Midweek View: The Catalyst With The Next Move


I discussed how rough it was to trade the FX market past 2 weeks, which was also echoed by other traders.  It is normal for markets to be in such conditions, and it is normal for breakouts to occur when they get out of a such condition. A catalyst was needed.

Would it be Egypt (as expected by some traders Friday)?
Would it be economic figures/central bank announcements?

It is looking like the later & the turmoil in Egypt has had little negative effect in the FX market, besides the turmoil was not as bad as expected, after the weekend.

I figured Friday was the start of breaking out of the rough conditions, as risk was swiftly taken off the table, and expected it to continue.  Wrong!

US Dollar Index – I noted the chart was bearish, but individual pairs said a different story.  It is currently below the 61.8 fib level I pointed out previously.

Catalyst: US manufacturing rose more then expected.

US Dollar Index

US Dollar Index

EURUSD – This pair had to get above the 61.8 fib of the 1.4284 high/1.2869 low, which also a support/resistance level, which has been accomplished. Next level in sight is 1.3950.

Catalyst: Germany unemployment the lowest since 1992.

Euro / US Dollar

Euro / US Dollar

GBPUSD – This pair is off to the races as it broke out of a symmetrical triangle that has been formed since November 2010.  It was also in consolidation for 2 weeks below the upper trendline.  The consolidation could break above was noted on the previous entry, although it was not necessarily endorsed. Next level is 1.6770 resistance.

Catalyst: Bank of England is expected to raise interest rates 3 times this year, to curb inflation, per National Institute of Economic & Social Research.

British Pound / US Dollar

British Pound / US Dollar

AUDUSD – The big mover in the waiting.  The pair broke out of it’s symmetrical triangle. Watch out though, it is approaching highs though.

Catalyst: The RBA did not change interest rates & provided a robust outlook.

Australian Dollar / US Dollar

Australian Dollar / US Dollar

Note of the story, as I repeat time after time on Stocktwits;

  1. Confirmation is needed on moves, as I emphasized we needed on my previous entry.
  2. Trade what you see. Trade with the price action.  Assessment is one thing, price action is another.
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About Clair Wyant

I am a foreign exchange & stock/ETF trader in Boston, MA. This blog will be dedicated to my out look in the economy, the financial markets, with an emphasis in foreign exchange. When I am not working, I enjoy watching sports, participating in recreational sports leagues, travel & spend good times with my friends.
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