By Alexandre Deslongchamps April 23 (Bloomberg) -- Canadian retail sales unexpectedly fell for the first time in five months in February on cars and clothing, indicating consumer spending may not be enough to prevent an economic slowdown. Sales dropped 0.7 percent to C$35.5 billion ($35.2 billion) after gaining a revised 1.4 percent the month before, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News predicted a 0.1 percent increase, the median of 24 responses, after January's initially reported 1.5 percent gain. The Bank of Canada yesterday lowered its benchmark rate by half a point to 3 percent to revive an economy that's growing at its slowest pace in 16 years, and signaled more easing may be needed. The U.S. economy, where about 75 percent of Canada's exports are sent, may be experiencing a ``more protracted'' slowdown than anticipated, the Bank of Canada said yesterday.
GBP/CHF has to be due for a significant pullback soon. the UK GDP Report will be released tomorrow at 4:30 am EDT and often provides at least 50 pips of movement. The GBP/USD might climb a bit possibly before news... or after news rise a bit. Actually, buying it just below 9700 would have been a good bet for a large swing up, taking some profit at about 50 pips and leaving the rest in case a large swing up to above 9900 happens. The pattern is ambiguos looking at the 3 hour 40 day chart as a large abc up could happen taking the GBP much higher, or the ABC up is done and it won't go much higher than 9741 before dropping more. Better to enter at points where it doens't matter if one is wrong re the larger picture. Buying that was below 9700 and selling, I souldn't unless it broke down towards 9600
Back form short break for the Week Preview! Cable Pretty erratic movement on this one, probably a reflex of better than expected readings over the past two weeks on US manufacturing activity (Trade of physical goods and exportable services) & the inception of a narrow range scenario on the E/U daily charts suggesting, since it came right after the last narrow range, that we could see more than just a slight correction on daily charts, specialy taking under consideration that both weekly and to an even greater extent, monthly charts portend an overbought scenario that could push prices lower when compared with previous occasions (historic correlation). Closed a short position on about a 100 pip profit (though target was about 200 pips lower). E/U (Long) Entry: 1.5545 SL: daily price close bellow bollinger bands (but significantly below) TP: this is a very short term play devised at getting some money from prices bouncing off of daily bollinger bands, plus a potential bullish slow stochastics break. This type of system is very effective in terms of winners/losers ratio but very hard to handle in terms of RRR. Even so, I like this system it has yielded nicely during a recent small test on 5 pairs, but for only the past year and exclusively daily charts. U/Chf (short) Entry: 1.0150 (entered during my vacation) SL: any daily close above the high of the past 3 sessions will probably make me stray away from this bet TP: BATSL, my best alternative to a spectacular loss: stochastic may be on the brink of providing a bearish signal on daily charts and if it does so will try get out at marginal loss or even a small profit. If all this forecasting happens not to be true, still got BATSL to back it up. Here is why shouldn't trade when we take some days off to... enjoy and have fun. entered this trade based on one chart (daily) and one idea about it, and just let it run for two days (without cheking it for once, up to yesterday!). S&P / Carry Trade First resistance milestone set at the start of last week has been crossed (100 day SMA). But my guessing is on price action around the second resistance lvl (100-Week SMA), also considering the 200-day SMA (third lvl of resistance for S&P), but more "enticed" by the former, up to Fed decision & statement and only then expect to see a break (depending on what we get and follow up reaction). We might see some further rate cutting but there is not much room left. The statement will probably be more "tradable" than the decision itself: 1- Any stronger return of inflation fears to the statement (which is extremely likely since all inflation readings are coming in way off of expectations, around the Globe) can push the dollar up and shun many part-time currency traders or full-time stock traders, out of carry positions. 2- Some sound Fed insight into economy picking up predictions might lay the ground for the market's tone in the next month or even months. 3- The "dollar weakness" debacle. It could well be a statement that makes a difference on this issue since it's probably one of the most commented topics for pegged currency countries'/ strong currency countries' officials. 4- What about savings? Bernanke had (from my point of view) a strong and demanding speech where it was argued (rightly to me) that savings rates in the US are worryingly low. This will probably not yield anything in the short run, but could pave the way for more conscious and involved household role in the economy. Reserves (country) and savings (consumers) are buffers that would help any downturn or contingency. If both Government (Budget deficit and National debt) or consumers (savings and to a much lesser extent, assets), have no room left we would need fresh credit to revive the economy (and this won't trick most of us traders in the long-run, for sure (besides, with enough to counter recessions we could get longer and sounder bull markets; and frankly speaking it is much easier to make money on bull rides rather than bearish slides, regarding stocks and consequently significantly correlated carry trade pairs) Reports Some nice reports for this week (in total contrast to last week). GDP, ISM and PCE from the States. Still some numbers coming out of EU on inflation and confidence indicators. GB is quite calm for this week with special focus on M4 report. Also got retail sales for Japan and Australia. Canada has inflation and GDP numbers looming our way. For this week, since we're testing possible new price action on E/U & carrytrade (stocks) and with such a "flood" of fundamental reports, it semms to be faring for a week of news/events-driven markets. Commodities Even more an influencing fact for both stocks and currencies, since oil prices have broken the range from past weeks and other commodities remain strong. Credit Credit crunchs should take longer than asset price bubbles to correct. The reasoning is that prices can be corected in relatively short-time (most of the time), whereas credit crunches are mostly based on default risk, and that takes longer because we're talking about trust between parties involved in any deal, trust in future economic prospects and in the respective business... Just don't think it should be a swift stroll from "total distrust" to "reasonable trust". Wishes for a week of opportunities!
Good call on the EUR/USD, I missed it. I Wonder if it has hit it's target and will drop once more? Had I entered I'd have taken some profit at above 5600 and left the rest to see. Same on GBP at 9705 area, a good bouncepoint after long drop. USD/CAD is wedging on 1 day charts and I expect a larger break up after it settles a bit lower than current level of 0135. As per usual the pattern is tricky on U/CAD. Buying from about 0075 may be good although it will have to be watched as it might morph into a trend up before drop. Worth putting price alarms on I think. One below current level and one above so not to miss breakout.
On 1 day charts, USD/CHF is doing an ABC up not finished although it has retraced a bit over the last few days. It will work higher but might drop once more first. The ones to watch were and are the EUR/CHF and GBP/CHF. If G/CHF reaches near 0300 it should bounce up nicely. Will have to monitor the pattern as it unfolds to better pinpoint a large potential swing up as it works down more. I'm not prepared to estimate how high it will bounce before turnaround today.
So, G/CHF did reach near 0300 and "bounced" 400 pips, retraced significantly before reaching higher... I missed the runup but caught some of the retracement. USD/CAD has worked higher as of this morning finally, leaving me with suspicions that it will travel at least past 0300 so buying on the dip if it's extreme enough is fairly safe. Once again I was away from keyboard when it bottomed as expected. EUR/USD is nearing a bottom again if not already at 5440 although I'll wait for 5410 at least before buying or if it doesn't reach there soon, watching for a confirmed trend reversal up for a B up of probable larger ABC down.
The NFP data was quite USD positive, and caused good movement, I missed the bottom of the ABC of the USD/CAD down at 0150 but caught the pullback after the initial spike up and bought at 0172 exiting at 0224. Will watch for re-entry up to 0300 after a drop, hoping I don't miss further climbing. I just sold the USD/CHF at 0599 and just scalped some and leave the rest to see if it retraces to 0510 area.
USD/CAD Elliot Wave Analysis. I think the probable picture is that of the black 12345 being 1 of a larger 12345 up that will carry the U/CAD past 0300 eventually. Or the black 5 could extend in its own smaller 5 wave set rather than morphing into something larger in terms of counting scale. Whatever the case, a top above 0300 will probably occur by next week.
The pattern on the USD/CAD seems like it's finishing an ABC down after last weeks high of 0240. The high completed a 5 wave set as seen in previous posts chart and as the ABC down completes a new 5 wave set up should form. An attempt to catch it at 0105 as a buy for highs of 0250-0300 is a viable swing option I think. If overall analysis is wrong, it should bounce enough there to allow stops to move to 0 or positive. Taking some off the table at 35-40 pips and leaving a position in for the full proposed swing will be the strategy used. AUD/USD has climbed nicely and appears basically unfinished so buying opportunity on dips will be worth watching for. It's currently at 9455 and may extend to about 9475ish before some significant retracement.
Is it Looming? (Stocks & Carry) Fundamental "Catalyst". For the first down slide we had the oportunity to witness some big private equity deals that did not go through and all of a suden everyone started to be wary of future growth prospects. Along came panic that resulted in more demanding requirements for collateral to back loans and higher prices for money (interest rates). Eventually the most sensitive (or riskier) parts of debt collapsed. Economic and psychological forces were yet to provide another (and also the most worrying) "catalyst" for further bear sentiment, among speculators: Bear Stearns debacle. FED surpassed all of (my) expectations with respect to the extent of the effort to hinder any spectacular fall-out of the US economy. Starting to get the feeling that we're done with common credit (oposed to consumer credit: credit card and retailer monthly payment schemes) - as catalyst for stock trending. Own point of view is focused mostly on two counts: Consumer strength (Retail Sales) & Inflation. Consumer is harder to gauge because, eventhough we may have numbers on the amount of savings, could hardly predict what a whole country would do with it. So retail sales is a fairly reliable metric to assert this force's influence. Inflation. Think commodities will only stop when stocks indicate that demand will shrink, or if prices get out of hand it might happen to be commodities that will ultimately come on to scene as the next "catalyst". Technicals Technically we have plenty of resistance points being tested, even tougher ones (weekly and monthly charts). But the two points looking for as ultimate resistance are 200-day SMA and 20-month SMA. Expect monthly price action to bounce up and down, below 20-month SMA. Loonie It is so hard to play this one right now, in the coming weeks. Even with oil prices steadily moving up, the correlation appears to be fading, probably because to some extent the commodities effect is being countered by the lossening of monetary policy in Canada. It looks like set for continuing range bound price movement in weekly charts. Aussie I absolutely concur with your views. It doesn't look like a strong strong trend. Besides commodities strength, the rate oulook for Australia looks favorable. E/U (long) Maybe today could close position with at least 50 pip profit. But this trade shows how hard it is to play bollinger bands narrow range, in terms of RRR. E/Aud (short) Almost 700 pips of profit and have a trailing stop-loss at 500 pip profit more or less. U/Chf (short) This one is looking nasty! Took a day right when it jumped to the 1.0500 lvl. But expect to see some bearish movement in stocks that could bring prices down and make the exit less harsh.