Tuesday, June 21, 2011

June 21, 2011 - Market update

The second week of June predominately characterized with risk aversion. Risk was coming off the table left and right. The financial market conditions dominated and was the catalyst across the majority of markets. Despite any S/D issues, the dollar weighed heavily on crude prices pushing it below key 97 support. The USDX index was touch high into 76 but quickly retraced. Of course this was me with wild EUR/USD moves and the majority of majors tanking vs the USD. The US treasuries quickly paired back losses they experienced in the first weeks of June as equities continued to tank (clear indication risk aversion).

Last week June 13 - June 17

  • 4:6 total risk on/risk off  Europe and American sessions
  • 2 of 5 trading days were above the weekly High-Low average
  • 4:1 up/down days. 
Sentiment is definitely was negative all last week. Despite there being more up days the up day ranges are not volatile at all. This signals caution going into this week despite the end week and monday day risk on action. It is cautious at best.  Significant down side risk remains in the pair, much of the sentiment/fundamental risk coming from the Sovereign debt crisis. If relief is truly here we will see 1.445 in sight for the next resistance (this coincides with a 50 RSI break on the daily). Fail's at the 50 RSI on the daily can mean back to strong risk off and flooding the USD again. Look for confirmation of US treasuries falling this week and equities up. 

  • same risk on/risk off stats as EUR/USD - Same catalyst
  • However, the number of up/down days is 2:3 slightly higher than the EUR/USD 
  • There is higher volatility as well in the price high low ranges as  3 out 5 days were above the weekly average.
A lot of the volatility and negative price action has to do with soft Economic data coming from the UK, which was exacerbated by the Sovereign debt worries. Where as the EUR/USD generally experienced all its volatility in one day and crawled back up.  Though generally prices remained buoyant against the strong historical and psychological 1.60 level. A move down down this week at the previous weekly high low range would bring it right above 1.60 support. A break below this could be devastating for the pair and see lower price action and strong risk aversion. 

Analyze Capital LLC

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