In the absence of the Major Asian participants the Foreign currency market will again be susceptible t wider trading ranges amongst the majors. The Chinese holiday period would normally last for a week as investors take a breathing room as they celebrate the year of the Tiger. Although, some may disagree to these hypothesis but the major Asian players are equally as important like the traders of Europe which happens to own majority of the volumes in the Forex market.
On the technical side point of the forex market, the expectation would be a price reversal of the previous weeks prices as a technical pause on the candlestick configuration is seen on most of the majors from the EUR/USD, GBP/USD, EUR/GBP cross rate has a significant bearing due to a thinner market. Although, a price reversal may not literally be a trend reversal. As the major trend for the US dollar is to follow a ladder-like scale up formation as we have mentioned for the past months starting December. We are just assuming that we have made our point that the 1st quarter of the year was meant for the USDX to upstage most of the majors which it did and have closed at 80.20 week ending the 12th of February 2010.
YouTube URL : http://www.youtube.com/megatrade101 - Corrective Move on the Euro, GBP
Key prices to watch would be helpful specially for the EUR/USD crossing between 1.3585 and 1.3510 on the low side of the price. As for the EUR/GBP around the 0.8590 - 0.8660 levels were it may find some speculative short-term buyers as the range may fluctuate wider as we would be expecting. This has been quite the favor to trade if we were to choose as the trading range from the previous weeks has been identified as a symmetrical triangle and that the prices wold range within the apex of the triangle moving higher temporarily. As the USDX may have to make some breathing room and head lower gradually on a temporary reaction as it continues to build some more open interest after the Chinese holiday period.
The USD/CHF and the USD/JPY may also continue to play its contrary movments on a day to day basis as to confuse traders and investors as to which direction the USD would head to and the inconsistency of the trading ranges that would be establish this week of the 19th of February. However, it would not be difficult that the actual trend for the USD to move higher after its corrective move will still prevail in the market. Although. there is no such thing as a straight up or down. But if one would notice that the gradual ladder-like formation for the USDX already has proven its course. This would also hold true with similar expectations for the Aussie Dollar and the Kiwi.
As of the moment just bear in mind that there is no alternative currency that would replace the USD dollar as the World's Reserve currency. As Europe has its own problems as far as the EUR/USD is concerned. The same case with the GBP/USD even if they are not with the ECU but still tries to hold its ground when it comes to the current price levels.
Best to your trading and good luck!
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