2009 November

The last day of November … after which, 1 more month before 2010 .. after which 2 years to

2012 !!! We have been warned. NOT !

Happyyyyyyyyyyyy Monday bluey !

The EUR/USD currently back above 1.5000. Dubai World seems to have not much of an effect here.

Remember i said that equities are usually my leading indicators to currencies?

Dubai World did apparently have a greater impact here. The S&P 500 remains below 1100 for now. If this continues, traders may start to develop further negative sentiments. The situation now is rather mixed with talks of the U.A.E pledging the Dubai banks possibly keeping the boat afloat.

Find how why i use equities as a clue to currency movements here. Monitor the developments closely and be ready to trade the chart.

Oil remains ranging at around $77. This suggests that the real economy is not improving as fast as what the financial markets suggests as demands for oil remain depressed.

Gold in the meanwhile has fallen to the $1170s after failing to reach $1200.

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Humans and koalas, this week is packed with important releases, including MAMBO JUMBO MARGIN CALL nfp ! Non Farm Payroll is due this Friday!

Pending home sales for US is on Tuesday, US ADP Non-Farm Employment change on Wednesday, EURO minimum bid rate on Thursday etc etc etc.

Any unexpected release for these reports or developments from the Dubai Crisis may trigger spikes in both directions.

I am widening the range up to the recent previous high of 1.5140+/- for bullish assaults and 1.4910+/- for bearish attacks. ( In short, the current situation in my opinion is rather tensed and more monitoring must be done )

***

Good and bad news.

Good : My cough is finally recovering !

Bad : I am due for more crazy life draining long work days. O M G I knew “the others” will not make it so easy for me before i go on a break till 2010.

I watched New Moon ! ( Yes Yes laugh at me.. hey i am a romantic koala and i am proud of it ) To think of it, i think Jacob Black seems to love Bella very much and he got a nice bod too! ( i want to pack those abs Arrgghh) Come on Bella you are one lucky girl !!!!

Trade Safe don’t let the kangaroos knock you down!

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

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The pause in Euro rally triggered by Dubai World debts payment delay so far expected to be temporary as after hit bottom at 1.4827, Euro recovered quickly, closed much higher at 1.4985 on Friday and the trendline support still did a good job prevented further bearish attack thus technically keep the bullish scenario intact, especially if price able to move consistently above 1.5062 today, which is technically potential to be tested after rebound from 1.4827. However, note that the false breakout from 1.5062 area (see my daily chart below) also hide a potential bearish view and price could make another downside attempt testing the trendline support and 1.4827 once again, especially if price break below 1.4920/00 area today.  No one knows whether the impact of Dubai World is only a temporary panic reaction last week or will continue to shake world stocks market thus could bring the Dollar higher this week. The bias is bullish in nearest term testing 1.5062. Valid break above that area should trigger further bullish momentum towards 1.5140/50 area.

EURJPY Forecast
The hammer candlestick pattern gave us a valid bullish correction signal on Friday as market responded to the intervention threat by the Japanese government to weaken the Yen. Price whipsawed to the upside significantly, topped at 130.13 and closed at 129.55 after attempted to push lower and hit bottom at 126.86. I am expecting further bullish momentum testing 131.75 and the trendline resistance area (red, see h4 chart below) as market may continue respond further to the intervention threat thus potentially bring the pair higher. Immediate support at 129.50/00 area. Break below that area should trigger further bearish momentum technically but I won’t place a short position under an intervention threat.

GBPJPY Forecast
The market responded to the intervention threat by the Japanese government and brought the pair higher, topped at 143.47 and closed at 142.66 after bottomed at 139.27 on Friday. Technically, the hammer candlestick pattern, as you can see on h4 chart below suggest potential upside correction testing 144.60 in nearest term. Break above 144.60 could be a serious threat to the bearish outlook and potentially begin the bullish outlook in longer term at least testing 148.50 area. Immediate support at 142.50. Break below that area should trigger further bearish momentum but I won’t place a short position under an intervention threat.

AUDUSD Forecast
The hammer candlestick pattern gave us a good signal of bullish correction on Friday as the pair closed higher at 0.9059 after bottomed at 0.8916 and continue to push higher earlier today in Asian session, traded around 0.9155 at the time I wrote this comment. The bias is bullish in nearest term targeting 0.9250 even 0.9327 in longer term but we need a consistent move above 0.9180 key resistance area to continue further bullish momentum. Immediate support at 0.9090. Break below that area should trigger further bearish momentum re-testing 0.9030 even 0.8916 area.

GBPUSD Forecast:
The GBPUSD had a volatile market but indecisive on Friday. Price attempted to push lower, bottomed at 1.6269 but further bearish momentum was rejected as price whipsawed strongly to the upside, hit the top at 1.6510 and close at 1.6494. On h4 chart below we can see that after break below trendline support (blue, now resistance), price retreat to the upside testing the trendline, which is often happen technically. Although the quick and strong bullish rebound from 1.6269 on Friday is surely a serious threat to the bearish scenario, note that my trendline resistance (red) still valid indicating that bearish scenario in longer term remains intact. The bias is bullish in nearest term testing 1.6600 – 1.6670 area. Violation the the trendline resistance (red) should be seen as bearish failure and potential bullish outlook in longer term. Initial support at 1.6430/00 area. Break below that area should continue bearish pressure re-testing 1.6269 area.

USDJPY Forecast:
The USDJPY attempted to push lower on Friday, bottomed at 84.79 but further bearish momentum was rejected as price whipsawed to the upside, hit the top at 87.00 and closed at 86.46. Beside the hammer candlestick pattern which proved to be a good signal of bullish rebound, the Japanese government threat to jump into the market to weaken the Yen seems effective so far. The bias is bullish targeting 87.50 in nearest term as I am expecting market continue to respond further to the intervention threat thus potentially bring the pair higher. Immediate support at 86.30. Break below that area should trigger further bearish momentum but I will not place a short position under the intervention threat although technically I still prefer a bearish scenario in longer term.

USDCHF Forecast
The USDCHF attempted to rebound higher on Friday, topped at 1.0174 but further bullish correction  was rejected as price failed to consistently move above 1.0120 and now back below the trendline (aqua) indicating potential bearish view. The bias is bearish in nearest term with technical target around 0.9913 area. Immediate resistance at 1.0120 area. Break above that area should lead us once again into no trading zone as direction would become unclear for me.

Good day,

hope you had a great week full of harvested pips.

This week was rather ranging and many folks wrote to me to say that they were having problems navigating all the noise!

While this is the long term chart, i would like to highlight 3 points to you.

1) Notice how the currency pair whipsaws towards the end? That’s the week in review and the Dubai crisis probably had a hand in it. This is why in forex it is critical to have proper money management. I have a series of proper money management articles. Do read up on it if you are available.

2) 3 direct bearish attacks had been made over the months on the March 09 bullish trendline. Each had been thwarted by the bullish opposition. This seems to suggest to me that the underlying bullish fundamentals are strong. Whether these fundamentals are justified or not remains as another story as the economy remains fragile.

3) I plotted the horizontal line of 1.5065 as a resistance for any bullish moves and this week we shot above it. Although i noted that it was sharply rejected, that move probably open up for further bullish possibilities since the envelop was pushed further higher.

Once again i would like to remind you my dearest reader that forex is moved primary by sentiments and should this Dubai crisis trigger a fallout, the EUR/USD may dip towards the bullish trendline.

This is why it is important to have a trading plan with clear defined stop loss and take profit levels, structured within a maximum 2 – 3 % risk. As long as you stick to this plan, you will not be exposed to excessive risk. Read up on why you should plan your trades here.

We may have a choppy upcoming week as the bullish trend line moves higher, tightening the price movement range as the currency pair tries to break new grounds above.

Look to the equities for clues as usual.

Have a great upcoming week and as usual please trade safely.

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

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This week, the bullish momentum of the EURUSD was limited as price refused to break above 1.5150 resistance area, hit the low at 1.4827 but bullish momentum regain some strength and closed higher at 1.4985 yesterday. My strategy to place a long position  if price move near the trendline support or 1.4850/20 area with tight stop loss proved to be a good strategy . On my daily chart below, we can see that the trendline support  and 1.4850/20 area provided a good support at this phase as price was significantly reverse higher, closed at 1.4985 after hit bottom at 1.4827. This fact indicating that bullish scenario remains valid thus potentially should re-retesting 1.5150 and 1.5300 technical target in the upcoming week. The trendline support and 1.4850/20 area  remains a key support level for me at this phase and only break below that area should be seen as potential bullish failure which could trigger bearish reversal towards 1.4625 and 1.4450.

On fundamental side, the impact of Dubai World debts payment delay was only a temporary panic-selling. However, this fact show us how instable and vulnerable the economy recovery progress is and maybe now is the time that we shouldn’t have too much confidence as it may hurt us badly. If debts payment delay of Dubai World can create such panic and high volatile market, I can’t imagine what is going to happen if we have bigger surprise.

Have a great weekend and see you guys next week

Good Friday to all!

Well it is the end of another week. Time for the weekends to come and go just as fast !

The woes of Dubai continues as traders, speculators rush to cash out early due to risk aversion or beer money on the friday! Hey nothing is worse than losing the money to buy beer right?

The S&P 500 dipped at the start but has since recovered close to 1100.

While sentiments are not as strong as before, the slow climb up suggests that the risk seekers may not be ready to give up as of now.

Oil is back at around $76, ranging for the longest of time. This suggests that the economy is not picking as quickly as hoped since demand for oil is not pushing up the price.

Gold our winner of the pack eases off to $1170+ now.

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Notice the doji to today’s EUR/USD, the market may be uncertain now as we have a mix of bullish and bearish folks. Therefore it is important for us to pay attention to the developments of the Dubai problem. Bloomberg reports that the Bank Of America feels that the issue may worsen to become a ” major sovereign default”. If the problems do escalate, tighten your money management seat belts and keep an open mind to trade the charts.

Bullish endeavors should target 1.5000 while bearish folks may aim for 1.4910+

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Hey koalas, i know i seem off the track these days and indeed my cough / cold has not recovered. I wonder if the Kangaroos are up to no good!! Am taking the chance to rest this week but no worries i will still be working off my furry koala *ss for you! Expect the EUR/USD Weekly Review and a forex education article this weekend!

Enjoy the Friday and drink safely!

Trade safe!

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

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While global stock markets plunged (and the dollar rose) in the wake of Dubai World’s effort to reach a standstill agreement with its creditors, one has to keep the most important fact in mind. Technically, at least at this time, there is no default nor is there likely to be one. And although there could be some restructuring of the $80 billion stockpile of debt accrued, the impact will likely be but a short term, a knee-jerk reaction that will soon be forgotten by investors.

Dubai World, which is controlled by the government of Dubai, did however have something that was very important to investors; an implicit guarantee from other United Arab Emigrate nations (especially from oil-rich Abu Dhabi) that the debt would be repaid.

Background

Abu Dhabi and Dubai are two members of the United Arab Emirates (UAE), a federation of seven small states that was formed in 1971. Abu Dhabi is by far the richest of the seven because it has the bulk of oil reserves and is the federation’s capital. Since the 1980’s, Dubai has been intent on diversifying its economy because it has little or no oil and it’s main thrust has been a huge infrastructure expansion in support of a global financial hub. The states of Dubai and Abu Dhabi are ruled by royalty and there are long-established merchant family relationships between them.

Dubai has experienced cash flow problems since the collapse of Lehman last year and it became necessary to do what many governments do when cash appears to be running short-issue more debt. In February, the UAE central bank subscribed $10B out of a proposed $20B bond program issued by Dubai. On Wednesday, two Abu Dhabi banks subscribed a further $5B to the program, leaving another $5B yet to be issued. Then something strange happened.

On Wednesday, the Dubai department of finance made two statements, saying first it had raised the remaining $5B and then two hours later asking for a standstill until the end of May on payments due from Dubai World.

The Reaction

As is typical with any debt crisis, the credit default swaps protecting the bonds rose dramatically in price. Investors in Asia and Europe (U.S. markets were closed Thursday for the Thanksgiving holiday) fled risky assets (stocks and any currencies other than the dollar and the yen). S&P futures declined as much as 3% in overnight trading but by Friday morning had pared the loss to around 2.5%.

The (Likely) Result

Investors in the region (primarily banks like RBS and Barclay’s) will need to reassess their risk premiums in future transactions, since the formerly implicit sovereign guarantees seem to be less so. But by global standards the amounts are relatively small and in any event, much (if not all) is likely to be repaid. What this sets up then, in my opinion, is a chance to once again “buy low,” or to partake in what Warren Buffett refers to as being greedy when others are fearful.

Now, doing this of course involves a bit of risk in that it’s extremely difficult to time the best entry correctly. Even Buffett himself failed miserably at this when he made his famous Goldman Sachs investment (announced on September 23, 2008) which came months before an actual bottom was seen in the stock although at this point, he’s billions of dollars ahead of the game.

Of course, if the data next week should surprise to the downside, Dubai will be viewed as a tipping point. There are a number of important reports such as Chinese, European and American PMI numbers due for release next Monday and Tuesday and of course, we’re in the holiday shopping season so reports on sales will obviously be very important to investors as well. I’m looking for the data and sales figures to continue the trend of improvement as the global economy continues its modest rebound from the worst financial crisis since the Great Depression and if all works out as planned, the Dubai effect will recede to the backrooms of the banks involved.