The Aussie and Gold might be good buys this week

December 2, 2013

A fairly quiet end to the week given it was the day after the Thanksgiving day holiday and  the Stock Exchange closed at 1pm New York time. In the end there were some small losses for the Dow and S&P on Friday night in what was fairly quiet post holiday trade. At the close the Dow was resting at 16,086 down 0.07% with the S&P 500 falling a similar amount to close the week off 1,806. The Nasdaq was up 0.15% and closed the week at 4,060 it’s highest level in 13 years.

In Europe it was a similar story of relative weakness into the close with the FTSE ending down 0.05%, the Dax rose 0.19%, the CAC fell 0.17% while stocks in Milan and Madrid fell 0.41% and 0.21% respectively.

On the ASX the SPI 200 December contract closed Saturday morning down 9 points at 5,319 bid. I’m short that and have been for around 80 points and am targeting a move below 5100.

The Australian dollar is up this morning it is up a little at 0.9120 probably after the decent result in the Chinese Manufacturing PMI which came in at 51.4 against expectations of 51.1 – that’s an 18 month high still and supportive of the Aussie dollar.

Last week even though the Aussie fell I made money being long – not a lot by the way – maybe 3-4% but I did it trading long. Over the weekend when prepping for my show on BTFDtv it occurred to me that maybe Gold and the Aussie dollar might have been finding some support last week – or at least found a short term level of support.

This view is largely technical insofar as it driven by the charts and my own watching of the price action – so lets have a look.

On the Weekly charts the Aussie just made the third test  (maybe 4th, 5th or 6th) of a trendline going back to the 0.5960 GFC low and this level in the 0.9050/70 region is now key to whether the Aussie collapses to the 88/89 cent region or not.

Looking at the Dailies they have not yet turned but there are signs of a rally to come if the Aussie can stay above the lows of last week for a couple of days.

Worth keeping an eye on – especially with a week packed with data – but opportunities are likely to abound for Aussie traders this week.

Elsewhere even though it wasn’t a terrible week for the US dollar because of its strength against 2 of the big 4 traded pairs (Yen and Aussie) the strength of Euro and GBP is writ large and likely catching a few unawares. Sterling sits at 1.6358 and Euro and amazing 1.3585.

On commodity markets bitcoin has crashed as a dose of reality in parity with gold briefly on Friday New York time might have woken a few up to the ridiculousness of the recent run higher in real terms. It’s been down below $850 and is now back up near $1000 in the last half hour.

On traditional commodity markets gold looks like it might be finding some support and is up slightly at $1251 oz.

It’s the same weekly setup with gold as it is for the Aussie Dollar – same weekly support from the same point in time.

Might be time for a small long in gold or at least to go long an XAUUSD Call.

On other markets Copper has recovered again from a foray with a break lower and sits at $3.23 lb and Nymex crude is still in danger of a big break lower. It closed the week at $92.78 and $91.30 is key downside support.

On the data front it is the start to a monster week. I’d recommend having a look at the new Trader Diary post at Business Insider for a full look at a packed week.

Today we have the AiG performance of manufacturing index in Australia along with company profits and building permits but the HSBC Chinese Manufacturing PMI is probably the bigger data release for the day in a macro sense. Tonight we get a raft of European Markit PMI’s and then Markit PMI in the US and the big brother of all PMI data the ISM is released in the US as well.

Have a great day and good hunting

Greg

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