The Flying L Trader – August the 5th

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US NFP only added 162K, less than forecast, but the rate did fall to 7.4%, so mixed bag really and the markets are confused by it. The US$ got a little weaker but the stock market rallied somewhat. I see it as no end to QE3 this year, not even a slowdown.

 

Stocks will continue to rally throughout August barring any shock news, VIX is back under 12 now. Earnings season is past us and 73% of US stocks hit target or exceeded forecasts. So it is bull time for stocks now, with a little pullback in October before the seasonal Christmas rally in November and December.

 

DATA HIGHLIGHTS AHEAD (times are in AEST) – 1130am AU Retail Sales. 630pmm UK Services PMI. 12am US Non-Manufacturing PMI.

 

AUDUSD – Aussie is under pressure and the seasonality of August is upon us. August as some of you know is negative month for our dollar. Has been for the last 25 years. This year will be little different.

Resistance: 9000/9138/9300
Support: 8845/8807/8672

EURUSD – A lower low but closed on highs. Still it is a bit messy and not really clear for an entry or direction from here. I see it squeezing in b/w 1.33 and 1.3150 for a while.
Resistance: 13400/13700/14260
Support: 13206/13163/13040
GBPUSD – An awesome engulfing bullish bar and closed above resistance. However, it is right in the middle of the recent range of 1.58/1.48 and so it could go either way from here. I am leaning to the upside but will wait for price action to confirm that.
Resistance: 15270/15405/15608
Support: 15080/15000/14800

NZDUSD – Got absolutely smoked on the open thanks to China putting a ban on milk powder from the land of the long white cloud. The kiwi’s must export a mountain of powder to warrant such a big figure move. It has bounced now and is trying to claw back some of the 100pips.

Resistance: 7850/7947/8050
Support: 7710/7630/7450

USDCAD – The Loonie must be getting super weak as the US$ is trending down. Being a commodity currency like the Aussie I see the Loonie continue to weaken though.
Resistance: 10420/10597/10677
Support: 10341/10225/10100

USDJPY – Went and tested 100 before falling off. As I mentioned a week or so ago, the ¥ will just faff about (yes that is a technical term J) between 95 and 100 for some time. I think eventually it will get through 100 and even test 120, but that will require Ben putting brakes on QE3 first.
Resistance: 9980/101.20/102.53
Support: 9760/9690/9497

GOLD – Big turnaround and low test bar. One would normally get bullish on that sort of bar but I am not so certain of this. Not really interested until it breaks through 1355 and am looking to sell most rallies or look for shorting opportunities.
Resistance: 1,307/1,354/1,425/1,489/
Support: 1,266/1,226/1,160

 

David Long/ Proprietary Trading Manager

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