Month: October 2010

GBPUSD rebounded strongly from 1.5755, suggesting that a cycle bottom is being formed on 4-hour chart. Now the rise from 1.5755 is more likely resumption of uptrend from 1.5296, further rise towards 1.6017 is possible later today, a break above this level will confirm that the uptrend has resumed, then next target would be at 1.6200 area. Key support is now at 1.5755, only break below this level will indicate that the uptrend from 1.5296 has completed at 1.6017 already, then the following downward move could bring price back to 1.5200 area.

Daily Forex Signals

By Thomas Bainbridge

So the Bank of Japan (BoJ) finally decided enough was enough and bought approximately $3 billion versus the Yen.

On a long-term basis it is difficult to argue that the BoJ are throwing ‘good money after bad’ as the cross rate moved below ¥83.00 which was clearly absurd on valuation levels.

As Simon Denham of Tradefair remarked, “The country’s currency seems to defy logic as, apart from their trade surplus, practically every other serious determining factor for valuation would indicate that the current levels of the Yen are far too high.

“The cross rate hit the long-term bear support at ¥82.85/83.00 and someone in the BoJ was clearly looking at the same chart as any forex trader. On the first day of trading after the intervention, the cross bounced around 200 points in early morning trade from ¥82.85 up to a price of ¥85.20”.

It has been quite some time since a major central bank has taken on the market, however with the new Japanese Prime Minister Naoto Kan looking for some breathing space on the currency front to enact his fiscal squeeze, the recent events are perhaps understandable.

The question we must ask is whether this heralds a more interventionist chapter in world markets. The rather extreme forex spread betting moves over the last decade have caused significant problems. The Euro practically doubled versus the Dollar from 2001 to 2008, with the Yen also appreciating some 30% in the last couple of years.

For this reason, the argument about the demise of the Dollar seems somewhat overdone. Global industry is transacting deals almost exclusively in the Dollar. Until another floating currency challenges the Dollar’s dominance – and this includes getting financial futures contracts traded in anything other than the Dollar – its superiority will remain.

Whilst the Dollar bounced sharply versus the Yen, the same cannot be said against the other majors: both the Euro and Pound had strong sessions taking their crosses up to $1.30 and $1.55 respectively.

The moves were slightly odd considering that the more recent US data was better than expected and one could be forgiven for expecting this to lead to some increased buying of the Dollar. It appears that, firstly, too many people got it the ‘wrong way round’ and that, secondly, there was a sense that if the American numbers were good then the European numbers would be better.

Of course if you are trading the forex markets then be aware that further intervention is more than possible. There are even rumours of the BoJ getting ready to sell one trillion Yen.

A word of warning before you trade though, ensure that spread betting matches your investment objectives, it carries a high level of risk to your capital and you can lose more than your initial investment. Make sure you familiarise yourself with the risks involved. Spread trading carries a high level of risk to your capital. Seek independent advice if necessary.

About the Author

A leading financial author based in the heart of London’s Canary Wharf. Thomas Bainbridge is a respected commentator on the financial markets including the Financial Spreads markets.

USD/CHF

Daily graph: http://www.real-forex.com/charts-daily/141010/CHF_DAILY_141010.JPG

One-hour graph: http://www.real-forex.com/charts-daily/141010/CHF_1H_141010.JPG

For the last few weeks, the pair was clearly downtrend oriented. The last decrease started at the level 0.9851 and last for about 300 pips. However, it corrected itself until 0.9730, which is exactly a correction of two thirds.

Once this level reached, a bullish envelope template appeared, suggesting the end of the correction, and the beginning of a reversing trend, creating the opportunity for a “Short”.

Potential trade

Suggestion: Looking for a descending configuration on one-hour graph. Our analysis suggests the apparition of this configuration once the support level 0.9545 crossed.

• “Limit” order on “Short” position 10 pips below the support, meaning: 0.9535.
• “Stop Loss” order on the last high occurred: 0.9641

Our suggestion to reduce this large “Stop loss”: Wait for a first breach and its technical correction. When the second breach occurs, place your “Stop order” on the last high appeared.

USD/CAD

Daily graph: http://www.real-forex.com/charts-daily/141010/CAD_DAILY_141010.JPG

After the breach of an important support level at 1.011 occurred a few sessions ago,a non confirmed bullish envelope template appeared. The expected reversal didn’t occur and the pair is still decreasing.

Please pay attention to the important support at 0.9974. If the pair crosses that support, a stop in the trend followed by a correction may be expected. A confirmation of this could be a daily reversing candle on the support mentioned.

If such a candle appears, opening a “Long” transaction might be a great option of trade.

Have a profitable day!

Real Forex team.

By Chris Donnell – When a Forex trader looks for an opening, they examine charts that display all the clear balance point lines and moving averages. You can see the trend tools. What do you do?

With effective Forex training, you’ll know about support and resistance. If you know where to find the support and resistance areas, you’ll be in good shape. If you know the trend direction, you can know what to do. (We can go over time frame analysis elsewhere.) However, what time is the best time to enter?

You can’t conjure up the absolute perfect time to enter. Check out these tricks that Top Gun Forex trading courses provide that can give you an edge.

Don’t buy 10 to 20 pips prior to encountering resistance. This way, you won’t have to worry about getting reversed or stopped out by random market bouncing.

After that, don’t sell 10 to 20 pips if support is coming. You do this for the same reason; don’t get reversed or stopped out of the trade before you make good.

After that, wait out the price. Head fakes is a problem a lot of traders worry about. If you want to minimize your risk, pull back after the support or resistance is broken, and once the trend line breaks, you then go in, giving yourself the advantage. (Every Top Gun course covers this very effective method.) You can see this in action in our Forex Videos.

Keep a close eye on trends. If you start seeing divergence in your trends, or even if the trade loses momentum, you might lose the trade in the end. Therefore, it would be advantageous to just see where the price goes before dumping money into it.

Only bet on sure things! Just wait a bit before going in if you have the slightest doubt about a trade. If you plan on waiting for awhile, write down what opening you’re anticipating, so that when it finally arrives, you can successfully enter the trade and earn more profit.

Don’t just take a trade for a single reason. If you want to go long in the EURUSD because their trend indicators show that the EURUSD will be bullish for awhile, people have been receiving good news about the EUR, and the resistance for it suddenly became support, you might find it advantageous to actually go long with this trade. On the other hand, you might want to use multiple time frame analysis before you go in.

Trend lines are your friend. The Top Gun Forex courses cover this topic on a regular basis.

Stops also help! In order to protect their investments from turning on them and making them lose money, stops are put into effect by traders.

Momentum indicators will be useful. With the help of LeverageFX Forex Software, you can determine how the momentum of the trade is doing using moment indicators.

Traders find these tips incredibly useful and advantageous to their trading portfolios, as they can figure out the best times to go in or duck out of a trade.

About the Author

Chris Donnell trades and teaches Currency Trading. You can see examples of his trades/systems on our ForexBlogFX.com site.

By Russell Glaser – Over the last two days the price of the GBP/USD has pulled back from its test of the 1.60 level. Signs of negative divergence appear on the daily chart signaling a weakening trend and a possible reversal.

Looking at the daily chart, two trend lines have been drawn. The short term trend line begins at the June low (not shown) and the intermediate trend line starts in mid-September. The second trend line was broke during yesterday’s trading in a sharp decline over the past two trading days. In today’s European trading session the GBP/USD has climbed has high as the broken trend line and is now acting as a resistance level.

The daily chart highlights a potential reversal of the trend due to the close below the trend line and also negative divergence that has appeared on the Momentum (14) indicator.

The price for the pair was rising and reached a new high (1.6017) in the uptrend while the momentum line was falling, thus creating negative divergence. This is a possible warning sign of a reversal in the trend.

Traders may want to scale back any long positions they may have in the GBP/USD or tighten stops. A close below the support level of 1.5670 (S1), the low from September 30th and a break of the long term trend line will signal a shift in the long term uptrend.

Forex Market Analysis provided by ForexYard.

© 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 GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar continued to weaken against the euro during the Asia session in the wake of the FOMC minutes. EURUSD traded 1.3838-1.3979 and USDJPY traded 81.67-82.01. The minutes themselves kept expectations alive that another round of quantitative easing might begin as early as November. Several members considered it appropriate “to take action soon”, but the minutes also made it clear that any additional easing would “depend upon future information about the economic situation and outlook.” Market attention also focused on the presence of New York Fed economist Eggertsson at the meeting. Eggertsson’s field of expertise is the conduct of monetary policy when interest rates are near zero. His attendance at this time is noteworthy given he last appeared at an FOMC meeting in December 2008, the meeting where the original MBS purchase program was launched.
Equities also found some support with the S&P500 closing +0.4% higher. The minutes were vague on what form any additional easing should take, but participants were said to have “focused primarily on further purchases of longer-term Treasury securities and on possible steps to affect inflation expectations.” Possible strategies to affect short-term inflation expectations included “providing more detailed information about the rates of inflation…consistent with its dual mandate, targeting a path for the price level…and targeting a path for the level of nominal GDP.” Attention will now likely focus on Fed Chairman Bernanke’s speech on monetary policy which is scheduled for Friday.
EUR

ECB Governing Council Member Weber repeated his opposition to the ECB’s sovereign bond buying program, saying there is no evidence the purchases have had any significant impact on average Eurozone yields. He said the program “should now be phased out permanently”. Although he stressed the current policy stance is appropriate given that inflation risks are low, he warned that the risks from exiting too late are greater than exiting too early. On the question of how the exit strategy should be sequenced, Weber said that, “in principle”, rate hikes could begin before the phasing out of non-standard measures had finished. He repeated the now familiar ECB position that it is not the job of the central bank to provide long-term liquidity support to the banking system, and invited national governments and bank shareholders instead to provide the cash the banks need.
ECB Governing Council member Noyer said that price stability is still not in danger, and that upside risks are very limited. Elsewhere, ECB Governing Council member Nowotny said that there is no danger of inflation or deflation, and that the idea of a currency war is absurd. However, ECB President Trichet was more cautious and called on the international community to say “no to protectionism and no to beggar-thy-neighbour policies”.
JPY

Finance Minister Noda repeated that Japan reserves the right to intervene in FX markets when needed. BoJ Governor Shirakawa said that he is watching FX markets with great interest and the BoJ could extend the new asset purchase facility it announced at the latest policy meeting depending on the needs of the economy. The facility was originally intended to hold up to ¥5trn in new assets, ¥3.5trn of which may be JGBs.
GBP

UK consumer confidence fell sharply in September to 53 (cons. 59, prev. 62). This was the weakest reading in 18 months.
MPC Member Miles said that the outlook for growth and inflation remains exceptionally uncertain and that quantitative easing remains a potentially powerful tool. He added that it is not yet obvious in what direction monetary policy will next be adjusted, but said the BoE may yet come to use quantitative easing. Cable fell sharply in response to the latter remark.
Yesterday, CPI fell slightly in September, coming in at 0.0% m/m (cons. +0.1%, prev. +0.5%), and at 3.1% y/y (cons. 3.1%, prev. 3.1%). Our economists note that the CPI release is in line with the BoE’s inflation report and should therefore have no material impact on the MPC’s immediate policy decisions. We are cautious on sterling as fiscal austerity will likely dampen growth and keep monetary policy accommodative.

AUD

Consumer confidence stayed firm in October, rising 3.3% m/m to 117.0. Yesterday we learned business confidence only fell very slightly in September. Both readings support our analysts’ expectations for an RBA rate hike at the November meeting.

TECHNICAL OUTLOOK

EURGBP 0.8894 next resistance.
EURUSD BULLISH Focus is on 1.4029 break of which would open up the way towards 1.4194. Support at 1.3775.
USDJPY BEARISH Trend is bearish; initial support at 81.39 ahead of 79.75. Resistance holds at 83.03 ahead of 83.99.
GBPUSD BULLISH Move above 1.6018/69 would trigger further gains towards 1.6276. Support at 1.5670 ahead of 1.5503.
USDCHF BEARISH Look for a break below 0.9500 which will expose 0.9078 next. Resistance at 0.9739 ahead of 0.9918 breakout low.
AUDUSD BULLISH Upside potential held at 0.9918 below 1.000 psychological resistance next. Support at 0.9709 reaction low.
USDCAD BEARISH As long as resistance at 1.0380 holds, expect losses to target 1.0063 with scope for 0.9931 and 0.9820 next.
EURCHF BULLISH Pressure on 1.3265 ahead of 1.3072, but focus is on upside trigger defined at 1.3494 ahead of 1.3665.
EURGBP BULLISH Break of 0.8808 exposes 0.8894 and 0.9039. Support holds at 0.8689 ahead of 0.8563.
EURJPY BULLISH Clearance of 113.26 exposed 110.66 support, but overall outlook is bullish with resistance at 115.68 ahead of 116.68 Fibonacci resistance.

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 Dan Eduard – Sweden continues to be one of the major success stories in European economics. Recently, comments from the Swedish Central Bank signaled a possible rise in interest rates in the near future. This led to fairly significant gains for the krona, particularly against the euro and US dollar. Over the last several days, the EUR/SEK pair has dropped over 1200 pips, and is currently trading around the 9.2450 level. The USD/SEK had dropped over 1000 pips late last week, but the pair managed to stage an upward rally when markets opened on Sunday night. The trend for USD/SEK is still very much bearish, and analysts do not foresee a significant upward correction in the near future.

Turning to the other Scandinavian currencies, both the NOK and DKK have not been able to match the success of its Swedish counterpart. Since markets opened for the week, the Norwegian krone has lost almost 400 pips to the euro and close to 1000 pips against the dollar. While the Danish krone has been consistently gaining against the greenback in recent months, it has started off the week loosing over 600 pips against the USD. While the EUR/DKK pair has moved relatively little this week, the pair seems locked in an upward trend which is unlikely to break in the near future.

This week, traders will want to pay attention to several economic indicators out of the US that are likely to influence the Scandinavian currencies. US Fed Chairman Bernanke is scheduled to give a speech on Wednesday and Friday. His speeches typically give a clear indication of the direction the US economy is heading and consistently lead to market volatility. Any news that the US is moving to implement quantitative easing measures in order to stave off another recession, is likely to bring the dollar down against the Scandinavian currencies.

Forex Market Analysis provided by ForexYard.

© 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 U.S. dollar fell against the EUR on Tuesday after minutes from the U.S. Federal Reserve’s latest meeting confirmed that the U.S. central bank would likely soon inject the markets with cash to support the fledgling economy

Economic News

USD – USD Down Following FOMC Meeting Minutes

The U.S. dollar fell against most of its major currency rivals yesterday on news that policy makers at the last meeting of the Federal Reserve suggested they are closer to increasing money supply to revive a struggling U.S. economy. By yesterday’s close, the USD fell against the EUR pushing the oft-traded currency pair to 1.3940. The dollar experienced similar behavior against the JPY and closed at 81.80.

Markets reversed course after meeting minutes from the Federal Open Market Committee showed that officials discussed several ways to aid the economy including buying additional longer-term Treasury securities. Fed policymakers also discussed how to nudge the public into expecting higher levels of inflation in the future, which would inflate asset prices, especially commodities and stocks.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the Import Prices at 12:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Fed Chairman Bernanke’s speech at around 20:10 GMT. Traders are advised to watch closely, as this is likely to set the pace of the dollar for the rest of the week.

EUR – EUR Benefits from USD and GBP Bearishness

The EUR strengthened against most of its major counterparts yesterday, further demonstrating that for the time being, that this is the currency that traders can rely on to provide them with steady profits. The 16-nation currency extended gains versus the British pound on Tuesday, going as high as 0.8810 amid a broad sell-off of the GBP. The EUR experienced similar behavior against the USD and closed at 1.3940.

Sterling also fell broadly against the majors, after UK trade activity declined markedly in August, which added to concerns over the deceleration of the economy in the third quarter. Figures released by National Statistics showed total August exports fell 2.1% for the month while imports fell 2.7%. The figures caused the trade deficit to go up, adding to the concerns regarding the British economic recovery.

Today, there is plenty of economic news coming out of both Britain and the euro-zone that will likely determine the GBP and EUR levels for the rest of the week. From the euro-zone, there is the Industrial Production figure at 09:00 GMT. From Britain, the most important news will be the Claimant Count Change and Average Earning Index figures at 08:30 GMT. Traders are advised to watch closely, as the indicators are likely to generate market activity.

JPY – JPY Sees Mixed Results versus the Majors

The yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged vs. the EUR yesterday and closed its trading session at around the 113.80 level. The JPY saw bullishness against the GBP as it jumped around 100 pips and closed at 1.2930.

Traders today have very little fundamental news coming out of Japan. The only indicator being released is the CGPI report. Analysts forecast the figure to be unchanged from its previous reading. This indicator typically generates little volatility, and traders are advised to follow the news out of the US and euro-zone. The results of today’s main economic indicators will likely be the driving force for yen values.

Crude Oil – Crude Oil Prices Hold Near $82

Crude oil fell below $82 a barrel on speculation that U.S. inventories rose to a three-month high last week and signs that OPEC will leave production targets unchanged. Crude began dropping two days before the U.S. Energy Department’s report, which is forecasted to show a gain of 1.4 million barrels to 362.3 million.

OPEC said in its monthly report on Tuesday there was a broad consensus that oil prices around their current range have helped support economic recovery and promote industry investment. While crude prices have dropped over the last two days, an upward correction took place in overnight trading. This appears to be largely due to the dropping value in the dollar. Analysts are forecasting that for now, as long as the dollar remains low, oil has the potential to go up.

Technical News

EUR/USD

The pair has seen much bullish behavior in the past several weeks. However, the technical data indicates that this trend may reverse soon. For example, the daily chart’s RSI signals that a bearish move is imminent. Going short with tight stops might be a wise choice today.

GBP/USD

The daily chart is showing mixed signals with its RSI fluctuating in neutral territory. However, the 4-hour chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the near future. Going long with tight stops may turn out to bring big profits today.

USD/JPY

The cross has experienced much bearishness in the past few weeks, and currently stands at the 81.80 level. There is evidence in the daily chart’s oscillators, including the RSI, indicating a possible bullish correction today. Going long with tight stops may turn out to bring big profits today.

USD/CHF

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

The Wild Card

Silver

Silver prices rose significantly in the last few weeks and peaked at $23.50 an ounce. However, the daily charts’ RSI is floating in overbought territory suggesting that the recent upward trend is losing 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. Going short with tight stops seems like the preferred strategy.

Forex Market Analysis provided by ForexYard.

© 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.

AUD/USD

Daily graph: http://www.real-forex.com/charts-daily/131010/AUD_DAILY_131010.JPG

One hour graph: http://www.real-forex.com/charts-daily/131010/AUD_1H_131010.JPG

A few sessions ago, the pair reached the resistance of 0.9918, stopped and started to decrease. Last session’s hammer (professional name for a specific candle) suggests the end of the correction process occurred during the last sessions.

About 33% of the movement has been corrected when the pair reached the support level 0.9769. Once crossed, a new uptrend started. This new trend may create an opportunity to trade “Long”.

Potential trade

On the one-hour graph, an ascending configuration might be identified once the pair will cross the resistance level of 0.9877.

• “Limit” Order on “Long” position 10 pips above the resistance, meaning 0.9887.
• “Stop Loss” on the last low occurred: 0.9829

USD/CAD

Weekly graph: http://www.real-forex.com/charts-daily/131010/CAD_WEEKLY_1301010.JPG

For the last months, the pair didn’t follow any specific trend. Only a weekly graph is able to show the different levels where the pair might be stopped (resistances or supports). Currently, we are about 170 pips far from the next support level, 0.9928.

Once the support reached, we anticipate reversing trend which may create an opportunity for a “Long”. The trade should last until the upper side of the channel.

Have a profitable day!

Real-Forex team.