Month: April 2011

Source: ForexYard

The greenback’s latest reprieve may be partially explained by a relaxation in demand for commodity-linked currencies, like the Aussie and Canadian dollars. Moreover, a series of dovish statements from members of the Federal Open Market Committee (FOMC) have actually helped boost the dollar as the Fed’s monetary policy appeared relatively more stable than recent policy moves in Europe have suggested.

Economic News

USD – USD Positive as FOMC Members Make Dovish Statements

The US dollar climbed against a number of its currency rivals in today’s trading. The EUR/USD fell from its recent high of 1.4484 to as low as 1.4399 in yesterday’s trading, while the GBP/USD moved from its latest peak of 1.6427 to 1.6303.

The greenback’s latest reprieve may be partially explained by a relaxation in demand for commodity-linked currencies, like the Aussie and Canadian dollars. Moreover, a series of dovish statements from members of the Federal Open Market Committee (FOMC) have actually helped boost the dollar as the Fed’s monetary policy appeared relatively more stable than recent policy moves in Europe have suggested.

As long as news out of the American economy remains stable, or better, the greenback may continue to see support from market fundamentals. Today’s economic calendar may just provide the stability needed for such movement. The US trade balance data is expected to publish a minor decline in the US trade deficit and import prices may have grown 2.1% over the past month.

EUR – German ZEW Data May Drive EUR Lower

The euro fared poorly in today’s trading as investors appeared to be fleeing the riskier assets and moving into safer investments, like the USD and JPY. The 17-nation single currency moved almost 90 pips lower versus the US dollar, ending the day at 1.4399. The EUR/JPY also shifted into a bearish posture, moving from as high as 123.32 to this morning’s low of 120.95.

The downturn appears to be connected to a recent shift away from commodity-linked currencies and poor fundamental data out of Europe and Asia. The American economy appears to be outperforming its Atlantic neighbors and a string of reports on today’s calendar may verify the greenback’s recent strength.

The EUR is relatively absent from today’s calendar with only one significant event being published at 10:00 GMT. The ZEW reports from Germany and the euro zone, however, are not expected to help the region’s currency strength as both are forecast to drop from last month’s reading. If that is indeed the case, the euro may continue its recent bearishness at least through today’s trading hours and into tomorrow.

JPY – Japanese Yen Benefits from Shift into Safe Havens

The Japanese yen has benefited lately from a shift into safe haven assets. Traders have viewed the dovish statements from the Federal Reserve yesterday, and the recent decline in European fundamentals, as a sign of economic retreat and moved their investments accordingly.

Technical buy-ins on the yen also appears to have been triggered following the European Central Bank’s (ECB) rate hike last week. These combined technical and fundamental factors have helped lift the yen in today’s early trading hours. Traders should not allow themselves to be duped by these value shifts, however, since Japan’s economic strength remains under question. As long as the EUR moves bearish, it appears safe to buy into the yen, but be wary of the inevitable swing.

Crude Oil – Oil Prices Meeting Resistance as USD Finds Strength

The price of Crude Oil has begun to undergo a downturn as market fundamentals turn in favor of currencies not linked to commodities. A general risk flight has also helped lift the US dollar, driving commodity prices lower in the short-term.

Traders should be wary of the market today as multiple news events out of Great Britain and the United States are expected to generate a significant level of volatility in the value of the Majors and commodities. Oil prices are coming under pressure after surging beyond $112 a barrel last week. If the USD continues its downturn, traders may want to expect the price of oil to do the same.

Technical News

EUR/USD

The EUR/USD has gone increasingly bearish yesterday, and currently stands at the 1.4400 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 2-hour chart’s Stochastic Slow signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

The pair has been range-trading for a while now, with no specific direction. The 8-hour 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/JPY

The price of this pair appears to be floating in the over-sold territory on the 8-hour 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 appears to be preferable strategy.

USD/CHF

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the 4-hour chart’s RSI. Going long with tight stops may turn out to pay off today.

The Wild Card

CHF/JPY

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

Forex Market Analysis provided by ForexYard.

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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.

GBP-USD

Daily time frame

Strategy: short

The prices reached the upper side of the a-symmetric triangle (turquoise background), with an attempt to break out the third time the level of 1.64, and failed. If it does not stop above this level we believe that the price will retrace the last upward continuous movement (broke blue line), between a third to two thirds Fibonacci- between the level of 1.6240 to the level 1.6100.

As can be seen by the graph bellow:

4 hour time frame

It can be seen how the price made exact upward movements to the level of 1.64 and completed the depth of the range target upward. The level of 1.64 constitutes a resistance point and after the price tried three times to break out this level and did not succeed we believe that the breakdown of the level 1.63 will lead to the downward movement of 100 pips in the first stage, to the level of 1.62.

Potential Trade

Short

Enter: 1.6295

Stop: 1.6430

Target: 1.6200

As can be seen by the graph bellow:

EUR-USD

Daily time frame

Time: 2.00 Rate: 1.4436

Strategy: short

The price got to its exact target that was set in the previous daily market review -1.4475 in addition got to the upper side of the parallel upward channel. Furthermore, the closing feature of the upward movement is a large bodied candlestick (last chance of buyers to create work in the field). If the level of 1.4775 will not break out we believe that a retracement movement will start of the last upward moving platform (broken blue line) first stage between one third to two thirds Fibonacci between the levels of 1.4310, to1.42.   

As can be seen by the graph bellow:       

4 hour time frame

It can be seen that the break out attempt of the upper side of the long parallel upward channel (discontinuous black), was not possible and the price returned under, in addition a second channel was created, (discontinuous red) where the price reached the upper side. We believe that this area is a resistance area and the price will retrace at least between one third to two thirds of the last upward movement (broken blue line), between the level of 1.4310-1.42.

As can be seen by the graph bellow:

Important News calendar for the 12.04.2011

Time: 11.30 GBP- CPI y/y

Time: 12.00 EUR- German ZEW Economic Sentiment

Time: 15.30 CAD- Trade Balance

Time: 15.30 USD- Trade Balance

Time: 16.00 CAD – BOC rate statement  

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Polar Property Holdings Corporation or PO in the Philippine Stock Exchange is a Philippines based company engaged in investment and the real estate business. This was the highlight of the day as its stock price climbed the top of the gainers list with a whooping 19.47% increase. In the process, it had broken out from its 5-month downtrend with a long white candle and a surge in volume after bouncing from the 16-month support days earlier. As a newly breakout, the stocks could continue to rise given that today’s buying pressure will continue in the coming days. However, it might encounter some selling pressure at the 50 and 100-day moving averages as well as at the PHP4.41 resistance. If those hurdles get cleared out, the next resistance to be looked out for is PHP5.00. On the other hand, in case today’s move was a false breakout and the stocks slide, as long as the 16-month support remains intact, holding on to the stocks could be safe. Although, cutting your losses below that is around 25% from the current price and that’s quite big. Given it’s poor liquidity and volatility, it would be wise not to go all in on this one.

More on LaidTrades.com …

Yesterday saw a mixed trading session for both the USD and CAD. While both recorded gains against the British pound throughout the day, the yen was able to develop serious bullish momentum in overnight trading, and took in well over 100 pips profit on each of the North American currencies. Today, traders will be paying close attention to both Canadian and US trade balance figures, as they are likely to determine the short term trends for both the loonie and greenback.

Here is a roundup of the day’s main news events:

12:30 GMT- Canadian Trade Balance

Analysts are forecasting the Canadian Trade Balance figure to come in at around 0.6B. If true, it would represent a stark increase over last month’s figure of 0.1B. The CAD could see a jump in afternoon and evening trading today as a result of this indicator, in particular against its main currency rivals the euro and US dollar.

12:30 GMT- US Trade Balance

The US Trade Balance figure is forecasted to come in slightly better than last month’s result. Analysts are calling for a number around -44.1B, as opposed to March’s figure of -46.3B.

While the prediction does represent an improvement, it is unlikely to help the dollar as it still shows the US importing significantly more than it exports. Unless the figure comes in well above expectations, the dollar is likely to see a drop following the release of this report.

USDCAD stays below a downtrend line on 4-hour chart, and remains in downtrend from 0.9826, and the price action from 0.9526 is treated as consolidation of downtrend. As long as the trend line resistance holds, we’d expect downtrend to resume, and another fall towards 0.9400 is still possible. However, a clear break above the trend line resistance will indicate that lengthier consolidation of downtrend is underway, then further rally could be seen to 0.9650 zone.

Forex Signals

Another good day for the Philippine Stock Exchange fellows. During awesome runs like these, it’s the best to take advantage of the opportunities the market gives. Many stocks especially blue chips rise but remember to lock up your profits and not be greedy.

Last January, I posted on Megaworld Corporation or MEG in the Philippine Stock Exchange and mentioned that there was a head and shoulders pattern that was bound to break down and it did shortly (kindly check here). I also mentioned that the target price for its descend could be 1.86 Philippine Peso. With the market’s current condition and today’s 7.14% gain to close the Megaworld stocks at PHP2.25, I highly doubt MEG  is going anywhere close to PHP1.86 soon.

Earlier today, Megaworld broke out from a 2-month consolidation which apparently looks like a rectangle, symmetrical triangle or even an inverted head and shoulders pattern. Regardless of what pattern it may be, it has broken above the PHP2.23 resistance and its 5-month downtrend. However, MEG closed right at the neckline of the former head and shoulders which serves as a resistance along with the 100-day moving average. With the MACD leaning towards the positive territory and the sudden surge in buying pressure, MEG’s move up could further continue tomorrow. If it does, the next resistance the bulls could encounter is PHP2.38 then off to the PHP2.60 hurdle. On the downside, PHP1.96-2.00 is the level of support I’m looking into in a way that when the price goes below that level, I’d cut my position.

More on LaidTrades.com …

Oil sold off sharply today erasing all of the gains from Friday. Oil at neutral to positive now seems to be positive for the markets while a big move up or down is negative.

Gain Capital Holdings (GCAP) is down after Barron’s says shares may fall to about $4 within a year as retail clients’ losses loom, it loses a key customer and regulators cut leverage limits, Bloomberg reports. Earlier, GCAP hit a 52-week low of $6.08. It was last at $6.51.

April 11 (Bloomberg) – Olivier Blanchard, chief economist at the International Monetary Fund, talks about the outlook for commodity prices, the U.K. economy and the European debt crisis. He speaks with Andrea Catherwood on Bloomberg Television’s “Last Word.

By J.W Jones (See My Free Trade Setups: optionstradingsignals.com)