Month: May 2010

Editor’s Note: The following article is excerpted from Robert Prechter’s April 2010 issue of the Elliott Wave Theorist. For a limited time, you can visit Elliott Wave International to download the full 10-page issue, free.

By Robert Prechter, CMT

Technical Indicators

It is rare to have technical indicators all lined up on one side of the ledger. They were lined up this way—on the bullish side—in late February-early March of 2009. Today they are just as aligned but on the bearish side. Consider this short list:

1. The latest report shows only 3.5% cash on average in mutual funds. This figure matches the all-time low, which occurred in July 2007, the month when the Dow Industrials-plus-Transports combination made its all-time high. But wait. The latest report pertains only through February. In March, the market rose virtually every day, so there is little doubt that the percentage of cash in mutual funds is now at an all-time low, lower than in 2000, lower than in 2007! We will know for sure when the next report comes out in early May. Regardless, the confidence that mutual fund managers and investors express today for a continuation of the uptrend rivals their optimism of 2000 and 2007, times of the two most extreme expressions of stock-market optimism ever.

1. The 10-day moving average of the CBOE Equity Put/Call Ratio has fallen to 0.45, which means that the volume of trading in calls has been more than twice that in puts. So, investors are interested primarily in betting on further rising prices, not falling prices, and that’s bearish. The current reading is less than half the level it was thirteen months ago and its lowest level since the all-time peak of stock market optimism from January 1999 to September 2000, the month that the NYSE Composite Index made its orthodox top. The 30-day average stands at 0.50, the lowest reading since October 2000. It took years of relentless rise following the 1987 crash for investors to get that bullish. This time, it’s taken only 13 months.

1. The VIX, a measure of volatility based on options premiums, has been sitting at its lowest level since May 2008, when wave (2) of ((1)) peaked out and led to a Dow loss of 50% over the next ten months. Low premiums indicate complacency among options writers. The quants who designed the trading systems that blew up in 2008 generally assumed that low volatility meant that the market was safe, so at such times they would advise hedge funds to raise their leverage multiples. But low volatility is actually the opposite, a warning that things are about to change. The fact that the options market gets things backward is a boon to speculators. Whenever options writers are selling options cheap, the market is likely to move in a big way. Combined with the readings on the Equity Put/Call Ratio, puts right now are a bargain.

1. In October 2008 at the bottom of wave 3 of (3) of ((1)), the Investors Intelligence poll of advisors (which has categories of bullish, bearish and neutral), reported that more than half of advisors were bearish. In December 2009, it reported only 15.6% bears. This reading was the lowest percentage since April 1987, 23 years ago! As happens going into every market top, the ratio has moderated a bit, to 18.9% bears. In 1987, the market also rallied four months past the extreme in advisor sentiment. Then it crashed. The bull/bear ratio in October 2008 was 0.4. In the past five months, it has been as high as 3.4.

1. The Daily Sentiment Index, a poll conducted by Trade-Futures.com, reports the percentage of traders who are bullish on the S&P. The reading has been registering highs in the 86-92% range ever since last September. Prior to recent months, the last time the DSI saw even a single day’s reading at 90% was June 2007. At the March 2009 bottom, only 2% of traders were bullish, so today’s readings make quite a contrast in a short period of time.

1. The Dow’s dividend yield is 2.5%. The only market tops of the past century at which this figure was lower are those of 2000 and 2007, when it was 1.4% and 2.1%, respectively. At the 1929 high, it was 2.9%.

1. The price/earnings ratio, using four-quarter trailing real earnings, has improved tremendously, from 122 to 23. But 23 is in the area of the peak levels of P/E throughout the 20th century. Ratios of 6 or 7 occurred at major stock market bottoms during that time. P/E was infinite during the final quarter of 2008, when E was negative. We will see quite a few quarters of infinite P/E from 2010 to 2017.

1. The Trading Index (TRIN) is a measure of how much volume it takes to move rising stocks vs. falling stocks on the NYSE. The 30-day moving average of daily closing TRIN readings has been sitting at 0.90, the lowest level since June 2007. This means that it has taken a lot of volume to make rising stocks go up vs. making falling stocks go down over the past 30-plus trading days. It means that buyers of rising stocks are expending more money to get the same result that sellers of declining stocks are getting. Usually long periods of low TRIN exhaust buying power.

For more market analysis and forecasts from Robert Prechter, download the rest of this 10-page issue of the Elliott Wave Theorist free from Elliott Wave International. Learn more here.

By CountingPips.com

The U.S. dollar is trading mostly lower or unchanged against the other major currencies in forex trading today following the better than expected U.S. government employment report. Meanwhile, the U.S. stock markets have continued their decline one day after a major freefall and rebound took place.

The dollar has been on the rise against the British pound while falling versus the euro, Canadian dollar and the Swiss franc. Against the Japanese yen, Australian dollar and New Zealand dollar, the dollar is currently trading close to unchanged from the day’s opening exchange rate.

The euro, which has been on the defensive all week, has rebounded off of 14-year lows versus the dollar and has increased by approximately 75 pips today. In European news, the German parliament voted to approve the aid package for Greece after a heated debate and much opposition. France, Italy, Spain and Portugal also approved the measure today.

The U.S. stock markets have fallen again so far today with the Dow Jones down by over 100 points, the Nasdaq decreasing by over 45 points and the S&P 500 falling by more than 15 points at time of writing. Oil has been trading lower by $2.05 to the $75.06 per barrel level while gold has dipped by $2.30 to trade at the $1,194.60 per ounce level.

NonFarm Payrolls jump in April

U.S. Nonfarm Payrolls employment data released today showed that jobs rose by the most in four years and for a fourth month in a row in April. The Department of Labor nonfarm payrolls report showed that employment grew by 290,000 workers in April following March’s revised job gain of 230,000 workers. March’s data was revised higher after the original estimate of 162,000 jobs created while February’s data was also revised higher to show an increase of 39,000 jobs.

April’s data marked the best showing in employment in four years and surpassed the market forecasts that were expecting a gain of 190,000 jobs.

The unemployment rate rose from 9.7 percent to 9.9 percent as more people entered the job market looking for work. There are now a total of 15.3 million workers remaining unemployed. The 9.9 percent rate level was higher than the market expectations that were predicting a 9.7 percent unemployment rate.

The service-providing sector led the way of job creation as this sector gained 166,000 total workers in April as the professional and business services sector increased by 80,000 jobs and leisure and hospitality also added 45,000 jobs. The education & health services sector added 35,000 jobs while retail trade added 12,400 jobs and temporary
help services gained by 26,000 jobs.

The goods-producing sector added 65,000 total jobs in April with the construction sector gaining 14,000 jobs and manufacturing creating 44,000 jobs. Mining and logging also added 7,000 workers for the month.

Government hiring, boosted by census hires, increased by 59,000 workers in April after adding 56,000 workers in March.

By Fast Brokers – Gold popped above its highly psychological $1200/oz level and is holding the line today after yesterday’s panic in the U.S. and EU sent investors scurrying towards safety.  Gold showed its luster as a safe haven and investors snapped up the precious metal in a hurry, nearly sending it towards a retest of all-time highs.  The risk trade is still under pressure today as investor confidence falters, giving gold more topside momentum.  However, gold does have to deal with those December 2008 highs and will need another strong boost to climb past it.  Meanwhile, investors should be on high alert as it seems activity will remain at an abnormal level with investors on edge.  On the other hand, if the G7 can work together to ease uncertainty then this may enable the risk trade to end the week on a solid note.  However, it’s tough to get any kind of clear reading at the moment considering the circumstances.  Hence, investors should exercise caution and keep an active ye on the news wire.

Technically speaking, intraday and December 2008 highs.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with intraday lows and the highly psychological $1200/oz area.

Present Price: $1202.20/ oz
Resistances: $1204.58/oz, $1207.76/oz, $1211.05/oz, $1212.78/oz, $1215.41/oz, $1217.38/oz
Supports: $1202.01/oz, $1200.31/oz, $1196.37/oz, $1194.07/oz, $1192.10/oz, $1188.30/oz
Psychological: $1200/oz, $1175/oz, December 2008 highs

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2795 level and was supported around the $1.2585 level.  The common currency retraced some of yesterday’s losses and traders were surprised by the sharp increase in U.S. April non-farm payrolls data that saw a gain of +290,000, about +100,000 stronger than expectations.  The April unemployment rate ticked higher to 9.9% from 9.7% and April private payrolls printed at +231,000, up from the upwardly revised print of +174,000 in March.  Overall March non-farm payrolls were upwardly revised to +230,000 from +162,000 and even when temporary census workers are factored in, today’s print was relatively strong.  Other data saw April average hourly earnings climb 0.0% m/m and 1.6% y/y while April average weekly hours worked remained steady at 34.1.  The household survey reported the U.S. economy has now added about 1.6 million jobs year-to-date.  Notably, manufacturering jobs increased at their strongest pace since August 1998 and service sector jobs grew the most since November 2006.  Traders will struggle to reconcile continued improvements in the U.S. economy against the backdrop of the weaker aggregate economic climate in Europe and other global risk factors.  There is talk that yesterday’s precipitous decline in U.S. equity prices was caused by human error or program trading.  In eurozone news, German March industrial production was up 4.0% m/m and 8.6%.  Many dealers continue to express disappointment that the European Central Bank did not send more acute signals yesterday regarding its commitment to shoring up confidence in the eurozone.  ECB President Trichet indicated policymakers did not discuss purchasing eurozone bonds in the secondary market but most ECB-watchers believe the central bank will be forced to adopt extensive quantitative easing policies.  Eurozone finance ministers are convening an emergency meeting in Brussels this evening.  Euro bids are cited around the US$ 1.2295 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.85 level and was supported around the ¥90.00 figure.  Bank of Japan reported it is going to inject ¥2 trillion into the financial system to assist in stabilizing the markets following yesterday’s volatile global trading activity.  BoJ’s actions represent its first same-day repurchase operations since December when the central bank reacted to the Dubai World crisis and BoJ’s actions were the largest since December 2008.  Finance minister Kan reported Group of Seven officials will hold a conference call to discuss the Greek debt crisis later today.  Albeit the intraday low was exactly ¥90.00, there was no talk the government intervened overnight and a Ministry of Finance official reported joint currency intervention is “unlikely.”  April monetary base data released overnight saw growth of 2.9% y/y.  The Nikkei 225 stock index lost 3.10% to close at ¥10,364.59.  U.S. dollar offers are cited around the ¥96.85 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥118.35 level and was supported around the ¥113.60 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥138.15 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥83.75 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8258 in the over-the-counter market, down from CNY 6.8266.  Market chatter surfaced today that People’s Bank of China may lifts its interest rate by 27bps no later than June following its announcement last Sunday that it is raising its reserve requirement ratio for the third time this year.  A Chinese think-tank overnight said China should revalue the yuan trading band.  Many dealers believe China will revalue the yuan before the end of the second quarter.

£

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4475 level and was capped around the $1.4935 level.  Cable continues to move lower on account of political kabuki in the U.K.  Even though the Tories’ Cameron won the most votes in yesterday’s General Election, his party does not have a majority government and there is a lot of horse-trading going on between the Tories, Labour, Liberal Democrats, and other minor parties to determine who will be able to form a coalition.  The lack of an outright political majority in the U.K. will hang heavily on the U.K. as that country’s fiscal deficit is among the worst in the industrialized world.  Many data were released in the U.K. today.  First, April Halifax house prices were off 0.1% m/m.  Second, April PPI input prices were up 0.6% m/m and 13.1% y/y while April PPI output was up 1.4% m/m and 5.7% y/y.  Also, PPI core output was up 1.1% m/m and 4.4% y/y.  Cable bids are cited around the US$ 1.4335 level.  The euro appreciated vis-à-vis the British pound as the single currency tested offers around the £0.8805 level and was supported around the £0.8440 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1055 level and was capped around the CHF 1.1175 level.  Data released in Switzerland today saw the April unemployment rate decline to 4.0% from 4.2% in March while March retail sales printed at 4.5%, up from the prior reading of 3.1%.  Swiss Economy minister Leuthard verbally intervened, saying the franc’s strength vis-à-vis the euro must stay within a “certain limit.”  The franc went on a rampage yesterday as the Swiss National Bank was deemed to have been absent from the market.  The central bank may have deemed that euro sentiment is so negative that it would have been futile to buy euro for francs.  The CHF 1.4320 level on the cross has been talked about a lot as a key level the SNB has supported before yesterday.  U.S. dollar offers are cited around the CHF 1.1270 level.  The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.4185 level while the British pound depreciated vis-à-vis the Swiss franc and tested bids around the CHF 1.6090 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By Fast Brokers – The Aussie crashed with the risk trade yesterday as a collapse in U.S. equities and a shutdown in EU interbank lending sent the dollar flying higher.  The Aussie was certainly no exception, testing its psychological .87 level.  The Aussie has managed to pop back above .88, yet downward pressures remain as U.S. equities tack onto yesterday’s selloff.  The Aussie is suddenly trading back at February levels with .90 hanging high overhead.  The question now becomes when the risk trade can find stability.  While the weekend could investors and markets time to cool down and reflect so as to start next week on fresh footing, the Aussie could experience more volatility on Monday with key economic data from China on deck.  China will release trade balance data followed by CPI and industrial production on Tuesday.  Since Australia’s economic performance is highly reliant on resource demand from China, any confirmation of a slowdown in China could place more near-term downward pressure on the Aussie.  On the other hand, encouraging economic data from China may help the Aussie stabilize and regain its footing.  Australia will also release job advertisements and business confidence data during Monday’s trading session.  Should Australia’s data outperform this could also help buoy the Aussie since the RBA could feel the need to stay hawkish if conditions in the EU can stabilize between now and the RBA’s next monetary policy meeting.

Technically speaking, the Aussie faces technical barriers in the form of intraday highs and the psychological .90 area.  As for the downside, the Aussie has technical cushions in the form of intraday and 5/6 lows along with the psychological .88 and .87 levels.

Price: .8821
Resistances: .8824, .8836, .8846, .8856, .8869, .8879, .8889
Supports:  .8811, .8800, .8780, .8772, .8762, .8749, .8736
Psychological:  .90, .89, .88

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 – We cautioned that the USD/JPY can come alive at any moment, and boy did it every.  As U.S. equities dove to record intraday losses amid pandemonium on Wall Street investors rushed for the yen, dollar, and gold for safety.  The USD/JPY collapsed from about 94 to 88, roughly a 5% loss, before staging an impressive recovery back above the psychological 90 level.  Least to say it has been a historically wild 24 hours.  Part of the USD/JPY’s recovery today has been fueled by the BoJ’s decision to inject $22 billion worth of liquidity into the system in reaction to the Yen’s extreme strength across the board.  However, this measure may prove futile should the risk trade get pummeled once again.  The yen reaffirmed its status as a safe haven in the wake of investor panics, and we’d expect more of the same if equities tumbled again.  That being said, investors should keep an active eye on the news wires across the globe as governments work to counter uncertainty and bring stability to the financial markets.  Any renewed panic in the EU could prove devastating for the EU, though it wouldn’t be surprising to see the risk trade head into the weekend on an upbeat note as finance ministers pull out their fire extinguishers.  However, China will kick off the trading week with key economic data.  Any sign of a slowdown in China could spark risk aversion, whereas encouraging figures could help buoy the USD/JPY.

Technically speaking, the USD/JPY faces technical barriers in the form intraday highs and the psychological .92 and .93 areas.  As for the downside, the USD/JPY has technical cushions in the form of the psychological .91 and .90 areas.

Present Price: 91.62
Resistances: 91.70, 91.80, 91.98, 92.14, 92.32., 92.56, 92.77
Supports:   91.53, 91.31, 91.10, 90.95, 90.77, 90.53
Psychological: .93, .92, .91, .90

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 – The Cable has undergone a massive selloff today as the Pound underperforms in reaction to the parliamentary election results.  As expected, the concept of a hung parliament does not bode well for the Pound as discussion sparks whether a divided government will be able to enact austerity measures necessary to clean up the UK’s fiscal mess.  The election results prove untimely considering the risk trade collapse that has taken place over the past couple trading sessions.  Investors rushed towards the dollar yesterday as U.S. equities underwent an incredible selloff in reaction to mounting fiscal problems in the EU and a ‘technical error’ on the stock exchange floor.  Contagion in the EU is leading analysts to wonder whether the UK is next and this places more emphasis on the fact that the UK now has a minority government.  However, with the election out of the way, investors will now look to the G7 conference call taking place today to see whether the developed nations can issue a comforting, unified message in reaction to yesterday’s market panic.  That being said, it will be interesting to see whether the risk trade can manage to pull itself together and stabilize over the remainder of the session.  The weekend can give the markets time to cool off and look forward.  That being said, China’s key economic data releases on Monday and Tuesday could be a deciding factor regarding whether the risk trade can form a new base or whether the brisk risk route continues.  The BoE will also make a monetary policy decision on Monday, meaning the Cable could be in for another active session to kick off the week.  Investors will be looking to King & Co. to issue a statement that can reinvigorate confidence in the global economic recovery.  After all, outside of the fiscal issues in the EU fundamentals have been altogether sound.

Technically speaking, the Cable faces mounting layers of downtrend lines along with intraday highs and the psychological 1.47 and 1.48 areas.  As for the downside, the Cable has technical supports in the form of April 2009 lows and the psychological 1.45 area.

Present Price: 1.4693
Resistances: 1.4707, 1.4730, 1.4748, 1.4762, 1.4775, 1.4795
Supports: 1.4654, 1.4641, 1.4616, 1.4594, 1.4574, 1.4559
Psychological: 1.45, 1.46, 1.47, 1.47, April 2009 lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 – The EUR/USD has staged a solid rally from Thursday’s lows as investors hope that a conference call between the G7 leaders will yield a sign of global solidarity amid the crisis in fiscal crisis taking root in the EU.  Additionally, a much better than expected U.S. non-farm payrolls number has buoyed equities and the risk trade as a whole following yesterday’s collapse.  As everybody knows right now, U.S. equities underwent a vicious selloff, leading investors towards the greenback, gold, and the yen for cover.  In the meantime, EU bond interest rates climbed to uncomfortable levels and interbank lending dried up.  This brought up not so distant memories of the market turmoil during the Lehman bankruptcy.  The EUR/USD went on to test its psychological 1.25 level and March 2009 lows.  The currency pair is skating on very thin ice now with October 2008, or financial crisis lows, coming into reach.  Hence, it will be very important for the EUR/USD to stabilize soon to stem the bleeding and save some dignity.  That being said, investors will have to see some action backed by confidence from the EU and other industrialized nations soon.  Fortunately for the risk trade, the week is coming to a close and investors will have a couple days to cool off and look forward.  China will be the key to stability next week for they kick off Monday with trade balance data, followed by CPI and industrial production on Tuesday.  If China is in fact cooling off, this could place renewed downward pressure on U.S. equities and send the greenback higher.  On the other hand, strong data from China could be just what the doctor ordered for the EUR/USD and other major dollar pairs.

Technically speaking, the EUR/USD is really testing its support system in for form of 1.25 and March 2009 lows.  As for the topside, the EUR/USD faces an incredible amount of downward pressure along with intraday and 5/6 highs.

Present Price: 1.2673
Resistances: 1.2676, 1.2704, 1.2728, 1.2758, 1.2779, 1.2803
Supports:   1.2646, 1.2620, 1.2604, 1.2582, 1.2564, 1.2546
Psychological: March 2009 lows, October 2008 lows, 1.28, 1.27, 1.26, 1.25

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither 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 Greg Holden – The question posed in the title of this article shouldn’t sound impossible. It shouldn’t even sound far-fetched. Look at the chart below, what do you see? The trend of this pair has been obvious since December 2009. Why are we to think that this pair couldn’t reach 1.2000, or even lower?

Let’s do the math.

First, the US economy is in fact improving. Consumer confidence is up. The housing market is up. Manufacturing and construction are up. Even employment looks to be making gains, however minor they may be.

Additionally, this week’s news has only scared the life out of investors who were once interested in riskier assets. We’ve seen a massive migration of investment away from risky assets like stocks and high-risk currencies (EUR, AUD, NZD). The money pulled out of these assets was almost exclusively moved into 2 others: the USD and Gold – both of which are primary safe-havens.

After yesterday’s Wall Street debacle, there is a high possibility that today’s Non-Farm Payroll (NFP) data will help to recover some of the losses seen in the stock market, but yesterday’s events do not bear good tidings for market confidence. As a result, we’ll likely see a rising USD (a sinking EUR/USD) as a result of the NFP report, regardless of its outcome. Stocks may rise, but the EUR/USD seems destined for 1.2000, by my calculations.

If ever there was a good time to invest in forex and get in on this USD growth, now is that time.

EUR/USD – Daily Chart

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.

By Russell Glaser – The USD/JPY certainly experienced an interesting trading day yesterday. At one point the pair broke both its minor and major trend lines, falling to a significant support level.

1. Below, the USD/JPY daily chart shows the price action yesterday. The pair fell to the price level of 88.10, a price that pair bounced off of 3 other times. The sharp fallout of the pair occurred at the same time that the Dow Jones Industrials Average fell 998 points.

2. Another short term support line sits at the price of 92.80.

The short term trend line can be considered broken if the pair closes below the trend line for the second consecutive day. The chart goes to show the significance of support and resistance lines as many times large price moves will advance or fall towards a significant price level.

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.