Good Monday Koalas!

Blues getting to you? Kicking dirt into your eyes?

Get angry you dont! Take a deep breath and face the challenge! Life goes on

Yes, you know where this is going to. The EUR/USD is having a bluish Monday of it’s own too. Let us take a look at the current price action.

After testing the strong line of 1.38 last Friday, the EUR/USD took a dive and is currently testing the 1.3680 support. Altogether now, ” We love it when the koala’s chart works.” YES! Nothing beats shameless self praise on a Monday.

On a similar note, the S&P 500 takes a break from a bullish ascend and is heading towards 1140.

Oil drops to $77+. This may indicate that the anticipated recovery may not be here yet as oil can be a clue to the global economy’s health.

Gold remains unaffected at around $1103+. Demand for gold may be holding it steady. As gold is an investment of choice when it comes to stormy financial weather, risk aversion may be present.

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The TIC Long-Term Purchases report came out much lower than expected today. This report measures the difference between foreign long-term securities purchased by US citizens and US long-term securities purchased by foreigners and hence it is an indication of foreign demand for US securities.

As the actual data is much lower than expected, risk aversion may be happening as investors seek to make sense of this sharp drop of overseas demand for US securities. Two biggest holders of the US treasuries, China and Japan, reduced their holdings. This is contrary to the positive belief of the pace of recovery for the US economy.

Next up, investors are also concerned with regards to China and now India. These economy giants are sizzling with growth and investors fear of a curb of growth to contain inflation. Furthermore, it is greatly believe that these giants spur the global recovery on and hence any premature curb in growth may extinguish the fragile recovery.

A report i saw today gave me quite a bit to think about. Moody’s Investors Service said that the US and UK are “substantially” closer to losing their AAA credit ratings. This is considering the fact that both nations are spending about 7 percent of the year’s revenue on debt servicing. Keep a look out for this and remember you heard it first here at TheGeekKnows.com ( Unless you read the report yourself too )

Tomorrow brings us a number of economic releases including the important German ZEW Economic Sentiment and the US Building Permits. Be careful of unexpected spikes.

Bullish relief may bring us to 1.3740/800.

Further bearish developments may test the support of 1.3600/550.

***

Woah, a koala recently asked me” With all this articles that you are churning out, how can you manage time? How can you trade?” YES I CAN! When a “chore” is a passion, the meaning of chore disappears. I love writing articles and reviews for koalas. Every time when you send me an email or facebook message to say thanks, i am beaming with a smile

Surely the time must have came from somewhere right? Yap indeed. My issues with Ms Sleep are getting worst. We only spent 4 hours yesterday together.

Gtg! Trade Safely ( Remember ! Add me on facebooook !! )

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GBPJPY Forecast
The GBPJPY had a moderate bullish momentum on Friday. On h4 chart below we can see that price is moving inside a bullish channel after bottomed at 132.00/50 area indicating bullish correction phase but still in the context of a major bearish scenario.  The bias is neutral in nearest term but bullish correction scenario at least targeting 138.30 area remains intact. Break above that area should trigger further bullish momentum targeting 141.40 area. Immediate support at 137.00 followed by 136.10.

AUDUSD Forecast
The AUDUSD made another indecisive movement on Friday, made another Doji on daily chart. On h1 chart below we have a double top formation after bullish rally from 0.8982 area indicating potential downside reversal scenario as bullish momentum wanes. The bias is bearish in nearest term targeting 0.9040 area but the major bullish scenario remains intact so I still prefer a bullish scenario with buy on dips strategy. Initial resistance at 0.9138 (double top). Break above that area should trigger further bullish momentum targeting 0.9250 and 0.9326 region.

Good day to you.

Hope you are enjoying your weekend so far. I always feel that weekends are great for one to calm his trading mind down and to take an unbiased approach at the chart.

In the previous week, i mentioned that we may range around 1.34 – 1.38. Let us take a look now at the EUR/USD chart.

Indeed the week did range between 1.34 – 1.38.

The last 3 days brought about a great bullish trend and it ended after testing the 1.38 line, closing around 1.3760+/-.

The main highlights of the week were the Greek deficit issue and the apparent performance of the US economy. On Friday, the US Core Retail Sales came in better than expected. Investors were generally positive in the US economy and it was evident in the US equities. This helped to keep risk aversion at bay and the currency pair went up probably due to increased risk taking.

As we look towards the new week, i will like to start by reiterating on a few points.

Firstly, even if there was apparently not much new negative developments in the Greek deficit crisis, this was probably due to a lack of media coverage. It is not a sign of the problem having mysteriously disappearing over night. It was reported that next week, EU finance ministers will discuss on the possibility of a Greece bailout using EU Bonds should the situation calls for it. It is my opinion that the Greek deficit crisis goes beyond a simple fix and hence be on a lookout for risk aversion should developments stall. Furthermore Greece still faced the potential problem of having it’s rating cut by rating agency, complicating access to the ECB loans.

China made news again recently as it was reported that the Assistant Commerce Minister of China said that the Chinese inflation is “mild and controllable.” Reports stated that the China Consumer Price growth reached a 16-month high in February. This may prompt the leadership to take further measures against the speculative bubbles. Be on the look out for risk aversion as investors may be worried that a premature removal of stimulus measures may stall the fragile recovery.

Next week brings us a number of important economic releases. Starting from Monday, we have the US TIC Long-Term Purchases. This data shows the difference between local and foreign purchase of US equities and may be an indication of currency demand since the purchases were made in US dollars. The German ZEW Economic Sentiment in the early week may also shed light on the Euro Zone sentiment. Mid week brings us the US Federal Funds Rate and do be prepared for any unexpected developments. Late week brings us the US Unemployment Claims and the Philly Fed Manufacturing Index, which is a measure of manufacturing sentiment in Philadelphia.

You can find the list of the various economic releases in the Economic Calender below.

From a technical point of view, we are slowly ascending. The bearish momentum seems to have stalled for now and this is indicated in the 200EMA that i have drawn too. See the circle on the 200EMA in the chart above. It is turning flat, instead of the current bearish indication. Nonetheless, bullish fans should not assume that the train will definitely shoot up north as 1.38 can be rather strong.

If nothing adverse happens, we may be ranging between 1.35 -1.4.

Trade safely and do plan your trades well.

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Good day Koalas.

It is CASH THE PIPS FOR BEER day!

With the numerous data released today, we had quite a bullish run up.

As the week comes to a close, let us see how is the currency pair doing so far.

The EUR/USD continues it’s bullish momentum and tested the strong resistance of 1.3800. It has currently retreated to 1.3740. I love it when my chart works!

The S&P 500 made a new high today. This suggests strong positive sentiments. As of now, it has retreated to the 1140s.

Oil stabilizes around $80. Should it close above $80 this week, this may suggest a new phrase of economic recovery.

Gold continues with little activity, valuing at around $1108+.

***

The US Core Retail Sales came in better than expected. Despite poor weather, retail sales were up. Investors see this as a sign of a recovering economy as consumers spend. It is useful to note that the US Core Retail Sales is up for most of the months recently, strengthening the indication of a stronger economy. This may contribute to the positive sentiments surrounding the American economy lately.

Having said so, we must be prudent as the US Unemployment Rate remains high at 9.7%, presenting one of the most difficult challenge to the US economic machine.

Over at the European Union, it has been reported that next week the EU finance ministers will discuss on the possibility of a Greece bailout using EU Bonds should the situation calls for it. It is my opinion that the Greek deficit crisis goes beyond a simple fix and hence be on a lookout for risk aversion should developments stall.

Bullish momentum may test 1.3800.

A bearish relief for the currency pair may bring us down to 1.3680.

***

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Trade Safely.

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Probabilities:

Direction of  Highest Probability: BULLISH
60 minute trend support: 1.3610
Bearish Probability below: 1.3610
Significant support: 1.3440
Significant resistance:1.3750

Direction of  Highest Probability: BULLISH
60 minute trend support: N/A
Bearish Probability below: 1.4800
Significant support: 1.4800
Significant resistance:1.5270

Direction of  Highest Probability: BULLISH
60 minute trend support: 0.9140
Bearish Probability below: 0.9140
Significant support: 0.9080
Significant resistance: 0.9250

Direction of  Highest Probability: N/A, wedge needs to fail or break to downside
Bullish Probability above: 91.00
Bearish Probability below: 90.50
Significant support: 91.30
Significant resistance: 88.10

___________________________________
This analysis has been based on the Probability Study Technique which is derived from the Dow Theory

Also note that a “trading condition” does not constitute a trading signal, but rather a context to execute your own trading system within.

For more about the Probability Study Technique, please visit forums.fxinstructor.com or register yourself a seat at
http://www.fxinstructor.com/eng/courses/probability.php to learn this technique or to book a free Level 1 class

Enjoy and good luck!

Johan

Although my style of trading is more fundamentally based in that I mainly use technical price points for entries and exits, I think it’s important to recognize chart formations that are obvious and likely to catch the eye of even a casual observer. This formation definitely falls into that category.

What’s also interesting is where the double top was made.

I use several non-standard Fibonacci levels which I’ve found to be accurate and useful. For example, most people who use fibs on their charts have the 50% retracement line, which actually is not in the standard 23.6, 38.2 etc. fib sequence. I use it also, primarily because everyone else does. Fib levels themselves are separated by Fibonacci’s “golden ratio” of 1.618. To go up in a sequence, you multiply by the golden ratio and to go down, you divide. If you multiply the 50% retracement level by 1.618, you get 80.9. In other words, 80.9 is the next number in a Fibonacci sequence that begins with 50 and I use this level on my charts.

I set up a fib sequence that measured the fall of the S&P from the time Lehman collapsed until it hit bottom in March 2009, and I’ve been measuring the retracement of this decline expecting that at some point in the near future to see the entire decline retraced. But what’s interesting is that the 80.9 fib level is exactly where the S&P has made its double top.

And that has me a bit nervous about where stocks could be headed to from here.

In the post-crash economy, what we’re left with is an ever-widening divide between the haves and the have-nots. The haves (big banks, Wall Street firms and corporations) are doing quite well thanks to the Fed’s extraordinary interventions. The banks are making more money than ever thanks to the steep yield curve, Wall Street firms are earning money hand over fist, and corporations can once again borrow in the capital markets at very low rates. A new study done by economists Allen Sinai and Paul Edelstein has estimated that the Fed’s actions boosted GDP growth by 1.9 percentage points in 2009 and would add 3.3 points this year.

While that sounds great (and certainly things would have been much worse absent the Fed’s actions), the facts are that little if any of this stimulus has trickled down to the general population as of yet. Why would I say this? Well, aside from the dismal unemployment figures, there’s another simple metric I use to gauge what’s happening in the real economy-gasoline usage.

One thing is for certain; Americans love their cars. They love to drive and they love the freedom that driving affords. But if you look at the weekly Oil Inventory reports, you’ll see that gasoline usage is still down from last year’s seriously depressed levels. Also, as reported on Thursday, January’s Trade Gap unexpectedly narrowed by 6.6% to $37.3 billion because the demand for foreign oil and automobiles dropped. The U.S. imported just 245 million barrels of crude oil in January, the fewest since February 1999. My point here is that Americans would be burning more gasoline if they truly were doing better. The fact that they aren’t speaks volumes.

It all comes down to the jobs which haven’t re-appeared despite all that’s been done. I’m also not so sure that demand for workers is going to pick to any serious degree either, and the reason I say that is because Productivity (the measure of output per worker hour) keeps going up. And while that’s good for corporate profits because the cost of production is low, it doesn’t bode well for jobs. After all, if a firm can produce more goods and services with fewer workers, why would they hire and bring the cost of production up? The only way they will is if they believe that final demand will increase to the point where production can’t meet it.

So, while it’s likely that we’ve seen the last of the big job declines, there’s little reason to believe that hiring will expand strongly going forward. It looks like what we’re left with is Nouriel Roubini’s vision of an economy that has come out of a recession but for most people, still feels like one.