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The Main FX And Commodity Charts For The Upcoming Week

Submitted by Tyler Durden on 01/22/2011 13:49 -0400

The schizophrenia at Goldman continues. After one part of the FX trading desk told clients last week to chase the EURUSD up to a 1.37 stop limit, in John Noyce's most recent update on his EURUSD views he notes: "The ST structure is not particularly clear, but we are certainly uncomfortable chasing the recent bounce and are watching for signs of the market again peaking/turning to the downside." Uh... So one part of Goldman says to chase the EUR, while another part says it is not comfortable chasing it. Well, win win. Too bad the rest of us don't have access to the discount window and if all that 5,000x margin does not work out our way, we can't go running to our former co-worker Bill Dudley (not to mention our subordinate Brian Sack who personally came over to us and introduce himself) and demand another bail out.

More from Noyce:

Our bias to watch for a peak around current levels is driven by what we still feel is an underlying negative weekly/monthly chart backdrop; series of two multi-month 76.4 retraces against the all time highs from July ’08, bearish monthly reversal in November ’10 and similarities with the way the market traded following the highs in September ’92 which eventually culminated in another material move to the downside.
In terms of levels from here the 14th December high at 1.3500 is worth watching on a daily close basis. If the market achieves a close above that point there will be little in the way of notable resistance points to work with, the only real levels will be the Fibonacci retraces of the drop from the 4th November high to the 10th January low; 50% = 1.3571, 61.8% = 1.3739 and 76.4% = 1.3947.
Looking at the oscillators, daily stochastics have pushed to higher levels than those seen at the interim highs on 4th January and 14th December. They are, however, now not far from the top of the range, so again make it difficult to chase the current uptrend.

Incidentally we agree with Noyce. That said, the biggest concern in EURUSD right now is the 2 year swap which is predicting a substantial pick up in spot :

His comment:

This is definitely something which we have in mind and is one of the main reasons we’ve taken a more cautious stance towards our underlying negative views on the EUR in the ST
- Thinking multi-week/-month the technical setup on the components (as detailed on the previous slide) implies that EUR rate-support should be maintained at current levels or increase until we get a weekly close above the 55-week moving average on USD 2-year swaps (0.9%).
- Therefore, assuming the current divergent setup on 2-year swaps is maintained, to generate another period of EUR under-performance, which the longer-term (multi-week/-month) EURUSD charts imply is still likely, we’ll likely need to see a more risk negative backdrop develop in other correlated asset markets.
- Conclusion, EURUSD is becoming less clear, the underlying technical setup and the cross asset picture giving conflicting signals. Our eventual bias is to look for signals that it’s time to fade the recent bounce.

Noyce is also rather bearish on silver, per the 55/200 DMA spread, which is getting "stretched"

Technically silver is getting overbought:

The market is now beginning to move below the 55-dma. This follows an historically extreme consecutive 104 daily closes above this particular moving average prior to Monday this week when the first close below was achieved.
In terms of potential objectives, there isn’t a clear H&S top comparable to that has formed on gold from which to calculate targets. However from a multi-week perspective it’s not unreasonable to argue that the market should correct back to the 200-dma after such an extended trend. The 200-dma stands down at 21.996.

And since commodities are due for a retraction, Noyce also sees some material weakness in store for the AUD (more inside).

Full report:

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Sat, 01/22/2011 - 14:06 | 895873 Arius

well, it is their casino like it or not.

the problem is they are burning the ship and taking everyone else down with it...while they navigate safely ashore....

Sat, 01/22/2011 - 14:08 | 895874 Cognitive Dissonance

So one part of Goldman says to chase the EUR, while another part says it is not comfortable chasing it. Well, win win. Too bad the rest of us don't have access to the discount window and if all that 5,000x margin does not work out our way, we can't go running to our former co-worker Bill Dudley (not to mention our subordinate Brian Sack who personally came over to us and introduce himself) and demand another bail out.

Silly Tyler. Having your cake and eating it too are part and parcel of the new world order paradigm. You know the drill, heads I win, tails you lose. Stop your bitching and learn to love the insanity. I hear it's all naked bodies and rose petals in Ponzi heaven.

Sat, 01/22/2011 - 14:29 | 895910 uno

"Stop your bitching and learn to love the insanity."

Very well worded, I did it last year by buying in the SP500, pure insanity in a rational world

Sat, 01/22/2011 - 15:07 | 895951 Cognitive Dissonance

While I get your point if you think you live in a rational world, well..............

Maybe we could say it is rational compared to totally irrational standards. But only in an insane world can we declare our world rational.

Of course, if we are living in an insane world, that's exactly what we would say to adjust to the insanity. Rationality is determined by the majority and rarely by any independently verified standards. Everyone living within the insane asylum feels they are living a normal life when measured by the standards of the insane asylum.

Sat, 01/22/2011 - 14:26 | 895878 Spalding_Smailes

Saturday Financial Humor ~ ( Hedge Fund Style' )

Lets meet J. Fommer " The Boss ".

http://www.hedgefundlive.com/content/risky-money-sizzle-reel-3169

Lets meet Jack " Starman " Shuman .... ( Unreal - millions riding on Saturn, turning points , ... astrology...... funny shit starts at - 3.00 )

http://www.hedgefundlive.com/content/you-dont-know-jack-starmans-analysi...

Lets see how the " Big Boys " did this week. Please watch in order ... :- )

The Starman ~ 1/19/11

http://www.hedgefundlive.com/content/you-dont-know-jack-starmans-analysi...

Jeremy Frommer - 1/20/11

http://www.hedgefundlive.com/content/jeremys-end-of-the-day-vlog-1-20-11

Pre Market - 1/21/11

http://www.hedgefundlive.com/content/before-the-open-1-21-11

Jeremy Frommer - 1/21/11

http://www.hedgefundlive.com/content/jeremys-end-of-the-day-vlog-1-21-11

Mon, 01/24/2011 - 09:57 | 898431 HedgeFundLIVE

spalding smailes, out of curiosity, how did you find those links/videos to hedgefundlive?

Sat, 01/22/2011 - 14:57 | 895932 Blindweb

On the silver chart being a technical noob, if I extend an average line through the Apr 2003 to Oct 2008 trend to Jan 2011 I'd be in the lower 30s + or -. If the 2008 selloff was a mistake, then a doubling was due to return to the trend? We haven't even doubled from August

Sat, 01/22/2011 - 15:11 | 895959 satansanus

currency traders! Victims all!

From the central banks to the crooked FX houses to the fundamental 0 value of all curencies. 100% of currency traders have been robbed just by participating

Sat, 01/22/2011 - 15:13 | 895962 satansanus

who makes more % gains 100% of the time. Currency traders or Hookers?

Sat, 01/22/2011 - 15:24 | 895982 Sudden Debt

Yesss, yesss all is going according to plan.

EXECUTE ORDER 66!

Sat, 01/22/2011 - 16:16 | 896077 red2893

Bias in Euro has changed:::

http://theopeningrange.blogspot.com/

Sat, 01/22/2011 - 16:18 | 896082 red2893

Bias in Euro has changed:::

http://theopeningrange.blogspot.com/

Sat, 01/22/2011 - 19:09 | 896372 gkm

A pull back to 25.50 for silver would be very likely. Then we'll see the mettle of the metal.

Sat, 01/22/2011 - 19:38 | 896412 thegreekT

Two things fyg:

- GS (and many others) do not necessarily promote one view on markets. There are many opinions coming from different analytical groups and are all allowed out (almost). Imho this is much better than the watered down unified versions that have gone through the politically correct filters and are thus useless.

- Noyce is looking at things from a singularly technical pov. As a technician he used to be very good from day 1 back more than 10 years ago, he is now arguably the best bar none in the FICC space.

Sat, 01/22/2011 - 20:19 | 896456 something fishy

Disagree with Noyce on EUR/USD, underlying weekly chart has turned positive but better entry would have been around 1.34. I personally wouldn't chase it here. Monthly chart has also turned positive but I don't think it's very helpful for s/t positioning.

Sat, 01/22/2011 - 22:54 | 896602 Grand Supercycle