At the Open. The gold direction.

09:10CET

Good morning everyone, hope you are fine. The US Thanksgiving break usually reduces volumes and makes trading ranges rather tight; however, and particularly in the FX case, since it is London the place that dominates volumes, it has not proven to be so. After the EUR capitulation of two days ago, things seem to have eased down at first. There is one instrument though that can set the pace for the next USD move: Gold.

The unit is forming a very clear H&S pattern, and the latest dip sub $1,370 puts it back below the key support line it has been trying to regain for the last 4-6 trading days. The neckline of this move is found around $1,325-15, and a clear break of the level exposes a fast selloff towards $1,250 at least, which would make things look rather bright for the USD.

In the currency front, very little to add, except that AUD/USD, given its recent strength, is the best vehicle for going long USD at the moment, with the 0.96 target discussed earlier in this blog still valid.

To conclude this opening post, let me give you how retail traders are positioning themselves at this hour. Note that all 3 majors EUR/USD, GBP/USD and AUD/USD are now in majority of LONGS, which makes USD progress far more easy than before, hope the USD/CHF will turn the tide as well soon.

Nov 25, 2010 09:00 GMT+0100

   1. USD/JPY
      73.04% 26.96%
   2. XAU/USD
      71.14% 28.86%
   3. USD/CHF
      68.38% 31.62%
   4. USD/CAD
      66.86% 33.14%
   5. EUR/USD
      53.50% 46.50%
   6. AUD/USD
      50.27% 49.73%
   7. GBP/USD
      50.24% 49.76%

Posted via email from MT4