Price Action & Market Behavior ll

In recent reports not too friendly for the USD; it still have managed itself for the expected relief recovery contrary to a bias-bearish market sentiment where the USD index have found itself topping-out from its registered daily high @79.70. Close enough for the first stage price level of 80.05/10 initial objective; which have successfully broken-away from its technically oversold condition along with its major foreign counterparts.

Although, price action has been lackluster, as the market participants are again fixated on any possible fresh cue that can be derived from the FOMC report due today. The overall stand as reaching a patched-resolution on the government's partial closure, debt ceiling and the Fed having to scale furhter forward its tapering schedule has made the major market investors shift investable cashflow towards the stock market. Since the expected time-table for Washington politics to again be present by the middle of the first quarter of 2014; regrouping strategy of portfolio diverfication would be in order. Since the closing month for October and opening of the new November month is currently at hand, trade position and price adjustments amongst institutional fund mangers would ertainly take place.

Price Action & Market Behavior ll

MegaTrade101.com - Market Insight IV: Expectation vs. Market Perception

Expectation vs. Market Perception Majors & Crosses

After a lackluster trading week, we do expect an increase in market activity moving forward with another round of market reports are in the pipeline. On the other side of the European continent would be the German CPI forecast @1.7% and the Unemployment figure for July which is expected to remain the same.

While the US Consumer confidence is expected to correct and again the much anticipated FOMC meeting and rate decision scheduled on Wednesday would likewise provide the impetus for market volatility, along with US GDP Annualized figure forecast @1.0% vs. the previous figure of 1.8%. And Thursday highlight would be focused on the BOE rate decison on top of the Asset Purchase target for August together with the ECB rate decision is included in the schedule.

Coming through the US trading session, would be an expected increase in the ISM Manufacturing figure and culminating Friday with the Non-Farm Payrolls and unemployment rate adding to a long list of event risk the market particpants would have to absorb.

MegaTrade101.com - Market Insight IV: Expectation vs. Market Perception

Market Perspective: USDx-EURO

The unexpected GDP report showed a decline of 0.1% annual rate that may have dampened investor's sentiments. Although, some analyst have estimated a 1.1% rise the 4th qtr. contraction have fueled some investors shifting to USD shorts that prompted the USDx to decline @79.25 basis point in the North American trading sessions.
It was not totally that bad since a stronger household income after taxes and inflation numbers is at 6.8%. And the housing market have risen to a 15.3% from the 3rd qtr. period last year.
Pls. continue click here

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 ...

Technical Perspective: GBPUSD

Although, the GBPUSD had all the positive sentiments of a bull market continuation, the strength of the USD from the Non Farm payrolls have thus limited its advance with the parallel decline along side with Euro. However, it maybe the technicals have been justified with the double-top chart formation as reflected in the chart.

This also came from a price consolidation and HI/LO trading range from the 1.5945 low and the 1.6030 high where a gradual price pattern of up and down swings have been established before last Friday's decline. A bearish tone with probable extension back to its original starting price of 1.5880 dated May 2012. A gradual decline would be in order unless a build-up of interest from a flight to quality USD purchases would continue with enough momentum to push prices in a rapid fashion.

This will bear fruit if and whenever the rising channel on the support price would be penetrated that can likewise meet some profit-taking causing a temporary pullback or corrective move from liquidation. It would be real nice to be slightly ahead of the market price action as when timing is off then we do have some time to change and make certain amends for our strategy.

Click here for a Market Snap-shot!

UPDATE as of 11.02: NFP confirms Market Outlook 10.29 - USDx currently @80.51

The Non-Farm-Payrolls (NFP) numbers of 171,000 reported jobs added from the Labor department on top of the revised 85,000 government jobs created for the months of August and September. Although, the unemployment number inched a tenth of a point to 7.9% the USDx currently working at the 80.51 as of this writing have manged to gather enough volumes and momentum to finally break away from the channel - sideways consolidation as described in our Market view outlook dated the 29th of October below. Please refer to the analysis for a complete report.

Watch for the suceeding follow through for the coming trading week as more open interest would increase and this expected spill=over may well be the catalyst for the market direction and its confirmation. Spread trading between Spot and Futures utilizing the ICE USD Index as a secondary market opportunity versus the spot would eventually pay-off. Of course, it can only be favorable along side with the market expectation of a favorable report for the USD as we have indicated including the good consumer confidence  & manufacturing figures that already signaled this prior to todays's release.

Exclusive: Analysis &...

TECHNICAL PERSPECTIVE: EURGBP Cross

The trade outlook & analysis for this exclusive technical perspective on the EURGBP cross rate has been derived from the previous summary of technical price parameters since Oct. 15 and projected forward. The market potential of this trade would be quite lucrative when it is proven to be correct thereafter the potential gain has been achieve. As such the conclusive analysis were gathered from its technical chart formation using the Japanese candlestick theory, price range between the Highs and Lows for the past several months.

This report and detailed Analysis based on current market conditions are available for Premium members and valued clients of Megatrade101.com

Directional Trend 4th Qtr of 2012

The start of the 4th quarter of the year with relative good signs for US manufacturing providing the lift for the US Dollar. The surprising move has kept many analyst and traders in Wall Street to continue their raging arguments on the prospects for Quantitative Easing.

As many traders and hedge fund managers have tirelessly been going back & forth with the same issues the European debt crisis that evolves with Spain taking the recent limelight of the story. Confusing as it may seem to a lot of foreign currency traders and investors; the market conditions in trading have changed its financial landscape of market analysis and trading execution.
Since high frequency trade execution by institutional houses including interbank trading have provided a higher degree of trading difficulty in the market.

A classic example...

Market Assessment

Global Issues affecting the Financial Market

A more positive tone has been set today with a much better housing sector providing support. With housing prices increasing mildly into positive territory. Improving home equity no matter how slow it maybe would mean some breathing room for the US economy heading towards a recovery.

Improving Housing and unemployment are 2 of the key drivers for a stronger economic recovery along with a recent report that a bigger part of US manufacturing would be heading back towards the US by 2014 would indeed be a welcome treat for the employment figures. This would redefine a clear path for a positive outlook in the next few years to come. However, with the election year and the unresolved European crisis, may provide some changes in the financial landscape especially with the question of Spain and other EU zone countries ability to generate growth while meeting austerity measures may still dampen the prospects of a global growth in the interim years to come.

To top it all...

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. 

EURO, EURGBP & GBPJPY Forex Price Reversal

Keeping pace with a rapid market after the unilateral BOJ intervention and now the EURO and EURGBP cross rates reversing their price directions lower is one of those unexpected market movements which we were referring to in our previous market view report on Oct.10-EURO & EURGBP key levels and the 'Mid-week Market Analysis 10.27'. As most Forex traders, hedge fund and portfolio managers were caught flat-footed on the main price reactions and repercussions that has spilled over across the board particularly the EURO and the EURGBP. 

Currently, the EURUSD at 1.3650 with a low at the 1.3607 is struggling from the obvious market news on the EU debt crisis prompting the continued strength for the USDX to move higher now at the 77.52 basis point higher. Meanwhile, the cross rate EURGBP making its low at the 0.8546 with its initial objectives at this levels with extensions below the 0.8420/60 trading range. 

Sequence of Trade & Applied Strategy:

The strategy in place since the 10.10 was after taking/settling the EURGBP short trade and simultaneously reversing to a long the EURGBP was the right move as prices have reached its extensions at the 0.8810. Although, our calculations were at the 0.8870 not too far from the registered high on the week of the 28th of October. Pls. refer to our market view on 10.27 above. Long EURGBP is Shorting GBP; hence long GBPJPY ( while USDX at 74.72 low and USDJPY 75.75 equilibrium price levels ) is hedging the GBP while buying the USDJPY as a cross trade strategy before the BOJ intervention. Cross referencing GBPJPY with the EURJPY was not an issue, since the EURO was more in the limelight.

Now with that said, the liquidation on the way down for the EURGBP as the GBPJPY rises is offsetting both positions while maximizing the market potential. The registered high on the GBPJPY is 127.27 with an intra-day corrective move lower, currently at the 124.76 as of this writing. And while the EURUSD and the EURGBP heading lower at 1.3674 and 0.8575 respectively. With extensions nearing their respective support levels but without discounting the possibility of further momentum as it moves forward the end of the week with NFP this coming Friday's report.

However, the momentum for the USDX to move higher was greater than just a probability; creating a sequence of short sell-EURGBP as shown on the chart makes more sense as the market lost confidence on a resolution to the EU crisis has driven the market prices for the EURO & EURGBP cross lower with much more conviction. Either way we have accomplished to level the playing field and would be able to tolerate any sudden and unexpected adverse price reaction in the market.

These strategies may be a lot more expensive and risky for others to manage. And there is no guarantee that the same results would occur as market conditions changes so rapidly that could also result in a negative balance on the account holder. Tolerance and risk factors should always be properly exercised.

Psychology & Market Behavior:

The market's behavior of stalling price market action and thereafter delivering rapid market prices in lightning speed is what makes the Foreign exchange market one of the most volatile and dangerous markets to deal with if not well prepared. As most trading platforms executing an entry and even stop loss would have difficulty in connecting with a busy line where most would not be executed at all. And wait for the next turn while prices have changed dramatically from your intended price action/order. We wouldn't be surprised really!

The sudden change of price direction and change of hands has made it clear that the market's ability the lat couple of days was susceptible and typical of price reversal on both directions. Catching unsuspecting players not knowing what hit them. 

  

SNB EURCHF move effects on FX Prices...

and its market behavior.

With the not surprising move by the SNB; market participants were simply caught flat-footed as the timing would not have been perfect for US Traders & institutional players by this move. The typical market behavior for a London shake/fake-out that we have been anticipating; but nearly came from the Swiss National Bank's move. This has been reflected from our previous market view post on the market price behavior. Although, there were already statements made prior to the move but the unexpected move was one over the speculative trades by the Swiss National Bank traders. Surely, some talk would give rise with the BOJ may follow suite with a similar strategy which may not likely occur. 

But what does this all mean to the market's current behavior and effects after the fact?

As a matter of market analysis, price behavior would now depend on the volume and open interest entry on the financial futures by hedgers and options traders with a cross trade between the Euro vs. Swiss Franc. The relative cross trade since the present ceiling has been set; others would simply say... a pegged vs. Euro would favor major investments in Europe as a way to protect their interest; in case such news would emerge back from the European crisis would snowball towards this quarter ending.

Fact 1: EURCHF currently at the 1.2022 from a low of 1.0030 last Aug. 08, 2011 is in place. Extensions would be a small variable price level of 1.2335+/-, however such move would make the USDCHF more stable after the fact and remain at bay for the time being while waiting for some fresh news on the US side for a continued rally for the US Dollar Index. USDCHF is currently at the 0.8573 from a low of the day's opening at 0.7849 levels. Initially the good numbers from the ISM-US Manufacturing was another fundamental providing a new lifeline for the USD rally other than the flight to quality /safe haven investor's mindset. 

The SNB move sent the USDX higher to its current levels and spill over effects continued for the European majors as the GBPUSD sets a low at the 1.5950 as of this writing. Coming through our initial market objective set between the 1.5870-1.5990 trading range. Overall short trade on the GBPUSD set previously dated last 08.25 Sell @1.6269 is currently net positive on the balance sheet. The continuing market sentiments would hold for now as the USDX continues to gather some more positive breath for a rally. This would only hold true to its form above the 75.50 levels to maintain.   

Pls. review most recent market view analysis below and a complete report on our website http://megatrade101.com/ 

Market Overview & Analysis

The real concern for the week ahead would again come on Tuesday's US ISM manufacturing number of 57.9 vs.57 not to mention today's Canadian GDP report, The RBA Rate Decision in Australia and Friday's US Non-Farm Payrolls that would certainly be watched. Although, we do not expect any real change in NFP numbers with what the actual market sentiments are showing by the price movements. The volatility towards these reports would only provide market volatility for the major players. As market speculators from the retail side has had difficulty in trading and reading how the market reacts due to the wider price fluctuations even within intra-day trading.
As our outlook still remains bearish for the USDX currently working at the 77.80. A re-test of the previous low should not be discounted at the 76.65/80 basis point range. The numbers could not make any real serious recovery as the investors sentiments has been negative for quite a while now. Which prompted the steadier EURUSD moving north of the charts with sustaining weekly volumes on the financial futures. And thus helping to make price move forward at the opening levels for the week. EURUSD is currently at the 1.3717 where its initial target is at the 1.383-80 range for this week with up and down movements are expected before it attains this objective.

The previous outlook from our market view report has been quite supportive where a steadier cross rate of the EURGBP have been the key in the EURUSD trade in spite of the Irish negative reports that have resurfaced in the news reports. However, the more influential factor is the USD continues decline. Specially with today as the closing prices for the month would weigh-in on the sentiments and market outlook.

For the complete report please proceed to our website: http://www.megatrade101.com