Market Forecast for 01-29-13

Euro: The EURUSD broke out to the upside from our recommendation to straddle both sides of the pattern last week, just as we were leaning to the downside (the sell side) in the US Dollar index.The Euro has now reached a measured move objective to the upside on the daily charts, so we are at a resistance level now.

However, the EURUSD can maintain an upward stance as long as any corrections do NOT take out the current two day low of 1.3350, which, if broken, would allow for a larger correction. Either way, the Euro is getting close to weekly and monthly resistance bands (in purple), so the Euro will either resist in here or a bit higher, then pullback for 1-3 weeks or break out of the bands this week (or next) and head much higher. See the monthly, weekly and daily charts for the Euro below.

euro monthly chart for 01-29-13

eurusd weekly chart for january 29, 2013

euro daily chart 01-29-13

ACTION: Use caution if long, keep stops at the two day low. Look to reverse to short if that 13350 is broken (and then only on intra-day bounces).

S&P500: The Standard & Poor's index has divergence on 3 out of the 4 oscillators, so whether it sells off from here or one day higher, a pullback should begin within 24-36 hours. We are thinking it will begin today.

ACTION: short-term traders should fade the uptrend on the daily charts once the 30-240 minute trends turn lower (the 30 & 60 minute chart trends are already heading down). See the S&P daily and 240 minute charts below with complete analysis.

sp500 daily chart for january 29th

s&p500 240 minute chart 01-29-2013

DX: The US Dollar index sold off as expected, but not very much, which has left us with a compressed inside day for Monday.

One inside day is often a nice breakout point to straddle both sides. However, if we get another bar that stays inside Friday's range (the large down bar), then we would have an excellent breakout trade in either direction. The RD-Forecast indicator is slightly below the ZERO line, but close enough to zero to make us want to place both long and short breakout orders (see daily chart below).

dollar index daily chart 01-29-13

ACTION: BUY and SELL the high/low range of Friday's price bar. Use the dashed lines as the target points. IF Monday is an inside day of either Monday or Friday's range, then after Tuesday's close, move the breakout orders to Tuesday's High/Low range and take the breakout in either direction form those prices.

AUDUSD: The monthly chart for the Aussie has provided a compression pattern and leaves open a significant potential move in either direction. The USD or the AUDUSD may lead this move, so be ready for both of these markets. These are the kind of setups than can make your year.

ACTION: Get ready to pounce on this, perhaps heavier than usual. Consider trading the pullbacks or retracements using the daily and 240 minute trends to catch the big move this pair is likely to provide in the near future (see Aussie monthly chart below).

aussie audusd monthly chart 01-29-2013

Yen: The USDJPY pair has divergence on the daily price oscillators. Expect a pullback lasting 2-7 days starting in the next 24 to 36 hours and materializing likely sooner than later (see daily Yen chart below).

us dollar yen chart january 29, 2013

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