Price Action Snap-shot: 03.05 - Cross Currency Pairs

The following analysis is based on a summary of price action and the currency crosses in particular that we, @megatrade101 - have previously chosen as the primary trade positions best suited for the current market conditions and each currency pairs price weighted average. 

A certain process of deduction and currency elimination is based on a calculated exponential average price movement of each pair & which of the currency pairs would perform well, have the best probability and market potential with the least possible risk in the near-to-mid term period. A simple risk depends on the tolerance level one would be willing to take; in exchange for a probable gain in these kind of market conditions.

Price Action Snap-shot: 03.05 - Cross Currency Pairs

Price Action Snap-shot:

Mid-week Insight: The overall market data recently released has been mix to disappointing for the USD as the index has already been priced-in with its recent decline to 80.05 basis point psychological support price that has held with short-covering rally that we are currently seeing in the USD movement.

This has been what we were referring to as a possible follow-through short-covering contrary to the variable trend touching 80.05/10 levels mentioned from our previous market view analysis dated back to Feb 09 - targeting the 80.05/10 as a critical key support level. How close can we get to this target has come true to form.

PRICE ACTION SNAP-SHOT

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T-ANGLE: MAJORS & CROSSES -GBPUSD-GBPJPY-AUDUSD-EURUSD

After dissecting market reports from last week's trading activity & comparing price action based from our market perception, the end-result by making a market call for the USD debacle to continue its course lower have been confirmed.

The market perception then was a short-live corrective move higher which was suported with mix reports from the market place that registered a week's high @82.50 ending August 02, 2013. This was the result of the 2 day opening trading activity for August which overlap with the end of the week's trading for July as well.

MegaTrade101.com T-ANGLE: MAJORS & CROSSES

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EURGBP, GBPJPY CROSSES & AUDUSD

This trade Plan and strategy is composed of the cross rates EURGBP, GBPJPY and the Austrailan Dollar for the major currency pairs. The summary plan consists of a detailed approach to trading these currency pairs. The summary plan consists of a detailed approach to trading these currency pairs. 06.713 - Declassified Trade Strategies from Premium Section to assist serious investors-traders of MegaTrade101 and would like to share & provide these information to our valued trader-viewers. Click to register and receive a copy free of charge.

Reference to:
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USD-EURGBP Cross LIVE 7 05

"Behind the Long EURGBP Cross trade Contrary to the USD Strength"

Classic Market Squeeze: EURGBP Cross

Latest Market action: Price adjustment aligned with market behavior
The behavior of price action provides an insight to what happens during trading sessions. Part of the analysis on the EURGBP cross in our video support; the tight trading range for this pair reflects a dominating struggle between bull & bear players.

Where price pullbacks for the EURGBP from their Highs at (0.8550 1st high - 0.8540 2nd high) and Lows at (0.8467 1st low - 0.8474 2nd low) were made between the earlier European trading session and the American late trading session towards the close of the previous day. Currently, prices have recovered from this market squeeze where the obvious whip-saw on prices have come from major players in the market. The daily average trading range of 100 pips+/- between pivotal price set-up @0.8505/10 have made swing trades to move in both directions.

However, a tightening price action breakout would soon materialize before the end of the trading week with the University of Michigan confidence report could be the catalyst to provide the final push for the USD.
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Expect Increase Volatility

A short trading week after a US long Memorial weekend & UK holiday would provide a sentiment- based volatile market, a wider price activity towards the end of the month. Although, the Yen's dominating performance in the currency market have influenced the EURJPY & GBPJPY crosses more with its recent move as its gained back its strength.

GBPJPY registered a low @151.77 while the EURJPY reached a 129.95 low before retrieving back their losses at the current market prices @154.00 & 131.68 respectively. Price action at the recent lows have given the currency pairs a technical relief from an oversold area, the same way such a corrective move have given the USDJPY some elbow room in search of a tentative support level before the next leg could be establish. Click here

Midweek Price Reaction

USDx Breaks Primary R1

Earlier reports for the week with a positive US Retail Sales sustained the USD while adding fuel from the negative data coming from the Euro zone has fueled the rise for the USD to continue reaching relatively a high for the USDx @84.09 basis point. Bullish sentiments still prevail the market while the Dow and SP500 has continued to make newer highs registering the strength of market activity with investors looking for mild setbacks within a bullish trend.

The start of the week's trading have provided a softer yet gradual decline for the EURUSD before the German GDP data came out and currently working @1.2972 from a registered low @1.2942 to this writing. However, as most analyst have been watching price action across the board touching their respective support levels while waiting for a technical break lower for most majors. While maintaining a watchful eye on the USDJPY nearing its resistance level of around the 103.30; most traders were reluctant to establish any fresh new positions as probable risk on exist as prices continue to move higher.

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Market Analysis: Majors & Crosses

The price swing seen in the Forex market reflects the continued investors uncertainty and vulnerability to shift trade positions at a short span of time. Market exposure on trade positions across the majors has been cut short as reflected with the latest COT report with major participants still in dominating market sentiments contrary to data coming from both sides of the continent.

This week's barrage of economic reports with a special attention on the coming EU Zone unemployment data followed by the US Consumer confidence and the FOMC overlapping with the new trading month would provide market volatility and price swings in both directions. However, specific price range trading within their respective parameters have been defined awaiting some fresh incentives this week.

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Perspective: USDCHF - EURGBP Cross Rate

For now, we remain with the current market sentiments provided through our sequential analysis reports until such time a fresh market incentive would appear; when prices moves to their current directional trend.

A considerable market play combination are likewise seen between the USDCHF, EURGBP cross other that the Yen and the Aussie Dollar. As both currency pairs have reacted substantially to the BOJ and the Chinese data thereafter.

Strategies: USDx & EURO vs. EURGBP cross rate

The first few days of trading activity has been attributed to the Cyprus crisis that has been in the limelight that have driven the opening prices across the board with a surprising opening gaps on the majors and crosses. Contrary to their respective closing prices have seen traders confused as to what strategies can best serve market rapid price action & volatility at the opening trading sessions.

Trading price gaps clearly has to be studied well whenever it occurs. It is not the aftermath that counts more or should be say after the fact, but certainly being able to have a well-balanced trading strategy in place before any eventful-effects would influence the prices in particularly this week's trading. Not to mention the succeeding reports for the week coming from the FOMC meeting and FED Bernanke's conference in Washington has kept prices in check for now after a huge price difference in price range during Monday's levels. Naturally a pause seen after the price gap while others have simply been surprisingly caught flat-footed by the prices levels.

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Balancing Trading Strategies

Between sequetration USD negative & the NFP report USD positive

The rally for the USD after Friday's jobs data have caught some short-speculative positions flat-footed with the better than expected jobs numbers of 236K & a 7.7% unemployment figure. Which overwhelmed the market with a reinforced rally contrary to its corrective pullback since Monday's opening trade sessions.

Today is a little more subtle since a follow-through have not taken place, but likewise will occur at the least time expected by the market. For now, it is safer to state the importance that the first quarter of the year will be good for the USD, as supported by more than favorable data for the US economy.

The only uncertainty is the cloud hanging over the political bickering of Washington amongst members of Congress with the Administration. Meanwhile, the Fed has taken upon themselves further to provide monetary easing since 2008 and would gradually pull-out once a more sustainable recovery is seen. While doing so, the ability of Europe to really overcome their regional debt problems has not been helpful. And in contrast, as most analyst have been expecting a hard-landing from China has been quite disappointed as it is expected growth is within the range of 7.5-8% for 2013 compared to the US projections of 1.5-2% for the same year. With BOJ having a firm and aggressive stance for its monetary easing would likewise have to be within a competitive level amongst its trading European partners. 

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Market Psychology...

Behind price action: EUR.GBP Cross

Draghi's hawkish tone

As the Bank of England declined to add more to its stimulus package; the statements made by Mario Draghi of the ECB has turned the Euro from an obvious lower trend bias into a round about turn moving higher.

The initial price action remains to have ignited a EURUSD price swing from 1.2950/65 low to its current working price @1.3105; nearly touching its 14day-EMA and nearing its 1.3175/80 resistance price levels. The quick reaction sent most technicians referring to their charts pointing at the next resistance price level which spilled-over to the EURGBP cross that moved at least close to an 80pip range for the current trading session. And have marked an 0.8714 high coming from the low @0.8587-0.8610 range the past few trading sessions before the current price swing higher @0.8705/10.

Market Perspective SRO

USDx AUD EURO CABLE CROSS

Weighing on the market after the sequester, the US Dollar have been quite resilient with minor pullbacks even to this writing. It has managed to maintain at the higher end of the charts with bullish sentiments much in place.

However, as most reports say that this is just the beginning and a negative outlook is expected. Jobs, working hours would be cut and would definitely make a huge dent on the slow growing US economy. The reaction of the majors have been subtle for now with prices recovering across the board. Although, most analyst and traders would likewise be waiting for the end of the month for some fresh incentives. But almost all analyst is bearish for Cable which has pressured the market in spite of today's relief recovery

It was only the Aussie Dollar that has managed to recovery with significant grounds versus the US Dollar as it moves higher @1.0239 touching its 14day-EMA from a low parity price level @1.0114. This would be a temporary reaction from the RBA news of holding rates unchange and technically providing a relief from selling pressures. However,there will be a re-test of the earlier lows in the mid-term before a new trend reversal can be declared. Key price to watch is still the 1.0305/10 levels of its trendline resistance.

Market Perspective: EURJPY & USDx

The major trend for the EURJPY cross rate is still intact as the bigger technical perspective on the chart is bullish. The rapid acceleration of the USDJPY behind the fundamentals of the Japanese Yen and strength of the EURO have fueled the the EURJPY cross strength.

Monetary easing from Japan and renewed policy makers in Europe have been the reinforcing factors supporting this trend. That is unless some newer policy changes would take effect or announced to reverse price action in the market. And the FOMC minutes have outweighed these two remaining reasons until a fresh incentive would either reinforced the resurging strength of the US Dollar or otherwise investors confidence on the US economy deteriorates. Knowing these reasons and analyzing market behavior in line with price action would provide a better glimpse as to which currency pairs would best suite market conditions that can deliver a reasonable potential for a trade.
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EUR & GBP fades vs. USD, EURJPY slips Lower

Interestingly enough, the USDx has been toying its price swings above and below the 80.05/10 for the past couple of trading days. The indecision for a follow-through have been seen by traders as a lack of interest while awaiting for some fresh initiatives from the upcoming University of Michigan Confidence report and the two day meeting with the G20 leaders in Moscow. Eurozone GDP figures continued to show the signs of recession as the EURUSD declines further to this writing.

Currently, the EURUSD is @1.3333 and the USDx is @80.43 intra-day price from yesterday's candle bar signifying that such corrective move from yesterday's high still has potential to move higher. USDx trades are prefered for now, since the price parameters are more defined within the risk trades taken. And using the 80.05/10 as the pivotal price point, momentum and the volumes on a day to day session.  As USD bulls would expect a better than expected confidence numbers today.
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Directional Trend remains...

with daily price swings as major corrections.

After a around of mixed reports, the dominating influence still has been ECB Mario Draghi's remarks that have pushed the Euro to decline last week and supported the US Dollar to recover above the 80.05/10 psychological resistance levels again.

The market's sensitivity to these news wire have made it more difficult for market participants to play the price swings that dominates the market place. Although, there were previous game changing signals that we mentioned prior to the price decline that we have seen with some of the majors & crosses, the present recovery has been more a relief and a spill over on the EURGBP cross has made a considerable rebound more appealing for bullish traders. A quick note of reference is that a major correction will always exist within a major trend but more so specially within a reinforced trend. Market sentiments remain strong for the bigger picture with a price reversal wide enough for others would call it as a trend reversal.
The EURUSD declined to a near low @1.3350 and currently @1.3435

Perception vs. Trading Analysis

Technical or Fundamental:
Whenever investor's confidence gains ground in the European community; there will always be something that may spook the markets related to political uncertainty in Spain & Italy. These market conditions have provided some well timed relief for the USD recovery and a gradual slide in the Euro. Which have led equally the same uncertainty with investors and traders whether the decline in the EURUSD can lead to what others have eagerly been waiting for.
The USDx opening price levels for the daily have made some significant recovery...

Market: Yen vs. Crosses

Prior to today's market action, the consolidation across the majors finally gave way with the USDJPY leading the decline @88.60 from a registered high @90.20.
Although, prices declined and currently stalled at these levels of correction @88.72 as of this writing- the USDJPY is facing a technical correction due to a buying divergence between these prices prompting a session to session recovery for the USD vs. the Japanese Yen. While resting at its present support session level and still within a secondary rising channel as indicated on the chart figure 01. And the spillover to the rest of the cross rates related to the Yen have been more affected than the other majors.

The prices correlated to this decline among the cross rates have provided the relief that some traders have been so eager to see in the market, The GBPJPY continued its prices lower @139.79 with a corrective move currently @140.75. Prompting some liquidation from earlier longs that saw a relative reaction from the decline of the Sterling Pound. 

However, the EURJPY had a similar price action