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Update: Feb 19, 2013 13:48

We are adding 2 new trades on USDCAD to the Trades Section, with WEEKLY & MONTHLY charts as well as FUNDAMENTAL rationale for the trade

Late last month we brought back CAD into the Premium Insights with the intention of shorting it at a tim when several pundits favoured the loonie over its commodity counterpart down under – AUD.

As USDCAD breaks above 1.01 today, it is charting a path towards the all important 200-week moving average - a level tested (and failed) only twice since 2009.

Will this time be different? The oscillators below suggest sufficient momentum towards 1.0220-30. We will re-visit by month-end to assess the potential for a triple top (neat 1.04)

Recent downgrades of Canadian banks, rare losses in monthly employment figures & swelling household debt are just some of the factors likely to force the Bank of Canada to drop its “tough talk” on higher interest rates, making the CAD one of the few G10 currencies with greater ground for the downside than on the upside. The BoC was long associated with its governor Mark Carney, whose tough currency stance resisted calls of easy monetary policy from exporters complaining of excessive CAD appreciation. Carney's departure from the BoC to the BoE this summer may coincide with the likelihood of scaled down asset purchases from the Fed, which could further support USDCAD back towards 1.0400s. EURCAD remains on its way to our prelim target of 1.38 issued late Jan. CAD, alongside GBP, remain our preferred currency to fall out of favour at the next risk-off phase.

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Premium Sample - Usdcad Feb 19 2013 (Chart 1)

Update: Feb 15, 2013 15:25

2 charts on gold have been added, along 2 new trades on gold, 2 new trades on silver and 1 new trade on oil in addition to the existing long in oil.

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New Premium Insights ahead of this weekend's G20 meeting are issued. New trades on gold will be added on Friday, while the existing silver and oil trades remain in progress until new trades are to be added on Friday.

Latest Trades

	EURUSD
As we enter the volatile G20 meeting, EURUSD is expected to be among the least volatile of currency pairs because most attention is on JPY pairs. The more statement we hear about the importance of allowing currencies to be subject to supply and demand, the more likely we could see euro pushing higher – unless French politicians issue a fresh dosage of verbal concern. We're keeping close watch on 2 trendlines of support; the July trendline (support at 1.3205) and; the November trendline (support at 1.3340). The latter also coincides with the 100-WMA. We will issue a new long trade, placed sufficiently lower in order to absorb any post-G20 volatility, whose stop stands below 1.32. Euro bulls must accept the reality that February will likely be a down month after 6 straight monthly gains. While 1.3280-1.3270 may not be ruled out, we are not ready to issue shorts as they are unlikely to fit into out reward-risk matrix of demanding 100 pips, with a mere 50 pips in stops, which is insufficient, considering the anticipated volatility of the coming 3-4 trading days.
			ENTRY	LIMIT	STOP	STATUS
	14 Feb LONG	EURUSD	1.3300 - 1.3330	1.3400 - 1.3430	1.3260	Hit All Targets
	08 Feb LONG	EURUSD	1.3370 - 1.3400	1.3490 - 1.3500	1.3310	Hit All Targets
	08 Feb LONG	EURUSD	1.3380 - 1.3420	1.3490 - 1.3530	1.3330	Stopped Out
	14 Feb LONG	EURUSD	1.3250 - 1.3290	1.3360 - 1.3400	1.3200	Awaiting Fill

	USDJPY
USDJPY is the “pair of the moment” as we head into the G20. Part of the reason that G7 officials may have no opposition to Japan's weakening currency is that they themselves are carrying out similar monetary policies. Another reason is that a weakening yen is less problematic to G7 partners than it is to Japan's emerging market trading partners, who are members of the G20. We expect the uptrend in yen crosses to prevail after possible verbal landmines. After posting 3 consecutive daily losses, USDJPY is now impacting weekly momentum, which increases the probability of seeing a print below 93.00. But the bottom line continues to be in favour of going long USDJPY as Tokyo's “weak yen” is entrenched in a policy sea change and is unlikely to be swayed by a few emerging market concerns. One of the 1 longs will have a stop below the 92.00 support.
			ENTRY	LIMIT	STOP	STATUS
	14 Feb Long	USDJPY	92.50 - 92.90	93.70 - 94.10	91.90	Hit All Targets
	14 Feb Long	USDJPY	92.10 - 92.50	93.10 - 94.50	91.60	Hit All Targets
	08 Feb Short	USDJPY	92.20 - 92.40	91.05 - 91.25	93.00	Stopped Out
	08 Feb Short	USDJPY	92.30 - 92.60	91.30 - 91.60	93.10	Stopped Out

	GBPUSD
The change in GBP bias issued As the crucial 4-year trendline is broken, this leaves us little choice but to issue fresh shorts targeting the 1.5270-1.5300 base. We had warned earlier this week about the negative implications of prolonged dovishness from BoE governor King. The BoE has now all but said that it wants a weak GBP. With neither fiscal nor monetary policies producing results in relieving the nation from recession, currency policy may have to be the way. And with upcoming BoE governor Carney issuing the green light for further easing, our stance on GBP steps up its bearishness. In order not to be caught out corrective rebounds, we shall issue separately placed shots with widespread stops. 1.5850-80 appears to be the emerging resistance (confluence between 55 and 200 WMAs).
			ENTRY	LIMIT	STOP	STATUS
	14 Feb SHORT	GBPUSD	1.5500 - 1.5540	1.5310 - 1.5350	1.5600	Hit All Targets
	14 Feb SHORT	GBPUSD	1.5540 - 1.5580	1.5340 - 1.5380	1.5680	Hit All Targets
	08 Feb LONG	GBPUSD	1.5720 - 1.5740	1.5810 - 1.5830	1.5680	Hit All Targets
	08 Feb LONG	GBPUSD	1.5770 - 1.5795	1.5850 - 1.5875	1.5730	Stopped Out

	AUDUSD
We are sticking with the existing short (targeting final limit of 1.0250), while awaiting the fill on the other short (whose stop is at 1.0450right below the 55 DMA). Unlike most of the commentary being circulated on the Aussie, we are not yet convinced with the notion that Aussie has broken down technically. Meanwhile, dailies face trendline resistance at 1.0390s, a break of which is seen capped at 1.0450s for now.
			ENTRY	LIMIT	STOP	STATUS
	08 Feb Short	AUDUSD	1.0350 - 1.0360	1.0250 - 1.0270	1.0410	In Progress
	08 Feb Short	AUDUSD	1.0380 - 1.0400	1.0280 - 1.0300	1.0450	Awaiting Fill

	USDCAD
As per the current Feb 19 note above, USDCAD short term technicals ride alongside the 4-hour trendline from Feb 15, with support at 1.0100, 1.0090 from 1.0098 on the existing trade. We're entering conservatively in anticipation of a modest pullback following the 3-consecutive daily gains. Rare bullish stochastic convergence along the 3 time frames (daily, weekly and monthly) supports the rationale for our 2 longs. FUNDAMENTAL RATIONALE is cited above.
			ENTRY	LIMIT	STOP	STATUS
	19 Feb LONG	USDCAD	1.0080 - 1.0120	1.0180 - 1.0220	1.0030	New
	19 Feb LONG	USDCAD	1.0090 - 1.0130	1.0190 - 1.0230	1.0040	In Progress
	04 Feb LONG	USDCAD	0.9950 - 0.9990	1.0050 - 1.0090	0.9910	Hit All Targets
	LIMIT lowered to 1.0090 from 1.0098

	EURJPY
The reason we are not cancelling the yet unfilled long is out of precaution from any JPY rally occurring during on Friday's G20 meeting. With comments from Eurozone officials likely to influence the euro and the rest of the world sharing their opinion on Japan, EURJPY will be a key pair in focus. Sticking with the unfilled trade implies the stop of 122.40 will hold. The level is currently below the trendline support extending from the Jan 9 low. Key intermediate support stands at 123.40. We are adding one more, trade, with a more aggressive limit horizon to and lower stop.
			ENTRY	LIMIT	STOP	STATUS
	14 Feb LONG	EURJPY	123.20 - 123.55	125.40 - 125.80	122.10	Hit All Targets
	04 Feb LONG	EURJPY	123.70 - 124.00	124.90 - 125.20	123.10	Hit All Targets
	08 Feb SHORT	EURJPY	123.40 - 123.60	122.35 - 122.55	124.20	Stopped Out
	08 Feb SHORT	EURJPY	123.50 - 123.80	122.50 - 122.80	124.35	Stopped Out
	04 Feb LONG	EURJPY	123.00 - 123.30	124.20 - 124.50	122.40	Awaiting Fill

	AUDJPY
Top down analysis suggests prolonged bullishness in the long term but not before the consolidation of the past 2 weeks continues between 95.00 and 97.30. Our lack of conviction with near term outlook for AUDUSD and USDPY suggests a cloudy picture for AUDJPY. 98-100 remains a viable target for early Q2, but a downward drift towards 95.30-50 is not ruled out in the short term. We will issue an entry with a stop below the 95.00 base.
			ENTRY	LIMIT	STOP	STATUS
	14 Feb Long	AUDJPY	95.30 - 95.80	96.30 - 96.80	94.90	Hit All Targets
	04 Feb Long	AUDJPY	95.20 - 95.60	96.20 - 96.60	94.70	Hit All Targets
	04 Feb Long	AUDJPY	95.80 - 96.20	96.60 - 97.00	95.40	Hit All Targets
	14 Feb Long	AUDJPY	94.60 - 95.10	95.60 - 96.10	94.10	Awaiting Fill

	CADJPY
We are cancelling the unfilled trade at 91.60 and adding a new new one at a slightly higher threshold of 91.90. Despite a deteriorating daily chart, the weekly trendline support appears below the stop of our unfilled trade, which was intended to be filled at 91.60 once JPY rebound continues. We require a break below the 91.90 support for our fill to be executed. Weekly trendline from mid November low stands at 90.80.
			ENTRY	LIMIT	STOP	STATUS
	14 Feb Long	CADJPY	92.00 - 92.40	93.00 - 93.40	91.60	Hit All Targets
	08 Feb LONG	CADJPY	91.20 - 91.70	92.40 - 92.90	90.80	Canceled

	EURGBP
What appeared to have been a weekly engulfing candle was invalidated by a sharp weekly candle courtesy of sterling's broad damage. Rather than chasing the upside, we will issue a long with a stop below the 0.8540. Subsequent support stands at the 100-WMA of 0.8380. Monthlies show the 4 ½ year channel has yet to be broken and only a February close above 0.8630-40 would suggest a breakout.
			ENTRY	LIMIT	STOP	STATUS
	14 Feb LONG	EURGBP	0.8570 - 0.8600	0.8650 - 0.8680	0.8530	Hit All Targets
	29 Jan LONG	EURGBP	0.8490 - 0.8520	0.8590 - 0.8630	0.8440	Hit All Targets

	GOLD
Gold will close the week below 100-WMA for the first time since November 2008. The importance of this average owes to its statistical effectiveness in acting as a vital support/resistance in FX & commodities, but more importantly, the 100-WMA acted as a trendline since June of last year. While the charts above show a target of 1540, we will aim for a preliminary target of 1580. The extent of bearishness is supported by the deteriorating stochastics on the monthly chart, which have proven to be negative in the past when similar patterns emerged. Gold vs EUR is also deteriorating, hitting 9-month lows at 1209
			ENTRY	LIMIT	STOP	STATUS
	15 Feb SHORT	GOLD	1610 - 1630	1580 - 1600	1650	Hit All Targets
	11 Feb LONG	GOLD	1650 - 1655	1670 - 1675	1640	Stopped Out
	15 Feb SHORT	GOLD	1620 - 1650	1585 - 1620	1670	Awaiting Fill
	11 Feb SHORT	GOLD	1660 - 1667	1648 - 1655	1674	Canceled

	SILVER
Silver drops below 30 but remains remain above its 4 ½ year trendline, whose support stands at 29.60 for the week but at 29.40 for the month. Since the oscillators are converging to the downside, there not only lies the risk of seeing a print as low as 29.30, but for prices to remain adrift near these lows for weeks to come. Ultimately, we see preliminary signs of an extension towards 27.80.
			ENTRY	LIMIT	STOP	STATUS
	15 Feb Short	SILVER	29.80 - 30.20	28.80 - 29.20	30.70	Hit All Targets
	11 Feb SHORT	SILVER	30.80 - 30.90	30.00 - 30.10	31.30	Hit All Targets
	05 Feb Long	SILVER	31.80 - 32.10	33.20 - 33.50	31.00	Stopped Out
	30 Jan Long	SILVER	31.70 - 32.20	32.70 - 33.20	31.20	Stopped Out
	15 Feb Short	SILVER	30.20 - 30.50	29.20 - 29.50	30.90	Awaiting Fill

	US CRUDE
Falling gold-oil ratio continues to prop equities. I have mentioned this pattern in my book “Currency Trading & Intermarket Analysis” back in 2007. The relationship continues to hold ever since. Despite sluggish oscillators on the weekly chart, we expect support to hold around the base of 94.80-90, which is well above the existing stop of 94.20. As the price hovers between its 100 and 55 WMAs of 9.15 and 9.42 respectively, we shall issue a new long, with a lower target.
			ENTRY	LIMIT	STOP	STATUS
	15 Feb Long (CL_H)	US CRUDE	95.10 - 95.30	97.60 - 98.80	93.80	In Progress
	30 Jan Long (CL_H)	US CRUDE	96.90 - 97.30	99.70 - 100.10	94.20	Hit All Targets
	11 Feb LONG (CL_H)	US CRUDE	95.00 - 95.40	97.00 - 97.70	94.00	Stopped Out
	05 Feb Long (CL_H)	US CRUDE	96.80 - 97.10	98.80 - 99.10	95.90	Stopped Out