Tech Musings:- Currency

In my post on 16^th April 2013 I gave a long call on yen with a stop loss of 102. Yen had hit my stopl oss and is currently trading above 102 levels. Yen has already depreciated around 30% since my short call on November 16^th.  I think the rally in yen is overstretched and as we can see from the charts yen is trading near significant resistance. Yet I feel yen may have some more steam left and may move to 105 levels before it finally starts its retracement. As I have mentioned regularly, I am a long term bear on Yen and see it moving towards 112 and 120 levels in next few years.

    

AUD looked weak and in my call on 3^rd march 2013 I wrote, “Similarly AUD has broken the trend line and faced resistance exactly at channel resistance. I have been bearish on AUD since September 2011.   AUD should go below 0.95 levels by the end of this year.”   At that time AUD was trading around 1.02 levels and have made a low of 0.9711.

As you can see from the chart AUD looks very bearish and, we may see AUD falling below 0.88 before the end of this year.

Next chart is CAD. I have been bearish on CAD since June 2012 and reiterated my call on 19^th December 2012. CAD is consolidating at the trend line and is taking a long time to breakout. I expect it to breakout before the end of this year. Since it will breakout after long consolidation the up move will be very intense and violent.  Expect CAD to touch 1.20 before the end of 2014.

In my last post on Euro on 12^th December 2012 I wrote, “The neck line for breakout is around 1.30 – 1.32 levels. Once euro breaks above 1.32 the target for this pattern would be 1.40.”  

Euro broke the resistance but fell short of my target. It moved upto 1.3662 and started correcting from there. Euro chart is showing significant weakness. We should also consider that a very bullish pattern in Euro failed to materialize which increase my negative bias for Euro.

If we look at the current chart we can see that Euro is forming a bearish head and shoulder pattern and is currently trading near the neckline of 1.2750. Any break down below this level may result into further depreciation upto 1.18 and below. 

My last chart is of INR and USD. As readers would remember I have been continuously bearish on INR since August 2011. In my last post on 16^th April 2013 I wrote, “As per my reading INR is poised for long term breakout. Any closing above 55.50 and 56.50 will cause sharp depreciation in INR and it will move towards 60 if not more.”

Finally it seems that INR has given a break out. If we look at the given chart we can see that INR is clearly breaking out of long term consolidation which lasted almost 1 full year. I think finally INR is ready to resume its downward spiral and we will see it trading around 60 if not more by the end of this year.

Summary:-

·         Yen may start its retracement and may appreciate before eventually falling to 112 – 120 levels.

·         AUD will weaken significantly to 0.88 – 0.85 levels by the end of 2014.

·         CAD will move towards 1.20 levels.

·         If Euro breaks 1.27 it will fall sharply towards 1.20 levels

·         INR looks poised for deprecation expect 60 on charts before the end of this year.