Commodity Bloc Split Between Stalled Risk and Rising Physicals

[B]My picks:[/B] Long AUDNZD
[B]Expertise:[/B] Combining Money Management with Fundamental and Technical Analysis
[B]Average Time Frame of Trades:[/B] 3 days - 1 week

Commodity-sensitive currencies have stalled and reversed across the board this past week. For my carry over CADJPY position, the first half of the week would carry the pair all the way down to the bottom of its trend channel and hit the second objective along the way. For my new USDCAD setup, the mid-week turn would have curbed profit potential; but I would ultimately never be entered. In the pull back that I was expecting after making a notable trend-channel breakout, entry orders were set to 1.1155. It so happened that that the turn lower would miss execution by one pip and the spread.

Now, we can see that the drop in risk appetite that facilitated a pull back in commodity currencies through the first half of last week has been put off. Many of the more liquid pairs are now coming off congestion and attempting to forge a reversal. Looking ahead, there are few key events or indicators that can be expected to veer sentiment in one direction or the other; so pairs sensitive to these influences are uncertain and exposed to breakout potential. AUDNZD has a considerable buffer to these influences. Through the turn in risk this past week, the pair maintained its course for six consecutive daily declines. Of course, New Zealand’s less stable outlook could endow it with a greater risk sensitivity; but that would be under more extreme shifts. In the absence of this fundamental activity, technicals will stand in. A rising trend connecting lows from Nov 4 to Mar 31 to Jun 1 offers a general bias which is further stabalized by fib confluence and a notable pivot around 1.2480/500. Compared to the long-term triple top below 1.2950, this may be a relatively loose formation to work with; but it can nonetheless hold off relatively minor shifts. My entry will be placed at 1.2520 and an initial stop will be below Thursday’s low at 1.2440. The first target will equal risk at 1.26 and the second will be within the past two week’s range at 1.2760 (I do not want to forecast a major bullish breakout from this position). To improve the risk/reward setup, I will trail the stop on the second half of my position to breakeven when after the first half meets the first objective.