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.