Sometimes when trading all you need is the perfect candle and one of my favourites is the hammer candle, as it both simple to identify and can provide one of the strongest reversal signals across all markets and time frames. As you can see from the chart, in simple terms, it represents a transition from the bears to the bulls with selling pressure being absorbed by the buyers who then take the price higher, as a result. To enter a trade wait until the following candle has moved above the open of the hammer and your stop loss should be to the underside of the low of the hammer.
With eurodollar now broken above the resistance at 1.4520 euro bulls will be looking to target 1.50 and the key will be the resistance area at 1.48 which extends up to 1.50 and beyond. In addition, of course, we need to consider the fundamental picture and with a Fed meeting next week coupled with the prospect of an end to QEase2 we could potentially see a major reversal for the dollar over the next few weeks, putting a dramatic end to the current bearish sentiment towards the greenback. So a lively time ahead with plenty of trading opportunities.
With European markets closed tomorrow and Monday for the Easter holidays expect to see very thin trading volumes and erratic price moves. If you plan to trade keep your stops very tight but if you plan to take a few days off – enjoy the break and chocolate!
Us dollar has a real problem, but euro also fair value 1.28. – 1.33 – I only see the Chinese Yuan as having deposit value long term
The 800lb gorilla in the room is the US Bond Market.
My feeling is that it is cracking.
The USD has not just been beaten up by the EURO this week past – the commodity currencies have flattened it (AUD and CAD … and even the little NZD is snapping at its ankles … up 10%!) not to mention the CHF continuing to “kill” it long-term.
The USD currency can not continue to sustain this kind of pressure, given that we have recently seen a challenge in the form of the Republicans refusing to allow supply bills to pass the congress, almost shutting down the government.
Further, there is $3 trillion in bank debt to be re-financed in the next 2 years. And the US Congress has set a ceiling of $14.4 trillion in deficit debt … a figure that will be reached in about 3 weeks from now.
With a hostile congress, and bankers unwilling or unable to finance the debt, and China out of the Bond markets, what will happen?
Yes – the Bond market is looking very precarious.
Hi Ivan – many thanks for your comments which are much appreciated – it’s certainly an interesting time and with Greece teetering on the brink and QE2 coming to an end its for the market to decide between the two ugly sisters! – regards Anna
Canadian Dollar also looking pretty sweet speaking of chocolat.
Also wonder if Russia may be a play in all this commodity push.
Happy Joyous Easter
Hi – many thanks for your comments which are always appreciated – Canadian continues to look strong against the dollar as we push well below parity and with gold and oil continuing higher, all helping to add further momentum – but with the FED program coming to an end and the possible problems with Greece, we have an interesting time ahead. As for Russia, they’ve been bailing out of the USD and into the euro over the last two years – wonder if we may see this reverse? – much will depend on the fortunes of the dollar and whether the BRICS are able to come up with a meaningful and sustainable alternative to the USD – unlikely and probably more playground politics – but you NEVER know! – a belated Happy Easter and good trading this week – regards Anna