FX Instructor Forex Blog

Simultaneous Release at www.thegeekknows.com

Hello all,

anyone suffering from the blues? I am o k . surprisingly indeed

The EUR/USD gained a relief of sorts today as it crosses back to 1.3700+.

The S&P 500 gained some bullish momentum similarly.

Oil has dropped below $70 for now and i am monitoring it closely for signs of breakdown. I mentioned previously that oil can be an indicator of economic health and being under $70 may suggest further breakdown of the economy.

Gold is currently valued around $1066+. It is affected by the strengthening US Dollar as it is priced in US Dollar. However as gold may be a “safe asset” of choice when it comes to stormy weather, there may be demand behind the scene.

***

Two points i will like to talk about that may have caused sentiments to improve.

Firstly, in the G7 meetings over the weekend, ministers of the various countries agreed that economic stimulus measures should continue despite growing pressure on deficit issues. While this may bring about positive sentiments, let us not forget that growing pressure may hamper progress. For example Greece’s strike issues.

Next will be analysts recommendation lift of Google Inc., Amazon.com Inc. and Home Depot Inc. A lift among a majority of dampening outlook should be a great welcome. However the market does not revolve around a few companies and more remains to be seen.

There you have it, each “positive” sentiment can be matched with an equally “negative” one. Hence we can see this reflected in the charts now. Slow moving price action with no determined push in either directions. We have to understand the issues such as countries having problems with their deficits are far reaching and a few better than usual developments will probably not be enough to flip the sentiment switch to positive.

ECB President Trichet is due to spend a few hours later and hence do be on a look out for unexpected spikes. Investors will usually dissect the speech for possible clues and indications for future policies.

Bullish pressure may target 1.3740/1.3800.

A comeback of the bears may mean a visitation to 1.3680/00.

***

Arrggh! I am very late for my date with sleep. She is very petty and may throw a temper of migraine if i am too late. Sigh. Well at least i am not blue today. ( At least not blue enough to be “blue” ) Take care and i’ll see you soon koalas!

Trade Safely.

Read more Forex Articles and Views by The Koala at www.thegeekknows.com

Follow me on twitter

EURUSD Forecast:
The EURUSD attempted to push lower on Friday, bottomed at 1.3585 but closed higher at 1.3664, formed a hammer candlestick formation on daily chart indicating potential upside correction testing 1.3750 resistance area, but overall the bearish scenario should remains intact as long as price move inside the bearish channel and I still prefer to sell on rallies. Break above 1.3750 area could trigger further bullish correction back towards 1.3850 even 1.4030 area. Initial support at 1.3585 (Friday’s low). Break below that area should trigger further bearish momentum with technical target around 1.3490 – 1.3400 area this week.

EURJPY Forecast
The EURJPY made indecisive movement on Friday. On h4 chart below we have a hammer formation indicating potential upside pullback after significant bearish momentum on Thursday, especially if price able to move consistently above 122.10, testing 123.30 today. Initial  support at 120.69 (Friday’s low). Break below that area should continue the bearish scenario towards 117.50 in longer term.

GBPJPY Forecast
The GBPJPY attempted to push lower on Friday, bottomed at 138.23 but closed higher at 139.69. I still prefer a bearish scenario at least targeting 137.80 area but the nearest bias is neutral. CCI in oversold area and heading up on h4 chart suggesting potential upside pullback testing 140.28. Break above that area could trigger further upside correction testing 141.50 resistance area. Initial support at 139.30. Consistent move below that area should trigger further bearish momentum.

AUDUSD Forecast
The AUDUSD made indecisive movement on Friday. Price attempted to push lower, bottomed at 0.8576 but closed higher at 0.8670. The bias is neutral in nearest term but overall I still prefer a bearish scenario with sell on rallies strategy. Expected range at 0.8575 – 0.8780.

GBPUSD Forecast:
The GBPUSD continued its bearish momentum on Friday, break below 1.5707, bottomed at 1.5557 but closed a little bit higher at 1.5629. This fact should trigger further bearish scenario in long term targeting 1.5250 area but the nearest bias is neutral. CCI in oversold area and heading up on h4 chart suggesting potential upside correction testing 1.5650 – 1.5707 area. Break above 1.5707  should trigger further bullish momentum towards 1.5800. Immediate support at 1.5550 – 1.5500 area. Break below that area should trigger further bearish scenario towards 1.5250 area this week.

USDJPY Forecast:
The USDJPY was corrected higher on Friday, topped at 89.87 but closed lower at 89.37. The bias is neutral in nearest term but overall I still prefer a bearish scenario with technical target around 86.60 area this week after the trendline support (red) was violated on Thursday (Feb 04). Immediate resistance at 90.00 area. Initial support at  88.50.

USDCHF Forecast
The USDCHF attempted to push higher on Friday, topped at 1.0794 but closed lower at 1.0728. Overall direction remains to the upside with nearest target around 1.0850 before testing 1.1000 but as you can see on daily chart below, price is moving lower after touched the upper line of the bullish channel indicating potential downside pullback testing 1.0700 support area. Break below that area should lead us into to trading zone in nearest term but I still prefer a bullish scenario as long as the bullish channel valid.

On Tuesday, I said that we were seeing stocks decline even though many economic and corporate earnings reports had beaten expectations and that it wouldn’t be surprising to see price on the S&P 500 moving towards that 61.8 retracement level (at 1036) . I also said that unless last week’s reports turn out to be very disappointing, which I didn’t expect to see happen, the present correction would likely to max-out at 10% if it even got that far.

Well, the correction actually appears to have maxed-out at 9.2%, which was made about 2 hours and 15 minutes prior to Friday’s close. From that low, the S&P advanced nearly 2.1% to finish the day with a gain of 3.08 points or 0.29%. The DOW managed to close above the psychologically important 10,000 level.

What exactly does the S&P have to do with currency? A lot, actually, because the one correlation you can absolutely rely on is that when the market is risk-averse, as it was this week primarily due to the concern over a sovereign default from Greece, stocks and commodities are sold as the dollar advances against the better-yielding euro, pound A$ and K$ while the yen gains on all.

This is really the way, the one sure way, to make an absolute killing in the forex market. If you can spot these fundamental events somewhat ahead of the curve, you just buy the buck and hold on for dear life as the roller coaster goes over the edge and begins to gain momentum. Too bad they don’t happen every day.

Actually, the whole Greek thing is nothing new; since gaining independence in the 1830s, Greece has been in a state of default about 50% of the time. But it’s different now because Greece is a part of Europe and the European community sees itself very threatened by this. Other default risks (Portugal, Spain, Ireland) abound as well.

What’s likely to happen is the Grecian debt contracts will be altered by lowering interest rates and extending maturities, which technically is a form of default. But a solution will be found one way or the other and it appears as if the market is ready to accept this.

Have a look at the daily candle on the S&P and what you’ll see is a Pin Bar, which often times signals a bullish reversal especially when it appears after a steep, rapid decline like the one we’ve been seeing since January 19th. The low of this correction, or near it, could be tested again just to make sure, but the odds are that the market will not touch the lows made back in November and that the charts will therefore provide another strong signal of upward price movement-a higher low.

The implications for currency movements are that the dollar will now turn around and start giving back its recent gains, especially as it becomes clearer that Friday’s NFP report contained many kernels of positive signs.

A deeper look into the Household Survey section of the NFP showed that the civilian labor force grew by 111,000 in January while household employment surged by 541,000,which is why the headline unemployment rate and the alternative U-6 measure of unemployment both turned lower. The number of people working part-time either due to business conditions or because they could only find part-time work decreased by 631,000.

In the Establishment Survey section, total private jobs decreased by just 12,000. The Diffusion Index for total private jobs, which mimics the ISM number in that a reading over 50 indicates expansion, increased to 46.8 from December’s 41.3 and last January’s 19.7. Hours worked increased 0.2%, the equivalent of creating over 230,000 private-sector jobs. Manufacturing jobs grew by 11,000, the first increase since the recession began. Service-providing jobs gained 48,000 and there were 42,100 jobs created in the retail sector.

Throw in the year over year same-store sales at retail establishments (+3.0% vs. an expected 1.0% gain) and that the scorecard for corporate profits and revenue has been very strong, and you’ll see there’s plenty of ammunition available to propel the S&P to a new high.

Simultaneous Release at www.thegeekknows.com

Good day and i hope you are enjoying your weekend so far.

This week bought the bulls some hope in the beginning but ended in a sound victory for the bears.

As we can see from the daily chart of the EUR/USD above, the week began slightly bullish. However by mid week, sentiments took a dive for the negative and dragged the currency pair among with it. The finale was the US Non-Farm Payroll on 5 Feb 10 and after a temporary upside push, the EUR/USD threatened to break the support of 1.3600. It tested the support and eased around 1.3660+ to close for the week,

***

What is causing the major correction seen in the various markets? Risk Aversion comes up among the top reasons. As of now, we do have quite a few issues that are causing apprehension and the market is reacting to it.

• US’ Prsident Obama’s plans to lessen the budget deficit. It has been reported that the plans includes cutting back spending on various domestic programs and investors fear this may hamper recovery progress.
• China’s moves to curb speculative bubbles and growth is also a causing a cause for concern. Being the world’s second largest economy, many investors were looking towards China to lead the global economy out of the gloom.
• Eurozone deficit problems. Greece was the first to hit the fan. Promising plans to reduce deficits disrupted by growing domestic resistance. Investors usually run at first sight of sovereign problems and indeed funds are flowing out. Spain and Portugal may be next as reports indicate and investors are packing up.
• A recent article surfaced that a strategist from a major bank states that the US and UK have issues similar to Greece and the fall out in Greece may be a “dress rehearsal” for the two countries.

With the S&P 500 dropping severely these days, risk aversion may be strong and the effects may cascade. Oil is currently back above $70 after a brief stint below $70. As oil may be an indicator to the economy’s health. I am placing a high alert with regards to further intrusions below $70.

The G7 meetings over the weekend may bring more insights with regards to future plans and investors will be on a lookout. Next week brings quite a number of important releases. These includes US’s Trade Balance, Retail Sales and more. On the EURO side, we have the likes of French Industrial Production and German Prelim GDP. View the economic calender for more.

On a technical point of view, we are below the 200EMA and with it tilting downwards, it suggests bearish momentum. The previous times when the EUR/USD was in the 1.3600 region, the 1.3600 line functioned well as a support and resistance. However do not put all you eggs in one basket and remember that support and resistance lines are never a single pip.

Should 1.3600 fail, 1.3400 may be next. Otherwise, an attempt to climb back to 1.3800 may happen.

Trade safely and practice proper money management.

Read more Forex Articles and Views by The Koala at www.thegeekknows.com

Follow me on twitter

The EURUSD made another bearish momentum this week after failed to break above 1.4030 on Wednesday, bottomed at 1.3585 but closed a little bit higher at 1.3664 on Friday, formed a hammer candlestick pattern, as you can see on my daily chart below. I still prefer a bearish scenario next week with potential technical target at least around 1.3490 – 1.3400 area but potential upside pullback suggested by the hammer is something that we must not ignore. Immediate resistance to be tested is around 1.3750 area. Break above that area could trigger further bullish correction testing 1.3850 – 1.3900 area even back towards 1.4000/30 region. Initial support at 1.3585 (Friday’s low). Break below that area should continue the bearish scenario and potentially cancel the hammer candlestick bullish scenario.

Have a great weekend and see you guys next week

Simultaneous Release at www.thegeekknows.com

Good day to all.

Yes it is Friday. Hopefully everyone survived the US non-farm payroll.

The EUR/USD dipped sharply and tested the 1.3600 line. While 1.3740 did present a support of sorts as mentioned yesterday, the negative sentiment overwhelmed the defenders.

The S&P 500 continues falling despite the improved unemployment rate of the US. This strengthens the view that the current correction is caused by global problems.

Oil falls below $70 and this is a cause for concern. As oil can be a clue to the global economy’s health, a break down may indeed be occurring should it fail to snap back above $70 soon.

Gold has fallen to $1050+, a level unseen since OCT 09. The pressure from the strengthening US Dollar is strong and close observation must be done to see if gold falls below this area of support.

***

While the US unemployment rate became better, the non-farm payroll clocked in worst than expected. The unemployment problem remains a threat and with the current correction underway, i am concerned that it may put a strain on the labor market again.

Over at the Eurozone, the problems of Greece, Spain and Portugal continue to weight down the sentiments like an anchor to a ship.

G7 meetings will occur over the weekend and hence do be careful of possible volatility over the weekend.

As the market prepares for the closure of the week, bullish pressure may bring us closer to 1.3680 while continued bearish momentum may target 1.3550. If momentum fails to pick up, we will probably close the week near 1.3600. Stay tune for the EUR/USD Weekly Review and the Non-Farm Payroll Report over the weekends.

***

It is the weekend and i need to catch up on my sleep. Anyway i did not get a migraine this morning and hence this week will not be remembered as “Migraine Week.” A koala buddy of mine was telling me that a newcomer to forex had his account reduced from $5000 to $900 in just 9 days. Am sad to hear this. Sigh. Is there anything else we can do to make folks realize the dangers of margin call?

T R A D E      S A F E L Y

Read more Forex Articles and Views by The Koala at www.thegeekknows.com

Follow me on twitter