<span style="text-decoration: underline;"><strong>1. INTRODUCTION:</strong></span>

I am still under the weather a little. I just cannot shrug of the flu like symptoms, hence, the reduced tweeting.  I am however, still trading a little and following the markets closely. There were some key break outs this past week and these will be the focus of  "The view" this week. I believe the market is once again poised to make a significant move.

I have been trading the USD/JPY  scalping both long and short with reasonable success, and as usual, scalping the EUR/USD. My biggest trading pair however has been the GBP/USD short and long, and, for once cable actually did what it should have done.....sounds crazy but usually when I see a short GBP/USD trade, it reverses on me and vice-versa. The last few days however it has been consistent for me. I am now just looking out of my kitchen window to see if I can the squadron of pink pigs flying by. Cable working out for me is that rare!!

Looking ahead the AUD/USD, USD/CAD, NZD/USD, GBP/CHF, USD/CHF and EUR/GBP interest me and some of these will form the basis of my longer term trading strategy. As I decide on my approach I will tweet my entry levels and trade thoughts.

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<span style="text-decoration: underline;"><strong>2. THE VIEW FROM FROM TRADING DESK:</strong></span>
<p style="text-align: center;"><span style="text-decoration: underline;"><strong>ARE YOU READY FOR USD STRENGTH?</strong></span></p>
I feel like at times that I am repeating myself a little. As I look back over my past blogs the same subjects re-appear, but then, this is trading and trading is a repeating and basically simple function, so it is not surprising that there is repetition.

We are once again back at the crossroads that I wrote about a few weeks ago prior to my Hong Kong vacation. The key difference this time is that we have seen the start of the moves with most of the currency pairs.  Fundamentally, I have been saying that since September/October last year my key indicators have been diverging. The best example is the AUD/USD not breaking 1.1000 like some of the analysts on CNBC were predicting over and over again. All the time as the equity markets relentlessly pushed higher the AUD/USD basically range traded. Even now as equity markets in the USA are almost at 5/6 year highs, and, all time highs, the correlation between the AUD/USD and equities is broken. It has headed lower and broken through the support of it's trading channel, we are at 1.0200.

I have written several times in past blogs that all the easing being placed into the markets via the central banks, will at some stage have a reduced impact as a diminishing effect would take over. In my opinion, we are there, and, we have been for a while. I always say, Commodities lead the markets, then bonds and Forex...equities are the last to the party. This can been seen so clearly at the moment in the U.S. equity markets. There is clear divergence, with good or bad U.S.econmic news the equity markets rise as they (The Money Men) know the FED will continue to support Wall Street.

In the Forex markets we have had significant beginnings of some critical moves in the key pairs.

The GBP/USD is broken. We are testing 1.5000 and with the PMi, GDP numbers recently released, the debt down grade and basically the poor fundamentals in the UK, I can see this pair below 1.4000 in the next six months. I see no good news on the horizon, no bright lights at the end of the tunnel. More QE...big whoopie, at best it will hold the present positions for a short while, but then, we drop lower.

The EUR/USD is on the brink. I am being kind with that comment. We are currently playing out a "Head and Shoulders" pattern, which has a measured move down to 1.2900. We are just consolidating around 1.3000. I do fear a bounce in the near term, but, fundamentally we will head lower. Remember, Europe is a mess there are only so many things that the ECB and Draghi can do. Liquidity maybe an issue once again as during this past week LTRO payments to the ECB were severely cut back which indicates liquidity issues with the European key banks. No surprise this position/news is Euro negative. We still have uncertainty in Greece and then there is Italy. Holy Mother of God....Italy is a blog on it's own. It's not good news, it's uncertainty will be with us for weeks, maybe months and markets hate uncertainty...this will roll on an on, or should I say, the "Can"(another Euro can) will be kicked down the road. Spain is in denial. Whichever direction you look in the Eurozone, north, south, east or west the fundamentals are so poor. It is only a matter of short time before we are testing 52 week lows.
Draghi's press conference this week will be interesting. He does not have to worry about Euro strength this time but more concerns about the periphery. He can do little about the fears and hates the voters have with austerity, in fact, the politicians cannot sort this. The Eurozone is NOT goo news.

As the EUR/USD goes own it's inverted friend the USD/CHF goes the other way. We are in break out territory with the "Swissy", 0.9500 and above beckons.

The USD/CAD, AUD/USD, NZD/USD, USD/SEK, USD/NOK all the commodity currencies are weakening, which means, the US is strengthening. commodities and then their currencies lead the way.

Look at the Holy Trinity...Gold, Oil and Copper....all in down sloping channels.

USD strength is without question appearing and recently there were calls that the USD index could hit $88 or $89. If this were to happen this would place the EUR/USD below 1.2600.

Get yourselves ready and note the moves, get your trading strategy in place, If you do not want to trade the USD majors look at the cross pairs like the EUR/AUD, EUR/CAD, EUR/NZD, GBP/AUD and GBP/NZD.

I have not mentioned the Yen pairs.....but what if commodities  and the USD move as I hae written? This will have an effect on the equity markets eventually. What do you think happens to all the Yen pairs?

Interesting times ahead. Get ready.

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<span style="text-decoration: underline;"><strong>3. MY LONGER-TERM TRADES:</strong></span>

None in place at the moment, but follow me on  twitter @pipaccumulator over the next week and as I place my long term  trades I will post the levels etc.

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<span style="text-decoration: underline;"><strong>4. LOOKING AHEAD KEY SUPPORT AND RESISTANCE LEVELS IN THE USD MAJOR PAIRS:</strong></span>

<strong>EUR/USD: Closing Price 1.3016.</strong> We are on the brink. I think we may bounce off 1.3000 to 1.3250/1.3300 before resuming the down side move. I do however believe  that we will be trading sub 1.3000 soon. If we break lower in the coming sessions to complete the "Head and Shoulders" measured move to 1.2900, we may just re-test 1.3000 and then resume the down trend. I think the trading channel for now is 1.2900 to 1.3250.

<strong>GBP/USD: Closing Price 1.5034.</strong> The Cable is broken. We will be heading lower, much lower. It will not be a waterfall drop as we have come such a long way so quickly. We will need to work off the oversold RSi's (Relative Strength Indicators) first.  This week 1.5070 an then 1.5150 are key to the upside limits and support is 1.5000, below there there is a lot of air to 1.4300 and 1.3800. Round numbers supports will offer support on the way lower.

<strong>AUD/USD: Closing Price 1.0201.</strong> During the week an Australian Government Data release that was a couple of months old indicated that the AUD was overvalued in the eyes of the RBA. They saw that it needed a correction of about between 4% and I think it was 8%. We have support at 1.0150 then it's parity. The RBA is citing around 0.9800. That is where I am looking. Resistance is back at 1.0275 and 1.0360 should we go there. I am very bearish.

<strong>NZD/USD: Closing Price 0.8247.</strong> This pair has been very strong of late, but is now starting to weaken. As the RBNZ has stated recently that it will intervene in the currency markets  if required........this pair is also heading lower. My target is sub 0.8000.....quite a way sub 0.8000. For this week however we need to break below support at 0.8220 and resistance is at 0.8330.

<strong>USD/CAD: Closing Price 1.0265.</strong>  We are breaking out. Support is at 1.0200 an resistance is initially at 1.0360.

<strong>USD/CHF: Closing Price 0.9425.</strong> If this pair breaks 0.9500 and we run to 0.9750 then it's parity once again. It all depends on the EUR/USD and Gold. Support is at 0.9360 and then 0.9330.

<strong>USD/JPY: Closing Price 93.35.</strong> Just not sure how to play this pair now....I was convinced that we would be testing 92.00 by the end of last week instead we are mid range. I see the channel as 92.20 to 94.50.

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<span style="text-decoration: underline;"><strong>5. NEW ITEMS THAT INTEREST ME THIS WEEK:</strong></span>

MONDAY: AUD - RBA Interest Rates

TUESDAY: GBP - Services PMi
TUESDAY: AUD - GDP

WEDNESDAY: GBP - Merv the Swerve takes the stage once again (BOE)
WEDNESDAY: USD - ADP Non Farm payrolls
WEDNESDAY: CAD - BOC Interest Rates

THURSDAY: JPY - BOJ Press Conference
THURSDAY: GBP - Interest Rates ans Asset Purchases
THURSDAY: EUR - Interest Rates and ECB Press Conference

FRIDAY: CAD - Unemployment rates
FRIDAY : USD - Non Farm Payrolls.

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<span style="text-decoration: underline;"><strong>6. CLOSING THOUGHTS:</strong></span>

Big news items this week.

Opportunities to make lots of money this week, but also do not get caught on "Knee Jerk" market reactions. Trade smaller this week and add next week to profitable positions as the trends hopefully will take hold.

Good Luck,

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Scott Pickering
The Pip Accumulator
Saturday 2nd March 2013.

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