Price Behavior & Comparative Analysis - USD EUR CHF

With the long Memorial holiday weekend, a shorter trading week ahead would be focused on both the Asian and the European trading sessions. The only major market expected would be the NFP - unemployment figures. Although, most expectations are positive for the the jobs numbers and its net-effect over the economy is the main stay alongside with the expanded debt crisis in the EZ. However, there has been some relief on the wires that there is still a possibility that Greece would remain in the EU community, and spilled over in most stock markets in Asia and Europe today which signaled some positive moves.
The primary technical focus now is the behavioral price actions of the USDx  with a small primary gap between the closing and opening prices. While the US market would be closed for Memorial day; the Asian / European globex opening at the 82.15 basis point from a previous close last Friday at 82.40 was a negative signal reflected on a daily basis but not on a weekly chart formation. This opening has given the USD some room to gain enough momentum to continue its rally for the week before the end of the trading month.    

With that said, the EURUSD has slightly recovered but may have some limited up-swing action for the week ahead. But the bearish sentiments still weigh heavier closely link to the USDx movement directly alongside the USDCHF. Currently at the 1.2532; the price behavior of the EURUSD and the USDCHF would be dictated by the US Dollar. The influence of the commodity markets on gold and oil prices will play a supportive and vital role directly in the future direction for the global market as well.
Meanwhile, the strength of the USDCHF is reflected as current working price is at the higher end of the trend at 0.9582. The opening gap has been filled-in likewise the same price action with the EURUSD. Further analysis shall be provided at the mid-week prior to the final Non-Farm payroll figures and unemployment set at the end of the week.

The Market Place!

Keeping Market sentiments in check!

The continuing strength of the USD has been fueled by several factors relatively overlooked by some analyst, traders and retail main street investors.

And this is primarily due to the market's pessimistic focus on the European crisis. Not to mention the G8 summit meeting's stance in dealing with the global economy. As market volatility increases, speculative net positions generally by traders across the financial and commodity markets have continued creating price action across the board in both directions. The overall market performance of oil at the 92.oo levels, gold prices heading south to its critical support price of 1522.45 and likewise the Stock markets in both sides of the Continent has been feeling most of the pinch due to European debt crisis.

With that said,the EURUSD obvious trend position to move lower has been in the airwaves with cautious investors in taking a more aggressive stance of shorting the currency versus the USD. Currently marking a 1.2614 low, the magic number to really focus on would be the 1.2580 which is not too far from its working price at 1.2652 as of this writing. With limited market potential for now, one would have to think twice in trading the currency pair. And would well be advised to focus on other pairs relatively with better trading set-ups that would be more suitable. Link: The market place by MegaTrade101



USD EUR GBP JPY CHF

Trend Following:

As the USD continues to move higher after a couple of days closing below the 81.00 has gradually gained some mixed ground with the other currency pairs. Although, well expected the weekly lower opening for the USDx has given some corrective relief before the next full scale resumption of its rally. Much of the G8 meeting of addressing any financial crisis that may occur in the European continent shall be well supported by the member countries. As they say..its not a USD strength but a Euro weakness.

The immediate price reaction were a bit subdued due to the uncertainty as to how investors would take the current prices at its face value. The obvious came unanimously amongst the rest of the trading analyst that the Euro would continue its decline eventually. So much negative pessimism in the market place as money flows and shifts from Euro denominated currency back to the precious metals market. The sustaining decline for gold back below the 1530.00 /troy oz. have supported the relative up-swing for the US currency.  Continuation on website http://www.megatrade101.com/

Technical Perspective: EURGBP Cross rate

The EURGBP cross have obviously taken a recovery from its established low price at 0.7950 last week. Although, technically oversold, this recovery would be limited up to its 50% FIB retracement price as indicated by the 0.8170 1st objective point of resistance while simultaneously can be a pivotal point where fresh bids can emerge. This is where such dangerous volatile price action can take place and short-covering

reactions for the last two trading weeks ahead may seem to be too tight for mid-term traders to properly adjust positions.

The overall technical downtrend equivalent to its consolidation period is not finished. So there maybe some delay towards its weekly moving averages to adjust to the price levels while prices continue to correct upwards. For some technical strategists daily doji and island price reversal candle bar have taken effect last week ( indicated with an ISL signal on our weekly price page indicator dated the 15th of May) was an indication that this would be taking place. Why? Its due to the synchronized price levels between the USDx, EURUSD, USDCHF and the EURGBP cross coming together which we term as a cross signal between 4 major currency pairs. When this happens a contrary market price direction would occur, Timing such activity can only mean that a trade setup can be taken with limited risk Thus taking a short to medium term trade to cross our USDCHF long position is safe to initiate. Extensions on filling in the gap closes to 0.8110

would be the 1st objective.

Technical Perspective: EURUSD

The overall negative sentiments in Europe particularly in Greece and its parliamentary crisis now has dampened the EURUSD to as low as 1.2640 over the past week. The re-emergence of these reports have finally pushed the Euro to its all time pyschological support price of 1.2580. While some analyst have called a lower price within the months to come.

The weekly chart certainly looks to have gained its technical bear momentum backed by the rally taken by the USDx and made a slight recovery from its low by closing at the 1.2775/80 level for the week ending the 18th of May. However, this closing has penetrated its monthly H/S neckline formation giving the signal of a continuation for the bear trend while daily corrective movements are expected more in volatile fashion as we draw closer to the last two trading weeks of the month. The probability for the EURUSD to drag its momentum lower would come from the technical correction of the USDx after touching a high resistance price of 81.55/78 levels marking a retracement for the time being. But due to the extreme volatility that would occur alongside the EURGBP cross, there would be some limited downside potential as other traders may expect.

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Market Analysis -SRO 5.15

USDx - CHF - EUR

The opening of the 2nd quarter for the Foreign Exchange market has been expectedly been volatile with prices going in both directions daily across the board due to several re-emerging news from Greece, Spain, Germany and the United States. With the European elections as the earleir front-runners the effects on the US Dollar has been supportive not to mention the performances of the stocks, precious metals and oil prices earlier mentioned that should likewise be considered in the overall market outlook. 

The slow but certain trend direction upwards for the US Dollar has significantly given its initial signal since the earlier week of March as previewed in our sequence of market analysis that led to the confirmation of the strength of the USDx. 

The consolidating base formation and trading range has been defined with the techncial support price of 78.05/10 level and a consolidated resistance at the 80.05 before its break higher. Currently at the 80.55 basis point; where some daily corrective movement lower would be expected. Since the gravity of the JP Morgan 2BUSD loss is being played down in the market while the highlight of the German economy seems to overshadow the investors uncertainty in Europe have given the FX market a milder room to breath for the next market direction. Inspite of the EURUSD meeting its target levels working below 1.2850. An important key price to watch whereby the daily & weekly price would have to re-align with the moving averages and a base for consolidation would be made before the next leg would be resumed.

USDCHF as of MARCH 15
AISAN TO EUROPEAN MARKET
TRADING SESSIONS

Meanwhile, a more direct correlation in price and market movement is the USDCHF meeting its projected target higher above the 0.9300 with a registered high at 0.9371. While breaking its weekly trading range between 0.9000 & 0.9220 was the equivalent range in line with the USDx 78.09 - 79.85 basis point. But for some traders and strategist who may have done more research and due diligence would have identified the pivotal price of 79.18 EMA for the USDx was an established technical double bottom. Of course, its always easier said after the fact. However, the fact remains that eversince then the prices trended higher to where it is currently working at 80.55 basis point.

That was the cue in taking the long side of the USDCHF initial entry at 0.9043 dated the 26th of March. And a secondary position at 0.9288 on the break-away higher. Leaving us with a very good ave. price level of 0.9165 with an average size of half a dollar in trade. With extensions on the high side above the 0.9405/45 range for the week. Do expect some daily corrections along the way. We'll consider a settlement and or a cross-trade depending on the market conditions towards the week's reports. Expect some daily corrections and we'll consider a settlement and or a cross trade depending of the market conditions. But a protective cross with the EURJPY / GBPJPY or USDJPY would also be considered as well. Market flexibility is good to practise as one remains un-bias towards market donditons whenever some news arises unexpectedly.  

USD Market & Price Call

This is in reference to the “Sequence of Market View Analysis” leading to the final outcome for the US Dollar Index (USDX) rally today the 9th of May 2012.

By having a full understanding of the important events that are primarily in the news are equally as important whenever a comparison is made with any technical chart formation. However, there is a difference in maintaining a market call and having an un-bias market sentiment by equally having the flexibility of adjusting strategies whenever the need arises. Timing a market set-up based either on a simple fundamental news analysis or a technical formation, really depends on the trader’s perception and time frame of having a trade position in the market.

Dates & Topic:
May.07.12 USDX weekly chart

"In this weekly USDX chart, the most recent price action has been in a trading range between the 78.08/10 support price and the 81.55 level of resistance as indicated with the broken line. The rising channel and trend line support has been in the defensive every time it falls on a daily corrective move.....

USDx Price Behavior & Analysis

The US Dollar Index as a major indicator for the Forex market more often have been neglected as the primary leading indicator. There has been a few adaptation of the index in some variety as compared with the S&P and the Dow Jones Industrial Average. However, the close correlation and distribution of the other Foreign currency composing the USDx has been the standard of measure in pricing the rest of the major pairs.
USDX Weekly Chart

In this weekly USDX chart, the most recent price action has been in a trading range between the 78.08/10 support price and the 81.55 level of resistance as indicated with the broken line. The rising channel and trend line support has been in the defensive every time it falls on a daily corrective move. A clear example is the USDx retracing lower from an opening gap and ending the American Trading session lower and currently at the 79.55 basis point. For some analyst this daily movement could mean a weakness on the market's sudden reaction from the European elections that died down. However, the prices are seen or interpreted at an even par & just above the previous week's closing at 79.50 where bullishe sentiments are still intact. And inspite of the bearsih candle bar for the day on May 07, 2012 the reaction may well be for the USDx to gain enough momentum for the next leg higher.

The fundamental news from the French election was the main catalyst of the USDx rally with an opening gap at the 79.97 basis point. And is currently retracing its daily low for some technical re-alignment with the rest of the European majors at the 79.73 level. However, even without the news that sustained the rally; the technical candle configuration have shown a weekly buying divergence as prices moved sideways into a consolidation. While the relative strength and the Stochastics showed that the third consecutive swing low had enough momentum for technical traders and strategists to take a well defined trade position with barely a minimal risk factor. Futures traders cross trading the Spot forex with the Futures DXY would have made an awesome trade just from this technical indicator. For now any price above the 80.05/10 closing price would be a bullish signal for the USDX.

FX Volatility aftermath French Elections

European Majors & Crosses across the board went sharply lower after the Greek and French elections outcome which backed anti-austerity candidates against French President Sarkozy.

Concerns about the new French President and Greek PM would need a better working coalition government. Germany's statement is that they would be closely working with the new President on their stance on austerity towards building growth for the European economy as a whole. However the likely differences with Germany from the most recent resolution on the Debt crisis will continue to weigh on the market as investors have somehow foreseen that these differences may eventually weaken the single currency like the EURUSD & weigh more on the cross rate EURGBP to their lowest levels before and real deal on the new government would come out.

EURUSD DAILY - ASIAN TRADING SESSION

This has prompted the USDx to jump start the Asian trading week with a higher opening gap at 79.97; which would attempt to break the 80.05/10 1st (R1) resistance level for the USDx. With enough momentum to build up the rally from last week's move may well be the catalyst to further the USD strength to finally continue its original trend direction. The previous week's market squeeze between the Euro and the Pound will remain tight while adding the jolt the market received from the RBA would continue to be a trade war factor between European, US and Asian major market players in the Forex market.

Likewise the EURUSD and the EURGBP opened at 1.2960 & 0.8060 respectively in the Asian trading sessions as an immediate reaction to the European elections. And this was a welcome treat for short-sellers maintaining trade position until now. However, expect some volatile reaction on both directions after the opening gap which would lead to some profit taking and trade adjustments/ liquidations for long trades caught flat-footed with this fundamental news & movement in Europe.

Extensions on the Technical perspective for the EURUSD ...LINK: http://megatrade101.com/

A Forex Squeeze & a Jolt!

When contracting price action occurs in the forex market expect an increase in price volatility and a much wider price fluctuation from a session to session basis. The start of the new trading month for May shows this typical example; where we can find that two contracting fundamentals between the Euro and the Sterling Pound is at play.
The price decline on the EURUSD currency pair came about with the European manufacturing data, a struggling sovereign debt crisis and the pressure building up on growth & unemployment weighed heavier that caused the EURUSD to drop to its current price levels of 1.3145 as of this writing. That triggered a softer EURUSD compared to Cable. Whereas UK housing data is high-lighted versus the European continent's weakened economic growth. Thus, prices on both currency pairs contracted in opposite directions. With the EURUSD sustaining a loss for the daily session, while the Sterling Pound maintains its trend higher as more trade analyst are convinced that it would take much more to drag the cable back to a bearish tone, the signals are there as of now.

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In Focus: AUDUSD after the cut & outlook

With the RBA's move of 50bps reduction on rates have been seen as a realignment of rates corresponding with the rest of the other majors. Some analysts have attributed it to the aggressive stance taken by the Reserve Bank of Australia from its previous carefully selected outlook of the global economy compared to its own. But this move have taken it straight through the months ahead and would simply monitor how it would directly affect their trade balance sheet with their trading partners at the second quarter of the year.

AUDUSD WEEKLY

On the Technical perspective, this movement have litteraly justified the bearish candle pattern of the Aussie in the weekly formation. From a significant high price at 1.0855 registered on Feb.26 which was the target objective and Price reversal point that led the bearish trend for the Aussie Dollar and currently resting just above its 21week Moving average at 1.0335. However, this has given the Aussie additional leverage in the longer term period both techncially and fundamentally to perpare for some room to continue its bullish formation. The prices are well within a rising trend and channel that would support position traders / investors a considerable leverage to play and average a cross trade between rates of other currency majors.

We are currently looking at a possibility of extension just above the parity level as indicated in the broken trendline support & channel shown on the figure. And please refer to the monthly configuration that the inital bearish ner term trend would be good for short term positions before the next leg higher would be made. Key prices to check would be 1.0190-1.0220 range on the low side of the prices.

Trend Analysis on Majors & Cross rates

GBPJPY & EURJPY

The two previous market analysis has viewed FX prices widened considerably with the GBPUSD and the Japanese Yen both gaining against the USD.

With mixed reports from the Fed QE3 and the more negative GDP numbers last week where the USDx closed lower at a vulnerable support price of 78.80. The USD thus far has continued to weaken without any real signs of a recovery unless proven otherwise with a surprising end month closing and opening for the month of May.

Although, currently due to the month end trading activity the USD has found some relief rally and position adjustments after Friday's GDP bearish report. Prompting today's recovery are some bids for safer-haven trades as dampened risk-appetite, mainly due to Spain in recession. And a mixed report from the U.S, personal spending dropped from 0.9% in February to 0.3% in March, while personal income ticked 0.1 percent higher from 0.3% in February, on the other hand, Chicago purchasing managers index dropped sharply to a 56.2 from 62.2 in February.

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