All eyes on Yellen – Dollar

February 11, 2014 by

Our trades are still on from yesterday and even though the dollar has fell against both EUR and AUS we haven’t reached our targets. The EURUSD is trading at around 1.36700 and is just 30 pips of our take profit. As this is the bigger sized position we have decided to take off some of the volume here before Yellen to make sure we take some profit. We also are moving our SL to just bellow 1.36500 to take profit on that even if the stop loss hits. I have removed the take profit and will monitor it manually. A slow grind higher yesterday gained momentum overnight in thin liquidity and USD weakness and we failed just ahead of a decent resistance level at 1.3680 which should act as a tough level to push through today. To the downside support should now come in at the 50d MA at 1.3655 with a break unlikely to meet much until back at 1.3600/10 where coincidentally the 100d MA also lies.

As we mentioned yesterday Cable is trading in a tight range and you should wait for the break. Still around the 1.64 level. Can only call which way this might go after Yellen. Very little renewed thoughts to provide from yesterday as the market traded in a painfully tight range between 1.6380/1.6420. Broad USD weakness overnight helps push cable to a high up at 1.6434 but we have since come off from here trading back through the 1.6400 handle. All eyes on Yellen today and expect a continuation of this range bound market until this afternoon. As for levels to watch, a break of 1.6380 on the downside should see us pull back to meet support around 1.6300/30 which contained the pair for much of last week before a big level at the 100d MA at 1.6267. To the topside we have the 50d MA at 1.6420 ahead of 1.6450 and 1.6480.

As I mentioned I am staying away from the Yen pairs for now. I believe the general outlook is still bullish and will look to buy if it comes down to 101.80. It could be a range play as well as a longer term outlook. I don’t fancy doing with it anything right now as it is mid range and don’t want to gamble on what Yellen will say. Longer term I am still eyeing it to go up by the end of the year.

AUDUSD  has all the hallmarks of a short squeeze. That is why it is important not to panic and keep our stop losses in place. That is why we suggested to get in on small position yesterday with the stop loss a long way away. It has broken through the 0.90 level and has reached the 100 EMA on the daily chart and does look overbought technically now. We are keeping our stop loss above the 0.91 mark with a look to get in with more volume at that level if it holds.

So as mentioned before all eyes are on Yellen, so be patient and wait for three o’clock.

Good luck trading.