FX Technical Weekly

The US dollar languishes at its lows against most major currencies but the USDJPY has built a strong base and additional strength is expected

EURO / US DOLLAR

Joel: Rallies have now extended well beyond 1.5000, with the market eyeing next figure support by 1.5100. The overall bullish structure remains firmly intact and any intraday dips are expected to be well supported ahead of 1.4830. Next key topside resistance comes in by 1.5240, the 78.6% fib retracement off of the major 2008 high-lows and we look for this level to be tested over the coming days. Short-term and medium-term technical studies are however looking stretched and any moves beyond 1.5240 are seen limited in favor of a major USD corrective rally. But for now, only back under 1.4830 would negate constructive outlook. Our model is currently running a short position from 1.5010 (stop 1.5110) but the trade has not held up well in the strong trending environment.

Jamie: After trading to 1.5060 the EURUSD has come off slightly, but a drop below 1.4940 is needed to signal a trend change.  Keep in mind the larger 5th wave channel that we’ve focused on for weeks.  That line is at 1.5086 Monday and increases 11 pips per day.  In the event of additional upside, there are measurements concentrated at 1.5185.

BRITISH POUND / US DOLLAR

Joel: While the rally of the past few days has been impressive, the overall structure still looks quite toppish and we would expect to see the recent surge above 1.6500 to stall out at any moment. A closer look at the daily chart is quite revealing, with the market showing some strong internal resistance between 1.6665 and 1.6745 (former shoulder resistance of major h&s top). As such, we recommend looking to fade upside extensions into this area in favor of some bearish resumption. Look for a break back below 1.6485 to reaffirm outlook.

Jamie: After trading to a high just below 1.6700 (the high was made close to the 61.8% extension of the 1.5707-1.6404 advance), Cable has plunged.  Former supports are now resistance at 1.6484, 1.6530, and 1.6607.  The decline could be a series of 1st and 2nd waves, part of a leading diagonal, or a 3 wave correction.  Price action since 1.6750 could also be in the mold of a triangle.  There are many possible counts right now but most point lower from here.  1.6450 short was triggered this week.  Move risk to 1.6600.

AUSTRALIAN DOLLAR / US DOLLAR

Joel: Despite overbought readings on both the daily and weekly charts, the pair remains very well bid with the market continuing to surge to fresh 2009 highs on a daily basis (0.9330 on Wednesday). Next resistance comes in by 0.9350, which represents a weekly high from August 2008. A break above 0.9350 will then expose an eventual retest of the critical 2008 highs by 0.9850. Intraday dips should continue to be well supported ahead of 0.9100, with only a break back below this figure to threaten the bullish structure.

Jamie: The AUDUSD reversal off of channel resistance (albeit unorthodox channel resistance) combined with momentum considerations (overbought + divergent) on multiple times frames put the pair at risk of at least a setback if not an outright reversal.  Coming under .9181 would confirm as much.

NEW ZEALAND / US DOLLAR

Joel: Despite overbought readings on both the daily and weekly charts, the pair remains very well bid with the market continuing to surge to fresh 2009 highs on a daily basis (0.7635 on Wednesday). Next key resistance comes in by 0.7765, which represents a weekly high from July 2008. A break above 0.7765 will then expose an eventual retest of the critical 2008 highs by 0.8215. Intraday dips should continue to be well supported ahead of 0.7400, with only a break back below 0.7350 to threaten the bullish structure. The 10-Day SMA (0.7480) has been very supportive throughout much of the up-trend and bears would need to see a close below this level at a minimum to start to think about the potential bearish reversal and break back under 0.7350. Our model is short from earlier in the week at 0.7510 but the trade has been underwater for most of the time since inception.

Jamie: On the daily, the NZDUSD has tested (multiple times) and failed at a line extended from the 8/14 and 8/23 highs.  In assessing the wave count, the rally from .7076 looks to be the final subdivision (wave 5 of c of Y).  Since the high at .7640, the pair has marked time.  A drop below the support line extended from .7250 and .7350 would be the first sign that a top is in place.

US DOLLAR / JAPANESE YEN

Joel: Our shift to a bullish outlook on Wednesday (based on 10/20-Day SMA positive cross) has paid off, with the market breaking the recent consolidation and accelerating through the 50-Day SMA and Upper Bollinger. Next key resistance comes in at 92.55 (21Sep high) which also coincides with the Ichimoku cloud bottom. Any pullbacks are now expected to be well supported ahead of 90.00.  Weekly studies also confirm and show the formation of a base by 88.00.

Jamie: Either a triangle or complex correction is underway since December 2008.  The next leg should be up towards 101.50 (maybe even above).  Since the low at 88.00, a series of 1st and 2nd waves is visible.  If this count is correct, then an exceptionally strong USDJPY rally is underway now.   Move risk on the long to 91.20.

Written by Jamie Saettele

Sunday, October 25, 2009 | 0 comments | Read More

FX Technical Weekly

Dollar strength towards the end of the week may mark the beginning of a reversal pattern.  The best looking trade though is long USDJPY, as the pair has broken through a short term head and shoulders pattern.  The development fits with a longer term wave count.

EURO / US DOLLAR

Joel: The structure remains quite constructive on the monthly chart, with the market having put in 6 consecutive monthly higher lows and potentially now looking for a seventh. The price has also traded above the 61.8% fib retracement off of the major 2008-2009 high-lows, and next key resistance after 1.5000 is not seen until 1.5240, the 78.6% fib retracement off of said move. For now, 1.4175 is critical longer-term support and needs to be broken to end a sequence of consecutive monthly lows and put the pressure back on the downside. Until then, buying dips should be the preferred long-term strategy.

Jamie: Focus remains on the top of the channel from early July (5th wave channel, more on that below), which is at 1.5034 Monday.  The channeling nature of the EURUSD since July suggests that the push above 1.4847 is likely wave of 5 of v of C.  Wave count and momentum readings suggest a top, but not until a drop below 1.4820 would it be wise to attempt a short. 

BRITISH POUND / US DOLLAR

Joel: Difficult to determine whether we are in the process of attempting to carve a major lower top in the 1.7000 area ahead of the next drop below 1.3500 or are looking for a higher low ahead of a fresh upside extension beyond 1.7000 and back towards the 2 handle. For now however, at a minimum, it looks as though the market wants to trade lower with sights set on the 1.5000 area over the coming weeks. This, after the triggered major h&s top by 1.6000 on the weekly chart. As such, any rallies towards 1.6500 should be aggressively sold into.

Jamie: The GBPUSD has returned to and exceeded the head and shoulders neckline that was broken in September.  Resistance extends to a line extended from the August and September highs, which is at 1.6456 Monday.  The next move will be to position short against 1.6746.

AUSTRALIAN DOLLAR / US DOLLAR

Joel: The market has now exceeded the critical psychological barrier at 0.9000 to trade well into the 0.9200’s thus far. However, at this point, daily and weekly studies are showing overbought to suggest that the current trend will be unable to sustain itself. As such, we recommend looking for opportunities to fade the latest surge, with a break back under 0.9000 to confirm topping prospects.

Jamie: The AUDUSD has exceeded .9200 and I’ve mentioned in recent days/weeks that levels to watch are .9200, .9270, and .9325 (these are former support levels from 2008).  These levels make a large zone where a reversal could occur.  RSI (14 day) is above 74 but not as high as it was at the June high, when it was above 75 (divergence still exists).  Price action carved out an outside day Friday, which is a reversal warning.

NEW ZEALAND / US DOLLAR

Joel: The intense rally has finally reached critical psychological barriers by 0.7500, which also coincides with the major 78.6% fib retracement off of the 2008 high-lows. With daily and weekly studies severely overbought, looking to sell at current levels is the recommended strategy. However, we would wait for some form of confirmation to establish any short position. There is some solid support by 0.7250 and a break of this level will confirm our outlook.

Jamie: The NZDUSD continues to look heavy, especially on hourly charts.  Dropping under .7250 would break the series of higher lows and indicate that a top is in place.  Like the AUDUSD, Friday’s price action made an outside day (which warns of a reversal).

US DOLLAR / JAPANESE YEN

Joel: Remains locked in a very well defined downtrend from 2007 with the market putting in a series of lower highs and lower lows. A fresh lower top is now sought out by the 2009 yearly high at 101.45, to be confirmed on a break below the matched 2008/2009 trend lows at 87.15. Any rallies are classed as corrective and although the market is currently in the process of bouncing out from the recent lows by 88.00, we look for gains to be well capped ahead of 95.00. No trading is recommended at current levels.

Jamie: I presented this longer term bullish count earlier in the week.  Either a triangle or complex correction is underway since December 2008.  The next leg should be up towards 101.50 (maybe even above).  The break above 90.43 confirms a short term inverse head and shoulders reversal and sights are on a Fibonacci extension at 92.80.

US DOLLAR / CANADIAN DOLLAR

Joel: Although the market has undergone some steep setbacks since the onset of 2009, we contend that the longer-term structure is constructive from here. Although we had not anticipated a dip below the 1.0500 area, the latest setback into 1.0200 seem to have found a bottom which could now signal the start to a major upside push over the coming weeks. Thursday’s strong bullish outside day could very well prove to be the catalyst.

Jamie: “1.0317, which is the 61.8% extension of 1.3068-1.0782/1.1730, has been reached.  1.0375/1.0400 is short term resistance and a rally above 1.0527 would begin to suggest that a bottom is forming.  Additional objectives are .9914 and .9444.”  After dipping below 1.0300 (which has been a significant pivot since 2008), the USDCAD has rallied.  It is possible that an important low is in place.  Exceeding 1.0527 would warrant a strategy of buying dips.

US DOLLAR / SWISS FRANC

Joel: Has extended declines in 2009 to fresh lows by 1.0115 thus far ahead of the latest minor bounce. Despite the downtrend, we contend that the market is very close to carving out a higher low above the multi-year lows below parity, ahead of some fresh upside back above 1.1000 over the medium to longer-term. Although the 78.6% fib retrace off of the major 2008-2009 move has been slightly breached, the 1.0100 area could be an ideal spot for the higher low to take form. Ultimately, inability to hold above 1.0000 on a weekly close basis will however negate recovery prospects.

Jamie: The USDCHF has dropped to a new low and is probably completing wave v of C (just as EURUSD is in the process of doing).  1.0037, the 100% extension of 1.2303-1.0367, is a potential reversal point.  Trading above 1.0362 would suggest that a low is in place.

Written by Jamie Saettele

Sunday, October 25, 2009 | 0 comments | Read More

GBPCAD Long Term Bullish Opportunity

GBPCAD Long Term Bullish Opportunity - Opportunities through the more exotic currency crosses are often overlooked. This week, we are highlighting a long term opportunity in the GBPCAD. Technical evidence suggests that a significant low formed in November 2007 and upside potential significantly outweighs the risk.

From a technical standpoint, the GBPCAD may have formed a significant low. Notice on this monthly chart that the low in November 2007 (1.9011) spiked below a support line that is drawn off of the September 2000 and March 2006 lows. Price has held above that line since. The indicator plotted below price is a 60 period momentum oscillator. 60 months is 5 years so what this indicator tells us is how far in either direction price has deviated from its 5 year average. In November 2007, the indicator made a spike low near 5,000 (5,000 pips below its 5 year average). The 1992 low also formed after price had fallen 5,000 pips below its 5 year average. Momentum has turned up from a level that previously signaled a significant low.

This is the same line that was plotted on the monthly chart. As mentioned, price has held above the line since November. Since then, the GBPCAD has pushed through the 200 day SMA; another sign that a major low is in place.

Indicator studies such as momentum and averages help identify potential opportunities, but these tools are insufficient for pinpointing entry points and defining risk. The Wave Principle makes possible the determination of accurate entry points while taking on appropriate risk. From the May 2008 low, the GBPCAD rallied in 5 waves without making a new high (ended below the March 2008 high). Therefore, we know that the trend is up. A correction was expected and has occurred. It is possible that the corrective is over at 1.9919 (notice the red line at the center of the triangle…this indicates support from congestion). A deeper correction is possible but a long term bullish bias is warranted against 1.9288. Bullish targets will be approximated as the trend matures, but expect a test of the 2006 high near 2.35 in the year(s) ahead.

Written by Jamie Saettele, Technical Currency Strategist

Tuesday, October 13, 2009 | 6 comments | Read More

FOREX

WHAT IS FOREX?

Forex or popularly known as Foreign Exchange is one of the world’s popular for money exchange system.

Forex is the world’s trading currency market where currencies are trade and bought by merchants in Forex world. In the early 2000, Forex market was introduced and opened to exclusive members only where money starting as USD10 millions is required for them to participate in joining in the market.

In the beginning forex was a particular market for banking, Investment Institution and influence individual (high net worth individuals) such as George Soros. But now because of strong influence of the internet and worlds economy, forex market is now opened for individual investors like you.

So how is it that someone who at first have no knowledge in economy knows and understand how forex systems works..For your information, to generate great income is so easy.!!!

WHAT ACTUALLY DOES FOREX MARKETING DO?

The answer is simple, Forex marketing is a place for currency trading transaction. In other words, forex marketing is the place where currencies are sold and bought and convert to other currencies.

An example USD1 = RM3.30

There are still many and maybe people like you perhaps still does not know what is actually happening in forex market. In stock marketing, let’s say that you have little share that you invest in one big company as much as USD10/share for one lot. Even thou you invest little in that company you are an “owner” of that company. That goes the same for what is happening in forex. If you bought X currency for USD1000 that means you already have little portion of the X economy.

FOREX IN SAFETY MARKET!

1. Forex market is not controlled by under any country or controlled by Central Exchange, Forex market will not be closed just incase there should be a terrorist attack and natural hazard.
2. Forex is available in 24/7, You are in full control to invest in anytime.
3. No need to pay commission, You don’t have to pay commission for middleman to trade in forex trading.
4. Easy to gain profit by just a click of a mouse.
5. In general, trading by little modal allows you to do business 200 times the amount.

FOREX IS THE BIG MARKET IN THE WORLD!

Forex marketing is a place where USD1.95 trillion is being trade everyday. It is easy to generate income in this market. As a beginner, you don’t have to be very ambitious to gain profit. I believe that you can gain great income in a couple of months.Forex trading (foreign exchange) is one of the biggest market that exist in the entire world and it is growings fast and one of them is a Forex Tracer and Forex Assassin.This forex will be guarantee to gained a profitable income.

Friday, July 18, 2008 | 0 comments | Read More