Month: October 2010

By Karren Pollard – For most stock traders, the first difference they will notice between the forex market and equities is timeframe. Although the hours of stock trading have been expanding in recent years, they are still subject to a normal business work day and will be closed on banking holidays and weekends. The forex market is still the only one which can truly be viewed as 24-hour.

The lack of an exchange like a NYSE is probably the next big thing that stands out as being different in forex. The stock market in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market and the forex market. While it is true that there is exchange-based forex trading in the form of futures, the primary trading takes place over-the-counter via the spot market or in the form of online trading.

The lack of an exchange also means a difference in how a transaction is processed. In the stock market an order is submitted to a broker who facilitates the trade with another broker/dealer or through an exchange. In spot forex much of the trading done by individuals is actually executed directly with their broker/dealer. That means the forex broker takes the other side of the trade. This is not always the case, but a very common approach.

Margin trading is a familiar term to those used to trading in futures. Margin accounts are not limited to equities – they are also used by currency traders in the forex market. A major difference between the forex and equities markets is the number of traded instruments: the forex market has very few compared to the thousands found in the equities market. This makes currency trading easier to follow because rather than having to cherry-pick between 10,000 stocks to find the best value.

Although these are just a few of the differences between the traditional stock market and the fast-paced forex market, investment of any type should be considered carefully weighing the benefits and risks of each type of transaction before deciding the best option for you.

About the Author

This article was provided by Franklin Global Capital LLC, NFA member (#0391263), a Spot Forex management and investment research firm. They specialize in providing investors alternative market opportunities to diversify portfolio risk. For more information about all of their services, please visit their new website at: http://www.franklinglobalcapital.com

By Elliott Wave International

Over the weekend, I went shopping for Halloween decorations. In the store, one of the clerks was wearing a white T-shirt with a puff-paint rendering of the Dow Jones Industrial Average. The line representing prices was the color of blood red, dripping and splashed across the front. When I asked him what it was, he said “the October Curse.”

‘Tis the season of stock market adages; those age-old Wall Street platitudes that claim stock prices perform a certain way during certain months of the year. The problem is, such correlations are hardly a guarantee.

Take October, for example. Yes, this month has marked some of the darkest periods in stock market history: 1929, 1987 and on. Historically, however, it’s not the worst performing month. For example, the supposed “Halloween Jinx” failed to bring a deathly pallor to stocks in 2008, as the final days of that year’s October saw the biggest weekly gain since 1974.

Remove Dangerous Mainstream Assumptions from Your Investment Process. Elliott Wave International’s FREE 118-page Independent Investor eBook shows you exactly what moves markets and what doesn’t. It will change the way you invest forever. Click here to learn more and download your free, 118-page ebook.

Then there are these familiar saws of seasonal wisdom:

“As Goes The First Week of January, So Goes The Month”– In the first week of January 2010, the stock market enjoyed a powerful winning streak. Yet, by the end of the month, prices were back in the red, circling the drain of a two-month low.

“Sell In May And Go Away” — And don’t come back ’till St. Leger’s Day (September). If investors heeded this wisdom this year, they would have missed one of the strongest uptrends in stocks of the entire year from July to September.

“September Curse” — If you think October is supposed to be bad, September is widely assumed to take the financial killing cake. Yet this year, U.S. stocks enjoyed their strongest September in 71 years!

Bottom line: Don’t “buy” your trading strategy before the trend actually arrives. The choice comes down to old adages, or objective analysis. Pick the latter.

Remove Dangerous Mainstream Assumptions from Your Investment Process. Elliott Wave International’s FREE 118-page Independent Investor eBook shows you exactly what moves markets and what doesn’t. It will change the way you invest forever. Click here to learn more and download your free, 118-page ebook.

By Chris Donnell – Trading Forex is an exciting activity. No where is there more promise of immediate fortune and unlimited potential than in the Forex market. The problem is that the vast and dynamic nature of Forex is the very thing that appeals so readily to the greed inherent in human beings and tends to lead unwitting traders into behavior unbecoming of a professional. Professionalism is just the thing that often escapes part-time amateur traders. There is no truer statement than Forex trading should be treated like a business. Furthermore, a business can hardly hope for success if it is not planned and managed in a professional manner. You’re Lemonade Stand couldn’t possibly expect to succeed if you did not control costs, operate properly and work efficiently. The same goes for Forex trading. Due to the informal nature of Forex trading, with most traders sitting at home, alone, making decisions with little or no scrutiny and/or open consideration nor contribution from others, often people are risking their personal fortunes with little regard for structured action or set parameters on their behavior. This is the fastest way to go broke trading Forex.

Often squeezing trading in between dinner, washing dishes or babysitting the kids, traders set themselves up for defeat because they don’t allocate adequate resources (in addition to money) to their efforts. Nearly as often, many traders take short cuts, base their decisions on unqualified opinions from others, random guesses or even treating the Forex like their own personal ATM or home casino. If you lay down a bet on the roulette table, black or red, you may very well win many times in a row. You could even gain a small fortune if the stars ‘fell in alignment’. However, trading Forex we are not leaving our hard-earned personal finances entirely up to chance at all. On the contrary, like scientists, we should evaluate the conditions, our tools and information so thoroughly that, while price is a beast we cannot nor will ever control, every single action and possible re-action is entirely mechanical. There is no place for fragile human emotion in the world of spot currency trading.

No matter what method you use to trade you should be completely familiar with every aspect of the strategy you employ. Approaching your trades in a cold robotic way is most ideal. Furthermore, you mustn’t let your human desire for personal fulfillment, achievement, accolades, or just plain entertainment have any part in your system. It is not uncommon for traders to want so bad to be correct about their trading decisions they will risk an exorbitant amount of capital just so that they can end the day saying “I made money”. Or equally loathsome, some traders will take on unsuitable risk in order to maintain a winning streak. These features are the product of vanity and ego which have no place in an investment of any kind. Just like one invests in mutual funds, bonds or buys stock in GE for example, they are merely deciding that prevailing factors are in their favor and the rest is left up to market forces which they duly forget about until 1, 3, 5, or dozens of years later when they must redeem their capital (or what is left of it) due to a pre-subscribed rule or condition (i.e., their retirement, et al). Just like Forex traders set a stop loss and a take profit, average investors set their limits, goals and settings as well.

Some of the best advice to new traders could simply be: treat your Forex trading like a business. You would never act in an irrational way to get new clients at your day job, or undermine the company’s budget just so you could claim success on a daily project, or even risk losing your job to soothe your own psychology. Yet, people do similar things in Forex all the time. It is that critical, without your job you may very well not be able to survive. Likewise, if you want to make an investment you usually go seek out an investment ‘professional’ typically equipped with MBAs, CFAs and licenses out their ears. If you squander your investment income you won’t have a retirement future. It is that simple. Take it seriously.

In life, everything comes with a price. Aside from winning the lottery, everything we do and everything we achieve is typically earned in some way or another. That is why we must treat Forex trading as a magnificent yet constantly evolving and advancing obsession. We will never totally master it, we can only hope to acquire the skills sufficient enough to succeed at it. And that effort, time, research and so on is the cost of that success. There are no easy paths nor shortcuts. If you get lucky and buy an EA (Forex robot) that actually works, then you may be fortunate for a time. But, in order to succeed completely and in the long run you will need to treat trading as no less than a career. With a career come significant responsibilities. Respect your career and live up to its responsibilities.

About the Author

Chris Donnell is CEO of TopGun Software, LLC and is both an active trader and developer of the most profitable Forex Trading System available to retail traders and free to traders at FXCM or FXCM.

By Sara Nunnally, Editor, Smart Investing Daily, TaipanPublishingGroup.com

Earlier this week, the Associated Press ran two very different stories about the Federal Reserve. In fact, these two stories ran side-by-side on Monday evening about two hours apart. Here are their titles:

“Fed boss: More securities buys could help economy”

“Fed boss: Threat from deficits ‘real and growing'”

Federal Reserve Chairman Ben Bernanke warns that if we can’t get our budget deficit under control, we’ll endanger our economy down the road. We’ll see higher interest rates and higher taxes, which will cause the American consumer to stop spending.

But while Bernanke is calling for reining in deficits, he’s also calling for an increase in deficits.

Here’s why… During the recession, the Federal Reserve purchased some $1.7 trillion in mortgage securities, corporate debt and government bonds. Now Bernanke is hinting at buying more government debt.

While buying bonds certainly helps the government pay for things in the near term, those bonds will eventually have to be paid back — with interest. It’s just a way of deferring debt for a period of time.

It therefore increases the amount of debt the government will have to pay back.

What that means for your portfolio is clear… It’s just a matter of timing.

Prepare for Inflation

There’s no doubt that debt has a huge impact on an economy, and on individual investors, particularly with the threat of inflation. Inflation is, in its simplest form, an excess of “dollars.” Too much money for too few goods produced means the value of a dollar is diminished.

Inflation eats away at your portfolio like a silent killer… even at low levels. A small gain in your retirement portfolio could be eroding as government debt continues to rise.

When the U.S. went into a recession in 2007, the government took on an unprecedented role in the economy. It increased spending drastically to make up for the falling private sector. It sold billions of dollars in Treasury bonds and flipped the switch on the printing press.

The U.S. government was printing money like mad… Anything to staunch the flow of the bleeding economy.

But this created an “oversupply” of U.S. dollars, and to top it off, the increase in the debt burden through issuing the Treasury bonds leaves less money to support the economy.

We have a massive mound of debt… about $8.5 trillion, or 58% of our entire economy. But some estimates put the numbers much higher. If you take away the Social Security trust fund surplus, you’ve got a figure of about $13 trillion, or 90% of the economy.

This makes a strong case for inflation down the road.

One of the ways to prepare your portfolio for inflation is to buy gold. We talked about gold on Monday, wondering if prices were too hot for investors. Turns out they aren’t, and futures for December topped $1,360 yesterday.

I said I like gold at nearly any price when you’re hedging your portfolio against inflation, and with the Fed talking about buying more government debt, I still like it.

(Want to get my articles on gold and other investing topic? Sign up for Smart Investing Daily and I’ll simplify the market with my easy-to-understand investment advice.)

Preparing for a Lower Dollar

But the heavy inflation that comes from such a large burden of debt might not get here for a while. Perhaps years… We will, however, see the dollar fall in the meantime.

On Monday, I showed you a chart of the U.S. Dollar Index, which compares the value of the dollar to a basket of other major currencies. Since mid-June the dollar has fallen from a reading of 89 to below 79 — a drop of more than 11%.

Now, in the currency market, when one currency goes down, another goes up. Everything is relative. When the U.S. dollar falls, a number of other currencies go up…

Take a look at the Australian dollar:

View Larger Chart

I’ve liked the Australian dollar for a long time. We even included it in the Ultra-Resource Basket CD that we constructed with EverBank a couple years ago.

Australia was the first to raise rates after the global financial crisis, and it’s incredibly resource-rich with gold, coal, uranium, natural gas and iron. Its proximity to China is also a benefit, as Australia has surely cashed in on China’s growth and near-insatiable need for commodities.

The Australian dollar could be a good way to play growing deficits now, before the true effects of full-blown inflation hit the greenback.

This chart is a one-year view of the CurrencyShares Australian Dollar Trust (FXA:NYSE). This trust tracks the movements of the Australian dollar by holding this currency in a deposit account and distributing interest to shareholders after all fees have been paid.

You could use this ETF and other currency ETFs to ride the fluctuations in the dollar.

Or you could go to the source, and there are a couple of ways to do that. You can buy Australian dollars, or futures on Australian dollars. It’s the sixth most-traded currency, and the Australian and U.S. dollar pair is the fourth most-traded currency pair.

You could also invest in EverBank’s Ultra-Resource Basket CD, which holds the Aussie dollar, along with a handful of other currencies.

Or you could open an EverBank account for just the Australian dollar, and reap the direct rewards from a rising currency.

All of these ideas, from ETFs to Forex, accounts come with risk, so talk to your broker about which method is best for you and your portfolio.

While holding gold in the long term is the purest way to protect your portfolio from inflation, playing currencies is an effective way to manage fluctuations in the dollar during economic turmoil.

Don’t forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

About the Author

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

By Rita Ruvinski – At the beginning of the week, USD/JPY still struggled with 83.16, but after the pair fell ‎below the previous 15 year low of 82.82. Dollar/Yen continued the fall and went as low ‎as 81.72 before closing at 81.90. ‎
However as seen is the USD/JPY chart below the pair maybe heading for a bullish ‎reversal. Technical ‎indicators show there are good chances the instrument will increase ‎further with a potential ‎price of $82.75 in sight. ‎

The chart below is the USD/JPY daily chart: The technical indicators used are the Slow ‎Stochastic, Relative Strength Index (RSI) and Bollinger Bands. ‎

Point 1: The Bollinger Bands have already begun to widen, indicating that a price shift is ‎likely to take place. As we can see, the price ticks are currently right along the lower band, ‎telling us that the price shift is likely to be upward.‎
Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may ‎be in a downward direction.‎
‎• Point 3: The RSI signals that the price of this pair currently floats in the over-sold ‎territory, indicating an upward pressure.‎

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 Natalie R. – U.K. inflation exceeded the government’s 3% limit for a seventh month in September according to a CPI report released today. The rate is well above the 2% goal set by the Bank of England, adding to the debate over the future of the monetary policy as the country is attempting to recover from the recession.

The Central Bank has been debating expanding its 200 billion-pound ($318 billion) stimulus plan to stimulate growth as the government is expected to begin the drastic spending cuts in order to tackle the country’s enormous debt. The concern is that such drastic cuts will suppress consumer spending and therefore cause a double dip. Adding to this concern was the release of a highly disappointing Halifax HPI last Thursday, which showed that housing prices fell to a record low. However, with inflation already above comfortable levels, sanctioning more quantitative easing, namely pumping more money in to the economy, may prove difficult. Expanding the monetary easing programs will ultimately result in even higher inflation.

There is currently a split in the BOE regarding the future course of action. Bank of England officials are split over whether to raise interest rates to curb inflation or add stimulus to avert the threat of another slump. It seems unlikely, however, that any hikes in the interest rates will occur short term. With economic fundamentals in the U.K proving to be relatively weak, raising interest rates, and thus limiting liquidity in the markets will stifle consumer spending and ultimately the economic recovery. Consumer spending accounts for the bulk of the country’s economic activity.

This debate is particularly interesting ahead of Friday’s Inflation Report Hearing where the BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament’s Treasury Committee. With the necessity of spending cuts on the one hand, and uncomfortable levels of inflation on the other, it will be interesting to see how the BOE will decide to act. In any case, an exciting trading week is expected for the Pound.

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 grind modestly higher during the Asia session, the move having first got underway during Monday’s holiday in the US. There were no major releases, but Asian equities were significantly weaker. EURUSD traded 1.3845-1.3901, USDJPY 81.85-82.36. We have changed our one-month forecasts for EURUSD, USDJPY, EURJPY, EURGBP, USDCHF, AUDUSD and NZDUSD in the wake of our economists now expecting the Fed to announce quantitative easing in the form of a programme of bond purchases on the order of $100-200 bn a quarter. We have however retained our three-month currency views, as we believe the market has already priced in substantial new Treasury purchases by the Fed, meaning that the eventual decision risks being a disappointment, which would likely limit any post-announcement dollar weakness.
Fed Vice Chairman Janet Yellen made her first remarks after being sworn in but did not directly address the economic outlook or upcoming policy decisions. She did say, however, that policymakers should be cautious as accommodative policies could spark a build-up in leverage and risk-taking. The September FOMC minutes are due – no surprises are expected, but these should at least provide a fuller picture of the discussions surrounding the surprisingly dovish Sept 21 policy statement.
EUR

ECB Governing Council member Quaden said excessive FX volatility needs to be avoided by common efforts at the global level. He also said the ECB is not pre-committed to making any decisions on exit strategies and that there are no plans right now to change collateral rules in order to stop banks refinancing exclusively at the ECB.
CPI data in Germany is due. At 0.0% (cons. 0.3%, prev. 0.9%) August French industrial output was released below expectations. In contrast, seasonal adjusted Italian industrial output was 1.3% (cons. 0.0%, prev. 0.1%).
JPY

Finance Minister Noda repeated that he is watching FX markets with great interest, and said Japan is willing to take decisive steps, including FX intervention, if needed. Economics Minister Kaieda repeated comments that Noda made over the weekend, saying that Japan’s explanation for its FX policy met with a certain understanding at the weekend IMF meetings. Given the likelihood that US yields will remain under pressure in the run-up to the FOMC’s November policy announcement, we lowered our 1m USDJPY forecast to 80 from 85. Our US economists expect that any Fed easing at that meeting will likely disappoint the market in terms of its size and ambition. Recognizing this, as well as the scope for further BoJ easing, we keep our 3m target unchanged at 85.
GBP

CPI is expected to remain unchanged at 3.1% y/y, while core CPI and RPI are expected to dip slightly. The m/m CPI consensus is 0.0% versus 0.5% previously. While we will not see how the latest MPC vote breaks down until Oct 20, any upside CPI surprises could intensify differences of opinion ahead of the UK spending review.
We remain cautious on sterling as fiscal austerity will dampen growth and keep monetary policy accommodative, particularly following recent comments by Prime Minster Cameron and Finance Minister Osborne. Cameron said that there are risks for the economy and that monetary policy was the best lever for support.

AUD

Business confidence in September was broadly unchanged at 10 (prev. 11), while business conditions rose to 7 from 5 in August. Our analysts note that there is nothing in the data that ought to change the RBA’s expectation that growth ahead will be at, or above, trend.

TECHNICAL OUTLOOK

USDCHF look for a break below 0.9500.
EURUSD BULLISH Violation of 1.4029 will trigger further acceleration to 1.4194. Near-term support holds at 1.3799 ahead of 1.3637.
USDJPY BEARISH Trend is bearish; initial support at 81.39 ahead of 79.75. Resistance remains at 83.03 ahead of 83.99.
GBPUSD BULLISH Sustained break of 1.6018/69 would expose 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 Trend is bullish; break of 1.3494 would expose 1.3697 measured objective. Support at 1.3265.
EURGBP BULLISH Stalled in front of 0.8808 with next resistance at 0.8894. Support holds at 0.8689 ahead of 0.8563.
EURJPY BULLISH Pullback from 115.68 eyes 113.26 support, but overall outlook is bullish with next resistance at 116.68 and 119.33 next.

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.

Source: ForexYard

Yesterday’s celebration of Columbus Day in the United States, coupled with Thanksgiving Day in Canada, led to thin market conditions in yesterday’s North American trading sessions. The tension building up in the forex market has resulted in the recent wave of stability, appearing to be a calm before the storm which may be released this week.

Economic News

USD – FOMC Minutes May Reveal QE Discussion

Yesterday’s celebration of Columbus Day in the United States, coupled with Thanksgiving Day in Canada, led to thin market conditions in yesterday’s North American trading sessions. The US dollar is little changed since yesterday against most of its rivals, but the market’s movements seem to suggest further downward pressure on the greenback.

The EUR/USD peaked around 1.4000 on Friday before falling back down to currently trade just under 1.3890. Meanwhile, the USD/JPY continues to plummet, dropping as low as 81.45 on Friday, but settling around 82.00 during today’s thin trading. Speculators have begun to assume an impending currency intervention by the Bank of Japan (BOJ) due to the strengthening yen, while also forecasting monetary measures by the Fed to combat the weakening dollar.

The tension building up in the forex market has resulted in the recent wave of stability, appearing to be a calm before the storm. If today’s release of the Federal Open Market Committee’s (FOMC) Meeting Minutes reveals discussions of quantitative easing measures, the market could respond with sharp volatility in USD pairs and crosses.

EUR – EUR Flattening Against Rivals under Thin Market Conditions

The euro fell against most of its currency rivals in yesterday’s thin trading environment. The euro zone was also largely absent from economic news yesterday, feeding into the low liquidity of yesterday’s trading sessions. Today should not be much different for the 16-nation single currency seeing as most European news today is centered on Great Britain.

The euro fell against the US dollar mildly, dropping from highs over 1.4000 to as low as 1.3879 in late trading. Against the British pound, the euro flattened out and appears to be consolidating around 0.8730.

Germany will be releasing some inflationary data in the early morning hours, but they should be of little consequence. The market may react in favor of the EUR if these figures come out above expectations. Britain will be releasing some impactful CPI figures which should carry a heavy impact on the GBP, especially ahead of Friday’s Inflation Report Hearings in the UK.

JPY – BOJ May Intervene as Yen Continues to Soar

The Japanese yen has remained in an ascending pattern against most of its currency rivals despite efforts by the Bank of Japan (BOJ) to intervene in the forex market. The sudden spike in risk aversion in favor of the yen has allowed the island currency to gain against its rivals regardless of efforts by the BOJ to counter those effects.

Speculators, as a result, have begun to anticipate another round of currency intervention by the BOJ to once again combat the rising yen. News of a potential market intervention by the US Federal Reserve, however, has appeared to temporarily offset the BOJ’s efforts. This monetary intervention war between major economies is providing some unique market fluctuations which allow traders to benefit from clear, long-term trends, with obvious highs and lows.

Crude Oil – Oil Prices Consolidating Near $82.50

Crude Oil prices have descended somewhat over the past 24 hours. Commodity markets spiked mildly on Friday as the US NFP report disappointed with a sharp decline in American employment. The corresponding drop in the US dollar helped push the price of oil over $84 a barrel.

The consolidating price behavior for Crude Oil over the last day could represent a minor break in a long-term uptrend for oil prices. Industrial growth is underway, albeit slowly, and commodities like oil are beginning to find fundamental support from market optimism and mild growth. If the dollar continues to fall, even with quantitative easing measures from the Fed, then oil price should see a steady rise with a target near $88 a barrel in the next few weeks.

Technical News

EUR/USD

The daily RSI on this pair shows the price in a downward slope, about to exit the over-bought territory. The daily Stochastic (slow) also appears to be displaying similar behavior. It appears this pair may be building steam in a bearish direction. Going short could end up paying off over the next 24 hours.

GBP/USD

There appears to be a bearish cross forming on the weekly Stochastic (slow), suggesting a recent buildup of downward pressure. A recent bearish cross on the daily MACD supports this notion. Going short with tight stops could be a wise tactic today.

USD/JPY

The daily Stochastic (slow) and the MACD on the daily and weekly charts are all showing an impending bullish cross, highlighting an increase in upward pressure. The price also appears to be floating in the over-sold region on the weekly RSI. Going long after the price bounces off its next resistance line at 81.75 could be a smart move.

USD/CHF

The price of this pair looks to be floating deep within the over-sold region on the weekly RSI, but has recently turned upward suggesting a coming end to this pair’s bearish trend. Recent, or impending, bullish crosses on the MACD and Stochastic (slow) indicators on the daily and weekly time scale all suggest that a major correction is on its way. Going long may not be a bad idea given these indications.

The Wild Card

Crude Oil

There appears to be impending bearish crosses on the daily MACD and weekly Stochastic (slow), suggesting a strong downward movement is building for this commodity. The price also appears to be descending out of the over-bought range on the daily RSI, which supports the above notion. Forex traders may want to pay attention to these technical indicators today as a downturn may be in the works. Going short with tight stops could be a good way to make a buck.

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.

EUR/USD

Daily graph: http://www.real-forex.com/charts-daily/121010/EUR_DAILY_121010.JPG

One – hour graph: http://www.real-forex.com/charts-daily/121010/EUR_1H_121010.JPG

For the last few weeks, the pair had a clear and strong uptrend. A few sessions ago, a very important resistance at 1.4031 stopped it. The following session was quite anemic, but the last session showed a clear downtrend.

The uncorrected uptrend in addition to the important resistance opposed to the pair may suggest a reversing trend which will partially correct the intensive uptrend occurred during the last weeks, creating an opportunity to make a profitable “Short”.

Potential trade

We suggest looking for a decreasing configuration on one-hour graph. Such a configuration should appear once the support level 1.3866 will be crossed downward. If the configuration required is identified, we suggest to enter the following orders:

• “Limit” order on “Short” position 10 pips below the support level noticed earlier, meaning: 1.3856.
• “Stop loss” order on the last high occurred: 1.3901

NZD/USD

Weekly graph: http://www.real-forex.com/charts-daily/121010/NZD_WEEKLY_121010.JPG

A very sharp and clear uptrend started about 8 weeks ago. The potential stopping point can only appear on a weekly graph.

We are currently about 120 pips below an important resistance at 0.7642. We anticipate a reversing trend which may correct the uptrend occurred during the last period.  This correction may create an opportunity for a nice “Short”.

A daily reversal candle on the resistance could be a clear sign for the reversal.  If this candle appears, the opportunity to “Short” will be created.

Have a profitable day!

Real forex team