FX vulnerability

As the market absorbed the news in UK consumer confidence basically remaining unchanged and did little effect on the directional trend lower for the EURUSD from its high of 1.2400 down to the 1.2150 with slight recovery at the present price of 1.2233 as of this writing. the German unemployment which fell lower had neither a real effect as the diminishing risk have marked down as volumes also deteriorated. There is no significant sign of a price reversal for now from the last time it touched the 1.1875 since the week of 6-06. However, that was a good correction as we called it a temporary price reversal , short-lived held true.
Although, the contrary behavioral pattern between the GBPUSD vs. the EURUSD is quite obvious and has indicated that investors had shift hedging strategies from the USDJPY and the USDCHF. With GBPUSD making a high at the 1.5127 and a higher low at the 1.5005 indicating that it still has legs to move higher. while the EURUSD moved lower to 1.2150.

As both Yen and Swiss franc has been in line with the correction of the USDX which made a hold at the price level that we have mentioned in our market view analysis marking at 85.20 low and a swing back higher is what it has been doing currently working at the 85.93. With the USDJPY at the low end of the levels at 88.63 and the USDCHF at our targeted price levels at 1.0820 which happens to be slightly below its Fibonacci retracement level of 50% from the lowest level of .9910 last Nov. 2009 and its recent high of 1.1730 registered last May 2010 No significant changes in the outlook so far.

As some may have noticed that the market view and analysis varies but more often hold our bearings for at least on a medium term basis. Remember, that percentage trading can be your advantage as the market is quite vulnerable to it up and down swings which happens to be good for short term scalpers in the market and day traders.

This goes without saying that the AUDUSD and NZDUSD has made the same where both currency pairs have shown its weakness as the Aussie is currently working at the 0.8526 giving back half of its gains for the past couple of weeks. And the Kiwi has done exactly the same at 0.6925 from its high of 0.7145 and from its previous low of 0.6572 barely three weeks ago which made a quick recovery when it touched those prices.

The overall outlook specially for the precious metals like Gold has made some good corrections lower from the first 2 days of the week that a possible price reversal was in the making however, the bigger picture frame still holds significant legs for some new highs in the near term. But do not discount the possibility of market swings lower as the daily shows some possible exhaustion as lower volumes and profit taking are being made by institutional investors and hedge fund traders.

For now the technicals may prevail over the market as reports are being brushed aside as risk appetite are slowly emerging but our analysis is that the market movements are simply in wait and see attitude as the coming market holiday of the 4th of July is giving some investors and traders that holiday good feeling.

Good Luck and Happy Trading!

Technical Outlook 6-21

The sustainability of the forex majors such as the EURUSD and the GBPUSD to move forward higher has been at a slower pace since the volumes and volatility index have been diminishing to its low levels. The FOMC meeting may be the only meaningful indicator for volumes to increase and while most investors/ traders wait; the vulnerability of the market place is simply to move on a technically motivated market.

This has been true to the fact that the USDX has so far followed to the letter our market out specially after the index touched its initial objective on the 88.78 / 80 basis points which we have been constantly writing about. Now that the corrective mode for the USDX still continues to sustain since Gold has indicated its reinforced trend making new highs from last weeks movements has made money flow shift to the precious metals again. This has set the pace for the USDX to move lower in line with the corrective and pivotal price reversal for the majors like the Pound and the Euro.

Meanwhile, the USDJPY has shown its sensitivity of moving higher and currently working at the 91.25 from a technical double bottom price alignment at the 90.30 which happens to be a higher bottom price and making the symmetrical triangle of the weekly USDJPY chart more visible. This formation has been in the making since the candlestick configuration was setting in place. Contrary to the weekly chart formation of the USDCHF which has already reaffirmed its downward direction. Where currently working at the 1.1075-80 levels, there would only be a temporary correction on the prices but the continuation to move lower would continue after such correction is done.

Favorably, both the AUDUSD and the NZDUSD has been the ideal pairs as the established lows as held relatively at the 0.8150 levels and has now been at the 0.8815-20 maintaining its strength and the Kiwi at the 0.7125 from the 0.6677 key support prices. The psychological key prices on the low moving average of 0.8100 and 0.6600 respectively is now considered to be the base reference to consider for quite sometime.

Best to your Trades and Good Luck!

Market snobs Moody's

What the market already knew would not have made a difference in the market place. In spite of the downgrading of Greece to junk category and Germany's exposure to the package plan that have been in the news for sometime have not created much for the Euro vs. the USD but rather held ground back to the 1.2305 levels from a low of 1.2160 to as high as 1.2312 for the current week ahead of the scheduled reports this Friday. This has somehow been a snob from the down grade report and has been expected.

Although, the Foreign currencies has been moving to where technical analyst have projected that certain corrections were indeed in the making since the entire fundamental reports on the Euro Zone has been quite negative for the past months or so. that a corrective move has left technicians to freely move within these parameters of correction. A mix sentiment has driven the market in both directions has the approaching 2nd quarter ending has also made traders in the interbank market make necessary trade adjustments.

The general trading range for most major pairs has been limited and the market has also been quite ideal for speculative traders scalping the market for some quick market plays which were quite predictable as it moves more on technical formations. Short-lived as it may be seen on their up -down directions yet the soft data from the reports has had little effect on the market as it waits for the more important ones to come before the end of the week.

A typical sustaining trade is the GBPUSD which has maintained its support at the 1.4350 from the previous low of 1.4229-50 range and is currently working at the 1.4815 which has been the corrective movement we mentioned after over a thousand pip range which also happens to be its behavioral pattern whenever it makes it major moves specially prenetrating a trendline resistance as seen on the chart. this also serves as a confirmation of the correction.

As the USDX has been in its corrective phase after touching its 87.78 high very close to our objective at 88.80 and currently working a the 86.45 bp levels. Until fresh incentives are made; the market would swing in both directions more technical until this Friday's reports.

Good Luck on your Trades!

Trending the USD Index

The Jobs data last Friday was a significant disappointment to most of the surveyed analyst who called for a better numbers report. But in spite of that, the USDX as a measure for a basket of Foreign Currencies have managed to go higher closest to our target objective of 88.80 since our market view report for several weeks and ended the week of the 4th of June at the 88.26 The current price level as of this writing for the 7th of June registered a high of 88.55 in the American session.

Still dominating the market is still the Euro Zones sovereign debt crisis which is really nothing new, however what added was Hungary's inability to address their own respective debt obligation that also carried a relative relation with France's probability of being in the same boat. With all these negative sentiments hoovering above the USD ability to sustain its current levels that even on the technical perspective the promising outlook for the dollar is still very much intact.

As described with the corresponding chart, the relative HI-LO configuration of the USDX has more momentum to attain what we have already anticipated for sometime now. The increase in volumes and open interest has fueled the market and reinforced its trend. We would rather not speculate as to when a possible reversal nor a price change would occur. Not that we have been bias but the trending trades has been in line with the strength of the USD as a flight to quality investment alternative as to the European currencies deteriorating value.

Gold's price corrections lower has only be in line with the relationship of the Euros weakness rather than USD strength that also played a significant role to the cash investment flow of investors that saw the weakness of the stock market's closing lower for the week. The possibility of the Dow Jones to continue to move lower is greater than the last period where it would have to retrace its low price levels from the 900 Pt's. drop although, in a slower fashion as computer triggered orders during those times would have to be even-out for the least. There is no certainty as to this approach as it is more speculative in nature. Although, history does repeat itself as the market also tends to follow its wave pattern but this time on a technical perspective may create a falling wedge in the near term perspective. As of now the configuration would not be seen as it is still in the making. Although, the probability that we may also be wrong as newer fundamentals would disrupt this scenario whenever a new money flow will be back in the stock whenever the USD make is corrective movement. On the daily basis the negative divergence on the top side of the USD and the diagonal line lower relative to the RSI and percentage rate shows a corrective move on a technical basis is expected. But price adjustments lower will just check the overbought and resume its price levels higher on a later day.

We would be monitoring the volumes, open interest after the expiration of the June USDX, money flow, the average directional index and the investors / traders commitments on their positions that shows the actual sentiments of their trades. This is it for now and more to follow within the week's trading sessions as they develop.

Best to your trades and stay on top of the market!