GBP/USD Consolidation Continues, Trendlines Head Lower

By Greg Michalowski | February 09, 2010 | 8:10 AM |  0 CommentsTweet This

The GBPUSD has now consolidated the move lower for nearly 2 days now.  The price has a floor at the 1.5533/50 region and a ceiling at the 1.5648-59 area.  The consolidation comes after the most recent trend move which saw the GBPUSD move down from a high of 1.6068 to the low at 1.5533. The consolidation/non-trend period is not unusual. It allows the market moving averages - like the 100 hour moving average to start it's catch up to the market price. Currently, the 100 bar MA is at the 1.5727 and moving lower at a pace of 4 pips an hour.  In 24 hours that would put the moving average down at 1.5633. 

In early NY trade, the market has come in and bought GBPUSD back up from the floor area. This has continued the up and down nature of the pair over the last two days. There should be some resistance at the 1.5636 area where highs and low from the last few days have occurred. Above is the high over the consolidation period at the 1.5658.  Support now comes in at 1.5604 which is the 100 bar MA on the 5 minute chart (blue line in the chart above).  The 1.5596 is the midpoint of the 2 day range and will also be a key level to eye today.

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ETF Rewind - Announcing Customizable Rotation Modeling

By Jeff Pietsch | February 08, 2010 | 4:59 PM |  0 CommentsTweet This

ETF Rewind subscribers have long had the ability to derive customized relative strength models using statistics available in our nightly newsletter. By popular request, the nightly Excel spreadsheet now includes a customizable Relative Strength Rotation back-testing engine.  While it uses as many as ten tickers at a time, motivated traders might consider one set of tickers to represent major asset classes, then additional lists to effectively drill down on the active classes with more concentrated scans.  Without a doubt, this addition makes ETFR one of the most powerful and complete interactive newsletters/tools available to the individual trader.  Other features include:

• Nightly Market Recap & Next-Day Outlook
• Statistical Summary of Nearly 200 ETFs across 12 Asset Classes
• Pairs Trading & Scanning Modules
• Relative Strength Rotational Model
• Advanced Custom Portfolio Metrics & Hedging Analysis

Quite a Swiss Army Knife!  Three-day trials are still available here.  Advanced functionality expires in 30-days, but the files are otherwise yours to keep.  Why not give it a try?

Read more: http://marketrewind.blogspot.com/2010/02/etf-rewind-announcing-customizable.html#ixzz0ez5Lxd7W

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Slow Grind Higher

By Jeff Pietsch | February 08, 2010 | 1:26 PM |  0 CommentsTweet This

The majority of the a.m. session has been spent above the Volume Weighted Average Price. Speaking of which, volume is the lightest we have seen since mid-January (14th). Cumulative Tick is slowly grinding higher, suggesting underlying strength. However, I'd like to see the slope of the Advance - Decline line pick up.  Semis are doing very well, but the Financials are holding back.  Lastly, here is a nice piece by Rob Hanna.

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Wide Difference Between Breadth Indicators Favors Bulls

By Rob Hanna | February 08, 2010 | 8:42 AM |  0 CommentsTweet This

Two useful breadth statistics that are tracked by Worden Bros. are the % of Stocks Trading Above the 200ma (T2107) and the % of Stocks Trading Above the 40ma (T2108). At the current time the difference between these two readings is very large. 72% of stocks remain above their 200ma, but only 24% stocks are above their 40ma. The only other time since 1986 when Worden Bros. began tracking these statistics that the difference has been this large was late October / early November of 2009. To get such a large difference between the readings you would need to have a strong pullback occur in a strong uptrend. I was curious to see whether such a strong pullback was likely to derail the long-term uptrend and lead to further selling. To get a better sense I lowered the required difference between the two to 40. Below are those results.

In general, returns were positive from day 1. From a long-term perspective, such sharp pullbacks have been followed by additional buying. Any uptrend strong enough that such a large number of stocks were trading above their 200ma that the difference could be as large as 40 simply didn't fall apart when a strong selloff occurred. The 2004 instance saw a retest of the highs before the market underwent a lengthy but shallow selloff. The other instances all rallied through their old highs and kept rising. Instances are definitely low but results couldn't be any more bullish.

While we are now way above a difference of 35, I also ran that to get a few more instances.

This seems to confirm the previous findings and suggests the current breadth differential is indicative of not a market about to fall apart, but rather a market that is likely to resume its uptrend - or at least test its recent highs.

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GBP/USD Inches Off Floor in Volatility Trading

By Greg Michalowski | February 08, 2010 | 8:30 AM |  0 CommentsTweet This

The GBPUSD has had a choppy trading session as the market fights with negative fundamental bias and a market that may be oversold and in need of a consolidation/non-trend period. Last week the  price moved from a high of 1.6068 to the low of 1.5533 today.   The low from Friday reached 1.5557. 

The price is now back above 1.5600, moving above the 100 and 200 bar MA on the 5 minute chart at 1.5583 and 1.5593 respectively.   In addition, the price tested the 1.5557 level in the early NY session, falling to 1.5548, but this was reversed.  All of which gives a positive bias at least in the short term 

Longer term, there is resistance at the 38.2% retracement level of the 2009 low to high range which comes in at 1.5689.  Before that look for resistance at the 1.5629/36 area which was the close from Friday and a double top from Friday's afternoon trade.  With little in the way of economic data today, trading should continue to remain choppy. 

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