Month: December 2009

By CountingPips.com

The United States trade deficit decreased more than expected as exports rose by 2.6 percent in October according to a release by the Commerce Department today. The U.S. trade deficit declined by 7.6 percent as the deficit registered $32.9 billion in October following a revised deficit of $35.7 billion in September. Market forecasts were expecting the deficit to rise to approximately $36.7 billion for the month.

The U.S. had a total of $136.8 billion worth of exports in October which was an increase of $3.5 billion over September’s total. October imports edged up just marginally with a total of $169.8 billion worth of imports for an increase of $0.7 billion over the September level. Also contributing to the lower trade deficit in October was a decrease in imports of petroleum products which declined by 10.0 percent for the month.

The U.S. trade deficit with China, despite the monthly fall, did edge up in October. The deficit with China increased to $22.7 billion in October from a deficit of $22.1 billion in September. Other notable U.S. trade deficits were with the European Union at a $4.9 billion, Japan at $4.4 billion, Mexico at $4.6 billion, OPEC at $5.8 billion and Canada at $2.0 billion.

U.S. trade surpluses with other countries for October included Australia at $1.3 billion, Hong Kong at $1.6 billion, Singapore at $0.9 billion and Egypt at $0.4 billion.

Weekly Jobless Claims rise.

A separate government release by the U.S. Labor Department showed that weekly U.S. jobless claims increased in the week that ended on December 5th. New jobless claims grew to a total of 474,000 unemployed workers, an increase over the prior week by 17,000 workers. A 4-week moving average of unemployed workers fell by 7,750 from the prior week to a total of 473,750.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending November 28th decreased by 303,000 workers to a total of 5,157,000 unemployed workers. A four week moving average of continuing claims dropped by 123,500.

US Dollar mixed in Forex Trading.

The U.S. dollar has been mixed in forex trading today against the other major currencies as the U.S. stock markets have been higher today. The dollar has gained slightly today versus the euro, Swiss franc, Japanese yen and British pound while falling against the Canadian dollar, Australian dollar and New Zealand dollar at 12:09 pm EST according to currency data by Oanda.

The U.S. stock markets have been positive so far today with the Dow Jones gaining by over 60 points, the Nasdaq increasing over 10 points and the S&P 500 up by over 5 points.  Oil edged down by $0.28 to $70.39 while gold gained $7.60 to trade at the $1,128.00 per ounce level.

NZD/USD Hourly Chart – The New Zealand dollar gaining today versus the US dollar in forex trading.  Today, the commodity currencies are gaining versus the USD after a steady decline over the last week and the NZD has pushed to trading back over the 0.7280 level.

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By Anton Eljwizat – Gold slid to as low as $1121.30 an ounce early today, which is largely owed to the USD’s gains vs. the EUR in early trading. In the past week, Gold has made a significant downward correction, which can be directly correlated with the bearish trend of the EUR/USD cross. This recent activity has raised the stakes for traders. From here on, the forex and commodity markets will see very high volatility indeed.

Pivot: 1115.00
Our Preference: LONG positions @ 1120 with targets @ 1155 & 1165.
Alternative scenario: The downside penetration of 1115 will call for 1100 & 1070.
Comment: Price is shaping a falling wedge pattern, calling for a rebound.
Trend: ST Bullish; MT Bullish
Key levels Comment
1200** Horizontal resistance
1165** Horizontal resistance
1155** Intraday pivot point
1129 Last
1115** Horizontal support
1100** Horizontal support
1070** Horizontal support

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: ForexYard

After three days of continuous gains, the U.S. Dollar ended its winning streak Wednesday, as traders began to turn to riskier currencies amid a positive day on Wall Street. Subsequent gains made by the EUR threatened to end any prolonged Dollar increase.

Economic News

USD – Dollar Slides Amid Increased Investor Risk Taking

Following an upbeat trading day Wednesday on the U.S. stock market, the Dollar slid against its major counterparts for the first time since last Friday’s unemployment figures. The Dollar Index dropped to 76.043 from 76.236 as investors began to speculate whether rumors of an impending hike in U.S. interest rates may have been slightly premature. The increase in stocks led to significant gains for the Euro, which was trading above the 1.4730 mark earlier. While the Dollar may have had a rough day in trading, there are several news events on Thursday that promise to create some volatility in the market.

Set to be released at 13:30 GMT, the weekly U.S. unemployment claims report will be a telling statistic as to whether last weeks report was merely a fluke, or the American job market is really improving. If the number comes in at or around the forecasted 463K, the Dollar may make some gains, as the number is roughly the same as last weeks’. If the figure comes in at a significantly higher number, the Dollar could be pushed further down as this would signal the American economy is still not on stable ground.

EUR – EUR Makes Gains Following Positive ECB Rate Outlook

Amid speculation that a report being released on Thursday will show an increase in production in Italy and France, the Euro made impressive gains against both the Dollar and Yen in early morning trading. This is leading to speculation that the European Central Bank (ECB) may be able to abandon its policy of accommodating its banks in the near future.

Traders may want to pay attention to any news coming out of the ECB. Positive economic data could signal that Europe is recovering faster then America and Japan, and could lead to further gains for the EUR. At the same time, if the U.S. unemployment figures come in as expected, the Euro could lose ground on the dollar. A stable U.S. jobs market will likely lead to gains for the Dollar and could result in a repeat of this past week’s EUR losses.

Against the Yen, the EUR made gains after a strong Australian jobs report brought back investors to risk taking. It would appear that the positive news from Australia has halted the gains the Yen had made in the last few days. With the European production figures set to be released today, the Euro could emerge even stronger in afternoon trading.

JPY – Yen Falls Following Australian Jobs Report

Following yesterday’s gains against the Dollar and EUR, the Yen took steep losses after a very good Australian jobs report on Thursday morning. Investors appeared to be abandoning their safe haven positions with the Yen in favor of riskier currencies like the Aussie and Kiwi. Consequently the Yen fell to below 130.00 against the Euro in early morning trading.

Looking ahead, traders may want to pay attention to the news coming out of Europe and America. Any negative European news would increase the Yen’s appeal as a safe haven currency and could lead to serious gains. At the same time, positive news from Europe may lead to a prolonged drop in the Yen against its major counterparts.

Crude Oil – Crude Prices Fall Following Inventories Report

Following a U.S. inventories report showing an increase in distillate oil stockpiles, crude prices fell as there appears to be a glut of the commodity in the American market. While crude oil inventories actually fell, investors largely seemed to ignore this, instead choosing to pay attention to oil overall. Consequently the price of crude fell to just above $70.00 a barrel.

Most analysts are predicting that crude oil prices will stay low for sometime, as a weak economy is forcing many Americans to cut down on fuel consumption. That being said, any positive employment news coming from the U.S. could lead to an increase in prices. Economic gains made in the U.S. will likely lead to an increase in consumption, especially as the weather gets continuously colder.

Technical News

EUR/USD

The cross has been dropping for the past week now, as it now stands at the 1.4710 level. The Slow Stochastic of the daily chart shows a bullish cross has recently formed, indicating that an upward correction is imminent. This view is also supported by the RSI of the 4-hour chart. Going long might be a wise choice.

GBP/USD

The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops may turn out to pay off today.

USD/JPY

The typical range trading on the hourly chart continues. The daily chart RSI is floating in neutral territory. However, the pair currently sits near the bottom border of the 4-hour chart’s RSI, suggesting an upward correction may be imminent. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.0280 level. The 4-hour Chart’s RSI is already floating in the overbought territory indicating that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

The Wild Card – Crude Oil

Oil prices are once again dropping, and it is currently traded around $70.50 per barrel. And now, the daily chart’s Slow Stochastic is giving bullish signals, indicating that Oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Movers of the Day

Asia-Pacific

*Japanese GDP for the third quarter worse than expected at 1.3% annualized

*Australian Trade Balance worse than expected at -2379M

*The Reserve Bank of New Zealand kept benchmark interest rate at 2.5%

Europe

*UK Nationwide Consumer Confidence better than expected at 73

*Switzerland’s Unemployment rate lower than forecasted at 4.1%

*German CPI better than expected at 0.4% annualized

*German Trade Balance better than expected at 13.6B

*UK Total Trade Balance in line with market estimations at -£3.2B

*UK Pre-Budget Report

Americas

*US EIA Crude Oil stocks dropped 3.8 million barrels

*US Wholesale Inventories better than expected at 0.3%

The Overall Sentiment

Equities

US stock markets recovered from earlier losses, closing on the positive side, in a day where Europe provided the headlines. The S&P closed up 0.4%. European stock markets reacted negatively as Standard & Poor’s Ratings Services lowered Spain’s outlook on its debt to negative, one day after Fitch Ratings downgraded five Greek banks, raising worries about further debt grade reductions in additional European countries. The British FTSE 100 dropped 0.4% and the German DAX Index declined 0.7% led by losses from banks and financial institutions. The Japanese Nikkei 225 fell 1.3% on disappointing GDP figures showing that the country’s economy grew in the third quarter at a much slower pace than initially reported.

Forex

The Dollar traded in a volatile manner against most majors in a day with no key US economic data releases. EUR/USD altered between gains and losses, moving up to 1.4780 to fall back below 1.4680 and finally settling around 1.4725. The Pound weakened against the Euro and the Dollar ahead of the BoE’s rate decision as the Chancellor of the Exchequer Alistair Darling imposed a 50% tax on bank bonuses in his Pre-Budget Report and stated its intention to increase income taxes next year. The New Zealand dollar strengthened as the RBNZ left benchmark interest rate unchanged at 2.5% and its Governor Alan Bollard suggested that rate hikes may start in mid-2010. USD/CHF continued to move away from parity aiming the 1.03 level ahead of the SNB’s interest rate decision.  The Yen strengthened against its US counterpart as the Japanese GDP for the third quarter increased by 1.3%, a much weaker expansion than the 4.8% initially reported.

Commodities

Gold extended losses with a visit under $1120 as risk aversion and the Dollar’s strength remain in place. Silver followed dropping below $17.40. Crude Oil briefly advanced as the weekly EIA stockpiles report showed an unexpected drop of 3.8 million barrels but quickly reversed to a massive sell-off, almost to the $70 level, as the strong Dollar and the proximity of the holidays prompt investors to start unwinding their positions.

Technical Analysis

EUR/CAD DAILY

GBP/JPY has been trading sideways in the wide 156-160 range for the last six weeks. The cross has recently stepped out of the range, moving south to the 155 level, presenting the opportunity to open a Short position to take advantage of the building bearish pressure towards the 152.50 support.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By Sylvain Vervoort – With this article I want to introduce you to basic candlestick chart patterns. We are discussing black and white candles, doji’s, spinning tops and bottoms and, tweezer tops and bottoms.

A white body has a higher closing price than the opening price. The white body has a normal average size compared to recent prices. This is a rising pattern. The black body has a lower closing price than the opening price. The black body has a normal average size compared to recent prices. This is a falling pattern.

A big white candle has a long white body with little or no shadows (wicks) compared to recent prices. This is a stronger rising pattern. If there is no other support nearby, you can use the midpoint of the white body as a support level. A big black candle has a long black body with little or no shadows compared to recent prices. This is a stronger falling pattern. If there is no other resistance nearby, you can use the midpoint of the black body as a resistance level.

A doji has an opening price and closing price very close together with upper and lower shadows. Doji’s are part of many candlestick patterns. A doji with bigger shadows is more important. A doji in an up-move with a closing price below the previous closing price is a strong reversal indication.

A doji in an up-move with a closing price above the previous closing price needs confirmation for a reversal. With no confirmation the uptrend continues. Confirmation is at least a closing price below the closing price of the doji. Preferably a bigger black candle with high volume. This confirmation should appear within 3 days after the doji.

A doji or any other reversal pattern followed by a candle with a window, also called a gap, is mostly a reliable reversal indication.

There is extra pressure on the market when more doji’s appear together.

A doji in a downtrend has much less value than a doji in an uptrend. A doji in a downtrend always needs confirmation as a reversal signal. Confirmation is at least a closing price above the closing price of the doji. Preferably a bigger white candle with high volume. This confirmation should appear within 3 days after the doji.

A doji in a flat, neutral trading zone has no meaning.

A doji or basically any other candle pattern confirms an existing support. A doji or basically any other candle pattern confirms existing resistance.

A long legged doji is a doji with big upper and lower shadows and is also called a big wave doji. This is a warning signal for a reversal and an indication of big uncertainty in the market. A doji star is a doji below a black candle in a down-move or, above a white candle in an up-move. A reversal signal to be confirmed by the next candle to become a morning doji star or an evening doji star.

Spinning bottoms are very common in a consolidation phase at a price bottom. The most important characteristic of a spinning bottom is the small body. The body can be black or white and has no shadows, up to big shadows. As such, this candle is neutral, and the market does not know which way to go. Nevertheless, just like a doji, this may be the first indication of a possible price reversal.

Spinning tops are very common in a consolidation phase at a price top. The most important characteristic of a spinning top is the small body. The body can be black or white and has no shadows, up to big shadows. As such, this candle is neutral, and the market does not know which way to go. Nevertheless, just like a doji, this may be the first indication of a possible price reversal.

Tweezer bottoms are two or more candles with bottoms at the same price level indicating support. The first candle is preferably the bigger candle; the second is the smaller one. The same price level does not have to be with low prices. A combination with other price levels is also acceptable. Tweezer bottoms are a reliable reversal signal.

Tweezer tops are two or more candles with tops at the same price level indicating resistance. The first candle is preferably the smaller candle; the second is the bigger one. The same price level does not have to be with high prices. A combination with the other price levels is also acceptable. Tweezer tops are a reliable reversal signal.

This ends my overview of candlestick basic patterns. Next time we will have a look at candlestick top reversal patterns.

About the Author

Want to learn more about candlestick chart patterns? You can find many technical analysis articles for free at my website: http://stocata.org/. Sylvain Vervoort is a trader and the author of a new book “Capturing Profit with Technical Analysis” and a regular contributor to Stocks & Commodities mag.

By Steve Warshaw – Developed in the 18th century by Homma Munehisa, candlestick charts were designed to give rice traders a simple open,high,low, and close view of the markets. Due to the ease of reading, candlestick charting become the preferred method of market analysis, and traders quickly began studying their usefulness in predicting future market direction. Candlestick charts were applied to the stock market first by Charles Dow around 1900, and popularized in the US by Steve Nilson in the late 1980s.

Why Use Candlestick patterns

The major benefit of Candlestick signals is that they are very easy to learn and identify. You do not need to learn formulas. You do not have to do extensive fundamental analysis. A Japanese Candlestick reversal signal is a visual identification of a change in investor sentiment. Of the 50 or 60 Candlestick signals, there are 10 major signals that occur at the reversals the majority of the time.

Mastering Candlestick analysis can be done very easily by learning the 10 major signals. Knowing the signals, and understanding how those signals are formed, provide investors with a tremendous insight into what goes on an investor sentiment at reversal areas in a trend. Being able to identify the major signals and understand the investor sentiment that created those signals allows an investor to project market reversals with a high degree of accuracy. This is based upon hundreds of years of actual observations by Japanese rice traders. Simple logic tells us that if these signals did not work, they would not be here for us to view after centuries of use.

Single Stick Candlestick Formations

Each candlestick can tell you much about the forces acting on the market that day. The Japanese quickly began to identify and name these individual patterns:

1. White candlestick – signals uptrend movement (those occur in different lengths; the longer the body, the more significant the price increase)

2. Black candlestick – signals downtrend movement (those occur in different lengths; the longer the body, the more significant the price decrease)

3. Long lower shadow – bullish signal (the lower wick must be at least the body’s size; the longer the lower wick, the more reliable the signal)

4. Long upper shadow – bearish signal (the upper wick must be at least the body’s size; the longer the upper wick, the more reliable the signal)

5. Hammer – a bullish pattern during a downtrend (long lower wick and small or no body); Shaven head – a bullish pattern during a downtrend & a bearish pattern during an uptrend (no upper wick); Hanging man – bearish pattern during an uptrend (long lower wick, small or no body; wick has the multiple length of the body.

6. Inverted hammer – signals bottom reversal, however confirmation must be obtained from next trade (may be either a white or black body); Shaven bottom – signaling bottom reversal, however confirmation must be obtained from next trade (no lower wick); Shooting star – a bearish pattern during an uptrend (small body, long upper wick, small or no lower wick)

7. Spinning top white – neutral pattern, meaningful in combination with other candlestick patterns

8. Spinning top black – neutral pattern, meaningful in combination with other candlestick patterns

9. Doji – neutral pattern, meaningful in combination with other candlestick patterns

10. Long legged doji – signals a top reversal

11. Dragonfly doji – signals trend reversal (no upper wick, long lower wick)

12. Gravestone doji – signals trend reversal (no lower wick, long upper wick)

13. Marubozu white – dominant bullish trades, continued bullish trend (no upper, no lower wick)

14. Marubozu black – dominant bearish trades, continued bearish trend (no upper, no lower wick)

Exmples of Major, Complex Japanese Candlestick Patterns

Harami – “Pregnant Woman”, or “Body Within”, the Harami is a 2 candlestick trend reversal formation

Tasuki Gap – “A sash that holds up one’s sleeve”, that Tasuki gap is a 3 candlestick formation that confirms the continuation of the existing trend.

Engulfing Pattern – A two candlestick reversal pattern in which the second candle, known as the DAKI (“embracing line”) engulfs (body is larger and is both higher and lower than the previous candlesticks body) the previous candlestick.</p?

Piercing Pattern – A two candlestick, bullish reversal pattern. The first candle is black, a continuation of the existing trend. The second candle is formed by opening below the low of the previous day. It closes more than midway up the black candle, near or at the high for the day

Dark Cloud Cover – A bearish reversal pattern comprised of two candlesticks. The body of the first candle is white and the body of the second candle is black. The black day opens higher, above the trading range of the previous day. The price closes below the 50% level of the white body.

Star Patterns – A symmetrical, reversal candlestick pattern. The bullish pattern, known as the Morning Star, is a three day signal consists of a long black body, usually one produced of the fear induced at the bottom of a long decline. The following day gaps down. However, the magnitude of the trading range remains small for the day. This produces an indecision type – day. The third day is a white candle day. The white candle represents the fact that the bulls have now stepped in and seized control. The optimal Morning Star signal would have a gap before and after the star day.

About the Author

Impressed with the power of trading using Japanese Candlestick patterns? Discover 15 powerful stock screens that show you exactly how to find and trade these profitable patterns.

Article produced by RecordPriceBreakout.com, a traders blog dedicated to createing easy to use stock screening and technical analysis trading plans.

By Fast Brokers – Gold is continuing its recent downturn as the Dollar strengthens in reaction to more negative debt news.  Standard & Poor’s downgraded Spain’s credit outlook to negative in conjunction with discouraging news concerning the debt loads of Dubai and Greece.  The discouraging developments in regards to government debt have delivered a negative psychological blow to investors, resulting in strength in both the Dollar and Yen as investors head for safety.  Additionally, gold has been on an incredible run since breaking past its psychological $1000/oz barrier.  Therefore profit taking in gold is not too surprising and could end up being a positive development for gold’s uptrend should economic fundamentals print positively.

Investors will be receiving a key set of Aussie employment data during the Asia trading session tomorrow morning.  Gold has been strongly correlated with the AUD/USD and EUR/USD, meaning investors should eye the Aussie’s reaction to tomorrow morning’s data releases.  That being said, investors may also want to monitor the EUR/USD’s interaction with our approaching uptrend lines along with November lows should they be tested.  Any noteworthy technical setbacks in the EUR/USD or AUD/USD could result in further downward pressure in gold.

Technicaly speaking, gold still has multiple uptrend lines serving as technical cushions along with intraday and 12/08 lows.  However, should our 1st and 2nd tier uptrend lines give way, the currency pair may opt to retest its psychological $1100/oz level.  The $1100/ozlevel could prove to be a strong psychological support should it be tested.  As for the topside, we’re still not able to confidently place a downtrend line due to the lack of hisorical perspective.  However, gold does face technical obstacles in the form of 12/08, 11/23, and 11/26 highs along with the psychological  $1150/oz, $1175/oz and $1200/oz levels.

Present Price: $1138.10oz

Resistances: $1141.42/oz, $1145.50/oz, $1149.18/oz, $1153.67/oz, $1161.84/oz, $1165.11/oz

Supports: $1134.47/oz, $1129.98/oz, $1126.71/oz, $1123.03/oz, $1117.72/oz, $1113.22/oz

Psychological: $1100/oz, $1150/oz, $1175/oz, $1200/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – Yesterday, the DPJ announced the implementation of a $81 billion stimulus package to help buoy a beleagured Japanese economy.  Although the DPJ’s new stimulus package should give a positive boost to the nation’s economy, analysts are already debating whether the $81 billion is enough to turn deflationary pressures.  The Yen initially strengthened in reaction the DPJ’s announcement, highlighting investor skepticism in regards to the effectiveness of the stimulus package in regards to tempering deflation.  In addition to the DPJ’s announcement, Japan reported that its Trade Balance widened more than expected, suggesting global demand for Japanese exports continues to recover.

However, the USD/JPY took a hit today after Japan’s Final GDP printed 5 basis points below analyst expectations (0.3% vs 0.8% expected).  Japan’s disappointing GDP data has increased investor uncertainty in regards to the health of the global economy.  Asian markets logged losses on the news and the USD/JPY sank back below 12/04 lows.  Today’s discouraging Final GDP figure shows us why the DPJ was so eager to announce its stimulus package while leaning on the BoJ to increase liquidity.

Meanwhile, the USD/JPY is also being dragged down by risk-averse flows in the FX market as a whole.  Investors are snapping up the Dollar and the Yen after S&P downgraded its credit outlook on Spain amidst debt problems in Dubai and Greece.  Investors will now be looking forward to tomorrow’s BoE meeting followed by weekly Unemployment Claims and Trade Balance Data from the U.S.  Furthermore, Yen investors will be focusing on Australia’s key employment data releases during Thursday’s Asia trading session and China’s Industrial Production figure the following morning.  Japan is reliant on export demand from China and Australia, meaning positive data flows over the next 24-48 hours could help allay concerns about the state of Japan’s economy.

Technically speaking, the USD/JPY is trading back below its highly psychological 90 level in addition to multiple downtrend lines hanging overhead.  Therefore, the currency pair still has its fair share of topside technicals to deal with before creating a more solid uptrend.  That being said, longer-term downtrend forces remain.  As for the downside, the USD/JPY is presently testing the patience of our 3rd and 4th tier uptrend lines along.  However, the USD/JPY does have additional technical cushions waiting nearby in the form of 11/25 and 12/01 lows.  Should conditions deteriorate further, the USD/JPY has our 1st and 2nd tier uptrend lines serving as supports along with November lows and the psychological 85 level.

Present Price: 87.84

Resistances: 88.07, 88.33, 88.48, 88.67, 88.86, 89.12

Supports: 87.82, 87.66, 87.49, 87.32, 87.11, 86.92

Psychological: 90, November Highs and Lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

The Buzz: RBNZ to leave rates on hold

Ahead of the RBNZ rate decision market is expecting rates to be left on hold as the New Zealand economy continues to lag behind its larger neighbor Australia, with exports falling 22.4% since the beginning of 2009.The RBNZ is very well aware of the negative effects the strong NZD has on New Zealand’s exports and has stated the fall in exports will weigh on GDP growth. Hence it is not surprising the consensus bets are that the rate will be left on hold at 2.5%.

So how should roll the dice?

A positive outlook from the RBNZ- if the RBNZ will provide an optimistic outlook on the Kiwi economy especially regarding to exports this will be interpreted as the Governor feels comfortable enough exports will recover and investors will feel future rate hikes look more reasonable. If this is the case it could provide some support for the NZD. However if the RBNZ will mention once again the pressure high NZD places on New Zealand’s exports this could ignite another round of  heavy bids for the Kiwi.

Technical Analysis:

USD/NZD

Bearish Scenario- A break of the 0.7 key level downwards would ignite a strong bearish momentum targeting the 0.65 zone.

Target-0.66

Bullish scenario- A daily close above 0.73 would push the pair to retest the 0.75 resistance.

Target-0.746

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.