Next Week's Main Market Trends

Courtesy of "sales strategists" at the real Octopussy (the one marinating in brine at One New York Plaza). As always quadruple reverse cephalopod psychology is critical to survive these salty waters:

Main Points

• Message of the week: The USD correction holds against 55-dmas. The underlying downtrend looks intact for now. 1.5064 is now very important on EURUSD.
• Conclusion from the charts: The Japanese asset market picture remains poor. USDJPY is trying to base.

Favourite Themes

• (Add) Bullish-AUDNZD- Underlying positive structure continues to develop, a move to the April highs at 1.2938 and possibly significantly beyond looks possible (6th November 2009)
• Bullish-USDJPY- Monday’s low was close to 76.4 retrace support. Reverse Head and Shoulders targeting 96.72? (4th November 2009)
• Bearish-EURNOK- Correction held well against the  8.5425-8.5580 region, will maintain bearish view as long as we sustain below this area (29th September 2009)
• Bearish-USDCLP- Closes at new lows for the trend. Double top target now at 515.15 (21st October 2009)

Main Points

• EURUSD LT– Bearish weekly reversal from the trend high.Following this pattern the market will often consolidate and “build a top”. How we trade at the old high of 1.5064 is critical.
• EURUSD ST– For now the market has stabilised at the right level. Tuesday’s low on EURUSD at 1.4626 was right on the 55-dma. In simple terms this should open a re-test of the trend high at 1.5064.
• USD Index– Here too the 55-dma held well so far. Tuesday’s high at 76.81 to the pip on the 55-dma. This looks the pivot to watch going forward with it now standing at 76.71.
• Gold/Oil– Still look bullish. Gold has continued higher over recent sessions and oil looks set for an eventual test of $90. This should act as support for the G10/USD crosses.
• U.S. 2-year yields Vs the G10– Nearing support. This is something to keep an eye on as the fall in U.S. short-end yields versus the G10 has been correlated to the recent leg of USD-weakness.
• Nikkei – Remains heavy. The market is currently consolidating against the neckline of the H&S top around 9,800, but over time downside risks still look high.
• Japan 10-year yields– Set to rise further. A test of the June highs at 1.56% appears likely. Above here would point to 2%.
• USDJPY– Trying to base. With JGBs and the Nikkei under pressure simultaneously there is much discussion of a JPY-negative backdrop developing, USDJPY is trying to base.
• EURNOK– Corrects to the 8.5425-8.5507 pivot and holds well. With daily oscillators back at the top of the range the market looks heavy, an attractive region to be short-EURNOK.
• AUDNZD– Looking very constructive. The market has continued to push higher and a test of the April ’09 high at 1.2938 appears likely. We’ve added bullish-AUDNZD to our Favourite Themes.
• NZDUSD– Sat right at the 55-dma pivot at 0.7165. This level needs to hold to maintain the underlying uptrend.
• NZD/Broad Index– Below the 55-dma for the first time since 13th March. The 200-dma stands 6.4% below current levels. This supports the idea of higher-AUDNZD.
• AUDUSD– Has respected support levels better than NZD related markets. The market basing against the uptrend from the March lows for now. 55-dma at 0.8800 remains pivotal support.
• Australian 2-year yields– Turning heavy against resistance. This is important to monitor given the strong positive correlation between AUD and Australian domestic yields.
• USDCLP– Breaking to new lows for the cycle. The market has now made a daily close below the prior cycle low from 26th June at 525.5. Should open the double top target at 515.15.

Comments

[economessed]

"As always quadruple reverse cephalopod psychology is critical to survive these salty waters"

LMAO!  The vivid scenery in this writing is beyond the pale.  Excellent job, Tylers.

[fedya]

I wouldn't say that everything that GS research (or sales strategies) write requires "quadruple reverse cephalopod psychology". Sometimes they do very good stuff. By the way, today they were fairly close with their 200k NFP estimate..

[Anonymous]

Fedor, that maybe cause they got leaked info?

[Argonaught]

Not hard to be 'fairly close' with BLS telling you what the number is before it is released to the public.