Month: December 2010

By Anton Eljwizat

The USD has dropped significantly versus the CHF in the past 2 weeks, and it is currently traded around 0.9375. And now as evident in the data, the 4-hour chart is giving bullish signals, indicating that USD/CHF pair might go up. Forex traders can take advantage of this impending movement by having their Entry Orders in place to capture this reversal.

• The next support levels are located at the 0.9345, 0.9315 and $0.9295 levels.
• The next resistance levels are found at the 0.9405, 0.9435 and 0.9470 levels.

USD/CHF 4-Hour Chart

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 Anton Eljwizat

The USD/JPY pair saw quite a consistent bearish trend during the past few weeks. The pair lost about 300 pips since December 16th, falling from the 84.40 level to the 81.40 level today. However, after the pair failed to breach through the 81.40 level it began correcting itself, and is now trading near the 81.60 level. The bullish correction is likely to extend today, with potential to reach the 82.00 level.

• The chart below is the 4-hour chart USD/JPY by ForexYard.

There is a very distinct bearish channel formed on the 4-hour chart, and the pair is now floating in its bottom.

• The pair recently reached as high as the 84.20 level, yet this appears to have initiated a mild bearish correction.

• The Slow Stochastic has just completed a bullish cross above the 20-line, indicating that a bullish correction might take place.

• In addition, The RSI signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• The next support levels are located at the 81.20, 80.80 and 80.50 levels.

• The next resistance levels are found at the 81.90, 82.30 and 82.70 levels.

USD/JPY 4-Hour Chart

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 USD/JPY has fallen for the past 6 consecutive trading days as Japanese exporters buy the yen. This one-sided trade and the sharp losses in the pair may force the Japanese Ministry of Finance to intervene in the currency markets at the beginning of the new year.

Economic News

USD – Dollar Weakens on all Fronts

In light volumes, the dollar was down on the day versus the majors, marking a losing day in all the major currency pairs. The biggest slides for the dollar occurred versus the Japanese yen and the Swiss franc. The losses in the dollar accelerated following the auction of $29 billion in 7-year treasury notes.

Notable technical levels were reached in yesterday’s trading with the AUD/USD moving as high as the 1.0180 level, the all-time high for the pair which was last reached in early November. The GBP/USD moved higher but the gains were capped by the 38.2% Fibonacci retracement level from the May to November move. Silver prices also reached their all-time high at $30.70.

Traders today should be looking for heightened volatility as many trading desks are thinly staffed with the approaching holiday. Data from the US will be influencing the direction of the dollar and may offer a respite from the dollar selling that has been experienced for the last 24 hours.

Weekly unemployment claims as well as pending home sales will be released today. US economic data has shown a propensity to come in at the upside of economists’ forecasts.

EUR/USD support rests at the 50% retracement level from the June to November move at 1.3070, with resistance coming in at yesterday’s high at 1.3275 and the 38.2% Fib retracement at 1.3360.

EUR – Euro Rallies Versus the Dollar

The euro was boosted yesterday by dollar weakness with the EUR/USD rising to the 1.3250 level during early Japanese trading today. Light volumes had the pair trading in a wide band with large price jumps that are uncharacteristic of the most commonly traded currency pair. However, the euro was little changed versus the Swiss franc and only slightly lower versus the yen. This type of market action may speak more towards yen strength rather than euro weakness.

The EUR/CHF was trading even on the day at 1.2490 while the EUR/JPY was down slightly at 107.75 from an opening price of 108.01.

A lack of data coming from Europe has given traders little info to bid the euro higher versus the majors. But the European debt crisis has not disappeared. The previous weeks barrage of downgrades of European sovereign debt and credit ratings should serve as a reminder to traders that the threat of further fiscal problems in Europe remains. Despite the European debt crisis it looks as though traders may overlook the structural problems in the euro with a resumption of euro selling potentially to come after the New Year.

JPY – Yen Buying Accelerates

The Japanese yen continues to strengthen amid selling by Japanese exporters. The USD/JPY finished down sharply today as momentum behind the selling increases with the new year approaching. Low liquidity may have played a part in the acceleration of the pair but the downtrend is nevertheless reasserting itself with a strengthening yen.

At the end of yesterday’s trading, the USD/JPY was trading at its daily low of 81.60. The pair opened at a price of 82.27.

Comments from the Japanese Finance Ministry show the government may once again step in and intervene in the FX trade to halt the appreciation of the yen. Previously the Japanese Ministry of Finance entered the markets with a $25 billion intervention which briefly put a halt to an appreciating yen. Traders and economists are split whether this will happen prior to the USD/JPY testing its yearly low at 80.23 which serves as a target for many trades.

Crude Oil – Oil Prices Prove Resilient, Still Trading Above $91

Spot crude oil prices were relatively unchanged yesterday with prices trading in a tight band that is characteristic of light volumes. Oil prices ended the day down at $91.19, near their opening price of $91.30. With little data to go on for most of the week, the price of crude oil has proved resilient and has not traded below the $90 mark.

Traders will be anticipating key data from the US today with the release of the weekly inventory numbers. Analysts anticipate a decline of 2.8 million barrels for the previous week. Should the drawdown be more than expected we may see crude oil prices push higher. The same can be said for the weekly unemployment numbers and pending home sales data that are due out in the US trading session today. Price targets for spot crude oil may be near the $100 psychological level.

Technical News

EUR/USD

While the pair continues to press the downward sloping trend line that begins at the November high, the price has failed to make a significant breach above the line. This signals resistance at these levels. The pair also shows a propensity to trade between the 38.2% and 50% Fibonacci levels from the June to November move which rest at 1.3360 and 1.3080 respectively. Traders should look for the price action to be contained between these two levels until after New Year’s.

GBP/USD

Following a breach of the rising trend line from the May low, the pair has retraced to the previous trend line which has acted as a resistance level. This level comes in today at 1.5560. Traders should look to short the pair at this level or above.

USD/JPY

The downtrend for the USD/JPY has reestablished itself with the pair falling for the past 6 consecutive days. Momentum is building behind the move as yesterday’s candlestick is a shaved head, signaling selling from the opening of the trading day. Traders will want to target the support at 80.50, followed by the yearly low at 80.23.

USD/CHF

A bearish channel has formed on the daily chart as the declines in the pair begin to pick up pace. Traders should be short on the pair with a take profit level at lower channel line which comes in today at 0.9300.

The Wild Card

Silver

The commodity is currently testing its all-time high at $30.69. When the price of a commodity makes a new high, this is a signal to traders that a change in the market has occurred and more potential gains may be forecasted. Forex traders should be long on spot silver with stops placed below the rising trend line that extends from the late August low.

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.

The gold climbed to a high of $1414 an ounce, compared to the low of USD 1372 an ounce in the end of last week, supported by Euro’s recovery from a three week low against the US Dollar. At this period trade is thin as most of funds and banks are out of the market. Little activity is expected during the break.

The markets will resume properly in the first week of January and investors expect gold to climb around $1450. an ounce. Fears about Euro zone’s peripheral economies debt crisis still exist and are not going to vanish easily. These concerns make people to feel better when they hold a tangible asset.

• The next support levels are located at the $1410, $1400 and $1390 levels.
• The next resistance levels are found at the $1420, $1435 and $1450 levels.

The holiday season must have really great for those who are long on the Australian. The month of November was not particularly well since the AUDUSD pair has slid by 640 pips after marking a historical high at 1.0183 and bottoming at 0.9537. Since then, the Aussie has rebounded off its long term uptrend line and just today it has already surpassed its previous high to mark a new all-time high at 1.0198. With the stochastics indicating an overbought condition, will the Aussie be able to push itself forward? Or will the previous high’s gravity pull it back down?

Two things can happen here. End of the year window dressing by major corporations could spark a year-end rally in the equities market. Optimism arising from such could then lead traders to higher yielding assets (equities) and currencies like the Australian dollar and away from the low-yielding ones like the USD, effectively pushing the AUDUSD pair up. Positive fundamental data from the US’ initial jobless claims for the week ending December 25, which is seen to taper to 416,000 from 420,000, could also build up investor confidence. On the flip side, flat trading because of the holiday break, year-end book consolidation by forex participants, and softer than projected November pending home sales in the US (1.8% from 10.4%) could dampen the market’s and the Aussie’s support. Nonetheless, the bias remains positive at least for the Australian dollar given its long term uptrend.

More on LaidTrades.com …

Well, it’s only two days before the New Year so I better make my end of the year resolutions… Exercise daily, eat healthy, steady on the partying, and so on.. Trading-wise, here are my top 10 forex decrees:

1)      Don’t hesitate to trade the breakouts!

• Chart patterns are the bread and butter of technical analysis. There are five basic must-know chart formations – triangles, head and shoulder (inverted), double bottom (tops), cup and handle, triple bottom (top). If you spot a breakout.. trade it!

2)      Don’t forget the fundies!

• Marry fundamentals with technicals like you’re marrying Jessica Alba. Okay, the latter does not make any sense. In any case, you should always try to execute trades that are both supported by technicals and fundamentals/sentiment as this would increase the chance of them winning.

3)      Don’t gamble!

• Say no to rogue trading! Trading currencies is not like in a casino where you can just do a one-time big time trade. Of course you can do that but don’t fret if you find your account down to zero the following day. If you want to gamble.. go to a casino! It’s more fun there! If you want to profit… trade forex in a systematic way!

4)      Don’t revenge trade!

• Did I say no rogue trading? Well, losing is part of the game. So if you do just relax, calm down, and move on. Don’t hit the entry button again and trade twice or thrice of the position that you lost in hopes of getting it back and even winning in one go. You’ll find yourself in a deeper ditch if you lose again.

5)      Manage your positions wisely

• Manage your positions wisely like your managing your chicks… I mean your checks. Don’t risk more than 1% of your account balance in one trade. Enough said!

6)      Avoid trading in a highly volatile time

• Trading during the releases of high profile reports like GDP and NFP is not my style. I got whipsawed the last time I tried to ride a sudden slide in prices from a GDP report. You cannot really gauge how much a currency will move given a report. You might get the tail end of the move if you decide to just jump in. If you miss it… then stay away.

7)      Trade on retracements

• This one is related to number 6. If you miss a breakout or the initial strong move in prices then don’t just jump in. Wait for it to retrace (sounds fancy, eh?) so you can get a better price. Hit the limit order function… it’s there for a reason.

8)      Be flexible

• The market acts like a girl… fickle minded. You just don’t know what she wants exactly. So sometimes it is best to just adjust and be flexible. To be profitable and likable you gotta do what the woman wants.

9)      Use a journal

• Okay, journalizing sounds kinda gay-ish. But if you want to keep track of what’s working and what’s not in your trades then you better jot all of them down. Write down your trade ideas, what happened, what you did, what you felt… everything.

10)   Go out. Drink. Chix.

• Yes. You read that correctly! Forex is a tough business with all the things that you have to read and analyze. We’re just humans. We get strained too. Sometimes we have to take a break as well. So for my tenth decree… Free yourself from stress. Clear your mind. Go out. Drink. Chix.

So there you go… my top 10 forex resolutions. Currently, I’m working on the tenth (Hey Babe!). Alright. Got to head out now. Peace!

More on LaidTrades.com …

Elliott Wave International’s free 118-page Independent Investor eBook explains why financial markets are NOT a matter of action and reaction

By Elliott Wave International

“There is no group more subjective than conventional analysts, who look at the same ‘fundamental’ news event a war, interest rates, P/E ratio, GDP, economic policy, the Fed’s monetary policy, you name it and come up with countless opposing conclusions. They generally don’t even bother to study the data.” — EWI president Robert Prechter, March 2004 Elliott Wave Theorist.

If you watch financial news, you probably share Bob Prechter’s sentiment. How many times have you seen analysts attribute an S&P 500 rally to “good news from China,” for example — only to focus on a different, supposedly bearish, news story later the same day if the rally fizzles out?

You need objective tools to make objective forecasts. So, we put together a unique resource for you: a free 118-page Independent Investor eBook, where you see dozens of examples and charts that show what really creates market trends.

Here’s a quick excerpt. For details on how to read the entire Independent Investor eBook online now, free, look below.

Action and Reaction

In the world of physics, action is followed by reaction. Most financial analysts, economists, historians, sociologists and futurists believe that society works the same way. They typically say, “Because so-and-so has happened, such-and-such will follow.” … But is it true?

Suppose you knew for certain that inflation would triple the money supply over the next 20 years. What would you predict for the price of gold?

Most analysts and investors are certain that inflation makes gold go up in price. They view financial pricing as simple action and reaction, as in physics. They reason that a rising money supply reduces the value of each purchasing unit, so the price of gold, which is an alternative to money, will reflect that change, increment for increment.

Figure 4 shows a time when the money supply tripled yet gold lost over half its value. In other words, gold not only failed to reflect the amount of inflation that occurred but also failed even to go in the same direction. It failed the prediction from physics by a whopping factor of six, thereby unequivocally invalidating it.

Investors who feared inflation in January 1980 were right, yet they lost dollar value for two decades… Gold’s bear market produced more than a 90% loss in terms of gold’s average purchasing power of goods, services, homes and corporate shares despite persistent inflation!

How is such an outcome possible? Easy: Financial markets are not a matter of action and reaction. The physics model of financial markets is wrong. …

Cause and Effect

Suppose the devil were to offer you historic news a day in advance. … His first offer: “The president will be assassinated tomorrow.” You can’t believe it. You and only you know it’s going to happen. The devil transports you back to November 22, 1963. You short the market. Do you make money? …

[…continued in the free 118-page Independent Investor eBook]

eBay Inc. (NASDAQ:EBAY) has plans to establish an international base in Chongqing, China, Bloomberg reports Wednesday. The international hub will aim to help increase exports. On December 03, 2010, eBay was downgraded to Hold from Buy at Citigroup. The company has reported $9.0 billion in sales over the past 12 months and is expected to report $10.2 billion in sales in the next fiscal year.

Dec. 29 (Bloomberg) — Tax-exempt municipal bonds are heading for their worst quarterly performance in more than 16 years as yields soared amid a U.S. Treasury selloff and the looming expiration of Build America Bonds. Bloomberg’s Julie Hyman reports. (Source: Bloomberg)

Forex Pros – The Euro was higher against the U.S. Dollar on Wednesday.

EUR/USD was trading at 1.3220, up 0.80% at time of writing.

The pair was likely to find support at 1.3073, Monday’s low, and resistance at 1.3274, Tuesday’s high.

Meanwhile, the Euro was down against the British Pound and the Japanese Yen, with EUR/GBP shedding 0.06% to hit 0.8528 and EUR/JPY falling 0.08% to hit 107.97.

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