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TECHNICAL ANALYSIS


Currency Wars

05/03/11 09:51:35 AM
by Austin Passamonte

Here's a midterm outlook for the Australian dollar and Swiss franc futures.

Security:   6A, 6S
Position:   N/A

Global currency wars are the dogs that have wagged all other financial market tails. Gold, silver, crude oil, stock markets, bond markets, commodity markets ... all are being buffeted by which currency is higher or lower.

FIGURE 1: 6A, DAILY
Graphic provided by: NinjaTrader.
 
Australian dollar (6A) futures are a quasiplay on the gold standard. This symbol is widely regarded as a commodity currency due to gold production. We can see in the daily chart view where price traded sideways for months on end before the recent mercurial rise began. See Figure 1.

A general pennant formation broke upside from the 1.05 zone to current high levels. Measuring the inside of this pattern and taking that distance to equal projection higher off the breakout point gives a measured move to where 6A futures might pause or stall. Indeed, they have a first attempt to push higher above that measured mark.

FIGURE 2: 6S, DAILY
Graphic provided by: NinjaTrader.
 
A similar view of the Swiss franc (6S) futures shows a similar sideways trend breaking upward in 1-2-3 fashion (Figure 2). Measuring Fibonacci projections off the most recent base shows price action stalling at each price level. Those magnetic zones are used by institutional traders as points of reference to manage = exit trade positions.

With US dollar (DXY) futures pressing some historical lows while most other major currency markets press congestive measured highs, we must remain prepared for markets to pull back and/or correct themselves soon. Now that the entire trading world is sure that the DXY can do nothing but plunge straight down into the abyss, it is prime time for a v-turn reversal to prove that majority wrong. Time will tell as it always does, and we'll watch the critical zones on each chart like we always do.



Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Company: CoiledMarkets.com
Address: PO Box 633
Naples, NY 14512
Website: coiledmarkets.com/blog
E-mail address: austinp44@yahoo.com

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