Insights: CABLE, GBPJPY, AUDUSD

Market conditions post ECB and FOMC have had countless price swings across currency market in both directions of the chart. Directing an overall USD's reaction into a decline coupled with mix market sentiments among some currency pairs have again stalled market movement. Although, CABLE's resiliency and strength during the USD price recovery for the past 6 weeks since May 2014 has remained in focus.  

The disappointing figures from the Euro-zone PMI manufacturing have likewise missed-out expectations, Germany and France doing the same have kept a lid on the Euro and stayed within a day's tight range below the 1.3600 levels. While CABLE stayed above the 1.7000 contrary to the USD slight recovery on its price reaching an 80.40 daily high and currently stable for now @80.35 basis point. However, by the middles of the week's report on Consumer confidence slightly expected to be favorable, alongside New Home Sales contrary to GDP#'s -1.8% expectations probably offset any favorable price reaction if GDP misses out wider than expected. Click here

True Colors of the Market: CABLE (GBPUSD) vs.DXY

Coming from the fundamental side of the US GDP miss @0.1% have justified and driven the 'Top Heavy" USD Index back to its original levels at the bottom of the charts nearing the 79.33bp line of defense. And the all important price call previously mentioned dated the 11th of April.

Simply having walked thru these numbers, the Reinforced trend of CABLE has indeed provided a reasonable rally to its present high @1.6899; where the 1.6930 is what is being aimed at. While the EURO have renewed its vigor generating a lift from the low @1.3773 before the GDP figures came. And working @1.3866 as of this writing. Patience has indeed played a relatively good role as the current prices had eventually paid-off.

The three(3) successive higher lows as described in our market view analysis dated the 8th of April: Spot Check: GBP EUR AUD vs.USD. This has been attributed to the Cipher3 Trading Analysis which has now been justified. Although, it has been an extended period before the serious follow-through was made, supported by the news today. And have spilled-over to a GBPJPY recovery from its daily corrective move, aligned with the USDJPY currency pair. Of course session drawbacks are expected within the three major markets especially before the end of the trading week.Finally showing their true colors!

Market Update: GBPUSD weekly Chart as of April 30

Insight: Capital Flight From USD

Following a record high on Wall Street, the Chinese Reminbi or better known as the 'Chinese Yuan' have plunged to its biggest drop in over three years which was mainly due to its contracting economy and talks of credit-tightening that have pressured china's stock market at the same time.

The market conditions would be ripe to also trigger real estate prices to move initially lower for now while the market tries to steady investors behavior moving forward this week's market activities. Meanwhile, the positive mood among US and European stock investors has somehow helped spill-over interest in Asia with Japan's Nikkei moving by a 1.4% and going beyond the 15,000 key price level, which in turn has provided the US Dollar / Yen to move better to the 102.56 USDJPY to this writing.

Capital Flight From USD

EURGBP Resumes Trend Direction

After a major corrective decline:

A lower Eurozone unemployment figure and a corrective USD price movement at the middle of the week have been quite supportive with the graduall decline of the EURUSD. However, the EURGBP cross have benefited the most in the past two trading session outperforming other asset classes amongst the cross rates.

MegaTrade101.com - EURGBP Resumes Trend Direction

Trending Price action ...

After a Major Move Or a Price Correction.

The aftermath of a major move and a follow-through would obviously be a corrective move, in the true sense of trading a volatile forex market. Even with the Feds improved outlook for 2013 GDP of 2.3% and a widening trade deficit has not helped the USD to this point. A relief recovery can be seen naturally from the previous week's trading activity due to the fundamental remarks made by ECB President Mario Draghi has place a better outlook for the Euro Zone thus improving market price stability for the EURUSD.

Meanwhile, Japan's Prime Minister Shinzo Abe has retained his stance in improving Japan's economic outlook and has kept the pressure up with the BOJ for a more bolder monetary easing ahead of its policy setting meeting by next week. This also has kept USDJPY relatively stronger in line with the events in Japan and the overall market sentiments in the USDJPY current trend higher. So far, nothing has really changed with the current market conditions to this writing. Except for, 

Market Price Action - DXY

USD Index: The fundamentals of a positive housing price sector and consumer confidence have supported the US dollar as measured on the daily chart in this figure. Currently, working in Asia @79.78 ( round-off @23.6% FIB) basis point recovery levels from a registered low @78.60 dated Sept 14, 2012.

Likewise, serves as the double bottom support price levels for both the daily & weekly bar formation. In addition, the opening price gap for the following week of Sept 23 have signaled a probable push forward prior to the reports. And successfully supported the technical outlook pushing further to the price high of 79.92 to this writing.

This recovery and price reversal period shall continue with the Fibonacci time zone (gray-vertical-line) trend cycle for another week. Near term objectives and daily extensions are set at the 80.05/75 price range which happens to be within the 38.2% standard retracement levels. Combined technicals applied  for Stochastics / RSI trade tools shows a valid recovery from the lows while expecting daily pullback price action influencing the currency majors and indirectly correlated cross rates. This chart analysis carries a minimum number of at leat 8 technicals tools applied. However, most traders and analyst may vary as to the kind of technical application that they are most comfortable with. And this is what matters the most; as these tools are simply lagging indicators that supports historical and market conditions of prices.

Forex Market SRO 8.13

With the USD Index trading its weakest range for the past week with barely a high registered at 82.87 and a low at 82.04 have stalled again after a corrective move for the past two weeks from July 25 to the current price working at 82.55 mid-range level.

This was primarily due to the low interest of fundamental as well as any political reports that could seriously drive both the Euro and USD in any real direction. Which has kept the Euro at bay at the present levels of 1.2280-1.2300 price range at the start of the Monday trading in Asia and Europe. However, GDP reports in Germany, EU Zone including the Great Britain's Consumer Price Index; followed by the BOE minutes may add some early price action by middle of the week. The succeeding news reports in between Friday's US Michigan Confidence numbers may help turn the tables around from any directional price action brought about at the middle of the Wednesday results.

But the psychology of market price action and its behavior is still relevant to the growing decrease of speculative participants after the market squeeze experienced last Wednesday & Thursday's volatile up and down swings that have caused some USD short-covering on Aug 02 & a counter-trend reaction of market liquidation on Aug 03. Where a lot of speculative positions were caught flat-footed of such reaction.

Although, we have provided a signal in our market view report of the eminent price move dated the July 30-Aug 01, 2012 that has led to a market squeeze which we have experienced from those two consecutive days of counter trend price movement in both directions.

The consolidation of price swings ...pls. continue 

Market Strategy & Analysis 725

The UK GDP figures for the 2nd Qtr. falls for the third straight quarter thus placing the UK economy technically recession. The British economy has some serious economic problems attributed by some influence from its neighboring countries other than their own.

However, these numbers have prompted the GBPUSD to move lower currently at 1.5490 while this movement have cushioned its decline by the corrective move of the USDx lower to 83.55/60 basis point. Likewise, this would justify a weekly techncial selling divergence for the USDx from the high at 84.10 and would adjust the relative strength index lower for another attempt higher if and whenever the figures on the US GDP would be better than most would expect.The 83.05/10 basis point still proves to be the initial support price to watch relative to the closing price for the week and month of July. Whenever the prices closes lower and establishes a piercing formation or a spike; a correction lower would be speculated upon prior to the next leg higher.

Today's price action has provided the Euro and correlated EURGBP cross rate a relief and a recovery from their lows; at 1.2040 & 0.7760 respectively. A calculated risk position contrary to the trend, a counter-trend strategy applied have proven to be good for a short-term trade before the end of the week. Either way, a push in any direction would be well tolerated as it brings interest that a possible counter-trend can occur between both major pairs of the USD vs the Euro.

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Technical Perspective: GBPCHF

GBPCHF CROSS as of June 26, 2012

As a matter of due diligence; it would be good to check what the USDx levels were when the EURUSD was at the 1.2380 and compare it with the GBPUSD & the USDCHF. As a contrary strategy to the EURUSD position above is to be able to sustain this position by using the GBPCHF cross rate as the chosen pair which is in line with the USD continued recovery from its previous correction. Likewise, such a strategy would absorb any adverse price fluctuation in both directions as a cautionary position while maximizing the market potential for a USD rally in the medium term time frame.

Although, the technical outlook remains bearish due to the daily double top formation, not to mention a triple top high at the 1.4968 which serves as the 1st resistance price levels for the sessiion to session trading. While the relative support at 1.4920/25 should be well intact as the USDx moves higher and USDCHF may remain at its current levels but not lower than the support at the 0.9575.

The higher lows ascending to a steeper trend defines its bullish mid-term rally inspite of the technical resistance. Extensions to the high would be viewed at the 1st level of 1.5035/50 within the mid-week. Meanwhile, R2 would be at the range of 1.5150 - 1.5200 once volume builds for a continued USD rally. Session to session pullback reactions would also be expected as corrective moves no lower than the 1.4920 would be ideal for a medium term trade plan.And this would also serve as a position hedge versus any USD decline which would influence and delay the Euro's eventual downtrend.

Correlation Analysis - Majors & Cross Rates

Other than China's GDP report on Friday; the main highlights would be both the European & US Consumer Price and the US University of Michigan's Confidence figures for April. Which maybe expected to be within expectations and friendly to the US Dollar continuation for a recovery. Although, analyst would not undermine the lack of a follow through from the confidence after a few consecutive positive numbers from the previous months. A significant number would be the catalyst that would trigger a rally back higher for the US Dollar Index.

The behavioral pattern has been identified with daily lows couple with lackluster trading before a wide price fluctuation would occur between the last two trading days for the past weeks. The price swings from high to low of the USDx is forming within a symmetrical triangle prior to a break upwards. The two trading weeks of April is a make or break cycle pattern mostly known for by experienced traders especially in the financial futures 3 months forward market correlated with the Forex Spot market movements. A deeper due diligence should be considered as market weighs influential to both markets whenever trading the Foreign Currency market. Please follow: On the Technicals perspective at http://megatrade101.com/ 

Market Analysis for week 1.23

The highlights would weigh more on investors risk appetite and market sentiments on the US Dollar that would likewise be based on the coming 4th qtr. GDP report or even a mere hint of the Federal Reserve QE3 may really be a game changer for the Forex market.

EURUSD 01.23

The recent relief rally of the EURUSD last week from an impending debt crisis has dissipated for now until such time a more definitive answer for a solution is made. And this may find some pressure for the USD to continue its trend higher for the time being as evidence from its corrective downtrend. The higher opening price has provided room for the correction to continue in the European session.

However, after registering an 81.78bp high, the USDX has drifted lower to 80.00 and is confined to its lower support at 80.31 as of this writing. The critical price to watch for would be the 78.85-80.05 trading range and the shift in market sentiments are the key considerations moving forward.

Meanwhile, the Euro has enjoyed for now the decline of the USD in lieu of the dissiminating reports from the Euro zone. It is currently at the 1.2931 in the European opening showing signs of relief alongside the EURGBP cross rate still above its pivotal price at 0.8329 that a 2nd attempt is being set-up. Do expect a wider swing at the start of the trading week with some daily pullbacks from the daily highs. The earlier signs of this corrective move higher were ever present even before when the opening price gap occurred for the second time on January 15, 2012. Again, two considerations could be interpreted as an exhaustion gap or a second attempt for a run away which obviously didn't occur the following couple of trading days.
Please take note that the price behavior would never show when exactly such a price reversal would occur but can provide the insights only for those who has the due diligence of carefully studying the market from a series of events taking place and not merely on a per set-up basis. That is also why MegaTrade101 form of market analysis presentation is based on a continuing market condition as they occur quite different from others.

The complete report including AUDUSD & CHFJPY CROSS analysis at http://www.megatrade101.com/

Market Analysis & Outllook

The overall fundamental reports towards the end of the week between consumer confidence, rate decisions, US GDP ( Gross Domestic Product ) and the 2nd bout of G20 head of states meeting have moved the market almost in a speculative stance. Speculation has prevailed the market sentiments not to mention the position adjustments being made towards the end of the week and month of trading volatility. Risk appetite has remained with bias bullish for the European majors despite of the overwhelming sentiments of uncertainty contrary to a positive outlook that there will be a compromised resolution to the sovereign debt crisis.



US Dollar Index Daily Chart 10.24



The lack of conviction to re-establish its trend for the US Dollar remains in the market. The US Dollar Index has maintained its lower price levels as seen at the 76.14 basis point, relatively too close for comfort and the likely scenario as some traders may retest its lower band purely on a technical basis. The Daily candlestick formation shows the complex head and shoulders formation with the support levels found at the 75.85 - 76.05 daily range extensions. Take a closer look at the rising channel from its previous low where a consolidation was made prior to the rally that the US Dollar did before changing its course lower from the top.

However, who would take up the risk of selling the US Dollar at this levels is the question. The USDX does have an extension below the 76.05 which apparently would cause some probable market capitulation for short-sellers of the Euro. As the EURUSD have extended its price levels from the important 1.3880 and is now at the 1.3915 a slight break of its resistance line as indicated on the chart. Expect a volatile end of the week & month trading as position adjustments would be made. Volumes would suddenly appear within this period of trading sessions with investors makes and shift funds between asset class and liquidity positions by then.

Meanwhile the continued strength of the Japanese has been in the limelight although subdued by the European debt crisis and the rescheduled meeting this o|ct 26 from the G20 leaders. Currently, at the 76.05 levels with a registered low at 75.78 last Oct. 21; the sustaining imbalance between bulls and bears do remain as reluctance prevails in the Asia Pacific region of the outcome of the coming meeting. The bias technical bulls for the Yen to appreciate remains a stronghold by speculative institutions / banks in the market place. The technical configuration remains to the downside for the USDJPY as momentum deteriates and not a lot of speculative positions establish at this level.

Highlights & Analysis

With the State of the Union Address on Tuesday, the President would surely emphasize on the administration's accomplishment for both the economy and jobs creation looking forward with the agenda agreed during the meeting with Hu Jintao of China. Deals made and with a new economic team that strives for improve competitiveness in the global market in exports and jobs creation will highlight a positive tone for the US Dollar. Although, the troubles in Ireland have placed some slight pressure on the Euro as of this trading session at the levels of 1.3572 corrective move.

However, the reports for the week would play a significant part as UK GDP expected to be at 2.6 vs. 2.7 would weigh on the GBPUSD with some influence between the cross rate of the EURGBP to be steadier from the previous week working at 0.8514; whereas the 0.8550-80 levels may find some resistance for the next corrective move thereafter.

On the other hand, the USDX would rely more from the coming FOMC meeting, Durable goods orders, Consumer Confidence from the University of Michigan and the Friday's US Gross Domestic Product. These reports would be dictating the directional trend for the USDX in spite of its technically motivated bearish chart formation both on a daily and weekly basis. With an opening week of 78.30bp would provide a week of wider fluctuations on both directions but would maintain a bearish tone as it has indeed been bid-off to the lows below the 78.65/80 levels. And its initial target of 78.05 would be re-tested but will find some bouncing support and fresh longs on these levels. Most of the bullish positions has been settled from smaller speculators found mostly from retail trades.

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