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Today's Highlights - 06-20-11
Today's Highlights - 06-20-11
Technical Developments in the Foreign Exchange and Asset Markets 20 June 2011 Tom Fitzpatrick (1-212-723-1344) Shyam Devani (44-207-986-3453) Alex Good (1-212- 723-3469) CitiFX.Technicals@citi.com
Todays Highlights
Spanish government yields will look set to push much higher if they close above the nearby 5.62% level Continued trend channel holds on the Dow Transportation Index and the S&P 500 mean breaches of 1250 and 5000 supports should be seen before anticipating the next large drop in US equities EURUSD looks to retest the 1.3970 lows as the 76.4% holds and EURUSD trades below the 55 DMA. An acceleration of EURUSD 1 Month Volatility through the 13.2 area has furthered our view of a lower EURUSD USDCAD is approaching a double bottom neckline at .9850 while GBPUSD is testing its head and shoulders neckline in the 1.61 area. Daily closes through these levels would suggest further USD strength Crude has broken major supports in the $93 area and we expect it to push lower to the 200 week moving average at $83 USDBRL will look prone to push higher if it breaks through the line drawn from downward sloping tops at 1.6150 Chart of the Day: Spanish Government 10 Year Yields
Bullish outside week (yields), double bottom targeting above 6%, which is a major resistance from 1999
Spanish 10 year yields look posed to push much higher if they break through through their double bottom neckline of 5.62% on a daily close basis. The double bottom targets 6%. An acceleration through the 6% resistance would mark a major break suggesting much higher levels for Spanish yields Price action has consolidated in a flag formation after an impulsive move from 3.94% in October 2010 to the peak of 5.67% in November 2010 Continued pressure on Spanish fixed income, especially if we begin to see bear flattening 2s 10s in Spain, would suggest further downside for EURUSD.
CitiFX Technicals
20 June 2011
The Dow Transportatation Index has been holding its long term trend channel on a daily close basis for the last 4 days. This support would be breached if we see a close below 5100. Given our focus on this Index as a leading indicator for asset markets in general, a close beneath the 5000 area would be a bearish signal opening the way to the May 2010 4800 pivot level Continued bullish price action especially a push through the 55 day at 5330 would question our short term bearish view given the hold of supports S&P 500
The S&P 500 Index will look very vulnerable if it breaks through 1250 supports that correspond with the 200 day moving average, the March lows and the upward sloping trend channel We held the 200 day moving average on 16 June, at 1258. It appears that the price action is consolidating in front of supports similar to the Dow Jones Transportation Index
CitiFX Technicals
EURUSD
20 June 2011
The 76.4% on Euro has continued to hold and weve broken the 55 day moving average which now serves as resistance at 1.4410 The short term support area comes in around 1.4150 We see the Euro moving back to 1.3970 supports, a breach of which would argue a push much lower EURUSDV1m
Euro 1 month implied volatility has completed an inverted head and shoulders. Its break of the 12.85 % area argues a push higher towards 17%, with interim resistance at 15.6%.This chart may also be forming a double bottom at the 9% area with a neckline at 18.5%. A breach of this neckline would argue for an impulsive multi-percentage drop in EURUSD
CitiFX Technicals
USDCAD
20 June 2011
USDCAD has important resistance at .9850 which is the 76.4% retracement drawn from the March highs A break of .9850 on a daily close basis opens the way to .9975 GBPUSD
GBPUSD is testing the neckline of a head and shoulders pattern at 1.6110. A break below herec would target the 1.53 area.
CitiFX Technicals
AUDJPY
20 June 2011
AUDJPY is testing the 84.40 support area that was pivotal in both February, May and June. A breach of this level should open the way to 83.41, the 200 day moving average A push below 83.41 would see AUDJPY without any obvious supports until the 61.8% retracement of its move at 80.44 USDBRL
USDBRL paused at its long term base at 1.5540 and has since headed higher off a 76.4% retracement at the lows. A push through the downward sloping tops near 1.6150 would open the way to the 76.4% Fibonacci neckline at 1.6450
CitiFX Technicals
Crude Oil
20 June 2011
Crude has broken out of its triangle wedge, broken the neckline of a downward sloping head and shoulders (Target on this break could be a s low as $75), broken its 200 day moving average and its upward sloping trend channel We ultimately think that Crude is headed to the 200 week moving average in the $83 area at a minimum.
CitiFX Technicals
20 June 2011
PLEASE NOTE THAT: The tables and information specified below under Short Term Conviction views, Long Term Conviction views, CitiFX Technicals Portfolio, Strategic Portfolio, and Tactical Portfolio ARE NOT INTENDED AS, AND DO NOT CONSTITUTE, AN OFFER, RECOMMENDATION, ADVICE OR A SOLICITATION TO BUY, SELL OR TO ENGAGE IN ANY STRATEGY, WHATSOEVER, IN ANY FOREIGN CURRENCY CONRACT OR ANY INSTRUMENT OR INVESTMENT. EACH DECISION BY YOU TO ENTER INTO ANY FOREIGN CURRENCY CONRACT OR TO INVEST IN ANY INSTRUMENT OR ENGAGE IN ANY STRATEGY MUST BE BASED ON DILIGENCE AND ANALYSIS INDEPENDENTLY UNDERTAKEN BY YOU AND YOUR ADVISORS. PLEASE CAREFULLY REVIEW THE DISCLAIMERS AT THE LAST PAGE OF THIS DOCUMENT.
Instrument
View
Target
Level today
Crude
Bearish daily reversal at the highs and breach of near term supports suggest short term weakness
13 April
* $93 Target Met and extended to $83.40 (200 week moving average)** In addition a move to $75 (Head and shoulders target) cannot be ruled out.
$92.05
EURUSD
09 May
1.4266
CRB Index
Weekly reversal at the highs, momentum diveirgence and large 55-200 day moving average gap
09 May
334
NDX
Breached the 55 day and trend support arguing for a move to the 200 day
24 May
2,200
2,192
EURCHF
23 May
1.2056
EURGBP
Breached 55 day and 50% retrace of the rally from Jan. Setups in Fixed Income spreads also argue for a move lower
25 May
0.8450
0.8815
USDJPY
76.4 against the highs and close below 80.70 suggests lower levels ahead
06 June
80.28
Convictions represent the views of the CitiFX Technical staff and not actual trades.
CitiFX Technicals
20 June 2011
Source: CitFXTechnicals Views 20 June 2011
Instrument
Level today
S&P 500
Bearish year with double digit percentage down close of 15-16 % (1,055-1070) expected. Intra year bear market (High to low fall of 20%+ ) also a danger. Peak could well come in the opening days of the year.
Strong
Strong
1271
10 year yields to head towards 4% and possibly 4.5% by end of year. 30 year yields to head towards 5%
Strong
Strong
Crude
Strong
$91.90
Gold
Strong
Strong
$1,536
Palladium
Strong
Strong
$734
EURUSD
A move to high 1.40s (1.4850) by end of year) with possible 1.50+ and even 1.60+ in early 2012
Strong
Weak. We have now changed our year end view and believe that the move seen to 1.4265 1.4940 on 04 May has established a long term peak earlier than we thought. Data as at 20 June 2011
CitiFX Technicals
20 June 2011
Strategic Portfolio
Data as at 20 June 2010
Instrument
Position
Date established
Comment
Entry
Target
Present level
Tactical Portfolio
Data as at 20 June 2010
Instrument
Position
Date established
Comment
Entry
Target
Present level
EURCHF
Short
23 May 2011
EURGBP
Long 0.8450 Put Option (expiry 06 July) Long 1.40 Put option (Expiry 28 June)
25 May 2011
5 month consolidation seems over and the double top argues for further losses Price action is similar to that seen at the highs in October 2010 suggesting further losses Short term price action looks corrective and the setups still remind us of Nov 2010
1.2375
1.2520
1.2042
Premium paid
0.8450
0.8815
EURUSD
27 May 2011
Premium paid
Sub 1.40
1.4265
CitiFX Technicals
20 June 2011
CitiFX Technicals
20 June 2011
FX Technicals
Tom Fitzpatrick New York 1-212-723-1344 thomas.fitzpatrick@citi.com
Structuring Group
Stephane Knauf London 44-20-7986-9486 stephane.knauf@citi.com
CitiFX Technicals
20 June 2011
CitiFX Technicals
20 June 2011
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