Month: July 2010

Source: ForexYard

The Euro managed to erase most of its weekly losses against the Dollar yesterday, as investors expect bank test results to show that the Euro-Zone’s condition is stabile. The market waits to hear that the Euro-Zone’s debt crisis is not a threat to the region’s stability. Will the Euro strengthen following the test results?

Economic News

USD – Bernanke’s Testimony to Weaken the Dollar

The Dollar slid against most of the major currencies during yesterday’s trading. The Dollar lost about 180 pips against the Euro today as the EUR/USD reached above the 1.2900 level once again. The Dollar also saw a 150 pips drop against the Pound.

The Dollar’s bearish trend came as a result of Fed’s Chairman Bernanke’s testimony before the House Financial Services Committee. Bernanke stated that there is an unusually uncertain outlook for growth, yet he added that the Fed’s near zero interest rates are already very simulative. He also added that if the recovery seems to be faltering, the Fed will consider different alternatives, such as lowering borrowing costs. It seems that investors expected the Fed Chairman to have a more proactive approach, as several economic data that were published during the last month have shown that the U.S. economic recovery isn’t progressing as well as expected.

In addition, while Bernanke has delivered his speech, the Department of Labor has released the weekly Unemployment Claims data. The report showed that jobless claims in the U.S. have increased by 37,000 to 464,000, beating expectations for merely 449,000 claims. The combination of Bernanke’s speech along with the poor employment data has weakened the Dollar against most of its major counterparts.

As for today, traders are advised to follow U.S. equity markets as they have a large correlation with Dollar’s trading. Traders should also follow the European Bank Stress Test Results, which will be released tomorrow. The results might have a significant impact on thee major currencies, and traders should be prepared.

EUR – The Euro Soars Following Positive Economic Data from the Euro-Zone

The Euro strengthened against all the major currencies during yesterday’s trading session. The Euro gained about 180 pips against the Dollar, about 100 pips vs. the Pound, and about 250 pips against the Yen.

The Euro’s strengthened against its major rivals as several positive economic reports were published. The German Flash Manufacturing Purchasing Managers’ Index rose to 61.2 in July, from 58.4 on June. It is a survey of about 600 purchasing managers, who are asked to rate their level of business conditions. In addition, the European Industrial New Orders rose by 3.8% during May, beating expectations for a 0.1% drop. The report also showed that compared to the same month last year, industrial sales rose by 22.7%. The Euro-Zone’s economic condition is considered to be somewhat fragile due to the high debts of several European nations. As a result, the batch of positive data has a significant affect on the Euro. Investors are looking for reasons to believe that the Euro-Zone is recovering and such positive reports are all they can ask for.

Looking ahead to today, many interesting publications are expected from the Euro-Zone. First of all will be the German Business Climate report. This is a survey of about 7,000 businesses, who are asked to rate their current business conditions and expectations for the next 6 months. The survey is expected to remain at its high level above 101. In addition, the Euro-Zone’s Bank Stress Test Results are due today. The results are expected to reveal the European banks’ stability, and whether the capital reserves are sufficient. Positive report will further support the Euro, however if the results won’t be as satisfying as expected, the Euro might erase yesterday’s profits.

JPY – Yen Drops On All Fronts

The Yen fell against mot of its major rivals during yesterday’s trading session. The Yen dropped about 100 pips against the Dollar, and about 250 pips against the Euro. The Yen also slid 200 pips against the British Pound.

The Yen tumbled yesterday on speculations that the Japanese leadership is looking to weaken the national currency in order to stimulus economic growth. The Japanese press is reporting that the government will pressure the Bank of Japan to take more steps to support the economy. The Japanese economy relies greatly on its exporting, and a weaker Yen will support Japanese exporters. In addition, the current instability in Japanese politics is damaging the Yen’s safe-haven image, and as a result the currency seems less appealing in times of uncertainty.

As for today, traders are advised to follow the major publications from the U.S. and the Euro-Zone, as they tend to have a large impact on the Yen. Special attention should be given to the Euro-Zone’s Bank Stress Test Results, which appears to be the news even which will have the largest affect ion the market today.

Crude Oil – Crude Oil Reached Above $79 a Barrel

Crude oil rose over $79 a barrel for the first time in nearly 11 weeks. Crude oil began yesterday’s trading session around $76.40 a barrel, and gained about 300 pips in a single day, to peak at the $79.40 price.

Crude oil rallied yesterday following notifications that EBay Inc. and Caterpillar Inc. saw higher earnings than expected during the last quarter. In addition, several positive economic reports were published from the Euro-Zone yesterday, suggesting that energy demand in Europe will recover soon. Another support for crude oil prices was the Dollar’s bearish trend against most of the major currencies. Crude oil is traded in Dollars, and thus when the greenback weakens, oil prices tend to rise as a result.

As for today, traders are advised to follow equity markets in the U.S. as they tend to be highly correlated with crude oil trading. In addition, traders should take notice of the Euro-Zone’s Bank Stress Test Results. The results are expected to reveal the region’s banks stability in light of the high debts of several European nations. This report might impact global trading, and traders should be prepared.

Technical News

EUR/USD

The pair has recorded much bullish behavior yesterday. However, the technical data indicates that this trend may reverse anytime soon. For example, the 4-hour chart’s Stochastic Slow signals that a bearish reversal is imminent. . Going short with tight stops might be a wise choice.

GBP/USD

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a bearish cross forming on the 4-hour chart’s Slow Stochastic indicating a bearish correction might take place in the nearest future. When the downward breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF

The cross has been dropping for the past several days now, as it now stands at the 1.0430 level. 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 be the right choice today.

The Wild Card

Crude Oil

Crude Oil prices rose significantly yesterday and peaked at $79.20 per barrel. However, there is a bearish cross on the 4-hour chart’s Slow Stochastic suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

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 – Stronger than expected EMU PMI lead the Euro higher against the dollar, retaking the 1.29 briefly before settling at 1.2890. The Euro is likely to continue to grind higher retesting the 1.3000 level.

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.

Video: The Real-Time Power of Elliott Wave Analysis

Mainstream financial analysts always look for ways to explain market action through news stories and events. Conventional wisdom states that news and inter-market correlations cause market booms and busts, but such explanations rely on selective presentation of the data. In this video, Elliott Wave International’s Asian-Pacific Financial Forecast Editor Mark Galasiewski shows you how Elliott wave analysis was able to predict Hong Kong’s late ’90s mania and its aftermath in real time — without looking at the news or the market’s “fundamentals.”

Watch More about the Power of Elliott Wave Analysis in this FREE Video

Discover how Elliott wave analysis gives you a consistently logical explanation
— and debunk one of the major myths of what caused the Asian Financial Crisis
— in the free video, “The Real-Time Power of Elliott Wave Analysis:
Debunking the Myths of the Asian Financial Crisis.” Access Your FREE Video Now.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

What Will Happen as $1,000,000,000,000,000 in Global Debt Winds Down?
July 22, 2010

By Elliott Wave International

The biggest balloon in the world is deflating.

This balloon had been inflated with a quadrillion (10¹⁵) dollars, which is to say: This balloon was filled not with air but with debt from around the globe.

What will happen as this global debt winds down? In two words: Deflationary Depression — the likes of which could be unprecedented in history.

Want to Know How to Prosper in a Deflationary Depression?
If you haven’t yet given Robert Prechter’s deflation argument your full attention, you should know now that yesterday was the best time to do so. Download Prechter’s 60-Page Guide to Understanding Deflation here.

A thousand trillion in debt can’t be wished away or swept under the rug. No one can “forgive” the debt. The consequences of unwinding this debt could be as massive as the dollar figure itself.

We’ve heard plenty about the debt problems of Greece, Spain, Portugal and Italy.

But how about the world’s second largest economy? Consider this fact reported in the Japan Times (July 8):

“Japan’s government debts are the highest the world has ever seen, at 219 percent of gross domestic product, according to the International Monetary Fund.”

Then there’s the world’s sixth largest national economy. In January 2009,  Robert Prechter wrote this in the Elliott Wave Theorist:

“British banks have amassed $4.4 trillion worth of foreign liabilities, twice Britain’s annual GDP. … England, moreover, ‘has not defaulted since the Middle Ages.’ The possibility that it may do so again is yet another indication that the bear market is of … (larger) degree, exactly as Elliott wave analysts have predicted all along.”

Remember, Japan and Great Britain are major world economies. Imagine what the debt totals would look like in a line-item analysis of other nations, regions, states, provinces and municipalities around the world, including the U.S.

De-leveraging will likely lead to a deflationary crash — a “day of reckoning.”

How can you prepare for a deflationary crash?

To start with, keep your money safe. As Bob Prechter mentions in the June 2010 Elliott Wave Theorist:

“Investors should be primarily in greenback cash and Treasury bills.”

He also describes holdings which should be strictly avoided.

Want to Know How to Prosper in a Deflationary Depression?
If you haven’t yet given Robert Prechter’s deflation argument your full attention, you should know now that yesterday was the best time to do so. Download Prechter’s 60-Page Guide to Understanding Deflation here.

By CountingPips.com

The US dollar has declined in forex trading today as positive risk taking has provided a boost to higher yielding currencies and the US stock markets. Today’s forex action has seen a reversal of yesterday’s dollar strength as the American currency has declined against the euro, British pound sterling, Australian dollar, New Zealand dollar, Canadian dollar and the Swiss franc. The dollar has traded slightly higher against the Japanese yen after reversing off a fresh low point for the week at the 86.33 exchange rate earlier today.

Strong company earnings reported for the second quarter have pushed positive risk sentiment in the markets today as AT&T, Caterpillar, 3M and UPS all surpassed their earnings forecasts.

The Dow Jones industrial average has advanced by approximately 200 points to trade over the 10,300 level today and reversing yesterday’s decline. The NASDAQ has increased by approximately 50 points or 2.3 percent so far today while the S&P 500 has risen by over 20 points to climb to the 1092.82 level. In commodities, Oil has advanced by almost 3 percent to the $78.72 per barrel level while gold has been virtually unchanged at $1191.60 per ounce.

The market’s positive mood on earnings has brushed aside the downbeat economic releases out of the US today. Weekly jobless claims increased by more than expected as of July 17th to a seasonally adjusted total of 464,000, according to the Department of Labor. This was an increase of 37,000 workers from the previous week while the four-week moving average saw an increase of 1,250 workers. The number of workers seeking continuing employment insurance as a July 10th fell by 223,000 workers to a total of 4,487,000.

US leading indicators, a measure of future economic activity, fell by 0.2 percent in June, according to the release from the Conference Board. June’s score follows a revised increased by 0.5 percent in May and did come in better than the market forecasts that were expecting a 0.3 percent decrease for the month.

US existing home sales also declined in the month of June, according to the report by the National Association of Realtors. Existing home sales fell by 5.1 percent in June to an annual rate of 5.37 million homes following a decline of 2.2 percent in May. Despite a decrease, the results were better than the market forecasters that were expecting a 9.9 percent downfall and on an annual basis, existing home sales were still 9.8 percent higher than the June 2009 sales level.

NAR chief economist Lawrence Yun commented on the sales results saying, “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”

Tomorrow’s economic news releases include the United Kingdom’s second quarter GDP report, the Canadian consumer price index and the eagerly awaited results of the European Union’s bank stress tests.

By Adam Hewison – Late last week I produced a video on the euro (which was posted on INO’s blog on Monday), making a case that the currency was very close, if not at its highs. Since then, we have had two significant events fall into place which made the dollar skyrocket against the euro.

This new video shows you exactly what transpired and where we are so far this week. I think you’ll find it interesting and informative.

As always this video is free to watch and there is no need for registration.

I would appreciate that if you have comments on this market that you please leave them for everyone to see.

Watch the New Video Here…

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

The Bank of America, the largest bank holding company in the US in terms of assets, or the BAC in the New York Stock Exchange reported that its second quarter net earnings had slipped by 3% to $3.12 billion from $3.22 billion in the same leg the year before. Still, the company managed to hike its consumer loan business which caused its quarter-over-quarter net income to expand by 15%. In any case, the drop in its revenues from last year led investors to sell-off its shares.

As you can see from the chart, the shares of BAC made a bearish gap following the company’s earnings report. At the present, BAC is exchanging just above the 13.50 support. A break below this level would be critical as its next support would already be at 10.0. Technically, a move lower seems to be more probable. Notice that its shares are already trading below the 50-day and 200-day moving averages. Given this, it would therefore need a lot more buying interest to keep it afloat. Both the RSI and MACD are likewise showing some bearish signals with the former having a score of less than 50 and the latter just turning negative. What’s worse is that a bearish gap is usually followed by a couple more gap downs. Time to sell at strength?

More on LaidTrades.com …

By Greg Holden – The summer of weak price movements for precious metals is now fully underway and investors are watching as the price of gold and silver are trading sideways. This price action has a long history. For one reason or another, the price of precious metals has usually flattened throughout the months of June, July and August, and then shot back up prior to the holiday shopping seasons, which begin to build momentum around mid-October.

Our technical charts on silver tell this story quite nicely. We see that the sharply rising value came to an end about two months ago, and has been range trading widely between $17.20 and $19.50 an ounce ever since.

The expectation among many analysts seems to be that silver should continue trading in the $17s through the month of August. This flat trading behavior may then start to die out towards September when the steadily rising prices we’ve seen among the precious metals markets these past two years continues with full force.

A ray of sunshine for investors, however, is the predictable bouncing behavior we should see in silver prices for the next month or so. I’d expect to see silver bouncing against the $17.20 price mark at least one or two more times before continuing a strong uptrend heading into the global holiday shopping season. Entry orders for long positions around that price are to be expected; I would be surprised to see a major breach below that point as a result.

Let’s take a quick look at the chart to see what I’m talking about. Below is the daily chart of silver provided by ForexYard. I’ve drawn Fibonacci retracement lines over the chart to illustrate the support and resistance levels relevant.

It’s clear that at the 50% retracement level we have a very solid support line which has repeatedly been tested these past two months. This line is also on the price of $17.20 an ounce which, as mentioned earlier, represents the lower border of our range-trading trend.

As such, I’d expect investors to feel excited that silver, while not the highest priority for many commodity investors, is actually an investment opportunity of great value. It’s not every day we get such beautiful entry points!

Silver – 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.

Schnitzer Steel Industries, an American steel manufacturer, or SCHN in the Nasdaq index soared yesterday when its shares were upgraded to “Buy” from “Neutral” by UBS. the company’s profit outlook was raised by the mentioned bank due to rising scrap prices and the increasing demand from China for its materials.

As you can see from its chart, it had been trading within a descending channel for quite some time up until last week. It then went flat for a couple of days before surging. As a result of yesterday’s price action, it was able to break above its 50-day moving average and the 46.00 resistance. Its next obvious resistance now would be its 200-day MA. If it is able to move past it, it could continue to rise until it encounters some selling pressure at 56.00. On the flip side, the 46.00 marker should be able to keep it from falling any further in case it weakens. The RSI’s reading, however, is suggesting a probable move higher.

More on LaidTrades.com …

By Russell Glaser – The 4-hour chart shows a trading range along with a buy signal that could indicate a rise in spot crude oil prices above the static level that the commodity has seen over the past two months.

Looking at the 4-hour chart for spot crude oil, a trend line has begun on May 25th and shows the appreciation for the pair over with the price action taking place above the trend line. It is a modest uptrend as the slope of the trend line is less than a 45 degree angle, but nevertheless an up sloping trending line.

A minor trend line has been included for when the commodity surged higher on July 7th. Since then the price has risen and dropped back towards this minor trend line and has created an opportunity to go long on the commodity.

When the price fell to a low of $76.15, this was close to the minor trend line. At the same time a bullish cross was forming on the slow stochastic oscillator, providing an a buy signal. The price bounced off of the minor trend line and has since moved higher.

Buying near a trend line can many times be a good opportunity to enter following a pullback in the price. For more conservative traders, a stop can also be placed underneath the minor trend line should the price break lower.

Traders can target the first resistance level (R1) at a price of $78.15. A close above this level would then move the next price target to just below the $80 (R2).

A protective stop can be placed below the support level of $75.65. A close below this level would nullify the minor trend line and the price could then test the next support level at $71.00 (S2) along with the long term trend line.

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.