Month: July 2010

By Russell Glaser – Spot crude oil prices have jumped 5% last week and in turn have triggered a buy signal on the daily chart.

Following last week’s sharp appreciation in the price of spot crud oil, the dual cross over method is forming a buy signal. However, traders will want to wait to enter the long until a confirmation of the buy signal is displayed.

Using a 5-day simple moving average (Red Line) and a 20-day simple moving average (Black Line), a buy signal is confirmed when the fast moving line crosses above the slow moving line. The daily chart below shows a buy signal forming but has yet to give a confirmation by making the breach higher. Accordingly, a sell signal would be triggered following the fast line falling below the slow line.

This trade can also stay open until a sell signal is given, allowing the trade to catch a major part of the trend.

Traders can see that this method can be successful, but the trading system does have its flaws. This cross over method works particularly well in a trending environment. Such is the case following the sell signal triggered in April.

But when the market is consolidating in a range trading environment, the results can under perform. Notice the buy signal that was triggered in the end of May. The long position would have been closed out in the first week of June for a loss.

One way to combat this is with proper risk management. A tactic used to shield a trader from losses can be to move the stop loss to breakeven following a paper profit equal to the Average True Range. Another strategy may be to trade using multiple lots. This way a trader can take profits on one lot, move the stop loss to break even, and let the other positions run until a sell signal is triggered.

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 Greg Holden – Headline news this weekend has been the defeat of the ruling party in Japan in recent elections. The USD/JPY and EUR/JPY pairs both slipped to fresh highs as a result. Whether or not the yen will continue to fall is yet to be determined.

In other news, commodity prices have appeared to stabilize somewhat. Crude Oil has risen above $76 a barrel once more, but price movements appear steady and stable. Even though the price of Gold broke through its long-term bullish channel, the precious metal remains in a bullish posture heading into the start of this week.

Today’s leading news events:

08:30 GMT: GBP – Final GDP q/q

– Britain is due to release its final gross domestic product (GDP) figure for the second quarter later this morning. Should we see an increase in growth it could mean the latest austerity budget is having an impact. However, the forecast is set to show no increase from the previous quarter. If growth is higher, the GBP may see bullishness, and vice versa if the reading disappoints.

14:00 GMT: USD – Fed Chairman Ben Bernanke Speaks

– US Federal Reserve Board Chairman Ben Bernanke is due to speak at the Financing Needs of Small Business Forum in Washington D.C. today. The topic of his speech is going to be “Restoring the Flow of Credit to Small Business” and should create volatility in the USD market as his comments tend to influence trader speculation. Hawkish statements about increasing investment and boosting the flow of credit should help add momentum to the greenback against its currency rivals.

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

The 1-0 over-time victory of Spain over the Netherlands in yesterday’s World Cup Final has generated an interesting question among market analysts. Does this victory put optimism and positive sentiment back into Spain’s crumbling economy? Can it boost short-term growth enough to add further momentum to the euro’s latest gains against its primary rivals?

Economic News

USD – USD Sinking Under Weight of Risk Appetite

This past week witnessed the US dollar come down from its recent highs as risk returns to the market. With economic data showing improvements in various sectors around the globe, and with governments taking the necessary steps to reign in financial problems, investor sentiment seems to have returned to a temporary state of risk-taking.

Against the euro, the dollar has fallen to as low as 1.2700 this past week and looks to continue trading weaker as various reports show optimism throughout various European economies, albeit muted. The victory of Spain over the Netherlands in the World Cup yesterday may help to increase consumer spending across parts of Europe and lead to short-term growth. The boosted optimism also adds to the already-present risk appetite which has been returning slowly these past few days.

The greenback has been gaining against the Japanese yen, however, as the recent defeat of Prime Minister Naoto Kan’s ruling party put the his financial policies at risk of being overturned. The yen has taken a modest bearish turn as a result. Should uncertainty remain about future Japanese monetary policy, the USD/JPY’s bullish trend could continue.

As for today, the only major news that could affect the dollar directly is a speech being given by Federal Reserve Board Chairman Ben Bernanke about returning the flow of credit to small businesses at a forum in Washington D.C. If his statements reveal hawkish sentiment about measures to increase investment and credit flows to start-ups and other small businesses, then the USD could see some positive growth.

EUR – Does Spain’s Victory in the World Cup Help the EUR?

The 1-0 over-time victory of Spain over the Netherlands in yesterday’s World Cup Final has generated an interesting question among market analysts. Does this victory put optimism and positive sentiment back into Spain’s crumbling economy? Can it boost short-term growth enough to add further momentum to the euro’s latest gains against its primary rivals?

Theoretically, anything is possible. Does the World Cup affect currency prices directly? Not likely. But can it affect optimism, outlook, and risk appetite? Absolutely. All of these things affect currency values, the bigger question is: By how much?

Since last week the euro has climbed against the US dollar from as low as 1.2200 to a recent high of 1.2720 by Friday’s closing hours. The euphoria from having two European teams playing in yesterday’s final likely boosted retail sales and other consumables by significant quantities in the short-term, now analysts wonder how long this sentiment will last.

Looking forward to today’s news, there is not much to look forward to in terms of data. Britain will release its Final GDP figures for the second quarter of 2010. The forecast is for a 0.3% growth. Outside of this data, little else will be published from Europe.

JPY – Kan’s Democratic Party Defeat Saps JPY Strength

The Japanese yen has been plunging this morning against the majority of its currency pairs. The reason is currently being explained as the defeat of Prime Minister Naoto Kan’s ruling Democratic Party in recent elections. PM Kan had put forth policy initiatives to reign in Japan’s massive debt risk; his defeat puts those policies at risk of being overturned and has caused the yen to experience some uncertainty.

Against the US dollar, the JPY has fallen to as low as 89.10 from its recent high of 87.00 just last Thursday. Versus the euro, the yen has fallen to 112.15 from its 2-week high of 107.50. Unless the political situation in Japan receives further clarity, the Japanese yen could continue to experience weakness from uncertainty.

OIL – Chinese Imports and Weak USD Boost Oil above $76

The price of spot crude oil has climbed since last Friday above $76 a barrel on increased Chinese oil imports. The heightened demand emanating from China has helped support the price of oil to its latest high mark and the market currently appears to be appeasing this move with a complimentary decrease in value for the US dollar.

The USD has been trading lower these past few trading days as market sentiment favors risk taking over safe-havens. The price of the greenback has fallen and commodities – which were falling steadily just last week – are now returning to a stable bullish pattern. This week’s data on the strength of the dollar and on China’s latest surge in imports will determine the week’s movements.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-sold territory while the hourly chart’s RSI is indicating that an upward correction may be imminent. The upward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the upward breach occurs, going long with tight stops appears to be the preferable strategy.

GBP/USD

Narrow range trading continues as the pair did not make any significant move in either direction. The daily chart is showing signs of a bearish momentum. The Bollinger Bands are tightening and a breach might be imminent to any side. A good strategy might be to wait for the signal and ride the momentum.

USD/JPY

On the daily chart the moderate bullish price movement continues within the upwards channel which still has yet to be breached. The 4-hour chart is also joining that notion with the Slow Stochastic pointing to the continuation of upwards momentum. Next testing point should be around 90.50. Going long appears to be preferable today.

USD/CHF

Friday’s appreciation in the pair may have created a selling opportunity. The pair is trending sharply lower, both on the weekly chart and on the daily chart as the price is trading in a perfect order, below the 200, 100, 50, 20, and 10-day simple moving averages. Traders should be short and can target the low of the bearish trend as the first support line.

The Wild Card

Oil

Crude oil has rallied last week, rising from a low of $71 to a high of $76.40. Following the bullish run, a buy signal has recently been triggered as the 5-day simple moving average is crossing above the 20-day simple moving average. This signal works well in a trending market. CFD traders may target the resistance line just below $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.

Market Analysis by Finexo.com

EURUSD
The Euro’s rally, which pushed the single currency to its highest level in more than seven weeks, stalled on Friday as market sentiments towards the Euro remained cautious and some traders bet that its recent upswing was too quick. After hitting a high of $1.2723 on Friday, the pair slipped to close at $1.2637 – up 1.56% from the beginning on the week.

The EUR/USD remained under selling pressure this morning. After slipping briefly below the $1.26 mark, the pair has since recovered; however, the key going forward is whether the pair can remain above its $1.2550 support level. If the Euro slips below that key level, it could trigger sell stops which could in turn cause a drop to $1.2450.

GBPUSD
The Pound slipped below its $1.5075-$1.5275 trading range last week, as investors began to lose patients with the currency following a weaker-than-expected U.K. home price data and the Bank of England’s decision to leave interest rates unchanged at 0.50%. The Sterling closed on Friday at $1.5059, its lowest price since July 1st, and down 0.63% from the beginning of the week.

This morning, Britain is scheduled to publish its Final GDP figure for the first quarter of 2010. The initial GDP released showed a small 0.1% growth, which was later revised to 0.3%. The final GDP figure is expected to confirm this latest upwards revision; however if the number is worse than predicted, investors could see additional selling pressure take place today.

AUD/USD
The AUD/USD tumbled from its highest level in nearly three weeks as peculations grew over the pair’s rapid rise. Last week, the Aussie stuck a 9-day high against the U.S Dollar amid a better than expected Australian employment rate, wider than anticipated trade surplus and a strong rally in global commodity prices. The Australian Dollar slipped to 0.8733 this morning, down 0.5% from last week’s close of 0.8776. The pair rose 4.3% over the course of last week.

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.

GBPUSD has reached the lower boundary of the rising price channel on 4-hour chart. As long as the channel support holds, the fall from 1.5240 is treated as consolidation of uptrend from 1.4346, and another rise to 1.5400 is still possible. On the downside, a clear break below the channel support will indicate that lengthier consolidation of uptrend is underway, then deeper decline towards 1.4873 key support could be seen.

Daily Forex Analysis

By CountingPips.com

Canadian employment data released today showed that jobs rose by more than expected in June and boosted the Canadian dollar sharply against the other major currencies. Today’s jobs report showed that employment rose by 93,000 workers in June following a gain of approximately 24,700 jobs in May, according to the monthly report by Statistics Canada.

The jobs data easily surpassed the market forecasts which were predicting an increase by approximately 20,000 workers for the month.

The Canadian dollar reacted positively to the news and quickly gained ground against the US dollar, euro, Japanese yen, British pound, Australian dollar, and the New Zealand dollar in the forex markets today. The Canadian currency now trades at its highest level against the US dollar since June 23rd at close to the 1.0315 exchange rate while also advancing to the highest levels against the Japanese yen and British pound sterling since June 28th.

The unemployment rate declined to 7.9 percent from 8.1 percent as the unemployment rate has now fallen below 8.0 percent for the first time since January 2009. In the period from July 2009 through June 2010, Canadian employment has advanced by 403,000 workers or 2.4 percent, according to the report.

Service-sector employment was the main driver for jobs in June with an increase by 103,000 hires while the goods-producing sector employment fell by 10,200 workers. The trade sector, health care & social assistance and business, building and other support services all showed increases for the month by approximately 20,000 jobs. The professional, scientific & technical services sector, accommodation and food services sector and the other services sector all had job gains of 11,000 or more in June.

The province of Ontario led the way in job growth for June with a gain of 60,000 jobs while Quebec also added 30,000 workers. Ontario employment has now increased for six straight months and by 187,000 workers since July 2009 while Quebec has increased its job growth by 117,000 workers since July 2009.

Other data released from Canada today showed that housing starts fell in June to an annualized rate of 189,300 from a revised 195,300 level in May, according to the Canada Mortgage and Housing Corporation. The data failed to meet market forecasts that were expecting 190,300 housing starts for the month.

Forex Chart: EUR/CAD Hourly – The euro falling sharply today against the Canadian dollar following the better than expected Canadian jobs report. The EUR/CAD now trades at its lowest level in over a week as the pair fell through its 200-hour moving average (red line) and into oversold territory on the relative strength indicator in today’s action.

By Russell Glaser – The GBP/USD has taken a pause this week while forming a rising channel line before making its next move. Technical indicators show the momentum of this bullish move is wavering, which could set up for a downward move in the price of the pair.

The cable continues to range trade between the prices of 1.5080 and 1.5240 as volatility in the pair has significantly fallen. The Average True Range (14) has dropped to 135 from its high of 260. Many times volatility drops off and the price action consolidates before a large breakout move in a currency pair occurs.

Currently the price is contained by the short term resistance line at 1.5240. A break above this line could send the pair higher to the 23.6% Fibonacci level at 1.5300 (R1). This is a retracement from the long term bearish trend that began in November. Following a breach of R1, the pair could trade higher at the next resistance level of 1.5520 (R2).

However, this is where the bullish move may end as the price approaches the downward sloping trend line and the 23.6% retracement level. This technical resistance should be enough to contain the rising price action.

A sell signal that is forming on the MACD Oscillator also hints at a price move lower. The momentum appears to be weakening as the MACD histogram is negative sloping and a bearish cross is forming, indicating the potential for downward movement in the pair.

Price targets for a move lower in the pair will be the support level at 1.5050 (S1), which also coincides with the lower end of the channel. The second price target with a long term focus will be the March low at 1.4780 (S2).

As the price approaches the long term trend line, combined with significant resistance levels, large swings in the price can occur. Combining the resistance levels along with the technical signal, being short looks to be the right move.

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.

Hello FX fans! In my blog back in June 24 (please check that entry here), I thought that the EURCAD would continue to slide as it traversed a nice looking descending channel. After just four days of trying to break through the downtrend resistance, the buyers eventually won, causing an immediate upsurge in prices. The euro soared over the Canadian dollar after the pair broke above the downtrend, marking a new monthly high at 1.3426.

At present, it appears that the pair is starting to lose its upward momentum. With the stochasting just turning south, traders could take some of their profits, causing the euro’s valuation to weaken again. Notice, though, that a potential inverted head and shoulders could be in the making. Are the euro bulls just laying off to set-up a possible uprising? It’s possible. In any case, if the pair continues to dip, its likely support would be around 1.2750. A break above 1.3500, on the other hand, could propel the pair all the way to 1.4500.

On the fundamental side, the projected 17,900 increase in Canada’s June employment change could lift he Loonie some more especially if the latest tally comes in better than expected. Canadian housing starts for the same month are also predicted to be at 193,000 which is an improvement on the previous month’s 189,000 count. Remember that Canada’s May building permits unexpectedly skidded by 10.8%. Should this slide continue in the following month, then there could be a downside surprise in the upcoming housing starts release later today. A worse than projected score here could then result in a loonie sell-off. In the longer run, weak Canadian data coupled with the present weakness of the USD could reflect positively on the EURCAD.

More on LaidTrades.com …

Good day forex people! Here’s an update on the EURAUD pair which I last posted way back on May 26 (kindly see that post here). As you can see on today’s chart, the pair has continued to slide when it hit a resistance just below 1.5500 after moving past above the shorter term downtrend line. It then fell only to rebound for awhile when it found some support at 1.4000. Its rise, however, was halted yet again by the same downtrend line. Given its overbought condition and the presence of a hidden bearish divergence, where the price registers lower lows and the stochastics mark higher highs, suggest a likely move lower. The 1.4000 marker would be its likely support if it continues to trek south. A break of the downtrend line, though, could bring it back near 1.5500.

The euro’s rally was recently overturned by the Aussie. Despite the decision of the Reserve Bank of Australia to keep its benchmark rate unchanged at 4.50%, traders still picked up the Aussie given the governor’s somewhat bullish outlook on the country’s economy. He mentioned that Australia will likely benefit China’s growth since the former is one of the biggest supplier of raw materials to the Chinese.

A couple of other economic reports supported the AUD. First is the better-than-expected May trade balance which came in at A$1.65 billion which was way over the A$0.53 billion projected. Its April’s number was also positively revised to A$1.12 billion from A$0.13 billion. Australia’s labor market also showed some improvements with firms adding another 45,900 workers in June (vs. 15.3k estimate), which pulled the country’s jobless rate down to 5.1% from 5.2%.

No other reports will come out of Australia for the rest of the week. France, on the other hand, will publish its May industrial production which is seen to have gained by 0.3% in after dipping by 0.3%. Germany recently posted an upside in the same account. Such could also be the case for France. In any case, a rise of at least 0.3% could give the euro some short term lift against its peers like the AUD. Between the euro zone and Australia, the latter, however, remains to be the stronger one. And between the euro and the Aussie, the latter remains to be the more attractive given its interest rate advantage (4.50% as against 1.0%).

More on LaidTrades.com …

By Dan Eduard – The euro seems to be locked into a bullish trend as investor confidence in the global economic recovery seems to be on the rise. How long this trend lasts will largely be determined by economic indicators from around the world.

Here is a roundup of the days main events:

8:30 GMT GBP – PPI Input

While being more volatile than the CPI, producer prices have also exceeded expectations, showing that inflation is on the rise in the U.K. Following last month’s drop of 0.6% in PPI Input (the main figure), a rise is expected now. Also PPI Output is expected to rise and boost the Pound.

Assuming that the PPI Input comes in at its forecasted level of 0.1%, traders can assume that the GBP will make some gains against its main currency rivals throughout today’s trading. At the same time, if a negative figure is released, investors may turn to safe-haven assets, thereby boosting the USD.

12:15 GMT CAD – Housing Starts

The Housing Starts Report is an annualized number of new residential buildings that began construction during the previous month. This figure might be disregarded if there’s a big surprise in the employment data. After topping 200K, the number of starts slowed down and dropped to 189K last month, causing some worries. We’ll now see if this was a one time drop or a change of trend for USD/CAD.

Should the Housing Starts figure come in at the forecasted 193K, traders can assume the CAD will move up against the greenback in afternoon trading. That being said, an unexpected drop could help the USD after a fairly bearish week.

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.