go to http://www.chifbaw.com/en/forex-analysis/classical-analysis/
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[Chifbaw]

London open: analysis and trade signals
December 7, 2012

Recommendations:

Risky: Buy the EURUSD in between 1.2875/1.2890, SL 1.2770, targets 1.29, 1.2950, 1.30, 1.3050, 1.3120, 1.318, 1.335, 1.3480.
Medium: Buy the EURUSD in between 1.2800/1.2815, SL 1.2770, targets 1.29, 1.30, 1.3120, 1.318, 1.335, 1.3480.
Paradigms:

The market will have a moderately bearish bias until further clarity emerges on the US Fiscal Cliff issue.
Analysis:

Yesterday, the ECB signaled that it was getting closer to a rate cut and to possibly implementing negative rates on deposits should the economic situation continue to degrade. This caused the EURUSD to collapse to 1.2950. The 1.30 barrier was crossed easily thanks to a stop-loss acceleration. This morning the EURUSD has rebounded to 1.2970 but not higher. This in itself is bearish, and the price action suggests we are in consolidation mode before another sharp move down. Shorting from these levels (~1.2970) with a tight stop loss can be considered but we do not recommend it. The NFP data that should be released today is particularly unpredictable and could cause strong moves up or down, possibly whipsaws bigger than usual. The market is biased to the downside on the job numbers due to Sandy, which suggests a strong rally should emerge if the NFP number is above 150k. The NFP volatility makes this day a difficult and dangerous day to trade, and for most traders it is simply best to avoid trading altogether. Areas of support on the downside for EURUSD:

In between 1.2875 and 1.2890: this corresponds to the area where the EURUSD found support a few days ago. We also have in this area the 50% Fibonacci retrace as well of the impulse from 1.266x to 1.312x. But a negative NFP number (below zero!) could flush this area of support.
In between 1.2800 and 1.2815: this is where the trend line support comes and the very important 200 DMA is also nearby (1.2790). The 38.2% Fibonacci retrace is a little bit above at 1.283x. If we fall below 1.2790, then the bulls might simply capitulate and a retest of 1.2660 could occur.
Despite the gloomy outlook from the ECB, we still think that the economic data from the eurozone has more potential to surprise to the upside and that there are good chances that a bottom has been hit in this euro-recession. We maintain our bullish view on EURUSD.

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[daveM]

I am skeptical of being Bullish on the Euro at this time based on the two charts I will attach to this post

The Point and Figure chart has a bearish target of below 1.600 and the Ichimoku chart has the price in the Ichimoku cloud showing a ton of resistance to any upward move

 

[Chifbaw]

Dear DaveM,

You are certainly right that there are good reasons technically to be bearish EURUSD, the most important one in my view being the closure below the weekly resistance trend line (from the tops at 1.49 & 1.45). However, our bullish view is rather fundamental than technical. If the euro falls below the 200-DMA at 1.2790 then we will reconsider our bullish view.

 

[Chifbaw]

Math models daily update
December 11, 2012

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[Chifbaw]

Math models afternoon update
11th of December 2012

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[Chifbaw]

Math models daily update

12th of December 2012

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[Chifbaw]

Math models afternoon update

12th of December 2012

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[Chifbaw]

Math models daily update
13th of December 2012

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[Chifbaw]

Math models afternoon update

13th of December 2012

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[Chifbaw]

Math models daily update

14th of December 2012

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[Chifbaw]

Math models afternoon update

14th of December 2012

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