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
