The energy plays -- AUD, CAD, NOK, NZD -- among the 54 currencies I track are pounding against the boundaries of the 20-day Donchian price channel, pushing the boundary out but failing to achieve a decisive breakout.
In that behavior the currencies’ charts resemble that of light sweet crude oil futures, which has been marching down a descending boundary to the bear side for three straight trading days.
These are the pairs I noted as I scanned this morning: AUD/USD, EUR/NZD, GBP/AUD, GBP/NZD, NZD/CAD, NZD/USD, USD/CAD and USD/NOK.
I’ll use USD/CAD as an example. The price broke through the channel boundary to the bull side on Sept. 21, rather decisively, and followed through the next day.
However, beginning last Friday, it faltered, touching the boundary and then pulling back, and it has done the same today after setting a new high.
Anyone who caught this particular train as it pulled out of the station has had a nice run -- today’s high is 3.6% above the initial breakout point. However, it’s not a play for me now unless I see another breakout above the C$1.0361 boundary that shows conviction.
EUR/USD -- we’re all morbidly waiting for a euro meltdown, yes? -- has continued its sideways trend for a third day, with lows of US$1.3362 and US$1.3385. The highs have been descending for four straight days.
- phase: 20-day price channel phase, with green for bull trend, red for bear trend and yellow for neutral trend.
- trend: Price direction, green for higher highs and higher lows, red for lower highs and lower lows, yellow for neither.
- adx: Average directional index location, indicating the strength, or the temperature, of the trend. Orange for 40 or greater, aqua (light blue) for 25 and up but below 40, magenta (light purple) for 20 and up but below 25, and brown for anything below 20. (Mnemonic: Orange for the overhead sun, blue for the surrounding sky, magenta for sunset on the horizon and brown for the earth.)
- 200/50: The moving average cross, green for the 50-day ma above the 200, red for below and yellow for closely aligned.
- 40/10: The moving average cross, green for the 10-day ma above the 40, red for below and yellow for closely aligned.
About my trading methods
Read a detailed explanation of my analysis method, including trading rules.
Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
The trader’s greatest sin is inaction. Sleeper, awake! Seize the Nietzchean moment. Roll out of bed and trade.