Post SNB - Leveling the Forex Playing Field

The start of the Asian & European trading sessions were a little more subtle from last week’s surprise move by the SNB which resulted to a wild ripple effect on the currency markets not only for banks, but with a list of Foreign exchange brokers and hedge funds being affected with liquidity in the market. Everyone was caught flat footed with the news especially for retail clients and traders holding short-CHF related positions with the USD contrary to other investors in the EURCHF cross currency rate. 

Some analysts have mentioned, with the expectation of that a large ECB Bond Buying programs’ QE move would continue a EURO decline. And with the SNB cost to maintain its EURCHF cap would no longer be sustainable to carry. Thus, more likely have driven the decision to abandon its currency cap before the Jan 22 date. The timing of such would have been criticized because of the repercussions & abrupt effects brought about in the global financial markets, banks and investors.

Post SNB - Leveling the Forex Playing Field

DOW Cruising Rally

Not Just Forex: 

The DOW and S&P continues to cruise towards making new highs at the beginning of the 3rd quarter. Entering the 1st days of the week already have signified the market's real sentiments at a significant sacrificial lamb for the USD still declining and opening a window of opportunity for the rest of its peers to gain more ground.

As CABLE have overtaken as the lead currency pair, alongside with the AUD (AUSSIE), and the CHF (SWISS) taking their cue on the USD weakness. And making 20 Pence for every 1 British Pound traded in the market since we called it; at these price levels can only get better while the market last. Cautious play can only be advised at this time!

However, the real highlight is still focused on our Stock Portfolio heading towards a remarkable price rally nearing the previous call we have made for the DOW @17000 and the S&P @2000 is in the making. Since it is a short trading week, we would be taking our end of the 2nd quarter trading break. As mentioned any positions left would then be carried-over for the third (3rd) quarter but likewise still be monitoring price action from the upcoming data.

Have a good 4th of July every one and again...ONLY THE BEST FOR YOUR TRADES!

USD - A Major Correction! vs. CABLE & CHF Strength

Staying the course on the USD decline has been defined since retreating back from its high @81.02 levels and currently making a follow-through @79.80 basis point briefly touching a low @79.75. These moves have been identified and reinforced from the negative GDP with some delayed reaction while building enough momentum to carry-over the opening of the new contract month of July which is the beginning of the 3rd quarter, 2014.

The shortened trading week towards the 4th of July celebration; on top of a blitz-full of major Jobs figures & other data to be released would really provide a thinly traded market with enough zest for price action both for the Stocks and Foreign Exchange markets combined.with the May trade deficit and the June index on the services sector from the Institute for Supply Management. On Wednesday, U.S. Federal Reserve Chair Janet Yellen is scheduled to speak on financial stability at an International Monetary Fund conference in Washington would indeed bring itn the fireworks.

Anticipating new record highs for both markets with the current "Reinforced CABLE Price Trend and CHF majors gaining strength have further pushed the US Dollar nearest its lows." The alignment of the USD Index movement with the USDCHF which we have previously called have again showed its true colors with the USD Top heavy technical and fundamentally driven market have justified its major correction for the past few weeks now.

Meanwhile, with the USDCHF registering a low @0.8861 and CABLE's new high @1.7112 have stayed well ahead of the stock market prices before the end of the week's trading. But these prices set-by both majors have already fulfilled its initial objectives in setting a new  record for the closing month of June. Watch for the price action volatility during and after the market re-opens on the following week of the 3rd quarter trading activity.

Aligned: DXY / CHF Price Action

UPDATE: 6.06-to-6.27: The US Dollar (DXY) Index has always been the barometer or leading indicator amongst the major currency pairs being the dominant reserved currency pair in the world affecting every currency component in the basket of the index. Although, knowing how it works can best be beneficial as market price behavior and sentiments can be gauged at certain point in time. 

A side by side comparison of the USD Index compared with the USDCHF price performance post -ECB rate cut and a Pre - NFP /Jobs report would be an ideal insight as how prices reacts before & after risk events by understanding "Price and Market Behavior" based on investors / traders sentiments. At times can be defined with the pullbacks of each bar formation as shown on both the DXY & USDCHF in particular @81.02 for the DXY vs. 0.9035 for the USDCHF on 6.06.14.  

C3 Continuing Analysis

Counter-trade Strategy: USDCHF Perspective

With the USDx resilient @81.85-82.05 support levels; as we have maintained a hold, neutral to buy the USD based on our April 16 market analysis report. And currently moved unexpectedly higher to its current price @83.05 which have proven that the corrective phase of the USDx for now has been achieved; from the high @83.50 dated the 4th of April and declined to 81.70 on the 16th of April 2013.

This recovery for the US Dollar have been influenced more on the Euro's decline from market sentiments focused on the G20 meeting as global growth uncertainty still prevailed in the market place.

However, even without the fundamentals, our expectations for unsuspected USD recovery were anticipated and held true to its form and re-testing beyond the 83.50 basis point is in the making. And this is in spite of the reduction of open interest and short-covering volume reported on the latest COT reports. With considerable volume and momentum build-up USD recovery would continue within the week nearing the closing of the month's trading. Click to continue

Technical Perspective: USDCHF

Daily

The USDCHFdirectional trend higher has been aligned with the USDx recovery from its recent low equivalent to the 80.05/10 basis point compared with the 0.9250/55 for the Swiss Franc. The USDx is the pivotal price point where the breakout from the previous consolidation took-off and the probability for a rebound is extremely probable and likewise the lower risk is well worth the trade. The almost perfect timing from the latest positive US Consumer Confidence and rise in Home prices have provided the lift for the USD to continue its rally today 11.28.

The 0.9255 was resting just on the technical support; where a speculative risk position to go long the USDCHF was initiated due to the low risk factor that accompanies with the position. The initial objective in the near term is @0.9435 after touching a recent price level at 0.9333 as of this writing. Although, this temporary near term trend higher will have to gain some strength before an actual bull trend would be re-establish. Daily pullbacks can be expected with this short-term rebound, a good day-trade scalping opportunity.

Weekly

The bearish trend channel as shown in the weekly USDCHF has been established from the previous months was accompanied with a two and half months of consolidation. The trading range low @0.9215 and a 0.9510 high whereas the current price @0.9330 is within the 50% FIB retracement from the previous decline. Although, the good news from the market has provided the technical support for the USDCHF moving forward in a near term trend higher.

The weekly chart formation compared with the monthly may prove to be a morning cloud configuration not unless a contrary fundamental would oppose the major trend. Any negative surprises that would break below the 0.9210/20 would be equally bearish for the USDCHF. For now, the market sentiments prevailing still holds while the USDx trails the trend higher.

Technical Perspective: USDCHF

USDCHF:

Remains to be well insync with the directional trend of the USDx as it remains within the higher trend. And currently @0.9404 with probable daily extensions @0.9450/65; which happens to be 50% retracement levels from the previous decline.

A convincing higher trend moving forward while momentum gradual build-up with the right amount of price movement is a healthy bull market as of today's market action. Price behavior relative to the USDx shows that there is still a good potential for the USDCHF to move higher moving forward in the coming week even after the end of the months trading. With minor pullback from the daily price highs relative to the closing of the week. This will be well in line with the month's closing adjustments for the end of the third quarter of the year. While the opening price levels and the near election period would more likely lend some credible support for the USD with minor price adjustments lower on a daily session to session closing.

Strategy - Ability to Spot a Potential Trade

On Current Market Conditions:
After trading higher for the past few weeks, the stock market's ability to gain more ground has been dampened by investor's lackluster trading activities due to uncertainty and unclear market's direction. Alongside several reasons of the ECB's unconfirmed increase of unlimited Bond purchasing program and the Bundesbank's undoubtedly in disagreement to this program have curtailed the market's ability for the Euro to regain footing above its current price of 1.2350 level.

With that said, trading interest likewise have been low with volumes at its lowest levels for the second half of the year and the market's sluggish price action particularly this week's trading in the foreign exchange market. Unwinding market position's with the US Dollar based-trading on the latest COT report have only provided a small glimpse without any real market direction to base a considerable trade to start with. Although, there are some technical market consideration being set-up in the closing month's trading may well be taking place prior to a dramatic price action. This is where the ability to 'spot a potential trade' before any market price action could take place is vital in any trading decision especially in the forex market.
With current prices and market behavior in check; cross rates are still the prefered pairs to trade with a few exceptions the likes of Cable, Swissie & Aussie pairs that has a more direct correlation with the US Dollar at this particular trading period. However, the Aussie has had its run since June with a daily corrective move lower for the past week; while Cable likewise would still have some room to move higher. As these pairs are quite successful in covering its mark & directional trend behind the Euro being in the limelight. Meanwhile both currency pairs creates a daily market squeeze with a spill-over reaction with the EURGBP cross rate. But once such moves have been defined we would see a breakout from the European pairs higher.
Please continue....

Trade Strategy 7.11 - GBPCHF, GBPJPY, USDJPY

The market sensitivity for the majors and its price action for the remaining couple of days trading have dominated the current marketplace with the strength of the Yen and weakness of the Euro have again lifted the US Dollar. With the USDx rising to a new 83.80 basis point high as of this writing, started with Japan's action of increasing its repurchasing program led the USDJPY lower to the previous 79.22 while spinning the EURUSD down to the 1.2170 low, and the GBPUSD keeping pace at the new 1.5432 low levels have left investors the flight to quality US dollar next best choice in slow global growth.  

Trend following the US Dollar through its Index have been our main leading indicator relative to the price action of the currency majors and the correlated cross rates. While the European Debt crisis has been the fundamental catalyst for a counter-party price market mover that resulted to a Tug of War between the each currency pairs. Please proceed to our website for a complete analysis : http://megatrade101.com/  

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.

FX Trade Analysis: Series 3

CCY in Focus: USDX - USDCHF & EURGBP continuing Trade Analysis
Classic Cross Trade Strategy based on Price behavior and action.

Trend Following : Classic Bull Run for USD/CHF & EURGBP General Outlook
Applied Analysis: Long Position through mid-term with variable trailing adjustments on prices for the USDx, EURGBP cross rate and the USDCHF against any adverse fundamental price action affecting the correlated currency pairs. For now, price action and behavioral patterns reflect price swings to whipsaw in both directions on a daily basis. No visible set-ups that identifies the next probable trade except to follow the price trend and reversal whether they be on a short temporary basis.

On Fundamentals: Watch List on the EU Zone crisis, UK, Spain and Italy particularly the G7 meeting. Although, pessimism prevails with investors until some renewed confidence can be resolved over in the Euro Zone. Most reports would be limited to price action justifying the movement in the market. Relative Reports to consider are Oil & the Precious metals Market

On Technicals: A stronger emphasis on the Candlestick Chart/ Bar formation, Daily Opening Gaps, mid-week price action, changes in relative strength index with the Stochastics. But more importantly daily price trading range between HI/LO that makes up the session to session net changes for the day.And the overall behavior of the major pairs relatively in comparison with the Volume and Open Interest on the Financial and commodity Futures including oil and gold prices. Please continue on our website Market View

Price Behavior & Comparative Analysis - USD EUR CHF

With the long Memorial holiday weekend, a shorter trading week ahead would be focused on both the Asian and the European trading sessions. The only major market expected would be the NFP - unemployment figures. Although, most expectations are positive for the the jobs numbers and its net-effect over the economy is the main stay alongside with the expanded debt crisis in the EZ. However, there has been some relief on the wires that there is still a possibility that Greece would remain in the EU community, and spilled over in most stock markets in Asia and Europe today which signaled some positive moves.
The primary technical focus now is the behavioral price actions of the USDx  with a small primary gap between the closing and opening prices. While the US market would be closed for Memorial day; the Asian / European globex opening at the 82.15 basis point from a previous close last Friday at 82.40 was a negative signal reflected on a daily basis but not on a weekly chart formation. This opening has given the USD some room to gain enough momentum to continue its rally for the week before the end of the trading month.    

With that said, the EURUSD has slightly recovered but may have some limited up-swing action for the week ahead. But the bearish sentiments still weigh heavier closely link to the USDx movement directly alongside the USDCHF. Currently at the 1.2532; the price behavior of the EURUSD and the USDCHF would be dictated by the US Dollar. The influence of the commodity markets on gold and oil prices will play a supportive and vital role directly in the future direction for the global market as well.
Meanwhile, the strength of the USDCHF is reflected as current working price is at the higher end of the trend at 0.9582. The opening gap has been filled-in likewise the same price action with the EURUSD. Further analysis shall be provided at the mid-week prior to the final Non-Farm payroll figures and unemployment set at the end of the week.

Market Analysis -SRO 5.15

USDx - CHF - EUR

The opening of the 2nd quarter for the Foreign Exchange market has been expectedly been volatile with prices going in both directions daily across the board due to several re-emerging news from Greece, Spain, Germany and the United States. With the European elections as the earleir front-runners the effects on the US Dollar has been supportive not to mention the performances of the stocks, precious metals and oil prices earlier mentioned that should likewise be considered in the overall market outlook. 

The slow but certain trend direction upwards for the US Dollar has significantly given its initial signal since the earlier week of March as previewed in our sequence of market analysis that led to the confirmation of the strength of the USDx. 

The consolidating base formation and trading range has been defined with the techncial support price of 78.05/10 level and a consolidated resistance at the 80.05 before its break higher. Currently at the 80.55 basis point; where some daily corrective movement lower would be expected. Since the gravity of the JP Morgan 2BUSD loss is being played down in the market while the highlight of the German economy seems to overshadow the investors uncertainty in Europe have given the FX market a milder room to breath for the next market direction. Inspite of the EURUSD meeting its target levels working below 1.2850. An important key price to watch whereby the daily & weekly price would have to re-align with the moving averages and a base for consolidation would be made before the next leg would be resumed.

USDCHF as of MARCH 15
AISAN TO EUROPEAN MARKET
TRADING SESSIONS

Meanwhile, a more direct correlation in price and market movement is the USDCHF meeting its projected target higher above the 0.9300 with a registered high at 0.9371. While breaking its weekly trading range between 0.9000 & 0.9220 was the equivalent range in line with the USDx 78.09 - 79.85 basis point. But for some traders and strategist who may have done more research and due diligence would have identified the pivotal price of 79.18 EMA for the USDx was an established technical double bottom. Of course, its always easier said after the fact. However, the fact remains that eversince then the prices trended higher to where it is currently working at 80.55 basis point.

That was the cue in taking the long side of the USDCHF initial entry at 0.9043 dated the 26th of March. And a secondary position at 0.9288 on the break-away higher. Leaving us with a very good ave. price level of 0.9165 with an average size of half a dollar in trade. With extensions on the high side above the 0.9405/45 range for the week. Do expect some daily corrections along the way. We'll consider a settlement and or a cross-trade depending on the market conditions towards the week's reports. Expect some daily corrections and we'll consider a settlement and or a cross trade depending of the market conditions. But a protective cross with the EURJPY / GBPJPY or USDJPY would also be considered as well. Market flexibility is good to practise as one remains un-bias towards market donditons whenever some news arises unexpectedly.  

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.

Technical Perspective: CHFJPY Cross next after EURJPY

CHFJPY CROSS as of Mch 02, 2012

 After booking the EURJPY, the CHFJPY cross rate, is now in focus since the price behavior for the USDx have finally touched its objective of 78.09 price gap low registered on the opening trading of the US session. And have moved higher prompting the USDCHF to recover from its low of 0.8929. In our market view and analysis on the CHFJPY cross dated the 1.26; this position is in line alongside with the weekly EURJPY cross & the CHFJPY weekly charts as shown encircled the three bar Trend Reversal / Inverted Hammer candle bars that signified the reversal pattern are identical. However, the 89.52 corrective move as of this writing is likewise still within the higher trend as a price reversal but not necessarily a trend reversal. A trailing order to protect the floating gains accumulated and may consider a cross trade to be able to maximize and take a correlated advantage of its correction with the USDCHF currency pair vs. the cross rate since the BOJ policy is still maintained at the same time the USD is gradually gaining as of this Friday's movement. The closing prices for the currency pairs and the cross rate is what needs to be carefully watched moving forward the next trading weeks ahead. Pls. refer to the supporting video for the EURJPY Cross " The Process of Booking a Forex Trade-LIVE" for a comparative analysis & a better understanding of the similarities of the trade positions.

Trend Continues, as correction concludes 1st phase

USDCHF DAILY as of 010512

The continuation of the rally for the USD can be seen as it is moving higher with a more influential force on the Swiss Franc or USDCHF working at the present price back to 0.9498. Its attempting to reach its initial target at the 0.9550 (R1) with a possible extension nearing the 0.9650 (R2) - 0.9720/50 (R3).

However, there would be no straight directional moves as volume and volatility would only build up towards the third trading week of January. Daily pullbacks for the USDCHF are expected nearing the 1st resistance levels with some price adjustments between the USDJPY as it moves contrary with each other. As the Japanese Yen moves closer to its intervention levels some speculative moves are expected. We would stay clear of the USDJPY and instead work with a cross related trade this coming weeks ahead with the EURGBP pairs, USDCHF and the Aussie.

We are expecting a continuation of a rally for the USD that would occur in the Asian session towards the European market for that particular time period as some major players may soon start building fresh positions for the year. As the 1st corrective phase before the actual rally takes place have been completed. We should be able to pay a closer attention as to volume build-up and open interest for financial futures; as this would set the pace for hedgers and institutions to play with the market before the end of the fist month's trading period ends. Keep track of the reports and price behavior as volatility would increase, so does price fluctuations on both sides would occur.

Market Analysis-SRO 1207

EURO-BPOUND-CROSS RATE

The daily configuration of the EURGBP reflects a more positive tone (bullish) from a support price level at 0.8500/10 (S2) and 0.8535/40 (S1) respectively. Prices has held above these levels contrary to the bearish weekly candlestick formation that defines its directional trend lower. However, this is only temporary before it continues its directional trend lower. 

The fundamental actions of a concerted central bank intervention supported these technical price levels equivalent to the 1.3180 EURUSD support which has been defended from further depreciation and the current summit meetings with the EU leaders to really find a resolution for the debt crisis. Thus the Tug of War between the two continents carefully watching the developments that ultimately affects the financial markets and spill over to Asia region. Otherwise, the only remaining concern is whether these rating agencies would downgrade a majority of these other countries as a whole since it has dragging the overall global economy to almost a stand still, so to speak. 

EURGBP DAILY 1207



On the other hand, the resistance levels for the EURGBP cross is at the 0.8660/80 (R1) and 0.8770 (R2) trading range levels. The curent price as of this writing is at 0.8598 slightly above the 21 day MA in line with the EURUSD attempting to drive the prices at its 1st resistance (R1) price of 1.3500. The slightly positive news from the EU zone is supporting this recent action in the European session after the Asian trading Wednesday. Though, this can only mean that a probable corrective move is in the making within a major bearish weekly chart for the cross. And this also holds true for the EURUSD major currency.

The GBPUSD has held its ground reflecting a limited upside for the EURGBP cross, though the potential for such upward correction is seen as of today. A mid-week move higher would not be discounted as trading volumes would appear and book-squaring may start as early has the middle of the month.

A complete report including the AUD-NZD-JPY-CHF analysis is found at http://www.megatrade101.com/

Forex Volatility Increases Squeezes GBPUSD Trade

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.

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/