Month: April 2011

By Dan Eduard

The Norwegian krone had a very profitable week, as rising oil prices helped support the Scandinavian currency against its main currency rivals. Continued rumors of a Norwegian interest rate hike also helped support the currency. Against the US dollar, the krone has gone up well over 800 pips in the last week. Currently the USD/NOK is trading at 5.4550. The NOK faired even better against the euro, gaining close to 900 pips in the same amount of time. The EUR/NOK currently stands at 7.7815.

The Swedish krona saw more mixed results over the past seven days. A strong US jobs report last week helped boost the USD/SEK close to 700 pips before the pair staged a reversal yesterday and dropped to its current level of 6.3090. Meanwhile, an anticipated euro-zone interest rate hike has helped the euro gain close to 700 pips against the krona since last week.

Turning to the week ahead, the ongoing conflict in Libya is likely to keep the price of oil high, which could help the NOK. The SEK is likely to face a tougher time, as the anticipated hike in euro-zone interest rates is likely to send the krona plummeting against the euro. Traders will want to also pay attention to the main US economic indicators. Any positive American news will likely help the dollar 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.

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Source: ForexYard

The euro remained bullish in overnight trading as investors eagerly await the results of the ECB meeting scheduled to take place tomorrow. It is widely anticipated that the ECB will raise euro-zone interest rates, a move which is likely to cause the value of the currency to spike.

Economic News

USD – USD Hits Six Month High Against Yen

The US dollar continued to slide against most of the riskier currencies in overnight trading, as investors eagerly await the results of the ECB meeting tomorrow. Analysts are nearly unanimous in saying that euro-zone interest rates are likely to go up tomorrow, a move which would likely cause the EUR to spike. While the greenback remained extremely bearish against its European currency rivals, a rise in US Treasury yields helped the dollar extend its recent gains against the yen to hit a six month high.

Currently the EUR/USD is trading close to the 1.4260 level, up over 40 pips since last night. The GBP/USD has gone up a similar amount, and is currently trading steadily at the 1.6330 level. The USD/JPY shot up some 55 pips last night, peaking at 85.51 before staging a slight correction. The pair currently stands at 85.33.

Turning to today, a lack of significant US news means that dollar values will continue to be determined by external events. With the ECB meeting scheduled for tomorrow, the greenback is unlikely to make significant gains against the euro or British pound. Against the yen, the dollar may be able to extend its bullish trend, but traders should not count on the spikes we saw yesterday occurring again today.

EUR – Possible Interest Rate Hike Boosts EUR

The prospect of a euro-zone interest rate hike tomorrow continued to dominate market news throughout the day yesterday and into overnight trading. Should the hike take place, (as is widely predicted), it would be for the first time since July of 2008. The fact that other central banks, like in the US and Japan, remain largely averse to raising interest rates has helped the euro make significant gains against its main currency rivals as of late.

Analysts are saying that the EUR/USD, currently trading around the 1.4260 level, may rise as high as 1.4500 following the ECB meeting. Against the yen, the euro hit a fresh 11-month high during the overnight session and is currently trading at the 121.65 level. That being said, the news for the euro has not been all positive. After tumbling close to 100 pips against the British pound yesterday, the euro was unable to regain its footing in overnight trading and is currently trading around the 0.8728 level.

Turning to today, the ECB meeting is likely to continue dominating market sentiment, meaning that euro bullishness against the dollar and yen is likely to continue. With no significant news scheduled for the other main global economies, going long on the EUR appears to be a safe bet.

JPY – Yen Continues to Slide across the Board

The yen took heavy losses throughout the day yesterday and into overnight trading. The currency hit a six month low against the US dollar, an 11-month low against the euro, and a staggering 2-1/2 year low against the aussie.

Analysts attribute the yen’s bearishness to the prospect of a euro-zone interest rate hike tomorrow. In Japan, the devastation brought by the earthquake and tsunami last month have made the prospect of an interest rate hike practically non-existent at least for the near future.

Turning to today, a lack of significant news out of Japan means that yen values will continue to be determined by the news out of Europe. While it is possible that the yen may hit some strong support levels, traders should not count on any significant breakthroughs that could help the yen recoup some of its recent losses.

Crude Oil – Crude Oil Trades at 30-Month High

Crude oil jumped to a 2-1/2 year high above $108 a barrel on Tuesday, as conflict and unrest in Africa and the Middle East more than offset China’s latest interest rate hike. There’s also an expectation that an improving global economy will increase demand for oil.

The stalemate in Libya has fueled fears of a prolonged loss of its oil exports even as a tanker arrived at an oil terminal in the east of the country to load the first cargo of crude oil to be sold by the anti-Gadaffi rebels.

Crude oil prices have surged more than 20% since mid-February, when pro-democracy movements reached Libya, Africa’s third-largest oil producer.

As for today, traders are advised to follow all the developments from Libya as the conflict there is now the main catalyst in crude trading. In case the conflict escalates, oil prices might climb even further.

Technical News

EUR/USD

The EUR/USD went increasingly bullish yesterday, and currently stands at the 1.4260 level. The 8-hour chart’s Slow Stochastic supports this currency cross to rise further today. However the daily chart’s Williams Percent Range signals that a bearish reversal will take place. Entering the pair when the signs are clearer seems to be the wise choice today.

GBP/USD

The price of this pair appears to be floating in over-bought territory on the 8-hour chart’s RSI indicating a downward correction may be imminent. The downward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

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

USD/CHF

The 4-hour chart is showing mixed signals with its RSI fluctuating in neutral territory. However the 8-hour Chart’s RSI is already floating in the overbought territory indicating that a bearish correction might take place in the near future. Going short with tight stops might be the right strategy today.

The Wild Card

Crude Oil

Oil prices rose significantly in the last few days and peaked at $108.57 per barrel. However daily charts’ RSI is floating in overbought territory suggesting that the recent upwards 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.

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/JPY

Daily time frame

After continuous increase without retracement the pair reached on its own to the next resistance Fibonacci – integration of 50% retracement from the big decrease and 161.8 % Fibonacci of the range 122.00-121.80 (green area). This is the last strategic area for downward retracement prior to the arrival to the full target of the range – 125 (purple area).

As can be seen by the graph bellow:

4 hour time frame

Since the momentum is still high one must wait for the creation of the double top pattern or the breakdown of the increasing price structure which exceeds the integration of the short position in order to take a part of the downward technical retracement, one can also wait for the breakdown of the discontinuous red line in the RSI indicator.              

As can be seen by the graph bellow:

Potential Trade

Short in the breakdown of the discontinuous red line in the RSI indicator or in the breakdown of the upward price structure (double top pattern or the creation of downtrend structure). Target: since the pattern does not yet exist, the first target is 300 pips – the retracement depth 38.2 % Fibonacci of the last current upward movement (the movement is highlighted as a discontinues pink line).   

Stop: beyond the high of the pattern.

AUD/JPY

Time: 08:00 Rate: 88.40    

Strategy: short

Daily time frame

The pair did not activate the short trigger and is found in a sequence of 14 candlesticks without one red candlestick, something that is clearly outside of the statistics, therefore it is still waiting for a major downward retracement despite the rising momentum.

In the first stage, the retracement down is at least expected at 300 pips – the depth of the retracement is 23.6% Fibonacci currently true, in the second stage the depth of the retracement is 38.2% Fibonacci, about 530 pips.

As can be seen by the graph bellow:

4 hour time frame

The pair gets closer to the following resistance level 90.70-89.80 (red area), the area is a good point for the momentum stop and the downward retracement.

From this point the stop pattern should be searched (double top pattern) and to take the short in its breakdown. If the pattern creates an arrival to the breakdown area, the stop should be placed above.

As can be seen by the graph bellow:

Potential trade

Short in the breakdown of the upward price structure in the 4 hour time frame

Stop over the pattern or above the stop area (whichever is higher)

 First target: about 300 pips (23.6% Fibonacci of the upward movement)

Second target: about 530 pips (38.2% Fibonacci of the upward movement)

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After tumbling throughout the last week, technical indicators are now showing that the USD/NOK may be due for an upward correction. As we will see, now may be a good time for traders to open long positions for some potentially significant profits.

• Below is the daily chart of the USD/NOK currency pair, provided by Forexyard.

• The technical indicators used are the Slow Stochastic and Williams Percent Range.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal could take place in the near future.

• Point 2: The Slow Stochastic has recently formed a bullish cross, signaling that the next move may be in the upward direction.

• Point 3: The Williams Percent Range signals that the price of this pair is currently floating in the over-sold territory, indicating that upward pressure exists.

The Norwegian krone had a very profitable week, as rising oil prices helped support the Scandinavian currency against its main currency rivals. Continued rumors of a Norwegian interest rate hike also helped support the currency. Against the US dollar, the krone has gone up well over 800 pips in the last week. Currently the USD/NOK is trading at 5.4550. The NOK faired even better against the euro, gaining close to 900 pips in the same amount of time. The EUR/NOK currently stands at 7.7815.

The Swedish krona saw more mixed results over the past seven days. A strong US jobs report last week helped boost the USD/SEK close to 700 pips before the pair staged a reversal yesterday and dropped to its current level of 6.3090. Meanwhile, an anticipated euro-zone interest rate hike has helped the euro gain close to 700 pips against the krona since last week.

Turning to the week ahead, the ongoing conflict in Libya is likely to keep the price of oil high, which could help the NOK. The SEK is likely to face a tougher time, as the anticipated hike in euro-zone interest rates is likely to send the krona plummeting against the euro. Traders will want to also pay attention to the main US economic indicators. Any positive American news will likely help the dollar against the Scandinavian currencies.

Over the last week and a half, the AUD/NZD has experienced a bearish trend that has brought the pair down over 300 pips. Technical indicators are now showing that the pair may be in store for a bullish correction in the near future, providing forex traders with an excellent opportunity to open up long positions for some potentially significant profits.

We will be looking at the daily chart for AUD/NZD, provided by Forexyard. The technical indicators being examined are the Relative Strength Index, Stochastic Slow and Williams Percent Range.

1. The Relative Strength Index has recently crossed into the oversold zone, in what is typically a sign that a reversal is likely to take place. Furthermore, it appears that the indicator is beginning to angle upward in a clear indication that the pair may turn bullish in the near future.

2. The Stochastic Slow has recently formed a bullish cross. Traders can take this as a clear sign that a trend reversal may be imminent.

3. Finally, the Williams Percent Range has crossed well below the -80 level, in what is the clearest sign yet that the pair is in oversold territory. Traders will want to pay attention to this indicator. When it begins to turn upward, it will be a likely sign of impending bullish behavior.

April 5 (Bloomberg) — T. Boone Pickens, the billionaire chairman of BP Capital LLC, talks about crude oil and natural gas markets, his plan for tax incentives and the need for new U.S. energy policy. Pickens speaks with Matt Miller and Carol Massar on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

USDCHF stays in a rising price channel on 4-hour chart, and remains in uptrend from 0.8922, the fall from 0.9339 could be treated as consolidation of uptrend. As long as the lower border of the channel support holds, we’d expect uptrend to resume, and another rise to 0.9400 is still possible. However, a clear break below the channel support will indicate that a cycle top had been formed at 0.9339 level, and the rise from 0.8922 had completed, then deeper decline towards 0.8922 previous low could be seen.

Forex Signals

How to Play the Stock Market When They Keep Changing the Rules?

By Aaron Tyrrell

I’ve got a cousin who likes to play board games. But no one will play with her. Because she has a habit of changing the rules as the game goes on…

I’m sure you know the type.

Just when you think you’ve got the rules down pat, she makes up new ones.

Or changes old ones.

Or knocks your pieces off the board.

And all you can do is go back to square one and adjust – that’s if you want to keep playing.

This is where we’re at in today’s market.

Just when you think you can see what is meant to happen, the government intervenes and – BANG! The rules change.

Reuters reports the Group of Seven (G7) sold an estimated Y530 billion on Friday 18 March to weaken the Japanese Yen. And according to an article on Yahoo news, traders think the Bank of Japan bought back about $25 billion with yen, to boost supply and weaken the currency’s value.

Kris talked about what this is doing to the Aussie dollar last week.

According to Murray Dawes, (the technical genius behind Slipstream Trader) the central banks have basically come out and said they’ve capped the Yen.  They won’t allow it to climb.

And this manipulation is stuffing up the market.

Murray has spent over 20 years in the markets. He’s battled it out in the trading pits. He’s handled multi-million-dollar accounts for some real high rollers.

But right now he’s incredibly frustrated.

Because – thanks to this outside interference – it’s almost impossible for him or any experienced trader to tell where the market is going to go next.

Below is a chart Murray knocked up of the Aussie Yen versus the ASX 200. The AUDJPY is in blue. The ASX200 is the black line.

AUDJPY vs ASX200

Source: Slipstream Trader

As you can see, they are about as closely correlated as they could be.

You see that sharp selloff to the right of the screen? The low was the same day as the G7 intervention… now take a look at that turnaround!

The ASX200 can’t keep pace with the rally. But it’s trying to.

Murray called the rally to 4700 – using his technical indicators – but just when the market should have fallen, the G7 stepped in and propped it up again.

The market is like a feather floating on the breeze. And the central banks are using a big cash fan to keep the feather afloat.

Eventually they’ll blow it so far it’ll fly out of reach… then nothing they can do will stop the crash from happening.

But here’s where you’re at today…

The US dollar is weakening.

The yen is weakening to the US dollar.

So, versus the Aussie dollar, we’re seeing a large sharp spike in that Aussie yen which is feeding through to strong buying in the equity market.

And things could be about to get interesting…

You see, Murray says the market has rallied into a key sell zone.

Source: Slipstream Trader

Over the last two years, this area (around the 5000 mark) has provided amazing resistance… you can see the market has failed to break through it four times.

We’re rallying strongly into that zone. And Murray expects we’ll meet resistance here… but if we continue to rally through and break out to the upside – and the strength of this market continues unabated next week – who knows where it could go?

Instead of looking for ways to cash in on this rally – or a crash – you might be better off waiting to see what the market will do next. Because we’re still waiting for the smoke to clear from the G7′s latest effort. And you need clear vision if you’re going to profit from what happens next.

Aaron Tyrrell
Money Morning