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FX Daily Hotline 
27 August 2010     By C Dichio, Analyst

    
    
    
    
Chart of the day: KDR & downtrend renewal for the USDKRW

The Korean Won is not one of the most popular currencies to trade on the international markets. However, given the country's economic strength (the 15th largest in the world by GDP), we would suggest that this is an FX pair worthy of more attention.  

Our automated scanners have identified that the USD Dollar has posted a "peak" Key Day Reversal against the Won. We note that this event has happened at the slightly ill-defined sideways activity level of KRW1200.

Given that price action also seems to be reasserting the pattern of falling highs from June, we open a position in this pair - short the USD and long the KRW.

Elsewhere, we are a little short of trading ideas for today's hotline, but we highlight the USD at the top of the range against the Canadian unit. For the moment we hold back from attempting to short this pair - the tail down on last night's price action suggests that there are buyers waiting in the wings.

Please note that there will be no FX Hotline on Monday due to the UK public holiday.

    
Daily Comment:

The Swiss Franc appears to be still the currency of choice in the FX markets - a decision process determined by not so much as a beauty parade but more "which currency is the least awful. As we know, the other currency to benefit from inflows is the Japanese Yen. This latter currency makes less sense as a defensive hold in the long term (think of Japan's dreadful public debt situation and poor demographics), but momentum is all for the moment. We have overlaid the CHF index and JPY index for comparison.

 

 

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
EURMXNEuro/Mexican Peso16.6184+1.1%
CADMXNCanadian Dollar/Mexican Peso12.3537+0.8%
MXNUS$/Mexican Peso13.0693+0.7%
AUDJPYAustralian Dollar/Japanese Yen74.85+0.5%
NZDNew Zealand Dollar/US Dollar0.7029+0.5%
Top 5 Losses.
SymbolStockClose% Change
CHFUS$/Swiss Franc1.024-0.6%
DXYUS Dollar Index82.884-0.5%
USDEURUS$/Euro0.7864-0.5%
KRWSouth Korean Won per 1 US Dollar1189.95-0.5%
SEKUS$/Swedish Krona7.4136-0.5%
    
Signals

P&F Breakouts: Aug 26, 2010.

None Found

P&F breakouts identify medium-term trend changes. "Bull" breakouts occur when a stock reverses its downtrend by posting a "higher high". "Bear" breakouts are the inverse.
 

Key Day Reversals : August 26, 2010
CodeNameSignalLatestClose Change
KRWSouth Korean Won per 1 US DollarPeak1189.95-6.05

Key day reversals are technical signals formed by stocks posting an "outside day" of a higher high and a lower close. Sells/Peaks occur on countertrend reversals from a bullish trend and buys/Troughs occur on countertrend reversals from bearish trends. Signals are particularly powerful when occurring after a period of overextension.
 
 

MA Crossovers : August 26, 2010
None found

Moving Average (MA) crossovers identify longer-term changes of trend. We scan for "Golden" (bullish) and "Dead" (bearish) signals occurring when an instrument’s 50-day MA crosses its 200-day MA.

 

The FX Model Portfolio
Date Stock Code Type Open Price Current Price % P&L Stop Comment
12 May 2010 Turkish Lira Trade WeightedTWI TYSP Long 92.95 91.99 -1.03%86
12 Aug 2010 US$/South African RandZAR Long 7.2907 7.3155 +0.34%7.1
18 Aug 2010 US Dollar IndexDXY Long 82.223 82.884 +0.80%81.90
23 Aug 2010 Euro/Japanese YenEURJPY Short 107.10 107.39 -0.27%109.20
Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
DXYUS Dollar IndexProbes above the prior high and the falling 50-day MA.82.884-0.5% 79.507/80.03183.451
EUREuro/US DollarReasserting down from the falling 200-day MA.1.2716+0.5% 1.27331.3416/1.3361
GBPUSDUS Dollar per British Poundrecovers the dip below $1.551.5528+0.5% 1.51251.6069/1.5999
JPYUS$/Japanese YenDownward dynamic reafirms major downtrend.84.45-0.2% 79.75/8588.12/86.45
CHFUS$/Swiss FrancUSD reasserts the downtrend against the CHF.1.024-0.6% 1.0131/1.03321.0641/1.0619
CADUS$/Canadian DollarPair trades a choppy range. USD encounters resistance intraday above 1.06.1.0579-0.2% 1.0014/1.0108?1.0587
AUDJPYAustralian Dollar/Japanese YenFinds support at the bottom of the range.74.85+0.5% 71.9/72.6980.87/79.43
AUDNZDAustralian Dollar/New Zealand DollarAUD consolidates the recent rally.1.2608+0.2% 1.2209/1.241.2918/1.28?
EURJPYEuro/Japanese YenSignificant break to new low.107.39+0.3% 107.32115.49/114.74
EURGBPEuro/Pounds SterlingHolds the decline towards the Jun low.0.81888-0.0% 0.8070.8532/0.8363
GBPJPYGBP/Japanese YenPound shows sharp drop onto support from May lows.131.13+0.3% 130.43140.58/137.79
GBPCHFGBP/Swiss FrancTail down suggests support for GBP at the bottom of the range.1.5901-0.2% 1.5833/1.61811.6924/1.676
EURCHFEuro/Swiss FrancEuro probes below the late June lows. New all-time low.1.3023-0.2% /1.4041/1.3924
CHFJPYSfr/Japanese YenChoppy price action contrained by pattern of falling highs.82.47+0.5% 77.98/80.284.51/82.6
ZARUS$/South African RandUSD rallies from the floor at ZAR7.2.7.3155-0.2% 7.27.6758/7.3828
AUDAustralian Dollar/US DollarAppears to be finding support at the slightly ill-defined 0.88 sideways level.0.8877+0.2% 0.8634/0.89060.94/0.9222



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