Some More On S&P Resistance, And The AUDEUR From Goldman

Earlier we discussed the third sequential inability by the market to breach the 200 DMA, a very relevant technical indicator, after which the market just lost all strength and rolled over to negative. In this vein, we present the following thoughts from Goldman's sales strategists (distinctly different from other inhouse research times), who seem far more in touch with reality, and who are advocating entering into "short risk" correlated ideas as long as the marker is unable to penetrate resistance. Furthermore, as this team is usually recommends the opposite of what the traditional FX guys, which have once again totally destroyed any clients who may have listened to them, the most recent example of which was the EURUSD downgrade to 1.15 on June 9, when the pair was at 1.185, and has subsequently surged all the way to 1.23, stopping out most who got in, endorse, we are quite interested in the recommendation to establish a bearish AUD position.

From Goldman:

• Earlier we discussed- In last Thursday’s The Charts That Matter Next Week we detailed a number of factors which make us think the correction in AUD (i.e. AUD-weakness) is not complete:

1.   The double topping structure on AUDUSD hasn’t yet hit its ultimate target of 0.7759
2. The bigger picture developments on asset markets (equities and commodities) still look negative…
3. …specifically the S&P now sits just below a major resistance region from 1,103 to 1,108 (based on the cash)…
4. …and is likely to post a negative candle pattern today following a test of this resistance region intraday
5. Also as per the long-term charts we included in the chart pack on EURAUD, the currency pair has historically traded as an oscillator and sits right against the base of its historic range…
6. …this would be a clear place for the market to base and at least rally correctively

• Taking all of the above into account, particularly as long as the S&P holds below 1,103-1,108, we’re still biased to look for attractive risk/reward opportunities to enter “short risk” correlated ideas…
• With this in mind the chart below shows an equally weighted basket of AUDEUR and AUDUSD…
• …it’s now against a significant resistance region formed by the interim high from 14th January, interim low from 26th March and the ABC equality target from the 20th May low
• Overall, given the resistance we have just above current levels on the S&P (1,103-1,108) and the setup on the AUDEUR/AUDUSD basket…
• …it seems an interesting time to re-establish a bearish AUD position with good parameters
•  The index currently stands at 0.7805, and the resistance region provided by the levels discussed above runs up to 0.7870…
• …so a 0.7890 theoretical stop seems sensible and gives a decent risk/reward, particularly taking into account if this setup is correct it implies the market should move to new lows from here

Comments

[Mr Lennon Hendrix]

The market is panning for gold!

[Cursive]

Double double reverse psychology.

[JonTurk]

if goldMan say sell we buy -- the name of the trade::  fuck the clients -- heyyoo prop desk....

mothrfckr banksters

[economicmorphine]

There's a lot of technical resistance at this juncture including that big nasty downward sloping trendline, a 38.2% Fib and yes, Mr. Spyder rolled over right where it was supposed to.  That's why I don't trust it, least not yet.

[VegasBD]

what a boring day =\

[john_connor]

I also like short GBP...again.

[Dismal Scientist]

I guess this was not a Tyler submission. Too many basic errors

[Milestones]

Are you familiar with Marbury v Madison? It is the legal reason why the Federal Reserve Act is void and has been since 1913. I would like to submit an argument to prove why the proposition is correct, but I cannot figure out how to submit said paper so you can read it and decide if it makes sense. By the way court ruling are in agreement. Carl

[Jonny poor boy]

Hey can any of you technical geniuses out there post a call and a AUDGBP chart.....this poor boy can't make any sense out of why it is trading at 1.72 should'nt it be trading in the 1.50/1.60 range...I must be missing something? ....over to you