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Early Thoughts on the Markets:
U.S. Dollar looks strong on the opening. The focus will be on the Euro and how traders react to the arrest of the IMF chief this week-end in New York.
The AUD USD changed its trend to down last week on the move through 1.0536. An uptrending Gann angle at 1.0544 today stopped the decline. This is the key angle controlling the direction of the market. A failure to hold this angle could trigger the start of the break to the major 50% level at 1.3057.
The NZD USD is still in an uptrend on the daily chart. A trade through .7814 will turn the main trend to down. The close under the downtrending Gann angle at .7921 and the uptrending Gann angle at .7954 is a sign of weakness.
The main range on the daily chart for the Euro is 1.3428 to 1.4940. This creates a retracement zone at 1.4184 to 1.4006. Although the main trend turned down on the daily chart when the market crossed the swing bottom at 1.4157, oversold conditions and bottom-pickers may try to find an excuse to buy it inside this retracement zone.
No one is certain what the arrest of the IMF chief will mean to the new Greek bailout package, but it can’t be good. Although there may be downside pressure early, don’t be caught in a bear trap inside the retracement zone.
The USD CHF is technically still in a downtrend. A trade through .9014 will change the trend to up but not necessarily trigger a strong breakout. With this type of pattern, let the trend change to up then look to enter the long side on a 50% retracement of the first leg up from the bottom. This first leg up is usually short-covering. Fresh buying tends to come in following a secondary retracement and only when bullish traders have something to lean on in case they are wrong.
The GBP USD changed its daily trend to down last week on the trade through 1.6270. The weekly chart indicates that 1.6045 is the next likely downside target.
The USD CAD is rangebound between .9444 and .9712. Late last week buying dried up at .9708 as the market approached the upper boundary. On the downside, .9578 is likely to act as a major pivot price.
The USD JPY is still trying to shed the key 50% retracement level at 80.94. Building a base above this level could trigger a short-covering rally. Is this the week that the Dollar/Yen accelerates to 82.54?
Look for more updates throughout the day.
