Month: July 2010

By Russell Glaser – The pair has been consolidating over the past 6 weeks while forming a chart pattern that looks to break to the downside in a continuation with the long term trend.

Following the sharp deprecation in the price of the pair during the month of May, the GBP/JPY has consolidated its losses and has formed an ascending triangle pattern.

A halt to the trend can be verified by the flat 20-day exponential moving average. Also a significant drop off in volatility is shown by the decrease in the Average True Range (14). A tightening of the daily chart’s Bollinger Bands confirms the reduced volatility in the pair.

Because the long term trend is to the downside, it is assumed that a breakout will be in this direction. However, traders are not limited to one direction in this trade setup. By placing a stop on the inside of the triangle to guard against a false breakout, losses can be minimized should the breakout fail to materialize. Therefore, a trade setup can be in either direction.

A breakout to the upside would target the resistance level at 138.25, followed by the significant resistance line of 139.25 and a long term target at 140.50, the 38.2% Fibonacci retracement level from the downward trend that began in August of 2009.

If the long term trend continues and the pair breaks out of the triangle to the downside, the first target would be the support at 131.30, followed by the bottom of the downward trend at 126.75.

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.

Extra! Extra! The US dollar has buckled its long term uptrend? Will it head south now? On today’s chart is my recent take on the US dollar index. For quite some time now, the US dollar had been gaining a lot of favors from investors due to the general bearish tone in the markets. The last time I reported on the USDX, the index’s uptrend was still very much intact despite its retracement from its yearly high (kindly see my previous post here). Just this week, though, the index’s long term uptrend line got broken. The only support now that is holding it at its present value is the 61.% Fibonacci retracement level that I drew. A break of this level could send it down to 82.00 or at 81.00. But given the doji candles and its oversold condition, the index could move sideways for awhile or even rebound. If it rallies, the immediate resistance would be the former uptrend line.

Anyway, given the recent string of strong rallies in the global equities and in the non-dollar currencies like the euro, the greenback appears to have lost its appeal. Remember that bulk of the USDX counter-weight is composed of the euro. Therefore an increase in the euro, would negatively affect the valuation of the index and the dollar. During the last couple of weeks, the euro has gained some support. Technically, it even has a higher chance now of moving north after it broke above its long term downtrend line against the USD (see the chart here).

On the fundamental front, the USD further weakened yesterday as a result of the stellar earnings figures from Intel. The USD’s slide and consequently the global markets’ advance could be extended today since another US giant is set to post its 2Q earnings. Later today, Google is expected to post an EPS of 6.53 for the second leg of the year. Tomorrow, a couple of big US banks, Bank of America and Citigroup, are due to post their earnings report as well.

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Source: ForexYard

Despite enthusiasm over the start of earnings season markets paired gains yesterday. Retails Sales in the U.S. came in lower than expected for the second consecutive month. Investors responded by sending equities lower. In the currency markets the Euro continued to head higher against the USD, explained by reasonably better macro data released by Europe.

Markets recovered during the mid NY trading session, just to pair gains again after the FOMC meeting minutes were published, eventually ending the NY session flat. Fed minutes released later revealed more concern over the economic recovery. The Fed stated that, for the time being, there is no need for new steps to boost the economy. However, in case the economy continues to slow, it might take the necessary measures to accelerate growth.

Economic News

USD – Retail Sales and Fed Minutes Sent USD Lower

U.S. Retail Sales and Fed Minutes released yesterday sent the greenback lower against its major counterparts. The EUR/USD pair continued the recent rally for another day. The rally gathered momentum as European macro data was better than the disappointing figures released in the U.S. The U.S. economy is signaling that the economic recovery may be slower than previously thought. The fed sees rising risks and growth at a slowing pace.

The U.S. Dollar is currently trading at 1.2750 against the EUR during early trading today.

Looking ahead to today, more macro releases will influence the greenback. Data is expected to be lower than previous months but in case economic growth is indeed slowing, data might turn even worse than expected. In this case the U.S. Dollar might continue to decline against its major counterparts.

EUR – Weak U.S. Figures Send Euro Higher

The Euro continued its rally against the U.S. Dollar for the second day, although the pair traded higher most of the day it ended almost flat. The EUR reached $1.2776, thereafter it paired some of it gains, while concerns over the European economy remains.

The EUR remained almost unchanged versus the British pound. The EUR/GBP is currently trading at 0.8342, however the EUR traded lower against the Japanese yen currently at 112.58, as investors return to buy safer assets.

Looking ahead to today, there are no major news events to be released in Europe. Therefore U.S. macro data may influence investors’ appetite for riskier assets. In case figures turn worse than expected, investors would continue to prefer the EUR and GBP over the greenback. The Japanese yen, unlike the USD, could turn stronger against the Euro and British pound, as it still considered a safer asset.

JPY – Remains a Safe Heaven Currency

The JPY strengthened against the U.S. dollar as investors expressed their concerns about the U.S. economy by selling the U.S. dollar and buying the Japanese yen. The yen traded higher against most its counterparts, aided by lower likelihood of currency intervention from Japan’s policymakers. It strengthened against the British pound, the euro the Canadian dollar and the Australian dollar.

Looking ahead to today traders should pay attention to the support line at 88.00. A below this level might take the USD/JPY pair even lower. Some analysts estimate that that the yen could even reach as low as 85 in the following months.

OIL – Worries about Double Dip Hit Crude Oil price

Crude Oil price ended flat yesterday after Fed Meeting Minutes signaled slower growth than previously expected. Crude Oil traded higher above $78 before NY trading session only later to pare its gains after disappointing U.S. Retail Sales, declining further after the Fed published its monthly minutes.

Crude Oil prices have risen sharply since last Tuesday from $71.46, currently trading at $77.25. Having little effect on price, Crude Oil stockpiles decreased by 5.1 Million barrels according to the weekly EIA report published yesterday. Distillate stocks rose by 2.9 million barrels, analysts expected, on average a rise of 800K barrels.

Crude Oil prices may decline further in the short term if economic figures continue to deteriorate. Investors are worried about a possible double dip, or a renewed recession. The Fed at this stage will not take steps to accelerate the economy.

Technical News

EUR/USD

Yesterday the EUR/USD rose as high as 1.2776 but found resistance at the upper line of the pair’s rising price channel. The close was also above the resistance line at 1.2750 and the long term downward trend line that began in December of 2009. Traders may want to target the next resistance line at 1.3100. This level also coincides with a 76.4% Fibonacci retracement level from the pair’s bullish trend in 2009.

GBP/USD

The pair ran into technical resistance yesterday, rising to a high just shy of 1.5300. This price level is reinforced by the long term downward sloping trend line that began in July of 2008. The price level also coincides with a 23.6% Fibonacci retracement level of the same long term bearish trend. A breach of this price could send the pair to the resistance levels of 1.5380 and 1.5520 in the short term, with a long term target at 1.6425.

USD/JPY

The brief bullish correction has ceased in the pair as yesterday the price fell to the support level of 88, the significant resistance level reached on the same day of the “flash crash”. Falling momentum may push the pair lower as the 10-day Momentum Indicator is falling below the 100 level. The price has also failed to make a significant breach of the 20-day simple moving average. The next target for the pair could be the support of line at 87.

USD/CHF

Yesterday the pair pulled back to the 61.8% Fibonacci level at 1.0610 before heading lower to the daily low set on Tuesday. A breach of the 1.0480 support level could send the pair lower towards the 76.4% Fibonacci retracement level from the previous bullish trend at a price of 1.3050.

The Wild Card

Oil

Rising prices have been accompanied by increasing momentum as the 14-day Momentum indicator is sloping sharply higher. Yesterday the price of the commodity rose to a high of 78.12 before falling back for a slight gain. CFD traders may want to continue to be long on spot crude oil with a near term price target of $80.

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 eToro – Despite the recent downgrade of Portugal, the Euro continued to perform well in today’s trading.  The Euro is likely to test resistance levels near 1.3000. Click here to read the full daily Review

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.

GBPUSD’s rise from 1.4948 extends to as high as 1.5296 level. Further rally is still in favor later today and target would be at 1.5400 area. Initial support is at 1.5180, as long as this level holds, uptrend from 1.4948 will continue. Key support is at 1.5100, only fall below this level could indicate that lengthier consolidation of uptrend is underway, then sideways movement between 1.4870 and 1.5300 could be seen.

Daily Forex Signals

Good day my forex friends! Back in July 8, I asked if the euro’s rise against the greenback would be short lived since it was, at that time, approaching a significant resistance at the EURUSD‘s long term downtrend line (kindly see my previous entry here). Apparently, its breakout from an inverted head and shoulders has propelled it now even past the long term downtrend line. While I am not really convinced that the pair would reverse its course over the long term and start an uptrend already, its breakout from a shorter term inverted head and shoulders and its recent move above the mentioned resistance add to signs that it could. A successful break of this resistance could be like the breaking of the Berlin Wall. But in this case, it would represent the euro’s probable back to rise.

Technically, the pair could move sideways for awhile or even fall since the stochastics are already in the overbought region. Though, it could now use the neckline of the inverted head and shoulders and the downtrend line as supports to keep it from falling any further. Having said that, its next stage would probably be at 1.3250. A break of the mentioned supports, however, could send it back to the bottom of the shoulders.

To euro, alongside the other higher yielding assets, could gain some further support if the earnings reports of Google, JPMorgan and Chase, Bank of America, and Citigroup, post some stellar numbers. Buying interest could also rise if the US’s initial jobless claims, Philly Fed Manufacturing Index, inflation figures (PPI and CPI), and the UoM Consumer Sentiment log some upbeat figures. Stay tune for these releases!

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Hiyo stock friends! It’s good to be back in the market again! Anyway, on today’s post is the daily canvas of the  S&P 500. Like the Dow Jones in my friend’s post during the past weekend (kindly see it here), the broader index of the US, which for me, is more representative of the US’s economy, has also risen back to life after making a false break down. As you can see, the index had already broken below the neckline of a head and shoulders pattern. Luckily, investor confidence resumed and the index was able to keep itself back above the neckline again. Should the break down continued, the US’s equities could have been on a bear market again, probably leading to a double dip recession in the country’s economy.

Technically speaking, the S&P 500, however, is not yet out of the woods. It wood be on a better ground if it is able to move above both the 50-day and the 200-day average. A couple of indicators, though, show some bullish signs. One is the RSI which recently went above 50. In case you do not know, an RSI reading of above 50 indicates that the upward momentum is gaining speed. Notice also that the MACD had just made a bullish crossover as well with its histogram turning positive. In any case, if it is able to move past 1,150, then its next target would be its previous high just above 1,200.

Fundamentally, the market would be looking for some catalyst from the second quarter earnings report of the big firms in the US. Tech-giant Google and and financial holding company, JPMorgan Chase & Co., are set to release their earnings tomorrow (July 15). Bank of America and Citigroup will also publish theirs on July 16. Several market moving data from the US (PPI, Philadelphia Fed manufacturing index, CPI, and University of Michigan sentiment survey) will likewise be reported. Upside surprises from any of these reports could spur some buying while the opposite could cause some selling. Watch out for these reports!

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By CountingPips.com

U.S. retail sales decreased for a second straight month in June as consumer spending on retail goods fell by more than unexpected. Advance estimates of retail sales showed that sales decreased by 0.5 percent to a total of $360.2 billion in June following a revised decrease of 1.1 percent in May, according to the report by the U.S. Commerce Department.

This marks the second consecutive month of decline in retail sales following a string of seven consecutive monthly sales increases through April. The retail sales results were worse than the 0.2 percent decline for June that the market forecasters were expecting.

On an annual basis and despite the monthly decrease, the June sales level was 4.8 percent higher than the June 2009 level following an annual gain of 6.9 percent in May.

Core retail sales, excluding automobile sales and parts, fell by 0.1 percent in June after core sales declined by 1.2 percent in May. On an annual basis, core sales increased by 4.4 percent in June from June 2009 following an annual gain of 5.7 percent in May.

Contributing to the decreased retail sales numbers for June was a 2.3 percent decline in motor vehicle and parts dealer sales. Also showing decreases for the month were gasoline station sales with a decline of 2.0 percent, sporting goods, hobby, book & music store sales with a 1.4 percent shortfall and a decrease by 1.0 percent in building material & garden eq. & supplies dealers.

Positively contributing to retail sales last month were nonstore retailers (+1.0), food services & drinking places (+0.2), miscellaneous stores retailers (+1.1), health & personal care stores (+0.5), clothing & clothing accessories stores (+0.6) and electronics & appliance stores (+1.3).

US Dollar falls in Forex Markets

The U.S. dollar has been trading lower in the forex markets for a second straight day against the other major currencies after today’s U.S. retail sales release and a day after the positive earnings report from Intel that has helped boost risk appetite. The American currency has lost ground today versus the euro, British pound, Swiss franc, Canadian dollar, Australian dollar, New Zealand dollar and the Japanese yen.

The U.S. stock markets, meanwhile, have been slightly positive so far today with the Dow Jones increasing by over 25 points, the Nasdaq up by approximately 15 point and the S&P 500 is higher by over two points just before noon in the U.S. trading session. Oil has edged higher by $0.62 to the $77.77 level while gold has dipped by $3.70 to stand at the $1,221.00 per ounce level.

By Russell Glaser – Yesterday’s sharp appreciation in the EUR/USD signaled a fundamental shift in the trend of the pair.

The price made a close above the downward sloping trend line that has held since December of 2009. This is considered a significant breach of the long term trend line and the beginning of the uptrend that began in early June.

A distinct bullish channel has formed from the swing low on the chart beginning in early June where the pair has traded consistently. The lower line of the channel should now serve as the new uptrend line.

The near term resistance is yesterday’s high of 1.2740, noted by R1 on the chart. As such, the next target for the pair rests at the resistance line of 1.3090 at R2.

Supports for the uptrend come in at 1.2525, noted by S1, along with 1.2350 at S2.

The previous long term downward sloping trend line can also act as a support. If the price does retrace back to the old trend line, it could create a good setup to go long on the EUR/USD.

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 Analysis by Finexo.com

EUR/USD

The Euro continues to hover around its two-month high against the Dollar this morning, as more and more investors are buying higher-yielding currencies amid a surge in risk appetite.  This recent risk rally pushed the EUR/USD up from 1.2525 lows to back above the 1.2700 mark. Currently the pair is trading at 1.2705 after reaching an eight week high of 1.2735 earlier in the morning.

Helping drive risk appetite sentiments was a robust start to the U.S. corporate earnings season in conjunction with reduced concerns over the Euro Zone’s debt crisis. The Euro slipped yesterday afternoon following Moody’s decision to cut Portugal credit rating by 2 notches to A1; however, the single European currency recovered to touch on a two month high of $1.2739 yesterday afternoon following a strong response to the Greek government bond sale. The Euro also benefited from a wider than expected U.S Trade deficit, which widened by 4.8% in May. Economists had predicted the trade gap to narrow to $38.8 billion from $40.3 billion in April; instead a larger rise imports over exports forced the deficit to grow to $43.3billion.

Up ahead, investors will want to watch intraday support of 1.2690. If that area holds it may signal an emergence of buyers who are entering the market to accumulate positions in the pair, which could indicate another rally for the Euro.

GBP/USD

The GBP/USD rose to a 2-day high of 1.5166 yesterday following the release of the U.S’s worse than expected trade deficit. Helping the Pound’s recent rally was a report showing that consumer prices increased, as expected, by 3.2% in June, from a year earlier. Up ahead, this morning’s UK Claimant count change, the earliest report of unemployment in the UK, could cause volatile movement for the GBP/USD. After last month’s drop of 30.9K, a smaller drop of 20.3K is predicted this time. The unemployment rate is expected to hold at 7.9%.

USD/CAD

The Canadian Dollar rose to its highest level in nearly three weeks against its American counterpart following a surge in prices for raw materials, namely crude oil.  Yesterday, the Loonie touched on a high of C$1.0277, its strongest level since June 23. The USD/CAD then consolidated to close around C$1.030, up 0.7% from the prior day’s closing price.

Canada unexpectedly posted a trade deficit of C$0.5billion in May, as imports of machinery and equipment outstripped a rise in exports.  Meanwhile, Canada’s trade surplus with the United States, its largest trade partner, rose to C$3.59 billion from C$3.46 billion.

Forex Market Review & Analysis by Finexo.com

Disclaimer: Trading the foreign exchange (Forex) carries a high level of risk, and may not be suitable for all investors. All information and opinions contained on this website are to be used for general informational purposes only and do not consitute investment advice.