ASIA Lifts #USDJPY #USDCHF #DXY Respectively

Asian FX session Drives USDJPY @110.09 with three (3) consecutive weeks of gains from 105.55 low as basis of the focal turning point. While USDCHF marks higher @0.9880 from a 0.9663 low & pulls back above 0.9700 benchmark support / resistance. This has supported the lift of the USD Index above the crucial 95.05/10 levels pointed out earlier in our previous analysis that the market is 'Momentum driven while building volume trades to justify our Market call. Likewise, when such momentum is sustained towards the European and US trading sessions, we do expect a continuing rally to be made with intensity covering the USD above these levels while session pullbacks would not again be discounted due to the early hours heading towards the two major markets still needs to be priced into the market..

ASIA Lifts #USDJPY #USDCHF #DXY Respectively

INSIGHT: FX & Stock Indices Price Action

Marked Highs & Lows: The market's ability to set newer highs and lows is widely credited to the momentum and volatility of price action from a broad base combination of the US Dollar, the DOW JONES, SP500 & the JP NIKKEI 225 index and their respective correlated markets with OIL

The sequence of price movements on the USD; as defined with its trade weighted average DXY, which marked a new low @95.65 setting the market pace for the currency market to do the same. This already stated with the new low on the USDJPY @114.20. These initial moves were the first signal that a new cycle of alternating moves were in the making which we have anticipated in our most recent report. Let us define the series of price movement in their order and price sequence reaction.

INSIGHT: FX & Stock Indices Price Action

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

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

Insight: Price Action Analysis- EUR/GBP & CHFJPY

CABLE indeed have declined below an important support level @1.6745/50 and touched the 1.6690; well within the Ichimoku cloud formation. The bearish out look remains the same for now; whether a further continuation would persist would significantly depend on the USD's performance for the week.

Along this price angle, the EURUSD likewise have retested its psychological benchmark @1.3580, three times within the past few daily trading activity. And has shown a resilient price level before the upcoming ECB statements from Mario Draghi. However, on a pure price action analysis; combining these moves where two conflicting majors are at a TUG of WAR, the prevailing market sentiment for CABLE would weigh heavier when it comes to positioning with the EURGBP Cross CCY pair. Click here

Relevant Structure of Price & Time Elements

On Gold & USD Index Trend Direction: A mix read in the market fundamentals would stall price action until the day ECB Mario Draghi speaks other than the Jobs report which will culminate price action at the end of the week's trading.

For now, encouraging reports on China has fueled optisim and Russian President Vladimir Putin backing down rhetoric comments have sent positive reactions even providing a relief recovery for the Ruble. The Russian Ruble has had its share of extreme volatility, not only affected the Micex, but clearly Russian investors in the international market. Click here

Market SRO: Majors & Crosses

USD YEN CHF GBPJPY EURGBP
with the recent rebound of the August US Consumer Confidence to 81.5 contrary to market expectations may probably signal to a better August NFP figure in the upcoming report.

This has been widely expected as the USD initial market price action for the US dollar index have recovered in today's trading sessions. Although, overshadowed by the overseas US reaction regarding the Syrian crisis both on the Oil and precious metals market have somehow capped and limited the USD Index advance to as high as 81.59 basis point

Market SRO: Majors & Crosses

Forex: Price Action Strategy

Weighing Market Sentiments 2
Update: GBPUSD & GBPJPY vs. USD

As the ECB & the BOE held rates; the string of reports from the private sector jobs and the Labor department on jobless claims have dampened the spirit of the USD. Market sentiments on negative USD price reaction to this writing weighed heavier.

As the USDx maintained its decline as low as 81.07 slightly above the Feb.25 pivotal price breakaway towards the high. Expecting some pullback reaction from market capitulations coming from the huge Open Interest (bullish) USD speculators after the reports; once again have been caught flat-footed by the sudden decline & outburst of the major European currencies. Likewise, do expect a greater amount of increase in volume activity with declining open interest, on top of the declining USDx for the coming week. With the same case scenario for momentum build-up, increase in open interest and volumes from its European counter-parts. Click to continue

Forex: Price Benchmarks:

Critical Levels:

Reiterating this case scenario can be defined as an equalizing factor between an over-valued Stock market adjusting itself with the fundamentals comparing with the mixed economic data coming from the different sectors.

While the US Dollar price recovery have been slow inspite of being able to gather some earlier momentum. Relatively, the USDx price behavior has bestowed some lingering doubts amongst analyst and traders where the recent declines were attributed to negative reports from another increase in Jobless claims and a lower housing starts that pushed some corrective declines for the USDx @83.44 during the midweek trading session.

Apparently, such behavior can be seen as price action of opening high with a daily price gap against the previous closing and have been driven down in between trading sessions. This typical price action amongst traders have been a market squeeze and/or sometimes referred by major bull participants as a bull-trap. And a market recovery happens before the New York closing hours.The daily candle-bar would reflect a negative signal since most smaller day-trade speculators would unwind some intra-day positions. A true example is the daily candlestick bar on May 16 - Thursday closing @83.75 with a subsequent opening price gap @83.90. Pay particular attention with these bar formations, chart set-up and price action which will dictate the next directional price movement before it happens. There would be some instance that the closing prices may eventually close higher /lower than the opening price gaps at the end of the trading sessions.

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Market SRO Perspective:

USDx-EURO-CHF-GBP & EURGBP cross

Renewed confidence for bullish players after the fact, seemed to ignite the market today with some limited traction for the USD as it moves slightly higher to its current levels @82.50 high in the early trading session.

The limited trading time that occurred last Friday after the jobs report have left the USD market players in a wait and see attitude for a follow-through, while the Dow and SP500 continues to make remarkable price records inspite of the continued uncertainty where traders are still expecting a valid correction for the stocks to move lower as a healthy sign for a bullish market.

However, the psychology behind the market that this is a clear and typical example where price action is squeezed between economic indicators versus market sentiments that may limit market movements as each and every trader tries to feel through what the market would actually do. Where investors shift real money flows between markets would provide some indication for the prices directional move for the week. This now considered the real activity monitor as price action swings to where a more probable trade could be spotted. Spread betting between currency pairs with stocks would be a bit complicated for some as other traders would not to spread their wings so thinly that results to over-leveraging their trading accounts. Click here to continue.

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

Perspective: USDCHF - EURGBP Cross Rate

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

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

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.
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Counter-trade Strategy 711 Update

All eyes on Ben Bernanke's semi-annual Congressional testimony for any clues for the market's direction. However, the earnings numbers are closely being monitored as the stock market have recovered significantly to the high side for the start of the week.

This also signaled some renewed investors confidence despite of the mixed to negative reports on the economy for last week reports. While consumer prices came out as expected signaling that there are no inflationary pressure.

The USDx has continued its mix to lower trading activity as it has re-tested the lower band support at the 83.05 basis point(market view dated: July 11) with an intraday low at 82.91 while currently working at 83.10 as of this writing. Although, the overall trend for the USD is bullish; daily corrective moves are likely to continue and risk of a major correction may occur before with no fresh news that would provide the next leg higher. The technicals on the USD is more correlated with the currency price and behavior of the Euro and the Japanese Yen. Whereas the market's action related to the GBPJPY and EURJPY crosses have moved the market prices to their lower levels not seen in recent months.

The mid-trading day for Tuesday while waiting for Bernanke's testimony have been a little sluggish. The EURUSD and GBPUSD corrective move higher were simply due to the USD correction. While investors shifting to stocks trading during the earnings report have grown more in terms of volume transactions compared to the diminishing volumes and open interest for the foreign exchange market.The Euro would be consolidating in its lower range heading lower for some time before any real serious recovery can be made. While USDJPY and USDCHF would still move contrary with each other on a daily price movement in both directions; whereas the USDCHF would move more in tandem with the USDx.

The price action seen for the past few trading weeks have been obvious that prices have continued its decline for the European majors and crosses but the daily price fluctuation has been volatile in both directions. The trade strategy applied based on July 03 - 17 position trades have been best described with the counter-trades continuing strategies to cover both sides of the market on a short-term basis. Maintaining a net positive net result is always the objective of the trades combined regardless of the next price action in the market after each settlement.

Here is a summary of the trade & Counter-Trade strategies as of July 03 to present:

7.03 Long GBPCHF @1.4883   settled @1.5255 1st (R1)     7.13 +372
7.11 Short USDJPY @79.48      settled @78.82 1st (S1)     7.16 + 66
7.12 Short GBPJPY @123.78    ave. settled @122.88          7.16 + 90
7.13 Short GBPCHF @1.5208   ave. settled price 1.5275     7.17  - 67
7.13 Long GBPUSD @1.5529   settled price 1.5620             7.17 + 91

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/  

Counter-Trade Strategies l & ll Settled & Booked

UPDATE: Counter-trade Strategies l & ll executed from these market view trade analysis have been settled & booked prior to the closing trade as of today the 7.05.12

Target levels for the GBPUSD at 1.5510 first objective; GBPJPY at market current market value 123.90 and GBPCHF at the 1.5045/50 has been achieved. This is a considerable amount from the end-result of the ECB rate cut and a day before the NFP figures release. We'll be watching the market movements from hereunto as the strategies successfully implemented would provide us a trading break for the time being. Please refer to the market view analysis and sequential trades listed below. Or visit our website for a detailed report.

Counter-trend Strategies: GBPCHF vs. GBPJPY

Suffering its biggest,one-day loss the US Dollar (Index) settling at the 81.60 basis point levels; majority of which was due to the outcome of the EU xummit. Although, some of the reports today from the US Manufaturing numbers which proved to be lower than what the US Manufacturing figures are expected have given the USDx a pause from its recovery at the opening of the North American session.

The wider uncertainty in the long run that these troubles is not immediately going anywhere have prompted investors and traders reluctant in creating short positions at the beginning of the thrid (3rd) quarter of the year. The overall fear that a financial crisis may well be spreading across the global market is still up in the air. A review of the bigger picture, yields are still at its record lows, a sluggish economy with a fractional growth rate and major banks capital requirements are needed to extend liquidity in the market place the very core foundation of a bear market entering in the 2nd half of the year.

Speculation and institutional hedgers do weigh heavier as volatility may increase inspite of the lesser volumes traded daily. And with the upcoming 4th of July celebration the market would likely be all over the place in both directional play of price action taking advantage of some players not present in the opening trading week where the EU debate this Monday is expected. Subsequently by Wednesday's 4th of July celebration trading break for the stock market and the ECB meets Thursday followed by Friday's NFP numbers expect the market to be actively traded in the European and Asian trading sessions.

For the past couple of weeks now, we have applied a short-term exposure trading primarily the cross rates with a couple of majors and using the futures market for the USD Index. A counter trend position at the middle of the week's trading between the Asian and European markets and closing out at the end of the week's trading in New York.
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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.