Crude Oil (NYMEX) in Ascending Triangle Pattern - $82 breakout level to watch

Crude Oil has been consolidating below 82 nearly 2 months in 2009 and after a brief retreat to 70 it is back on track with a trend fueled by rising momentum as ADX is above 22 and going higher.

RSI is going along and rising steeply.

The trend has been steady since the bounce off 70 level and the Resistance at 82 should be really tough.

However if that level gives way there should be at least another 12 point rally on he other side of that line.

USD/CAD - Possible Breakout fo the 350 Range on Dailies

I'm looking for a breakdown of the 1.04 floor tested in November and December - with first target 1.0220 /the October Lows/.

The Daily chart has all he MAs and the whole pattern coiling in a tight 350 pip range and I'm suggesting at some point it will produce a meaningful trend as CAD is known for a good trending vehicle.

Usually the first test out of the is a fake one /tnx to Gary Savage for this one/ and I'm working with the assumption that the 1.0745 high was the first test out of the coiling range - so now I'm looking for the 1.04 Support to give way.

Looking the reactive moves in EUR/USD & GBP/USD off the recent lows I'm very close to calling the new USD selling wave has just begun an early positioning for the New 2010 Year.

US Treasury Yield confirmed Breakout - Target at 200-Week MA.

Two weeks ago I was calling US Treasury Yields are breaking higher.

Now we have a clear confirmation of that breakout and actually last week's candles both in Yield and UST 10-Yr Note price made meaningful Gaps and closed beyond long term trendlines that gives further credibility to the unfolding trends.

10-Yr UST Yield actually opened above both the long term trendline Resistance and the 2 recent consolidation Highs at around 3.60. RSI and ADX both look for continuation of the breakout and ADX actually is looking to turn up which means acceleration of the trend.

Targets and Ressitance clusters are at the 200-Week MA (4.08) and the Dec'07 & June'08 Highs around 4.30.

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10-Yr UST Note slipped through the LT trendline Support and the recent Lows around 117. Unwinding of the long Treasury positions will see gradual layers of support first at June-Aug'09 lows around 114 > then the 200-Week MA (113.22) and finally the Oct'09 Low at 111.

Fundamentally the selloff in bond market is logical as we see gradual improvement in jobless and industrial production data. Positioning for coming inflationary forces and the steepening of the Yield curve add more fire to the unfolding trends in the present environment.

4 Major currency pairs in the present moment and reflections on trend and range...

think as I misaligned my strategy for trend last few attempts while caught in a tight range day... that key to trading should be flexibility but also one needs a certain rule set or a method to discern the state of the market in order to trade in accordance to the present moment..

the reversal plays in this straight move in EUR/USD were very shallow - and on 4-hour timeframe the trend pattern is very clear. I think observing this trend move that ..

last 2 days /friday, monday/ however had low range - if using the BBands it pretty much likes as if the trend is actually accelerating - maybe this proximity to the 200-dma at 1.4186 has the whole market on focus and pulls mike a mega magnet.

the trading misfortune recently had a serious damage on the account but the learning worth believe is on balance.

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the momentum of a 3 week is obviously very strong!

when I see multi-day sequential trend I start to over rationalize of 'possible', 'unexpected' etc moves. in a way in my attempt to outsmart the market I outsmart myself while not going with the trend that is in the present moment .

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the trend - the contrarian thinking is takes the opposite side:
with each successive trend day the odds of reversal and its strength increases.
so here can be found 2 weak links:
1- one should be either using trend or range methods or in the best chance to be flexible and discernible to which the present market pertains.

2- the misalignment of risk profile to the timeframe - I got whipsawed on trades I attempted off the daily and 4-hour frames while I would be just great trading the daily range in the 1 hour to 15-min-as-signal frames.

Yield curve implications to FX trading

2 month inverted 10Yr-2Yr US treasury Notes Spread to EUR/USD direction shows it provided a divergence signal.

Buying the long end of the US yield curve on the assumption of positive economic growth translated into higher USD demand.

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The whole last 9 months we were in the tight SPX - EUR/USD correlation which was basically a risk taking/aversion trade.

Last 3 weeks since the USD reversed its trend we see the 10Yr-2Yr US treasury Notes Spread widening further and a sharp appreciation of the USD.

Here is a 1 year data 10-2 yr spread has been rising steadily along with the EUR/USD. Seems 3 weeks ago something happened as the EUR/USD trend has bent and spread is still moving higher. on this time frame we can make the 3 possible assumptions:

1. EUR/USD is leading and spread will tighten due to buying of the long end - which will mean deflation/economic problems/.

2. EUR/USD will again converge to the observed trend and is actually trading here at a huge discount.

3. This assumption is that the correlation is broken and USD will be bid on positive US economic prospects and the risk trading theme since March will be removed and give way to fundamental flows into US stock market as inflation fears will emerge and higher performance will be demanded.

SPX (S&P500 Index) correlation to EUR/USD was finally broken

US Treasury Yields are breaking higher

Last week I was calling for reversal in US Treasury Price and Yield.

Both Price and Yield of the 10-Year US Treasury Notes reversed their intermediate trends right at the 50-Week MAs.

As seen on the chart both are inside trend channels and bounced off the Trendlines and the prevailing scenario is they will break in the direction of the Longer term trend.

Yields closed last week at 3.55 High. There is Resistance levels confluence around 3.60 -3.75 and the break of that area will set target at the 200-Week MA at 4.08.

Bond prices reversed and closed for 2-nd week below the reversing 50-Week MA and bounced off the Trend channel top to lead its way into the projected 117 channel bottom. Breaking that support leads us at the Support confluence of Long term 114.50 Resistance/Support; the June - July Lows and also the 200-Week MA coming at 113.12 right now.

ADX trend strength has been at its lowest levels in the last 3 years and that would suggest we might be right before a trend acceleration once the course has been set. The recent USD appreciation along with latest positive US economic data signals a change in recent correlations and a turn back into more classic relationship: buying the currency of those going out of the recession first.