Sunday, February 21, 2010

Outlook for Monday 22nd Feb

Friday evening saw quite an impulsive move across the pairs. I'll take a look at a couple and provide my ideas on where I think they will go with Monday's markets. Note that I may think anything I like, it is the market that determines where it goes.:)

No major news expected for Monday for the USDCAD or USDCHF. Even if there were, it would be more pertinent to their respective time zones. (Courtesy of


 This was a very large impulsive move. What typically happens with impulsive moves is a retracement. 

Above, the green lines represent extended levels of support and resistance from a 4Hr chart.

I would like to see a little further push down just to retest the the lower level of support. Though price is already at the "00" mark - 1.0401. Then expect some hesitancy, indicated by the black arrows going up, then back down bouncing around the 1.0410 area.

The overall target area is a 38.2% Fibonacci retracement of the move down on Friday evening. We may get a little further extension to retest the level of resistance at 1.0450. This area is identified by the red circle. It would further benefit a long here if we could get the full 50% retracement, but I would prefer to take profit around the 38.2% area.

Looking for 40-50 pips off this.If I can't get an entry below the 1.0400 area off a retest of the lower support level, then I would be looking for 1 of the two potential entry scenarios.

1. A bounce down off 1.0410.
2. wait for a break of 1.0410 with an Entry of around 1.0415


I really like it when two different technical indications overlap on the same area. Although the upper S/R line isn't too clean, it does represent a similar level to where the 38.2% fibonacci retracement is. I think you may be able to push those extra 10odd pips in a long, but I would be happy to take profit at the 00 - 1.0800.
Similarly as with the USDCAD, I would expect some price hesitation where the orange dotted line is. It represents a level of historical resistance that can be identified above the lower "1Hr S/R" n the left. Toward the middle of the chart, and at the same level, you can see that price has had issues at this level. Once it is cleared though, it should leave a clear path to 1.0800. Overall that is only about 15-20pips.

Again, similar to the USDCAD projection, one entry scenario would be to wait for a rejection of the reistance indicated by the orange dotted line giving an entry about 1.0760, or waiting for the resistance to break around 1.0780. If there is a strong push up as part of the retracement, 1.0810 would be a secondary target to the original 1.0800

Potential Issues
Depending on where you are in the world, Monday morning can be a little difficult as some brokers don't allow orders too early basing their order availablity off a more local (to the broker) time zone. Or in cases like Oanda, orders can be placed early Monday morning (Asia time), but with the cost of so called "weekend spreads".

As indicated earlier, there are no major news announcements expected for these pairs, so my projection is a nice run to the 38.2% retracement level. 

Secondly, The Australian, New Zealand and Singaporean markets may collectively push price closer to the projected targets before retail FX brokers allow trade entry. This is obviously a per broker basis, and as such cannot be correctly anticipated. As a trade plan though, this is the proposed outlook for the USDCAD and USDCHF for Monday 22nd February.

Remaining Flexible
Assuming the Aussie markets push us past a good entry point for the BUYs on the pairs above, what I would be looking for then is a stabling out of price around the 38.2% level during the afternoon Asian session. Closing in on London, I would be then looking for continued USD Weakness and as such a continuation of the original Friday evening moves. 

GBPUSD would be interesting around the 1.5420, perhaps even giving a nice 00 retest at 1.5400.
EURUSD 1.3540
AUDUSD 0.8950
USDCHF/USDCAD as per above explanations.