Posted by TomShort on December 17, 2009 under daily forex analysis | 
Is the CAD Headed for a Breakout? By GoLearn Forex
USD/CAD:
The Canadian Dollar from a technical standpoint is giving every indication it is going to breakout. Price has been consolidating for several weeks. You can see more clearly the consolidation in the Chart below depicted by the orange triangle.
Typically we draw a triangle where only one side represents the slope. However, the triangle drawn below is indicative of investor’s uncertainty with regards to the CAD. The Canadian economy is holding strong. The CAD is a commodity currency and will rise and fall as commodity prices rise and fall (in particular Oil). The Dollar has been rallying which should mean a weaker Loonie, but this rally stems from positive U.S economic data. The U.S economy and that of their northern neighbor are linked to a certain extent as they feed off of one another. Therefore, positive U.S data should also be good for the CAD. Therein lies the conflict and thus you have a dual sided sloping triangle.
The CAD is currently trading above its 50 day MA. Similar to the AUD and NZD it failed to breach the 100 day MA in spite of the Dollar rally. As the CAD wedges itself into the triangle we are looking for the following to occur in order to trip an entry signal. If the Loonie produces a candle south of the 50 day MA and south of the bottom slope of the triangle then look to enter a Long CAD position. Alternatively, if the CAD produces a candle body north up the upper slope of the triangle and the 100 day MA then enter a Short CAD position. Lastly, if a Short CAD signal triggers we see a near term take profit level at 1.0880 coinciding with the Fibonacci 23.6% Retrace level. We view this level as strong point of resistance.
Oil Takes Off by GoLearn Forex
The FOMC meeting came and went without stirring the waters. In the Euro-zone and London, Equity Markets finished their sessions in positive territory ahead of the highly anticipated U.S FED rate decision. The accompanying FOMC statement was intentionally left mostly unchanged so as not to roil markets. It served its purpose well as the DJIA finished the day off slightly lower by 10.88 points to close at 10,441.12 while the tech heavy NASDAQ closed up 5.86 points to 2,206.91.
In the Currency Markets the Dollar followed Equity Markets finishing the session nearly flat against its G-7 counterparts. The AUD gave up .61% still reeling from CB comments that took on a more dovish tone in regards to any near term future rate hikes.
Oil soared to 73.54 during intra-day trading before leveling off the day at 72.66, a gain of $1.97. Gold climbed $12.70 an ounce to 1,137.90. On the Agricultural front Soybeans, Cotton and Sugar continued to rally while Copper, Wheat and Corn declined on Dollar strength.
On the economic data docket for today we have the BOJ rate decision to be announced, although no change is expected. In the U.K, Retails Sales are set to be released while in Canada CPI data will hit the wire. In the U.S, Jobless Claims will print as will the measure of Leading Indicators and the Philadelphia FED survey.
Upcoming Forex Events for December 17, 2009
GBP Retail Sales (MoM) Forecast 0.50% Previous 0.40%
CAD Core CPI (MoM) Forecast 0.10% Previous 0.10%
USD Initial Jobless Claims Forecast 470.00K Previous 474.00K
JPY Interest Rate Decision Forecast 0.10% Previous 0.10%
Analysis by http://www.golearnforex.net
Posted by TomShort on December 16, 2009 under daily forex analysis |
Review Key Support and Resistance Levels for USD by GoLearn Forex
Key Support & Resistance (S/R) Levels:
As the Greenback continues to rally heading into the end of the year we thought it would be a good time to review a couple key S/R levels. Traders generate S/R based on a number of factors. One key factor is based on the tenor of the chart the trader is using. A trader using a tick or minute chart will be less concerned about S/R generated from a 4 hour chart that is 100+ pips from the current handle. However, that same trader will want to know where the longer term S/R levels sit. If price moves towards those points he can integrate them into his trading strategies thereby profiting and or avoiding losses.
GBP/USD:
The Cable is currently sitting below its 100 day MA which generates an already negative bias. A candle body below 1.6198 would generate the next Short entry point Near term profit taking would be the 200 day MA. If the 200 day MA is breached we would target the low of this range bound period near 1.5683 which also represents the Fibonacci 38.2% Retrace level. The 38.2% Retrace level was generated from the Sterlings turn around in January of this year.
AUD/USD:
The Aussie has shown great resilience and for good reason. The RBA had taken a hawkish stance on rates as it was amongst the first to raise rates. The Australian economy is in relatively good shape. Additionally, the AUD is a commodity currency and it has ridden the commodity rally. Currently the AUD is sitting just below the 50 day MA. A candle body appearing below .8944 equal to the Fibonacci 76.4% Retrace level, which also coincides with recent support levels would trigger a near term Short entry. We would increase the Short position with a close below the 100 day MA, currently holding at .8834. A long signal would be generated with a close well above near term resistance at .9325.
With the EUR taking a sharp nose dive yesterday it prompts us to look at recent relative price levels on the G-7. The EUR/USD is the most commonly traded pair in the world. The price of the EUR has broad implications on the relative value of other G-7 currencies. Although the below data can be shown graphically it is easier to view price differentials in a table. If the EUR is a leading indicator of relative value then the CAD, AUD, and GBP may be in for a minor drop.
Historical
Date EUR CAD AUD NZD JPY GBP
2009-10-02 1.4576 1.0797 0.8652 0.7160 89.8050 1.5946
2009-10-01 1.4545 1.0839 0.8697 0.7149 89.6050 1.5955
2009-09-30 1.4640 1.0695 0.8828 0.7232 89.7050 1.5982
2009-09-29 1.4587 1.0846 0.8703 0.7143 90.0885 1.5961
Current
Date EUR CAD AUD NZD JPY GBP
2009-12-15 1.4533 1.0611 0.9067 0.7224 89.6355 1.6272
US Producer Prices Climb by GoLearn Forex
Global Equity Markets were mixed on Tuesday as Dubai continues to sort out its debt repayment obligations. In the U.S Producer Prices climbed 1.8% which was more than double expectations. This caused stocks to retreat as it may engage the U.S Fed to raise rates out of necessity instead of a planned withdrawal from its current quantitative easing policies. The DJIA slid 49.05 points to close at 10,452. Ahead of the rate decision today traders have consolidated positions as markets may move drastically depending on what language the Fed uses.
There are a number of other economic data releases on the docket for today. Oil traders will be watching Crude Oil Inventory figures. CPI data as well as Housing Starts and Building Permits will also be on the wire today. In the U.K Jobless Claims will print although no major changes are expected. GDP in Australia has already printed slightly below expectations.
The Greenback continued to advance against its G-10 counterparts with the AUD giving up 1.15% for the day. The DXY closed above the 100 day MA to 76.961 helping to legitimizing the recent rally. Gold and Oil were essentially unchanged finishing the U.S session at 1.125.20 and 70.69 respectively.
Upcoming Forex Events for December 16, 2009
EUR CPI (YoY) Forecast 8.00% Previous 7.80%
USD Core CPI (MoM) Forecast 0.20% Previous 0.20%
USD CPI (MoM) Forecast 0.40% Previous 0.30%
USD Interest Rate Decision Forecast 0.25% Previous 0.25%
Posted by TomShort on December 15, 2009 under daily forex analysis |
NZD Beginning to Falter by GoLearn Forex
NZD/USD:
The New Zealand Dollar is starting to falter and like most of its G-10 counterparts it is holding at pivotal levels against the Greenback. One slip either way may send the currency tumbling or ready to resume its advance on the Dollar. We have mentioned the Kiwi in the past as we feel it may yield the biggest percentage loss when the Dollar does finally rally.
In the graph below we see the formation of a downward sloping Triangle beginning to emerge. The Kiwi has been riding the 50 day SMA as support on its path to .7600. You can observe that NZD peaked in late October but after 3 attempts it has failed to break the October high.
Short term support has been holding near .7100 represented by the bottom leg of the triangle. As the hypotenuse converges on near term support the more likely it is that a breakout will occur in the direction of the slope. We have also diagrammed a pattern we use often to identify trend and that is a step pattern whereby there are lower high’s and lower lows (or vice versa as the case maybe). Typically we like to see more obvious lower lows than what the Kiwi has shown us thus far.
The NZD is currently sitting below its 50 day MA, which we mentioned prior, represented support for the NZD’s move over the last 9 months. During the Dollar’s rally last week the Kiwi was able to bounce off of the 100 day MA but was not able to bounce back above the 50 SMA. As price action moves into the wedge of the triangle it may force price below the 100 SMA.
For good measure we added a Fibonacci Retrace starting back in March when the Kiwi dipped below .50 running through its most recent high in October when the NZD struck .7635. This data range produces the 23.6% Fibo Retrace at a handle of .6988. To trigger a strong short signal the Kiwi would need to take out the 100 day MA, near term support (the base leg of the triangle), and the Fibo 23.6% level, as we then target a .6500 handle. In order to resume a Long NZD position at this point the NZD would need to break north of the hypotenuse, the 50 day MA, and near term resistance at .7525.
Abu Dhabi Sending Financial Aid for Dubai World by GoLearn Forex
World Equity Markets gained some ground Monday amid assurances from Abu Dhabi that they would provide $10 billion in immediate financial aid to ensure Dubai World meets its $4.1 billion debt obligation due yesterday. The DJIA closed a shade above 10,500 after picking up 29.55 points.
The Greenback gave up a little ground yesterday as the DXY was down marginally to 75.352. Gold advanced slightly to 1,126.70 as the dollar showed some weakness. Oil was unchanged as it continued to hold below $70 a barrel.
In the U.K CPI data is set to print today. The Euro-zone’s Current Sentiment/Survey will publish today. In the U.S a number of economic releases are slated for today; Crude Oil Inventories, Gasoline Inventories, Total Net TIC Flows, Empire Manufacturing Index, and lastly PPI figures will print. In light of the Dollar’s recent rally expect that traders will be watching these numbers very carefully ahead of tomorrow’s FOMC rate decision.
Upcoming Forex Events for December 15, 2009
EUR German ZEW Economic Sentiment Forecast 50.20 Previous 51.10
CAD Leading Indicators (MoM) Forecast 0.60% Previous 0.70%
USD TIC Net Long-Term Transactions Forecast 43.00B Previous 40.70B
AUD GDP (QoQ) Forecast 0.40% Previous 0.60%
Analysis by http://www.golearnforex.net
Posted by TomShort on December 10, 2009 under daily forex analysis |
he Gold & CHF Correlation by GoLearn Forex
USD/CHF:
The Swiss Franc has a positive correlation to Gold. Thus, as Gold appreciates so does the CHF and vice versa. When the Gold rush of 2009 began the CHF participated in the precious metal’s appreciation. However, the correlation broke down as Gold broke its all time high. In the below Chart the CHF hesitated as it broached Dollar parity while Gold enjoyed near new daily highs. We would have expected the CHF to enjoy new highs, in line with Gold, once breaking parity with the Greenback but that did not transpire.
INSERT CHART CORR
The CHF like most of the G-10 is currently holding at very volatile handles. During the Dollar’s initial rally the Franc closed just above the 50 day MA and has since surpassed it. Currently the CHF has breached S1 at 1.0278. In the Chart below we have drawn a Fibonacci Retrace from the CHF low on April 20th, then trading at 1.17. We used the CHF high on November 26th, with a handle at .9918 to complete the Fibonacci range.
INSERT CHART CHF
The Fibonacci Retrace puts the 23.6% retrace level at 1.0350. The 100 day MA is also converging on the same level. If the Swiss Franc takes out the FIBO 23.6% level and closes below the 100 day MA this would trigger an additional short CHF entry. A close below the 50 day MA at 1.0163 would generate a long CHF entry.
There are a number of moving parts to watch when trading this pair. Gold has been hit hard during this Dollar rally and most analysts felt a retrace was imminent given the metal’s stellar rise. However, most analysts also forecast Gold to retain most if it’s appreciation given the high level of demand. This view may shield the Franc from massive depreciation. However, if the CHF takes out the 100 day MA prior to Gold firming then we would expect to see significant price action.
Commodities in a Slump by GoLearn Forex
It was a mixed day on Wall Street following a continued selloff in the Asian and London sessions. The DJIA closed the day at 10,337.05 up 51.08 points. It saw modest gains as analysts upgraded their ratings on 3M and Sprint Nextel.
The Greenback gave up some gains from its 3 day rally as the DXY closed down slightly to 76.038, but still above the 50 day MA. The big winner on the day was the Kiwi, as it advanced 1.81%. The RBZ held rates at 2.5% but improved their forecasts to include a possible rate hike in mid 2010. Additionally, Governor Bollard added the Bank’s expectation now looks for a significant rise in GDP.
Commodities continued their slump as Oil closed the session down 1.75 to 70.87. Corn, Wheat, and Soybeans sold off as the dollar held firm most of the day. Gold finished the day essentially unchanged to close at 1,128.60
Thursday will see a lot of price action as Unemployment figures is Australia print. Consensus expectations are looking for a modest rise to 5.9%. Obviously a print above or below will advance or plummet the AUD as the market looks for direction in this Dollar rally. The SNB will make its Interest Rate decision, although widely expected to keep rates on hold. Traders will focus their attention to accompanying language from the Central Bank. In the U.K the BOE will announce their interest rate decision and although they are expected to keep rates on hold at .5% it will be the Central Banks accompanying statements that have the chance to stir the market. Lastly, in the U.S, Trade Balance figures will print as will Jobless Claims. Traders will be watching carefully to see where Jobless Claims print as they seek to confirm last week’s NFP numbers. A significantly higher print may put an end to the Greenbacks rally while a better than expected print will affirm the Dollars new levels.
Upcoming Forex Events December 10, 2009
CHF Interest Rate Decision Forecast 0.25% Previous 0.25%
GBP Interest Rate Decision Forecast 0.50% Previous 0.50%
CAD Trade Balance Forecast -0.50B Previous -0.90B
USD Trade Balance Forecast -36.50B Previous -36.50B
Analysis by http://www.golearnforex.net
Posted by TomShort on December 9, 2009 under daily forex analysis |
Pound Range Bound Since May by GoLearn Forex
GBP/USD:
The Greenback continues to rally and we are approaching pivotal handles across the G-10. The GBP has been range bound since the end of May, so much so, that it is the worst performing currency against the Dollar amongst the G-10 since May 25th. Currently the 100 day MA is sitting above the 50 day MA which is indicative of a falling price environment.
The Pound is currently trading at 1.6276 and the 50 SMA is sitting at 1.6404. A close below the 50 SMA generates a strong Short entry signal. In addition, using the Fibonacci Retrace from the Cable’s low on March 11th at 1.3657 to the Cable’s high at 1.7043 on August 5th brings to the forefront some important levels.
INSERT CHART A
The 23.6% Retrace level sits at 1.6244 just 30 pips from the current mark. The close today likely below the 50 SMA coupled with a breach of the 23.6% level may send the GBP free falling to the next Fibo level of 38.2% or 1.5749.
There are a number of trading indicators that are used for ranging markets versus trending markets. The MACD is a common and important tool for traders as it more easily identifies momentum and changes thereto. In the Chart below the red vertical line highlights the crossover of the Average versus the MACD, representing a shift in momentum.
INSERT CHART B
Another indicative technical pattern we use are lower lows, lower highs and vice versa. As you see on the chart above we have been trending down within the range. More importantly we have reached a succession of lower high and lower lows. The more the pattern repeats itself the greater the confirmation of the move and the more likely it is to continue.
The combination of MA’s, Fibonacci’s, MACD, and technical patterns identifies potential entry points, momentum, and profit targets.
Gold Continues Sell-off by GoLearn Forex
Global Equity Markets slumped on Tuesday as a wave of poor economic news and lowered rating caught the market off guard. In Japan, GDP printed less than forecasted, coming in at 1.3%. Fitch lowered its rating on Greece. In Dubai, the main developer reported a $3.65 billion loss contributing to the market’s woes. The DJIA finished the session down 104.14 points to close at 10,287.97
The Dollar continued its rally feeding off the poor equity performance as risk aversion remained in firm control. The DXY closed at 76.31, a level not seen since early November. Gold continued its selloff as it closed the day down $30 to 1,128.40. Oil was not far behind finishing the day down $1.31 to 72.62 a barrel.
The BOC left rates unchanged at .25. In Switzerland, Unemployment printed as expected for November at 4.2%. Later today the RBZ will announce its Interest Rate decision. They are widely expected to keep rates on hold, currently at 2.5%. With no relief insight we expect the dollar rally to continue in to today.
Upcoming Forex Events for December 9, 2009
CHF Unemployment Rate Actual 4.10% Forecast 4.20% Previous 4.10%
EUR German CPI (MoM) Actual -0.10% Forecast -0.20% Previous -0.20%
NZD Interest Rate Decision Forecast 2.50% Previous 2.50%
AUD Employment Change Forecast 6.00K Previous 24.50K
Analysis by http://www.golearnforex.net
Posted by TomShort on December 8, 2009 under daily forex analysis |
What If the Dollar Takes Off? By GoLearn Forex
NZD/USD:
We are not suggesting the Dollar bulls are running wild, however, every rally in hindsight has a defining moment. Every trader on the street is aware that when the Dollar bulls get set free they are going to come charging. Even if you are a skeptic to the end just the mere massive unwinding of the carry trade would rocket the Greenback.
Our pick would be the NZD and here 3 reasons why:
Performance – Going back to March 9th, 2009 through December 7th, 2009 the top performing G-10 currency (on a percentage basis) against the Greenback has been the Kiwi. It is up 47.24% which is quite shocking given the New Zealand economy is not among the largest of the G-10. To put some perspective on it the EUR is only up 19.59% and the GBP 20.57%
INSERT CHART A
Technical – There are 2 obvious technical reasons that stand out to us. A) A pattern we look for are lower lows and lower highs and vice versa. In the chart below we have depicted the initial emergence of this pattern. B) The Kiwi is already trading below its 50 day MA and on the verge of taking out its 100 day MA, a more significant breakout level than the 50 day MA, which many other G-10 currencies have yet to crack.
INSERT CHART B
Commodities – The Kiwi benefits from rising commodity prices as it is a commodity currency. Commodity prices are quoted in USD so as the Dollar strengthens commodity prices cheapen. If commodity prices cheapen so will the NZD.
Combine these three factors and you may see significant price action on this pair. Of course if the Dollar rallies all currencies will be on their heels but as a trader you are looking for the best trade, and this may be it. We define the best trade as the one with the best risk to return ratio.
Market Flat on Monday by GoLearn Forex
Global Equity Markets were off slightly Monday. A combination of light volume and a lack of any real economic data releases left markets essentially flat as traders continue to be risk averse heading into year end. The Dollar had looked to continue its rally until Fed Reserve Chairman Ben Bernanke’s comments regarding U.S rates remaining low for an “extended period of time” and his seemingly unimpressed manner regarding unemployment put the rally on hold.
The Dollar held its gains from Friday as the DXY closed down only a couple points to 75.757. Gold finished modestly lower to 1,158.10 while Oil gave up a little over a 1.50 a barrel to finish the day at 73.93.
The CAD moved into positive territory as Building Permits jumped 18%. This once again reaffirmed that Canada is in the midst of substantive recovery. This news comes on the heels of the BOC Rate decision today. Mark Carney, Governor of the BOC, has already expressed his commitment to keep rates on hold at least through mid 2010. In Japan, GDP figures are set to print and in the U.K. Industrial Production number are due out. We expect a good amount of volatility in the market today given recent events and today’s prints.
Upcoming Forex Events for December 8, 2009
CAD Interest Rate Decision Forecast 0.25% Previous 0.25%
GBP NIESR GDP Estimate Previous -0.40% 
JPY GDP (QoQ) Forecast 0.90% Previous 1.20%
AUD Home Loans (MoM) Forecast -1.80% Previous 5.10%
Analysis by http://www.golearnforex.net
Posted by TomShort on December 7, 2009 under daily forex analysis |
Dollar Bear Ready for Hibernation? by GoLearn Forex
The Greenback has been offered across the board since March 2009. As long as risk did not rear its ugly head investors were
selling the dollar in favor of better yielding assets. When risk showed up at the Market’s doorstep the Dollar was right
there with it ready to regain market control. We saw this a week and half ago when Dubai spooked the market with a needed
debt restructuring.
The pattern we have seen for the last 9 months has been equities advancing as the dollar slides. Equities would advance on
positive (or at least less negative) economic data. The correlation between increasingly better news and the Greenback was
therefore negative. When normal markets are in control positive news typically strengthens a currency. What we witnessed
Friday may be an early indicator that the Dollar bear is finally ready to hibernate.
Friday brought us 2 very important prints from the U.S. The first was the Change in Nonfarm Payrolls and the Unemployment
Rate. The Change in Nonfarm Payrolls fell by just 11k and the Unemployment Rate fell from 10.2% to 10%. This is obviously
positive news for the U.S economy and the Global economy as well. Stock’s advanced, but this time the Greenback would not
yield any ground instead it posted gains on all its G-10 rivals. The Dollar move was positively correlated with the
economic news, something not seen in 9 months. There was a tangible shift in market sentiment regarding the timing of a
potential rate increase. Originally, forecasts were calling for an increase in Q4, however, analysts now think it may come
sooner.
It is not by coincidence that a number of pairs slid almost exactly to Support levels before firming against the Dollar. A
breakthrough of support would most likely trigger a massive Dollar rally, something the market is not whole heartily a
believer in at this point in time. Rather, the move on Friday was one of caution as it may be the first signal the Bull is
getting ready to run.
Let’s analyze current key technical levels and what the trading implications are:
EUR – Friday’s close put the EUR right at the 50 SMA. The 50 SMA has been holding as support for nearly 9 months. An
entire candle below the 50 SMA would trigger a Short EUR entry while a quick bounce off of support levels would trigger a
a resumption of our EUR Long
INSERT EUR CHART
AUD – Similar to the EUR, the 50 SMA has been holding firm support. Therefore, a Short AUD entry would be triggered
with the appearance of an entire candle below support. We would resume a Long AUD position with a bounce off of support.
INSERT AUD CHART
GBP – The Cable has been trading the range but has not dipped below the 50 SMA since mid September at which point it
gave up over 4.5% to the Dollar. As with the EUR and AUD, an appearance of entire candle below the 50 SMA would trigger a
Short GBP entry.
INSERT GBP CHART
Obviously one occurrence hardly represents an entire shift in trend, however, a shift in trend starts with one occurrence.
Continue to monitor the correlation between economic news and the Dollar. In addition pay special attention to support and
resistance levels on the majors, as a breach of S&R may signal future changes and should be capitalized on.
Good News for the Greenback Finally Pushes Gold Down a Few Pegs by GoLearn Forex
Gold tumbled on Friday as better than expected Unemployment and Nonfarm Payroll figures helped prop up the Greenback. Gold
fell 5.1% during intra-day trading to a session low of 1,150. Crude Oil was mixed on Friday as it originally bounced higher
on the positive news, however, it gave up its gains and then some as the Dollar firmed throughout the day. Both Gold and Oil
are quoted in Dollars ,so as the Dollar strengthens it sends commodity prices lower.
Global Equity Markets advanced Friday finishing the week in positive territory. The DJIA added 22.75 points to close at
10,388.90. At the moment Equity Futures are pointing lower ahead of the open. Economic data releases will be on the lighter
side for Monday although the remainder of the week will yield some interesting price action as Canada, New Zealand,
Switzerland, and the U.K are on deck for rate decisions.
The DXY soared to highs not seen since early November as the DXY touched 75.911 during the Friday session. Traders were
unwinding some bets and covering shorts as the positive employment data gave rise to concerns that the U.S Federal Reserve
may raise rates sooner then later. With little economic data due out today do not expect much price action.
Important Forex Events for December 7, 2009
EUR ECB President Trichet Speaks
CAD Building Permits (MoM) Forecast 1.00% Previous 1.60%
USD Fed Chairman Bernanke Speaks
AUD Current Account Forecast -17.00B Previous -13.30B
Analysis by http://www.golearnforex.net
Posted by TomShort on December 2, 2009 under daily forex analysis |
EURUSD Survives Dubai Scare – What Next? By GoLearn Forex
EUR/USD:
Now that the EUR has safely breached resistance and survived the Dubai scare let’s take a look at where the EUR may be heading next. In order to project forward we must first look back at where the EUR has been. In the Graph below you can clearly see the period of complete market turmoil, commencing July of 2008. Over the next year notice the ensuing volatility represented by the white circle. The area in the red box shows a steadier trend emerging in June 2009. This is further evidenced by price cleanly riding up the 50 SMA in yellow.
INSERT CHART EUR1
I drew a Fibonacci Projection from the low indicated by Box A to the high indicated by Box B on the Graph below. These points are significant because they are inflection points that began the EUR rally. Additionally, they are located in the area of volatility circled in white above. Fibonacci makes sense and order from disorder and chaos. Therefore using these points for the basis of the projection is taking chaos or what we refer to as volatility and making order and sense from it which is the period of time represented by the red box above. View the results in the Graph below.
INSERT CHART EUR2
The Fibonacci’s Projections land on almost precisely the last 3 resistance levels and highlights past price action resistance points as well. The FIBO 138.2% level at 1.5048 was struck in October when the EUR finally broke the psychological 1.50 barrier. It was tested again in November before finally being taken out a few days ago.
So where is the EUR headed next? Based on the Fibonacci Projections we expect to meet resistance at 150%, which coincides with previous support levels as indicated by the 2 blue circles back in May and June of 2008. If the Fibonacci 150% level is taken out then the next point of resistance is the 161.8% or approximately 1.55. You can see the congestion at that level starting in May 2008 and lasting through June 2008.
Since the 50 SMA has been holding such strong support for this EUR move our new Long entries would trigger near the 50 SMA (buying on the dips). If we breach the 150% Fibonacci level then we would increase our Long and look to take profit near 1.55. However, in order to enter a short we would need to see an entire candle appear below the 50 SMA. This is an occurrence that has not taken place in months.
INSERT CHART EUR3
Good News Give the USD a Slide – by GoLearn Forex
The Dollar tumbled Tuesday falling just south of 74.30 on the DXY. The Kiwi was the big winner advancing 1.38% followed by the Pound at 1.03%. Meanwhile the JPY was the only major to lose ground to the Greenback as an emergency meeting of finance minister in Japan was convened to discuss the JPY’s continued strength.
The Dollar slide was triggered by a wave of positive economic data releases. On the home front, contracts to purchased existing homes jumped 3.7% unexpectedly. ISM figures remained above the critical 50 level. Couple the data releases with positive Black Friday and weekend sales as well as Dubai shoring up its debt facility payments and we had the ingredients for a massive Global Equity Market rally. It will be a quiet Wednesday for economic releases.
Oil finished the day up just over a dollar a barrel to 78.37. Gold closed at 1,196.60 up $20 from the day before. In intra-day trading Gold broke 1,200 before retracing, although futures are pointing up this morning so 1,200 should be no barrier today.
Upcoming Forex Events for December 2, 2009
EUR PPI (MoM) Forecast 0.10% Previous -0.40%
USD ADP Nonfarm Employment Change Forecast -148.00K Previous -203.00K
USD Beige Book
AUD Retail Sales (MoM) Forecast 0.50% Previous -0.20%
Analysis by http://www.golearnforex.net
Posted by TomShort on December 1, 2009 under daily forex analysis |
Fibonacci Does it Again! By GoLearn Forex
USD/JPY:
Fibonacci tools never cease to amaze me. The question becomes do they predict or become a self fulfilling prophecy? In the end it may not matter. What does matter is that Fibonacci tools assist traders in generating expectations on price action whether you day trade or trade a couple times a week. Traders can quantify seemingly random or chaotic price action with the use of Fibonacci tools.
Near term resistance on the JPY was at 88.00 or R1 as shown on the Graph below. R1 was tested twice before giving out last Thursday the 25th. R2 at 87.15 formed in December of 2008 and was tested again in January of 2009. The Candle that broke R1 stopped precisely at R2. The very next day R2 was taken out. The question becomes where will price go from there?
INSERT CHART
For the answer we turn to Sir Fibonacci. If you drew a Fibonacci Projection from the JPY low back in April of 09′ at a handle of 101.44 until R1 then the next Fibonacci level forms at 84.84, or 123.6%. Notice on the Graph that JPY hit exactly that line before retracing its path back to R2.
Simply looking at price action, the breaking news, and fundamentals would have left a trader sidelined by the volatility. However, the use of Support and Resistance lines coupled with Fibonacci Projections helped interpret price’s volatile ride.
The BOJ picked up its rhetoric alluding to potential intervention once the Yen slid beneath 85. Japan almost outright favors a weak JPY as they rely on a weak exchange rate for their export business. The export business accounts for a large part of Japan’s GDP. So where will the JPY go next? Consult your local Fibonacci tool………
Gold Advances – Again by GoLearn Forex
Commodity currencies rallied today with the AUD gaining 1.03% on the Greenback while the Pound gave up nearly 3/10th of a percent. The EUR and CHF were basically flat on the day. Speculation in the market about European exposure to Dubai kept the respective currencies in check. Gold advanced $1.20 to 1,178.90 and Oil picked up $1.15 to close at 77.18. In the Agricultural space Corn, Wheat, and Soybeans were up strongly as well.
Global Equity Markets were mixed as Asian markets advanced while European markets gave up Friday’s premature gains. In the U.S the DJIA picked up 34.92 points to close at 10,344.84. Normal trading volumes are expected to resume tomorrow. Futures at the moment are mixed with Asian markets looking to give back Monday’s gains while European markets look set to advance.
On the data docket for Tuesday we have the RBA set to announce its interest rate decision. The market is looking for another quarter point hike to 3.75%. In Switzerland GDP is set to print. In the Euro-zone, German Unemployment Change is due out with analyst expecting a positive print. In the U.S. ISM Manufacturing figures will be publish and expectations are for a 55 figure.
Upcoming Forex Events for December 1, 2009
JPY Interest Rate Decision Actual 0.10% Previous 0.10%
CHF GDP (QoQ) Actual 0.30% Forecast 0.30% Previous -0.30%
JPY BOJ Press Conference
USD ISM Manufacturing Index Forecast 54.80 Previous 55.70 
Learn Forex but Keep it on the Sunny Side
You will read everywhere that a positive outlook and a dash of optimism is integral when trading in the foreign exchange market. Learning forex trade is more than just examining charts and diagrams, but rather keeping a stiff upper lip and a bit of self control.
Attitude carries more than the worth of gold when dealing with the pressure and consequence of trading forex. Frustration grows easily when forex traders miss a lucrative opportunity or take a big loss. The temptation to go “all in” can be overpowering and impatience can breed a losing attitude.
Not allowing your emotions determine your next trade is easier said than done. It all comes down to one word – discipline. If you think that after a big loss (or a series of small ones) that you are going to “take vengeance” on the market, you’re about to embark on a disappointing path. Yes, being able to make serious decisions spur of the moment is crucial, but not when they are done in a reckless, emotional way. What differentiates these two behaviors is the thought process leading up to the quick trade.
Throwing off the negative feelings and low worth that accompany a loss is often the driving force that leads to these behaviors. You should never risk more than 2-3% of your capital on any trade, however during these emotional hazes, traders sometimes leverage 5-7% to compensate for the previous losses.
There are a few simple practices that you can implement that can help keep you grounded when trading in such a highly volatile market.
- Have a trading plan. Start your day with a purpose, after reading the reports and signals. This plan needs to have freedom to move according to market fluctuations, but put certain boundaries on your trading behavior.
- Be the adult. When you feel those feelings welling up inside of you that push you to make irrational trading choices, walk away from the trade.
- Keep a “mantra” or “motto” next to your computer. Find something that speaks to you and your goals as a forex trader. Draw on this wisdom instead of trusting your emotions whenever you feel tempted to make forex more of a gamble than an investment option.
- Analyze your losses, don’t just try to erase them. It is irrational to take a loss for 60, 70 or even 100 pips. This is the obvious outcome of a bad trade decision. If this happens it’s time to take a step back and re-evaluate whether you’re trading with your mind or your emotions.
- Put your heads together. Keep in the company of grounded individuals who are also experienced in forex trade. By getting feedback and analyzing together, you will feel less isolated and be held accountable to trade with the right expectations and intentions.
There’s always tomorrow, “it’s only a day away.” So, meditate on this and be assured that the next profitable trade will be coming along in a short while. Exercise some patience and faith and keep your mind free and clear to ensure success. Avoid getting down in the dumps over a few losses and keep on the sunny side of the forex trade.
Analysis by http://www.golearnforex.net
Posted by TomShort on November 30, 2009 under daily forex analysis |
Moving Averages Are Not So Average by GoLearn Forex
Moving Averages – they are not so average
EUR/USD and USD/CHF
On Thursday of last week we saw the EUR and CHF finally break near term resistance. The EUR cleanly sliced through 1.50 and took out near term resistance around the 1.5055 handle. The CHF finally broke parity with the Dollar after struggling for weeks.
The very next day the Dollar was saved by the news coming out of Dubai. Risk aversion was on as traders unwound short Dollar positions to cover themselves. We discuss Moving Averages a fair amount especially since the 50 SMA has acted as support for such an extended period of time and for a number of currencies such as the EUR and CHF.
The CHF touched .9918 on Wednesday only to give back its gains on Thursday. In the Chart below notice the CHF low on Friday as fear penetrated the market place. As a sense of calm returned the CHF was again bouncing off the 50 SMA, as support held again.
INSERT CHART CHF
The EUR easily breached resistance last Wednesday when the DXY hit new lows for the year. As you can see on the Chart below it closed just below the Fibonacci Retrace level of 76.4%. The very next day the EUR gave back all its gains as the market was reeling from the news of the day.
As details emerged and fear stirred recent wounds in the market the EUR plummeted again. Notice the level the EUR hit before retracing its losses on Friday. The 50 SMA again held support for the EUR.
INSERT CHART EUR
The moral here: Do not discount these as just “average” lines. Even if you question the indicative validity of a moving average the very fact that institutional traders monitor these levels makes them exceptionally important if for no other reason.
Mixed Day for Global Equity Markets After Dubai’s Announcement by GoLearn Forex
It was a mixed day for the Global Equity Markets on Friday following Dubai’s debt default announcement the day before. The markets in Asia continued to sell off while in Europe they apparently felt the exposure was sufficiently contained. In the U.S on Friday after returning from Holiday the day prior, it was the DJIA’s turn to take some risk off the table as it closed lower by 154.48 points to 10,309.92 Opening session futures are pointing positive in premarket hours.
The United Arab Emirates (UAE) Central Bank issued a statement indicating they would offer financing to the local and foreign banks at 50bp over the 3month local benchmark rate. This facility offered by the U.A.E C.B will ensure liquidity and restore some confidence in the market.
On the economic data docket for Monday we have a number items set to print out of the U.K. However, forex traders will be analyzing Black Friday sales numbers as well as the ensuing weekend figures. Currently, net sales figures look to be on par with last year. Additionally for Monday, Euro-zone CPI will hit the wire as will Canadian GDP.
Upcoming Forex Events for November 30, 2009
EUR CPI (YoY) Forecast 0.40% Previous -0.10%
CAD GDP (MoM) Forecast 0.40% Previous -0.10%
USD Chicago PMI Forecast 53.00 Previous 54.20
AUD Interest Rate Decision Forecast 3.75% Previous 3.50%
