Tug of Bar Cluster

The start of the year was positively influenced by the European dominated market sentiment while these shifted more towards a US Dollar dominated flow with FED Tapering having to end the month for a sustainable rally.

With the US Dollar index registering a full length recovery near its level of objective towards the 81.50 basis point.Correspondingly, the decline for the European majors have continued its secondary correction phase with wider swing declines as reflected with the Euro and Cable prices reaching a 1.3484 and 1.6415 low respectively. We did mention last Jan 07 on Cable, that this is part of their cyclical start of the year decline as a struggle between proper market positioning amongst commercials and institutional have been in the making. With barely a small portion of which would be accredited to speculators with variying degree of exisiting contracts.Click to continue.

Market Insight: Majors & Crosses lll

With the USD (DXY) finally reaching our target range between 83.20-83.50 along side the USDJPY moving higher above the 100.00 levels, Wednesday’s ISM non-manufacturing survey would provide valuable insight about Friday’s Non-farm payrolls (NFP) report.

This would likewise provide a volume and price action-pickup before and after these reports. With only a day to go before Friday’s US non-farm payrolls report, the US dollar Index have managed to extended its gains across the board with the majors by reaching the 83.50 all important level. while other currency pairs have initially broke key technical levels, the lingering follow-through may hold the final switch as to when exactly would this occur...is the question. That's is why a market price squeeze would be a normal behavior to see in a thinly traded market condition. Click to continue

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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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...

Forex: Game-changing Signals

It has been a one directional trend for the majors and cross rates for quite sometime now. New secondary highs have been marked for the EURUSD @1.3477, USDJPY @91.24, EURJPY @122.29. While the GBPJPY cross had been choppy from a range levels @144.40 high & @139.25 low with a steady-to-lower sentiments in line with the USDJPY corrective move @90.47 as of this writing. 

A subtantial decline in momentum can be seen with price action limited to daily ranges while most traders are waiting for more clues on the upcoming reports from Consumer confidence numbers, US GDP & the FOMC consecutively coming out by Wednesday. As recent reports have been friendlier towards the USD, Friday's Non-Farm Payrolls for January & Unemployment figures may simply be the main catalyst to set the final tone of the market's direction for the final trading days of the month.  

However, there are some game changing signals that are currently being set-up...

A Market Price Reversal...

Or a short-term trend reversal in the making...is what most traders are currently focused on. ECB President Mario Draghi's comments of a rate reduction during the press conference, have pulled the plug on the Euro's advances. The change could have came from various reasons moving forward as negative reports on the revised forecast of a 0.5% lower GDP for the year. And the recent rally above the 1.3100 levels may drag export numbers lower for the German economy that may also hurt exports. 

Although, technically the EURUSD has had some difficulty hurdling the 1.3130 levels which apparently met some profit-taking settlements from a variety of institutional investors. Currently the Euro is working @1.2967 against the USD, as of this writing. Thus, giving some relief for short-sellers who have been holding earlier positions on the short side of the Euro market. Some reluctance can be viewed as to whether this decline can find some stronger momentum as the market only has one more day for the much anticipated NFPs numbers.

The earlier report on the jobless claims came in @370k which happens to be better than expected that pushed the USDx from a registered daily low of 79.55 basis point to its current price level @80.21. Hardly a difference but enough to pullback at its present levels. This have given a better outlook for the USD moving forward as investors shifts sentiments and likewise the flow of positions from the precious metals have done the same for now. As prices for Gold have declined for the past couple of weeks, more on the levels below the USD1750.00 which also supported a gradual decline for the USD.

On the other hand; the Euro's decline

Market Analysis SRO 12.4

In the absence of any real market changer between the recent RBA interest rate cut within expectations, the ISM manufacturing data and the much anticipated Non-Farm Payroll data, the market sentiments on the GBPJPY, EURGBP & EURJPY Cross Rates reinforced trend remains resilient with the steadier prices still moving north of the charts.

From our closing analysis and insight for the US Dollar Index dated the 30th of November; we have made mention that ..." The key indicator for the opening price gap would dictate the first trading week for December." While the USDx opened lower with a price gap at the first trading day of the new month of December @79.99/00 from a month's closing price last Friday @80.25 basis point have indicated a lower signal for the USD. Which prompted the Euro & Cable prices to swing higher at the ealier Asian trading session towards the European sessions. Although, inbetween sessions, prices have had some minor session pullbacks breathing some false indication of a possible decline. However, these decline in prices are mere corrections and price adjustments that are intended to soften the relative strengths / weaknesses of the current prices related to their corresponding indices. These price adjustments is where changes are likewise made while technical divergences /convergence are created in the same manner that would provide some trade signals along the way. 

And one of the predominant technical traits ...

Forex Fact-Check & Market Technicals

OVERVIEW: Volumes & Volatility Index have declined more towards the last quarter of the year contrary to the slow growth of the US economy. The forex and equities market have been swinging in both directions between the Federal Monetary Easing, European Debt Crisis, Political & Government Fiscal Policies and the current Fiscal Cliff. The choppy market behavior have been more susceptible towards every bit of information and data affecting price fluctuations that has not been much help for the traders and investors. Liquidity, trade volumes and participants have held back towards this 4th quarter.

With that said, the Major Cross-currency pairs have managed to outperform the majors since September until to date. And we have mentioned this from our previous article in comparison with the EURUSD, GBPUSD, USDJPY versus the EURGBP, EURJPY and the GBPJPY cross rates respectively. Although, it would be wise to make a final assessment at the end of the year's trading as to the currency pair that best performed for the current year ending 2012. And we shall get back to you on this by then.

TECHNICALS:

Video Support: Confirms our Market Highlight & Analysis 11.20

Market Highlight & Analysis 11.20

USD Index, EURUSD, USDJPY & Cross rates
The polarizing effects between the Fiscal Cliff and the Finance Ministers meeting over the European Debt crisis have managed the market to react with mixed sentiments along side with the overall market conditions and price behavior of the commodity market such as the oil and precious metals.

In addition to France loosing it triple A rating have dampened investors sentiments in the Euro and the European stock markets in spite of the US stocks recovery from the past week. To top it all, the escalating conflict in Gaza and Israel have made oil prices recover from its lows; placing a constructive yet temporary barrier for the USD to continue its recovery despite of a better housing data and increase expectation in possibly avoiding a fallout from the Fiscal cliff.

On the contrary, except for the USDJPY re-taking its lead from the Bank of Japan while it takes a breather at the November monetary policy meeting which have led to its current weakness vs. the USD @81.25 to this writing to continue. However, some analyst have attributed this market movement to finally materialize since establishing its third (3rd) higher low @79.05 making a rising support channel quite supportive on its way up.

And with the Euro's steady-tight price action

Weighing market sentiments

And Price Action: Addressing the market issues between the Fiscal Cliff and the European Debt Crisis the foreign exchange market has been in a stale mate of consolidating prices. And to top the present market conditions of the depressing prices; the collective strikes in Spain, Portugal, Italy and Greece would add to the economic instability facing them today.

Although, the Euro has already reaffirmed its bearish trend on its technical basis after declining below the 1.2880 levels and finally reaching its first counter-trend support price levels at 1.2660. Which is only 80 pips away from the all important psychological and pivotal price of 1.2580; where a counter-trend would have appeared stronger. Currently, the euro is in a corrective mode @1.2745 & subsequently in line with its Cable counterpart working below the 1.5880 levels have kept its pace alongside with the USDx correction still @81.10 basis point as of this writing. A temporary daily exhaustion bar has occurred that prompted the US dollar to initially correct before any subsequent higher move can be made.  

Meanwhile, the USDJPY have reacted more to

USDJPY takes the Lead!

 Market Call Outlook through Oct. 23 ...Earlier than expected! Please refer to market view dated the closing of 19th of October report and video support" Bullish Trend Confirmation...dated the 18th of October.

....the EURJPY would hold its price levels as a continuation of the USDJPY would take the lead by then. Increase volume and market activity for Asian traders to move USDJPY higher in both the European and Asian trading sessions by the coming mid-week.

Counter-trend at closing...

Market Call Outlook through Oct.23

As we have expected prior to this report and towards the end of our video support that a counter-trend and price correction would be made for the Euro including the EURGBP and EURJPY cross rates.

And due to the latest release on U.S. home resales declining last September near a 2 year high, a contrary limited supply of houses up for sale drove market prices higher which provided an increase in home equity with very low mortgage rates.Thus making a stronger USD recovery working @79.61 near its daily high.

This has indicated that a stronger support @78.50/80 levels would remain while price continue to move forward to a higher level for the coming trading week. Which we made mention in in our market view analysis dated the 15th of October, 2012.

With mixed expectations from the European summit meeting which failed to provide some encouraging move; the Euro-single currency have given back some of its gains alongside with the Sterling Pound at the 1.6000 and 1.3024 respectively, as of this writing. With only a few hours of trading at the end of this week, the counter-trend would spill over for next week as the USDx recovery would now be in the making. We do remain positive for USD rally towards the middle of the last quarter of the year.

Meanwhile, the EURGBP cross remains resilient from the declining Euro but well supported by the GBPUSD as it corrects and establishes its daily lows within the US trading sessions today. Expect some lower extensions for the first two trading days for next week alongside with a USD index recovery. And the EURJPY would hold its price levels as a continuation of the USDJPY would take the lead by then. Increase volume and market activity for Asian traders to move USDJPY higher in both the European and Asian trading sessions by the coming mid-week.

Technical Perspective: EURJPY

EURJPY CROSS DAILY AS OF 10.15

The EURJPY cross has extended it high to 102.27 for now with resistance levels near the 102.47/75 range. The Euro have regained its higher momentum fueled by optimism in the upcoming summit meeting while Greek 10 year yields set new lows setting a positive sentiment for the Euro. Meanwhile, the USDx have set its daily correction as it opened with a wider price gap that caused some pullbacks during the American trading sessions. As long as increase momentum remains the same we should be able to see some bullish set-ups as a follow-through. Of course, unless otherwise stated with a negative fundamental from the Euro zone.

Although, current prices are well within an intra-week trading range, where a significant candlestick "hanging man" has provided an indication of probable daily pullbacks for the price during the turn of the mid-week. Low extensions are set at the 100.20-100.90 range levels; but should not settle for the week below these levels.

Market Analysis: SRO 10.9

Indeed, the spill-over reaction from last Friday's unemployment report have had a more direct impact with the USDx opening with a gap Monday at the 79.50 basis point versus the closing price of 79.30.

Undoubtedly small, but the reaction made across the board where unexpectedly stronger with the direct effect seen more with the Sterling Pound plunging to it lowest price of 1.6000 as of this writing. This added on top of the BoE unchanged stance with their monetary policies on Quantitative easing regarding their Asset Purchases that remains the same.

Sequential Trade plan & execution:

This move affected the GBPJPY cross rates retreating down to its previous support price at the 125.50 and registering a low extension at the 125.10. However, this was undoubtedly been expected based on our Market view dated the 2nd of October; as Friday's closing lower from the high alongside with the GBPUSD have indicated an exhaustive price action when the unemployment data was released. Which prompted us to settle before the closing the two (2) GBPJPY long position still above the average price entry with a net positive end-result on the way lower. Which still was an excellent strategy while leaving the AUDUSD well within it target levels to be able to maximize the market's potential heading down to the 1.0150 target objective. It only takes one (1) very good trade to be up every month spread over a well risk defined trade plan.

While the AUDUSD have indded achieve this objective registering a low at the 1.0148 at the opening of this trading week. And is currently on a corrective mode working at the 1.0203 as of this writing. This would prompt us to consider liquidation of the short-position of 1.0409 before the closing of today's North American trading sessions that would provide us a substantial net gain of over 200 pips the least. Although, the Aussie still remains bearish; following our trade plan would make more sense in doing so while watching for the next probable set-up. 

Market Behavior:

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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Technical Perspective - EURJPY 4.20

The EURJPY cross indeed made more headway into its recovery from a low of 104.60 and currently at the 107.30. The price range is within a down channel & Trend from the previous high of 111.12 and the recent low of 104.60. With volume declining from previous report were due to profit taking / settlement rather than short covering. As most traders were net-short of the EURO vs. the Japanese Yen from most of the week's past.

A 50% Fib retracement back to the 108.30 is the next objective as the corrective move higher remains to be favored after the USDx declined to a low of 79.39. The Stochastics and momentum slowly building in a session to session would spill over to the US session as we head towards the end of the weeks closing. Please refer to the weekly chart formation as probable extensions higher can be placed at the 108.05/30 range that will provide a near term correction that may well extend until the last trading week of the month of April. Meanwhile, the comparison chart with the GBPJPY on the next tab have provided the positive tone influencing the European majors to set-aside the negative news surrounding the crisis on Spain.

Technical Perspective: EURUSD as of 4.20

The Euro vs. USD price action has been at a standstill without any real clear direction. Much of which is fundamentally oriented with what has been happening with Europe especially with Spain in the limelight. The fear of contagion has not left much room for the Euro even to move in either direction. The bias sentiment from most analyst is still bearish.

The 1.2850 -1.2990 trading support levels has been constant despite most traders outlook of breaking a low remains in place. The technical recovery can be seen right after touching the 1.2985 and due to the buying divergence created from this low; plus some short covering did emerged after breaking the 1.3000/25 initial support. have made it possible. Alongside with the USDx coming back to the 80.18 basis levels gave enough momentum for the EURUSD to move higher. However, the USD moving in both directions then heading lower, have given enough room for the Euro to keep pace with the GBPUSD higher. The end of the week's closing price for these majors are critical to re-establish a clear trend but expect to have a continuation of increased volatility more with the EURJPY & GBPJPY cross rates.

Forex Risk & Price Trends widens

Monitoring price levels & risk trends should be a primary concern for all traders of all levels regardless of the market strategies applied. For those who are involved with the major currency pairs and the cross rates are equally vulnerable to mention the least, as price fluctuations are wider every week that passes by. The fundamental mix from the retail reports and the G20 meeting would just be in the front line for this week's trading activity.
After the the USDx moved higher at the closing of Friday as expected, the contrary price action for the USDx would totally change at the last two trading days of the week from our previous market view report dated the 10th of April. After registering a low at 79.20 last week the closing price was well maintained at the 80.00. With an opening price gap in the early trading session at the 80.11 the daily correction low is likewise expected but not too far from gaining momentum to another rally higher.
Volatility with the major pairs and the cross rates have been active since the opening of the first two weeks of April. However, much of the activity can be attributed to the USDx direction. While the EURUSD & GBPUSD have fallen from its recent weekly highs most of the earlier short positions have been taken out due to market capitulation while volumes have diminished for the past week. Visit our website at http://megatrade101.com/ for a complete report and analysis inclduing the Yen and Swiss Franc.

Majors & Cross Volatility expected!

With the short trading week for some traders towards the Easter Holiday celebration especially in Asia; the sustaining view for the USD is highlighted from the expected FOMC minutes. But more importantly would be the ECB rate decision, the NFP and unemployment report this coming Friday. Inspite of the disappointing Tanken report; the main currency leader has been the Japanese Yen gaining strength versus the USD. The USDJPY managed to move lower at 81.52 while it influenced the GBPJPY & EURJPY likewise moving down to the 130.74 and 108.62 levels of support the first trading day of the 2nd quarter of the year. These are the best levels so far for a one day move where an expected recovery would be made during the new opening sessions towards the European & US Trading sessions.

The majors are more susceptible towards the fundamental side of trading rather than the technicals. We are still leaning towards a neutral to bearish sentiment of the US Dollar within this period. With a consolidation pattern establishing a base and wider price fluctuation within the week likewise the next three tradings days of the week after. Volatility will be the main focus of the trading sessions as the mid-week for the month of April starts.

The EURUSD would dictate the same volatility with the EURGBP cross rate as it attempts the 0.8290 low and 0.8360 trading band to trade with a wide price range on a day to day basis. However, the bias market sentiment still remains bullish with contrary market analysis for those traders who still remain bearish for the overall trend lower for the Euro. The pressure is intact for bear USD traders and continued short covering plus market capitulations for bear traders position holding until now.