Trading Currency ETF’s: Easy As A, B, C
- Posted by Greg Harmon
- on April 6th, 2011
The tragedy in Japan is impacting the Yen, the debt crisis in Europe threatening the Euro and non-existent inflation and mounting debt devaluing the US Dollar. With all this bad news where else in the world are the strong currencies? Actually that leaves quite a list, even if you limit it to where they speak the same language. And even if you are limited to trading equities it can be as easy as A, B, C. Australia, Britain and Canada that is.
The FXA had a large run higher from June 2010 through to November 2010, gaining 21 points. Then it based between 97.60 and 101.80 for 3 months and it is now rising again. As it rises the Bollinger bands (BB) are expanding, the Relative Strength Index (RSI) is pointing steeply higher and the Moving Average Convergence Divergence (MACD) indicator is improving. The Simple Moving Averages (SMA’s) are also sloping up, albeit barely. There are two targets from this chart. The first is 106.00, adding the channel width to the breakout level. The second is 120.70, adding the previous 21 point move higher to the center of the channel at about 99.70. 103 would be a good place for a stop.
The FXB is approaching resistance at the 162.40 area that has been a menace previously in November and over the last month. If it can get through and hold over this level then it would have a target of 165.80 initially from adding the recent channel width to the break out level, and then a measured move to 168.40 from the comparable move from year end to early March. The RSI is steeply sloped and the MACD is crossing positive while the BB expand, all supporting a move higher. Enter on a hold over the breakout level and then place a stop just under it.
The FXC has been in a rising wedge/channel for the last five months. Wednesday it broke above the channel, but printed at shooting star, potential reversal candle, right a the top of the BB. Despite that reversal signal, which needs to be confirmed, the RSI and MACD both look strong and suggest more upside. There are three things to watch for with the FXC. The first, if it moves higher Thursday, negating the shooting star, then the initial target is 105.77 adding the channel width to the break out level. If it does move lower Thursday then watch the breakout level. If it holds above it then you can enter long with a tight stop just under the rail looking for the same target. If it drops below the rail then you could enter short with a stop at Wednesday’s low, looking for a retracement to the bottom of the channel near 101.
Enjoy these 3 currency plays if you are not able to dabble directly in the foreign exchange market. And if by chance English is not your first language but Spanish is, then you are also in luck.
The FXM has also been in a rising channel for several months. It has a rising RSI and MACD and expanding BB’s. If this can break through the top rail of the channel then it has a target of 86.90 and if it rejects then the ride to the bottom of the channel at 83.10 could be lucrative, using stops just below the channel on the long side trade, and just above it on the short side trade.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Watching the Cup and Handle in Hewlett-Packard
- Premium Earnings 11-20-14
- Spotting Sharks in Corn & Oil
- Positioning to Buy Disney on a Dip
- Premium Earnings 11-19-14
- The Dollar Is Recuperating
- Deckers Outdoor, a Chart with Some Much Goodness
- Premium Earnings 11-18-14
- Updating the SOX: Pausing Where You’d Expect, Move Along
- Market Pro Gartley: Short Dupont