Nice Little Bear Squeeze

Well, that was a nice little bear squeeze we got ourselves today – almost textbook I may add, featuring the early morning wipeout followed by a systematic run higher. If you paid attention to the charts I posted last week then this morning’s support zone should have come to no surprise to you:

Those two Net-Line Sell Levels (NLSLs) at the psychologically important 1300 mark proved too much to overcome, which frankly was not a big surprise to me. There is simply no confidence in the tape – one way or the other! For the entire month of January I have maybe seen one or two quick spikes beyond the Zero’s +/- 1.0 signal range. A twenty handle drop at the open usually comes with a bit more juice to the downside and lack of participation/momentum simply means that the tape can turn at any moment – and that’s exactly what we got.

If you are wearing your bear hat then please don’t get your panties in a bunch until we see a breach below 1285 – or even better 1280. Now that could open the door for a more pronounced correction, but until I see that happen let seasonality, momentum, sentiment, etc. be damned! 😉

But I really don’t care that much for equities right now – not until we get a strong move in one direction or the other. The FX side is a lot more juicy IMNSHO – very very nice setups today:

AUD/JPY – similar pattern as the spoos but there is a whole cluster of support sitting below plus we have a rising and fast encroaching 25-day SMA which should be good for some support. I would watch out for a breach of the 81 mark – if we get that plus a push above the 25-hour SMA then say hello to 81.80.

Alright the best ones below for my intrepid subs:
[amprotect=nonmember] More charts and cynical commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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USD/JPY has fallen from grace in a huge way and is now scraping support. I would love to see a touch of the 76 mark at which point I’d want to be long. Either that or a breach above that 76.42 hourly NLBL – not sure we’re going to get that one that one though as we’re running out of time.

Next runner up – USD/CHF – excellent excellent setup. Because either this is a last kiss goodbye (i.e. shorting opportunity before a drop) or we make it above those hourly buy Net-Lines plus that 100-hour SMA and we are golden to the upside. Play this sucker either way but be disciplined with not jumping the gun too early.

EUR/AUD also at an inflection point – it’s been taking its merry time but we do have a bonafide floor pattern here. I’d be long above 1.25 – assuming it can overcome that 25-day SMA plus the NLBL it’s pushing its head against right now. For your stops consider the support on the hourly I have highlighted.

And there is more! EUR/JPY – sitting right at the 100 mark – psychologically important and it’s a NLSL – you know what to do. If this thing turns to the downside then consider that there’s a bunch of support below – I personally would only be interested in a long trade here into 102.5.

And last but not least – the NZD/USD, which bounced against a bit of resistance. I told you guys last week that this thing has the potential to keep running – the force is strong in this one! Hey – I get one Star Wars reference a month, okay? The short side is tough to trade right here unless we get some kind of RTV Sell or an inside candle. But I would be long again on a breach of today’s high with a stop below yesterday’s lows (for the lack of a better stop point – sorry, the best I can offer right now).

There you go – tons of good setups on the FX side. Did I promise too much? Happy unbiased trading (to quote Volar).

Cheers,