Review & Analysis: Increase Volatility
The contagion and ill-effects of the European crisis still haunts the financial and stock market in spite of the short lived relief of the political change of the interim governments in Greece and Italy. Meanwhile, the general sentiment which was fueled with fears amid political instability prior to and thereafter in Greece and Italy; not to mention the weak fundamentals from the trade deficit widening in the U.K. Which prompted the European majors to continue to head south of the charts. While the continued demand for the USD as primary & safety currency choice supported the US Dollar Index to hold above the 77.05 levels.
As early as the American trading sessions on Monday, have started and all through out the entire mid-trading sessions, the market price behavior particularly the GBPUSD have been really 'squeezed' with volatility and price extensions lower. Which have given back the gains that it had made from the previous day's trading. The obvious bull and bear spreads were traded heavily between major institutional players with at least 150-200pips in both directions for the past couple of days. Swing and day speculative traders would have found this extremely dangerous as more market capitulation were seen along the entire trading sessions.
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| GBPUSD Daily |
The GBPUSD established trading range is between 1.5850 - 1.6160 inclusive of extensions from October 26, 2011. The wide range and consolidation period shows the ectreme uncertainty of bull and bear trades struggling to dominate the market especially with the movements of the past closing and opening days of the trading week. But the increase market shift of prices can change at any given notice coming towards the mid-end of the week's trading.
Currently, the GBPUSD is at the lower band of the support at 1.5883. Almost all traders and investors have concluded that even with the partial political resolution in Europe, it still does not change the fact that these countries in Eurozone would be heading to recessionary period for a longer period. Thus, the fundamentals would be for the European majors to be in the defensive. For more information about this review and analysis please visit out website at http://www.megatrade101.com/
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