Aspenalysis: Simple To Follow FX Trade Ideas

Ahhh, the Dollar Index (DXC) - everybody's favorite index to forecast!
Based on the move lower off the Sep 5th highs, it is reasonable to assume prices will stall and possibly reverse to the upside at the 81.34/81.00 area.
Not a signal to get long...yet, but keep a close eye on DXC if you are short EUR/USD per today's Trade Idea.
http://www.aspentrading.com/uploaded...3dxcUPDATE.png

Trend is clear - up....and the count is in-line with what I see in the S&P's.

Given that the 2 are positively correlated, we should see higher levels in AUD/USD on a break above .9388 with an initial target seen at .9483+

AUD/USD 60-min chart

http://www.aspentrading.com/uploaded...3audTARGET.jpg

Taper Jam
Here are my thoughts on yesterday's Fed meeting and how we will position ourselves going forward.
No-Taper Video Analysis

Looks like we might get a chance to pick up some 10-year notes on this pull-back.

Still ample room to run to the upside.

Daily noise to the trading brain - avoid these 7 unprofitable traps

Still some more downside left in AUD/USD. The only wrinkle is the S&P's. They are holding 1689'ish support in a corrective move off the recent highs. So while any upside traction from there has been lacking, if it does develop it may not allow AUD/USD to continue to push lower.
AUD/USD 60-min chart
http://www.aspentrading.com/uploaded...3audUPDATE.png

Still bullish on EUR/USD but will need to allow for a modest pull-back first. Upside target seen towards 1.3935+

https://www.aspentrading.com/systemi.../547_28742.jpg

EUR/USD took a beating last week - it now seems likely we will see higher prices - at least for a brief period.

Nonetheless, plenty of room to work with for longs with upside target(s) at 1.3550+

EUR/USD 30-min chart

http://my.aspentrading.com/Nov_1/11.3.13eurUPDATE.jpg

Traders, I think it is real important to factor in the alternate count shown below (yellow highlight) if you are long or considering getting long from current levels.

If Wave iii is complete at last week's highs it does not alter the bullish outlook but does allow for a deeper pull-back towards 1730/20.

Unless you factor that into the outlook, you may find yourself setting your stops too tight.

http://mediaserver.fxstreet.com/Repo...1104135846.jpg

Still some downside left in AUD/USD....

AUD/USD 15-min chart


http://my.aspentrading.com/Nov_1/11.5.13audUPDATE1.png

http://mediaserver.fxstreet.com/Repo...1106124035.png
Good morning traders. Each day the Top FX Charts highlights:

1. The technical set-up - wave count, Fibonacci projections
2. Likely price direction
3. Key technical levels for stops, target & inflection points

However, before those get posted each day I will start offering a brief report that suggests:

1. Likely price direction and target for the next 12-24 hours

This simple and streamlined update will be the perfect way for clients to get the most important information quickly & easily to kick off their trading day.
Naturally, the Top FX Charts posting which will follow later will provide far more insight for traders seeking further details.
So let's kick it off.

1. EUR/USD: likely to find resistance into the 1.3530/65 area before reversing lower towards 1.3430 and lower
2. AUD/USD: likely that the overnight high at .9540 (minor double top) will force prices back down towards .9460
3. USD/NOK: remains bullish overall and will want to see the 5.9340 level hold. If it does 6.0690 is the next stop
4. USD/JPY: this one is never for the faint at heart but I remain bullish as long as 98.40 holds - looking for prices to move higher towards 99.17
5. Dollar Index (DXC): abc correction off the Nov 3rd highs nearing completion. Targeting 80.37 as the level that halts the move lower and puts the bulls back in control.

Enjoy the day,
Dave

Good morning traders, here is a quick and simple overview of the FX market that offers the following:

1. Likely price direction for the next 12-24 hours
2. Key price levels that will provide support/resistance as well as profit target levels

This will be followed by the more in depth Top FX Charts posting (FX Insight & FX Alerts clients) within an hour or two.

----------

EUR/USD: looks like 5-completed waves off the Oct 24th highs played out on Thursday at 1.3294. I am expecting a modest move (correction) higher over the next day or so towards 1.3550. Bear in mind, the ECB's decision to cut rates may not allow prices to correct too high and the move could be very brief. Not exactly the highest probability trade.

AUD/USD: similar to EUR/USD, but without the pressure of Central Bank policies hangin over it, AUD/USD is likely to correct higher for the next few days towards .9500/.9550

GBP/USD: with an impuslive move off the Nov 3rd lows folled by a 3-wave correction into Friday's low, I see GBP/USD moving higher towards 1.6150/80

USD/JPY: the overall trend remains bullish but the action since the Oct 30th highs foreces me to the sidelines to wait for a clean break higher before pursuing long positions.

It has been a while in the making, but it appears that USD/JPY is poised to move higher in the days and weeks ahead.

Going back to the May 2013 high, prices carved out a nasty 4th wave triangle that now appears complete back on Oct 7th. However, it is the recent price action that is adding some conviction to this outlook.

Nonetheless, this pair can be a real pain and sometimes a longer-term view and wide stops is the best way to play it. Naturally that brings up a concern:

1. Wow, a 200 pip stop-loss!
2. I like to short-term trade

Fair points, however, long-term trades often times make for better trades as a larger portion of the trend can be captured. Secondly, if you reduce your lot size a fair amount, that 200 pip stop-loss is no different than risking 25 or 50 pips of many more lots.

Let's keep it all in perspective - wide stops do not mean more risk!

USD/JPY 6-hour chart

http://my.aspentrading.com/Nov_1/11.12.13jptLT.png

For all you market statistic geeks, let's consider the following.

http://my.aspentrading.com/Nov_1/11_...narymarket.png

A couple of additional points though:

1. The S&P can, when gains exceed 20% in one year, often decline by a similar amount in the following year.
2. However, the average gain in the S&P's since the 1960's, in a year after a 20% plus gain, is
   around 17%.
3. A plus 10% year occurred in 9 of 13 years following a 20% gain.

While not a statistical data point, I think the continued QE and warped Fed policies almost ensure another solid start in 2014 - I am not willing to look much beyond the first half of 2014 though.

Dave

Traders, the Dollar Index (DXC), as always, is a key driver in how and when we make trading decisions.

Given that EUR/USD, and to a lesser extent GBP/USD, are inversely correlated to DXC moves, if we can forecast where DXC is going - we know where EUR/USD and GBP/USD are going.

That said, with DXC approaching some key price and time support levels, the time for EUR/USD shorts is fast approaching.

DXC 2-hour chart

http://my.aspentrading.com/Nov_1/11_...3dxcTARGET.png

http://my.aspentrading.com/Nov_1/11_...aspenvideo.png

Traders, here are my thoughts on USD/CHF.

My goal with this video is to stress the importance of looking at related markets to make sure they are consistent with your wave counts.

Video Analysis

Do you have a trading question? If so, please drop me a line at Ask Dave

Good morning traders, let's get right to it this AM.
The Short-Term Outlook: well nobody ever said corrections were easy to forecast/trade or filled with white knuckle excitement. Looking at FX quotes upon waking up this AM and I was so tempted to go back to bed!
This post will be followed up by more in depth analysis with Today's Top FX Charts within the next hour or two (FX Insight and FX Alerts clients)

1. DXC: Neutral to Bullish I have adjusted the count, prices need to hold above 80.48 if the bulls are to take back control in the hours ahead.
2. EUR/USD: Neutral to Bearish trading in tandem with DXC (inversely), I fully expect EUR/USD to begin moving lower, we just need to see evidence of it. Will be looking to get short as long as 1.3620 remains unbroken.
3. USD/JPY: Neutral yesterday's call for a move lower towards 102.36/101.73 was spot on. I now expect that prices will consolidate a bit before moving higher yet again. I want to see evidence of a move higher before establishing longs
4. USD/CHF: Neutral like watching paint dry as this correction off the Nov 7th highs continues on Sidelines for now awaiting further clues. Prices need to hold above .8889
5. NZD/USD: Bearish a nice break lower last night puts the flightless kiwi back on the radar screen. Allowing for a move higher towards .8198/.8215 the near-term target is seen at .8147
6. AUD/USD: Bearish nice break lower overnight with .8990/65 the near-term target.

Dave

Traders, tomorrow's NFP data will be a bit more important than usual in my opinion.

While the jobs data is always an insight into the health of the economy, tomorrow's release also coincides with what I consider to be a key level for the Dollar Index (DXC). If the forecast I lay out below plays out, it will have an immediate and lasting impact for FX trader into the tail end of 2013 and much of 2014.

Given that the move off the November 8th highs is very choppy and overlapping, it is reasonable to assume the a bullish move in DXC is about to get underway. The implications for EUR/USD, USD/CHF, USD/JPY and AUD/USD are huge.

http://my.aspentrading.com/Nov_1/11_...5.13dxcNFP.png
Don't get caught flatfooted.
Dave

Good morning traders, let's get right to it this AM.

The Short-Term Outlook: I am still sticking with a forecast that calls for higher levels in the DXC (Dollar Index). While this forecast has not played out just yet it does not mean the forecast is incorrect. The price action since the Nov 8th high is certainly corrective and suggests that higher levels will unfold.

This post will be followed up by more in depth analysis with Today's Top FX Charts within the next hour or two (FX Insight and FX Alerts clients)

1. DXC: Neutral still looking at the 79.95/80.25 area as support and the end of Wave (ii)
2. EUR/USD: Neutral a mirror image of DXC, a messy and corrective move higher off the Nov 7th lows and I see the 1.3715/40 area as providing decent resistance and the end of Wave (ii)
3. USD/JPY: Neutral to Bullish leading the charge here while DXC tries to get a bid higher. We might see some early weakness towards 102.50/80 before the move higher resumes.
4. USD/CAD: Neutral to Bullish leading the charge here while DXC tries to get a bid higher. We might see some early weakness towards 1.0620/1.0560 before the move higher resumes.
5. USD/CHF: Neutral very choppy price action with a downside bias. This pair has not performed as I would have expected and the .8889 needs to hold if the bulls are to have a chance.
6. NZD/USD: Neutral to Bearish expecting the .8344 resistance level to end this choppy move higher off the Nov 22nd lows
7. AUD/USD: Neutral to Bearish a very shallow rally off the Dec 4th lows suggests the bears remain in control. Prices still might push a bit higher towards .9200 before turning lower.

Dave

Good morning traders and welcome to 2014 - a year that will likely have plenty on tap for traders.
Before we dig in here, just remember that we might still see some quiet price action for today and tomorrow before everything gets back into full gear on Monday.
That said, here is the short-term outlook for FX - with more detailed updates (as needed) for FX Insight and FX Alerts clients as the day unfolds.
The Short-Term Outlook:

1. DXC: Bullish I have often been wrong but never in doubt over the last few weeks about the direction of the dollar. The overnight move higher begins building my bullish case. In the short-term though, we could see prices move a bit lower towards 80.55/37 before regaining the upside momentum towards 81.10
2. EUR/USD: Bearish last weeks spike higher was nasty and likely took out a lot of stops and traders will. However, the bearish outlook remains intact. I see prices moving towards 1.3550 in the hours and days ahead.
3. USD/CHF: Bullish this is my 'big call' for 2014 - there is a lot of upside! Looking out over the next few hours though, I see prices trading towards .9073 and .9180 (with of course a few minor corrections along the way.
4. USD/JPY: Neutral to Bullish looks like USD/JPY is still digesting the latest move higher. I expect some sideways cop with 104.65 the lower level of the range before prices move higher.
5. AUD/USD: Bearish last week's sideways chop has yielded yet another thrust lower. Allow for a modest correction higher towards .8878/.8900 before yet another leg lower towards .8820 and beyond.

Dave