Euro rallies while AUD stalls while weekly level still holding up

Over the past few weeks, the U.S. Dollar has been selling off against the Euro, Australian Dollar, Canadian Dollar, and New Zealand Dollar. Aside from the Canadian Dollar, I have been monitoring the key weekly level watching the break-out confirmation at this point.

Last week’s trading remains a bit rough given that the EURUSD, AUDUSD, and NZDUSD did not respect the correlation strength as well as I would’ve liked it.

daily cor

Courtesy of Mataf.net, I was able to grab the daily correlation figures for these three pairs. As you can see, they remain rather strong. In terms of trade ideas, I am definitely still looking to long all three pairs if the setups allow.

Similarly, last week’s commitment of traders report continued to confirm increases in net non-commercial longs for the Australian Dollar and Canadian Dollar. We also see a slight drop in the Euro and New Zealand Dollar long positions, but that should not be too big of a concern.

Full COT graphs can be found over on Oanda’s tools: Forex COT

To begin with, I held the EURUSD pair through most of last week and also over the weekend. This remains a long term play given by the lack of retracement on the weekly chart.

This lack of retracement continues to confirm that this is indeed a strong breakout and will continue to rally onwards. My stop loss will be upwards adjusted accordingly. For the past month, I’ve been scaling in and out of this pair when I observed volume dying off. I plan on continue doing so especially given the negative swap charges on this pair.

When it comes to the AUDUSD pair as displayed above, there is one additional weekly level to be tested. This pair has largely been in a range the last week, but it failed to sell off even on the poor CPI figure from last week.

audusd1

Similarly, I would be looking to enter a long position on market open with a stop loss placed in the hourly levels around the 0.7923 price area. For now, we’re not seeing much movement despite pretty normal tick volume levels. There is a lot more market indecision than I would’ve liked.

Similarly, GBPUSD is also in a weekly uptrend breaking above the latest daily level. I haven’t actively traded this pair given the choppy the nature it tends to exerts. This is much more noticeable on the 4-hour or even hourly time-frame. Measuring pip movements, it doesn’t have the same appeal as the EURUSD and AUDUSD counter-parts so I have largely stayed out of trading this pair.

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