Saturday, July 31, 2010

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Monday, July 26, 2010

Asian & European Anaylsis Report 7.26

The better than expected 2nd quarter earnings report have boosted equities and a slight recovery for the USD finishing the end of week with a much stronger tone for investors sentiments. Although, the 1st day of the Federal Reserve Chairman Ben Bernanke gave no real inspiration as the " unusually uncertain "economic outlook outweighed the markets during his semi-annual monetary policy report. However, the 2nd day he gave a more subtle and a bit more positive outlook as the market were waiting for the release of the highly anticipated European stress test result. Quite a mix of ups and downs on market prices seemed to overwhelm participants as the two days market's volatility has increased.
With that said, Asian and European markets have followed suit with recovery still in mind making the markets absorbed after trading the positive outcome that most European banks have passed the stress test. This have prompted the positive tone currently being felt in the market place.
With increase volatility in the Foreign exchange market, a wider trading range would still be expected like we have mentioned in our previous market view. such an example is the recovery moves of the AUDUSD and the NZD making the 2nd attempt to the high side more visible than ever. closing at the top of the range for the AUDUSD at 0.8955 and still working at the higher levels as of this writing. With the Kiwi at the 0.7298/00 levels will still have some legs to move to their next target 0.7445/50 range, but do expect some wider up and down swings to create enough momentum for these prices to move higher.
Meanwhile, out of the ordinary configuration on the USDCAD weekly bar formation of market up and down swings have been more of a struggle for players getting caught in between movements. With an average trading range of its HI/LO between 1.0600 and 1.0250 plus / minus a few pips. The prices are caught in a wider symmetrical triangle where until such breakouts would be speculated on or for others simply a wait and see attitude as to where it is going to break. Watch for the next few days as we would be releasing our market analysis on the currency as to where it would likely break through.
The USDJPY and the USDCHF still has to maintain its tighter trading range as the players reluctance of a follow through trade seems to diminish when the volumes and the open interest are low from last week's trading. Some fresh incentives may surprise some traders and may try to catch the market's price movement when it does. However, both currency pairs have no signals of a trend reversal nor a price reversal in an overall picture. In essence, the prevailing trend for them to head south is more favorable at present circumstances and market conditions.
Which only means that the probability for a USD recovery may only be slim and sluggish. The USDX to hurdle its 1st resistance of 84.60 -85.20 range is much wider than anyone would expect. This will have an underlying effect for the majors to trade with increase volatility as we head towards the end of the trading week and month. Again, position adjustments are made during the course of the trading.
The EURUSD and GBPUSD shares the same sentiments for its bullishness with the EURUSD may outperform the British Pound depending on the money flow and market sentiments that would prevail the first three days of trading that will set the pace for the closing price and sentiments for the month of July.

Monday, July 19, 2010

Asia & European Sessions

A short recap of the closing price movement last Friday have been expected as the corrective moves for the Aussie and New Zealand dollars were simply a profit-taking of earlier long positions. For some who managed to shift or made some rather position adjustments were caught on their late positions for the EURUSD and the GBPUSD as the Friday closing have failed to give any significant higher moves. Although, the more active correction came when the New Zealand dollar did go back to 0.7038 from a week's high of 0.7301.
Meanwhile, the Asian and early European sessions were mostly influenced with Friday's wall street lower closing, hence leaving investors to damp some of their earlier stock holdings. The pressured market gave in with a mixture and still bearish sentiments of the US economic direction as the USDX has retrieved to the 82.10 psychological support price. A daily USD recovery as most have been expecting with the slight correction lower of the EURUSD, although the GBPUSD has held firm and currently working at the 1.5340 and 1.2966 respectively for both pairs. A continuing case scenario will still prevail the market sentiments has not change.
The succeeding reports for the week with the US housing starts , existing homes sales, leading indicators would be something to watch. However, the UK GDP for the quarter and year report would signify a tremendous boost if and when figures would be better than most expects. Still the prevailing USD directional trend would be the best indicator to analyze in the mid-term.
The USDJPY at these levels of 86.81 is not too far from their support levels of 84.79 registered on the week of Nov. 22, 2009. With that said the likely scenario in line with the USDCHF low of 1.0398 last week was not too far from our last week's market price call at 1.0380 and a slight recovery currently at the 1.0450 as of this writing.
There are no clear signals of the USD to recover higher even looking at its technical perspective and analizing the market's overall sentiment index that would have coincide with the open interest in the financial futures market relative with the spot currency moves for the past weeks angle.

Wednesday, July 14, 2010

USD weak vs. Euro & British Pound

With the relative declining volumes in line with the volatility index and not to mention the most recent report on the retail sales decline have given the market investors a negative view of the US dollar and its economic recovery. In the coming few days where the Producer Price Index and the Consumer Price Index not make much of the difference while the Federal Reserve would also keep rates at its lowest levels just to try to support and perk up economic growth.
The market's reaction towards the Currency market specially for the EURUSD and the GBPUSD was more of the US Dollar's weakness and not the strength of the Euro nor the Pound. Yet as of this writing based on our market view report the EURUSD has made some pace setting effort to move higher by reaching 1.2777 from the low of 1.2522. Where we have indicated that a 1.2510 level would be an ideal entry price as the USDX have maintained its lower direction back to the low of 83.38 basis point. With that said , the GBPUSD also reached a 1.5295 well within our range objective set in the market view analysis dated the 12th of July which was earlier based on the market's signals of July 7th 2010.
Meanwhile, the weakness of the USDCHF has indeed been more anticipated as the 1.0530 really looks weak as the USDX trends lower for the rest of the week. Although, some hope for any positive outcome from the reports may well be ignored by the overwhelming sentiments currently existing in the market. With sticks now on the lower price segment, a flight to quality may also be dampened as most investors have shifted funds to more attractive arbitrary hedging strategies of the Australian and New Zealand Dollars with a better rate of return on its rates. Some carry trades may soon emerge as this continues towards the middle of the weeks ahead as foreseen by analyst that a declining US dollar would continue to hold.
As of this writing, the AUDUSD has reached a high of 0.8870 from our average price of 0.8350 which translates to a positive trade from the earlier position together with the Kiwi at the 0.7101-17 levels and currently working at the 0.7208. A momentum indicator have made some signals that increasing volumes for both pairs are keeping pace with the price movements.
Please keep watch for the reports coming out for the week! There are some surprises along the way while trading the FX market. With low volatility some major players may consider taking advantage of the retail investors as it has always been the case for some.
Good luck and the best for your trades!

Monday, July 12, 2010

Speculative Outlook 713

With most traders and analyst focusing on the earnings reports of the major companies and banks this week; in-spite of a good showing for the year some analyst still predict a mild and slower performance for the 3rd quarter of the year. As the upcoming reports on retail sales, consumer price index and the housing sector mat still prove to be sluggish as most stocks may made some recovery from its low, the basic fundamental that is driving investors is still the flight to quality with the US dollar that is making some relief recovery from its low levels from last week's trading.
The European currencies like the Pound have been correcting from a rally that prompted the GBPUSD to move lower to the 1.4947 and currently at the 1.5077 and may continue to attempt its high range between 1.5120-1.5350 next resistance levels. this attempt would likely be achieve since the USD would only be short-lived correction. And the scenario that the EUDUSD would follow through since it has been lagging behind the GBPUSD for the past week.
The 1.2510 psychological support price would be a key level to watch for the week as the only factor driving the Euro lower is the cross rate of the EURGBP touching 0.8340 coming from a daily corrective mode restraining the EURUSD to move higher. As the more influential cross trade would streamline its movement unless new developments for the USD to go lower would come this week.
The USDJPY has been seen more in line with the weakness of the USD as the Yen losses its value more after a strong stance on the 86.95-87.01 double bottom price levels that held thus prompting the USDJPY to move higher in numbers and lesser in value as we have indicated reaching an 89.14 high and is at 88.55 correction. The question is where exactly would it go? the indicator would be a combination of the EURJPY cross as the same likely scenario would happen when it drags the USDJPY lower. So the contrary move for the USDCHF to move higher may occur within the weeks movement.
As the USCHF is currently making its corrective movement higher at the 1.0635 from a low price of 1.0480. Watch for 1.0580 to hold although, if and when it would be penetrated the 1.0380 is the next stop for this pair. Which would fall lower than the 61.8 Fibonacci retracement levels.
The most favored pairs are still the Australian and New Zealand Dollars as it has been the best performing currencies as of the past week. We still continue to hold our analysis reports from our market view indicating that there would be more room for these two pairs to further accelerate. As the Asian countries like China also maintains its stance as a better choice for investors to hold stocks compared with the United States which other analysts looks at the bigger picture at this time. since the economic conditions may falter as the 3rd quarter of the year may also be a corrective phase.
On technical stand point, 0.8350 would still be the key price figure to tolerate if one would decide to trade at the current levels of 0.8739 for the AUDUSD and the 0.7092 for the Kiwi looking at the higher range of 0.7280-0.7320 initial targets respectively. With a double bottom price levels at the 0.8314-15 from the previous weeks have been a clearer price entry as we have done last July 05 pivotal point from the chart.
As volumes still needs to build up as momentum have been slower although, there seems to have quite a pacing going on with the volatility index. This is also true with the stocks as the earnings and banks reports are just being speculated on the negative in-spite of their stronger performance for the year to date. Stay clear whenever the cross rates would drag the majors as the major players would then be present in the market place.
Good Luck on your trades and please choose wisely on the entry and exit strategies for the week. As we still expect some volatility towards the entry of the 3rd quarter has just started.

Tuesday, July 6, 2010

Market Volatility expected

The Non farm payrolls mix reports combined with an overall negative sentiments have made the markets uncertain of the US recovery and stalled most stock lower in the Asia and European markets. Trending lower for the US dollar with the index falling below the significant support level of 85.20 will have difficulty to call the rest of the coming weeks bullish. Some corrective actions may be seen as the week progresses simply because of lackluster volumes waiting for some fresh incentives coming from the US rate decision, Consumer Price Index and the Michigan consumer report coming this week that would make the market a little more volatile. However, we still expect an overall bearish sentiment contrary to the daily movements of the majors.
The Euro against the USD has more encouraging technical outlook as mentioned in our earlier blog and market view. On top of the monthly price reversal bar from its low of 1.1875 the weekly formation do indicate that a technically sound inverted head and shoulder's formation with significant fresh VOI will push it higher. Contrary to our opinion are the analysts who happen to maintain their outlook for a parity for the Euro against the US dollar.
The fresh start of the week would be at a slower pace since traders are feeling each other as the opening days of the 3rd quarter of the year would be a corrective for the USDX, still working below the 84.60 opening for the month of July spot and the EURUSD at the 1.2590 with an initial objective at 1.2820-50 range.
Meanwhile a more positive outlook for the GBPUSD sustaining at today's prices above the 1.5080 - 1.5195 trading range. With the austerity plans set to help the Pound maintain these levels. Basically looking at he price targets of 1.5275-1.5350 range for the week.
The Aussie is showing some promising signs of a recovery and still holds an average support price of 0.8285-0.8350 as entry levels for long trade positions as the weekly chart may hold its true levels supportive of this positions. Bias as it may seem but we shall hold this stand for a mid-term trade; as we do expect the corrective for the USD to be covered by this quarter.
For the time being the expected reports this week will provide some market volatility that may be favorable for short term scalpers and day traders.
Good Luck and Happy Trading!



Saturday, July 3, 2010

Focus on EURUSD !

The general effects of the reports last week has been negative overall for investors to shift sentiments with the US Dollar heading south of the border. With the USDX closing below a key important support of 85.20 closing at the 84.60 signifies that the bearish sentiments overwhelms bullish speculators on the US Dollar.
With the Holiday weekend schedule of the 4th of July celebration, the continuing factor will prevail next week. A major downward correction for the USDX will spiral lower with similar corrective movements higher though short lived as the third 3rd quarter opening prices already showed these behavior at the opening of the month. Needless to say, as the major players took advantage of the holiday schedule catching small operators / traders off guard with the recovery of the major European currencies.
On the technical stand point, with the closing of the month of June overlapped with the opening of the third quarter on the same week, with position adjustments both spot and futures financial have made liquidation and profit-taking more volatile and market price swings having a huge trading range where smaller traders on retail may have suffered more than one else.These earlier short positions specially bearish short Euros from institutions and speculators who have been calling ' parity ' on the EUDUSD have suffered the most. As these have been indicated with a much lower decline of open interest and an increase in volume liquidation.
A significant doji candlestick on the monthly chart of the EURUSD the day after the closing of the month would have made a good speculative move knowing that the recent bottom of the Euro was at the 1.1875 registered the week ending June 11, 2010 have defined the risk tolerance levels that would be tolerated in worst case scenario. Although, this strategy would have been better off with an appropriate portfolio even if the entry levels were on the average of 1.2250 moving average prices. True enough after the fact, but this case study being presented is a clear example of timing and positioning a trade before the fact.
In essence, a price reversal is obvious enough and the continuing movements would be expected as the weeks progresses which happens to be a corrective phase for the USDX entering the third quarter of the year after two consecutive quarters of trending higher. This corrective phase could easily be considered a major correction although, not necessarily termed as a major trend reversal.
As a methodology, an overlapping closing and opening of the month within a weeks trading schedule would be a must for speculative investors to watch with keen analysis. And to top it all specially entering a new phase of the third quarter right after two consecutive higher trend. This would apply as a clear case study as it happens most of the time not to mention the holiday schedules of trading activities.
Good Luck and Happy trading.