Wednesday, August 31, 2011

Daily Technical Analysis - August 31, 2011

Wall Street continued the bullish momentum yesterday, but the FOMC meeting minutes indicated that Bernanke is running out of tools for handling the economy's problems. The ADP employment change data will be on today's focus.


The pound was influenced by disappointing macro data and shed over 120 pips yesterday. The potential reversing was ruined by fundamental elements and the GBP got back to the previous week's lows. The JPY still has not made a significant move, but it is trying to break-down the support at 76.5 against the USD, and it looks like it is about to make a strong move.

If so, the GBP/JPY, which has already started a bearish trend, might dive sharply. 125 is the current support, though it was broken several times during the last 3-trading day. A strong break-down can take this pair to 123 and complete the "Inverted Cup & Handle" pattern.


Yesterday we analyzed NZD/USD and suggested that it might rise. The NZD made the expected rising and it is likely to keep its uptrend. The NZD's big brother, AUD, has a similar pattern against the USD, and the bullish trend is clear there as well.

These two countries have high interest levels that attract many powerful investors. However, the NZD seems to be winning in the battle between these two currencies. The NZD broke a significant support at 1.255 and now it is dealing with the round number- 1.250. A break-down there can fall to the 52-week low at 1.232.


The Canadian dollar might turn back strengthening against the USD, after the American dollar failed breaking through 1.0. This pair is extremely volatile and it is hard to determine the direction of this pair, but the recent candlesticks might suggest that the CAD might rise. It broke down the support of the 200 SMA, which is an indicator that many traders use and base their decisions according to that. The 50 EMA supports the break-down candlestick from Monday. If the CAD starts its engines, it will have a freeway to 96.0.

Pay attention to the Canadian GDP data later today, which have a high impact on the currency.