With Central Banks Out of the Way, A Look at Charts

AUDUSD Daily 070814

Good Morning, Friends. The Bank of England and the European Central Bank left their respective benchmark interest rates unchanged, as was widely expected. However, Australia released July unemployment figures that have market participants recalculating the outlook for Reserve Bank policy. An unemployment rate of 6% was expected, with the number coming in at 6.4%, a pretty big miss. In response to the surprise, AUD/USD is having a tough session. The pair has been lower in recent months, and the market may now anticipate lower rather than steady interest rates. AUD/USD could still come higher in response to stronger than expected Chinese data, but that’s hardly a sure bet. A short on a move back above 0.9350 or so looks appropriate to me.

EURGBP Daily 070814

EUR/GBP came as high as 0.7985 last week, and that proved to be a decent level to sell. It’s meandering here, to use the technical term; I’d be more confident of additional downside on a break back through yesterday’s 0.7915 low. There is a wild card on the horizon here; Scotland is holding a referendum on independence on September 18. The current indications are that the vote will be “No”, which should be good for a nice relief rally for Sterling. That would bring EUR/GBP lower. In the event of a “Yes”, however, people will be selling Pounds with their feet as well as both hands.

EURUSD Daily 070814

Speaking of the Euro, EUR/USD has comes off the recent lows, but not far enough as yet to be very interesting. It continues to look to be a tempting sale, but I’d really like to see it about a big figure higher, say 1.3475, before taking a short position if I wasn’t already involved.

USDJPY Daily 070814

USD/JPY looks more intriguing to me, since today’s vertical bar has a good chance at becoming an inside vertical bar. Among the many tactics I learned by going through Todd Mitchell’s course, trading inside vertical bars has been one of the most valuable, and quite reliable (although as with most things, not infallible). Taking a position following a break of the bar’s range, which of course involves waiting until the following session, is a high probability trade, using the opposite end of the bar as the reference point for a stop. For example, if the current session were to end right now, I would be looking to take a long USD/JPY trade on a move above today’s high at 102.45, a short on a push below today’s low at 102.03. In practice, I would likely wait for a break of 102 before getting involved on the downside. Ordinarily, I’m happier going in the direction of the trend, but these can also work as countertrend trades. In any case, USD/JPY isn’t strongly directional at present.

That’s it for now; please feel free to e-mail if I can help, and as always, no matter what you’re trading, be lucky!