#TSOT - Opening Trade & Price Gap Question:

Placing Fundamentals on the sideline.
Is this a 'RUN AWAY GAP' or an 'ISLAND REVERSAL' signal ?

Comments & thoughts would be appreciated!

Market Behavior ...

vs. Price Action
The ability to weigh trading analysis between economic reports and technical perspective has drawn a significant mark on price behavior in between the 3 major trading sessions. The upcoming reports on the European Consumer Price index would come earlier than the FOMC minutes that would provide a signal directly effecting the USD direction. Although, as the mid-week reports follows when the US Consumer Price Index would be compared with the German GDP report which would weigh more with the direction of the EURUSD.

Ahead of the market mid-week price action has given the USDx a daily signal of a probable pause as against a breakaway gap against all odds. Nevertheless, this should not discounted on a daily pullback and a retest of the continued strength towards the end of the week's trading will take place. Either way, Wednesday through Thursday sessions would provide a clearer picture. A Tug of War again appears to be in place

Perception vs. Trading Analysis

Technical or Fundamental:
Whenever investor's confidence gains ground in the European community; there will always be something that may spook the markets related to political uncertainty in Spain & Italy. These market conditions have provided some well timed relief for the USD recovery and a gradual slide in the Euro. Which have led equally the same uncertainty with investors and traders whether the decline in the EURUSD can lead to what others have eagerly been waiting for.
The USDx opening price levels for the daily have made some significant recovery...

Forex LIVE: DXY- 6 Majors & Gold

MEGATRADE101.COM - MARKET VIEW ANALYSIS


Here is a comparative analysis of the Forex Market primarily focused on the US Dollar Index, 6 majors including Gold. The analysis provides the behavioral price movemets of the USD vs. the CHF & Euro in particular due to the opening price gap from the closing prices and discrepancies that affects how prices would react. Price behavior should well be clear that there is indeed a discrepancy with most charting systems that does not truly reflect it on the charts.

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.

FOREX Technical Perspective: EURJPY

UPDATE as 02.22  While the EURUSD strength delayed reaction even after the EURO group's successful deal, it is only now that the market has gained interest due to most traders were actually back from the US President's day holiday schedule. The USDJPY's price acceleration to 80.28 high have indeed given the EURJPY the fuel to reach its 1st initial objective stated above at 106.31 high as of this writing. There is no actual straight price rally unless enough volumes and fresh risk appetite positions are initiated by renew institutional coming to the market. The only danger that may subsequently arise is a probable formation of candle bars on a day to day basis that may lead to an island formation for a major corrective move supported by some fundamental reason. But for now we do not anticipate one. However, such moves lower would enable us to improve our trailing orders for protective strategies & would be booking the gains accumulated since February 2, 2012. Although, leaving a small number of units to be risked whenever the 2nd leg higher would resume.

Mid-week Analysis 1.18

EUR-GBP-USDX
The end-result of the report by the IMF to increase the lending capabilities to USD1Trillion have indeed made a difference in initially halting the bearish price action for the Euro. There were some heavy offers in the European trade before the news and some have reluctantly withdrew when the reports came out. Thus resulting to a corrective price movement higher for the EURUSD pulling back to the 1.2810/20 and is currently threatening the 1st resistance price level of 1.2880 in this couple of days trading activity.

EURUSD DAILY

Increased volume activity from profit-taking activities from earlier shorts added to the relief rally for the EURUSD and an equivalent decline for interest with the USDX which prompted the USDX to pull back lower to 80.48 as of this writing. However, on the technical stand point; this is a normal corrective action within an established trend. Remember, that current prices are within the major channel trend for the currency majors and any such correction may be seen as temporary, although with a significant price difference between the OHLC prices as well as a wider fluctuation on both directions before the end of each trading week.

While both currency pairs; EURUSD and GBPUSD are well within its bear trend the current price levels are slightly above their 21Day-MA, 1.2830 for the EURUSD and 1.5450 for the GBPUSD respectively. And this is accompanied by an increase in volume activity and interest. Besides, on the Asian opening at the start of the trading week, the 2nd price gap opening shown in the EURUSD daily price chart has indicated another attempt of an exhaustion and/or a run-away. On the contrary, the next couple of days trading showed a failure of a possible run-down of the prices which meant that a correction is probable than a possibility. And adding to this sentiment is the daily spinning top / candlestick bar for the GBPUSD. Likewise, the EURGBP cross weekly chart formation showing an inverted hammer; as another signal for a probable corrective movement was expected against all odds of a bear market sentiment. And these signals were indicated in our previous market view report dated the 16th of January 2012.

The extreme hysteria of the Euro market condition previously have already been adjusted by these recent corrective actions making the trading HI/LO price band wider and difficult to speculate as to when a turn around would occur for the continuation of the major trend. However, there would be limited speculative and bias offers near the 1.2880 that may be triggered in anticipation of a price reversal back to the downtrend. For now, the market's price behavior is apparently in a corrective phase with price directions moving wider this coming weeks.

As for the EURGBP cross, this price action has supported the contrary bear price movement from the low of 0.8250-a higher-low bottom level and at 0.8290-a pivotal price level that would fuel a bullish price action whenever the price settles above the 0.8390-0.8410 closing price range for the week. The current price for the EURGBP is at 0.8330 as of this writing. The continuation of the directional trend would be dependent upon the influence of the price action of the EURO and the US Dollar that would be taking the center stage of this market. Pls. refer to our website for a complete chart presentation at http://www.megatrade101.com/

Asia Opens with a 'Trading Price Gap'

Although, the American trading session on the NFP and Jobs figures were the catalyst for fueling the USD rally; the Asian opening trading have resulted with price gaps particularly for the EURUSD, USDCHF, USDJPY and a couple of crosses the likes of GBPJPY including the EURGBP. The USDX is no exemption as this would tapper-off some daily gains from the previous closing last Friday. However, defining an exhaustion or continuation price gaps would depend on the succeeding and sustaining price action in the next few trading days. The highlights of last week's figures would continue to dominate investors sentiments that would push a favorable rally for the USD after its correction.

EURUSD DAILY

Daily corrective pullbacks are expected in-between trading sessions. The backdrop of market sentiments between the US and the European markets would still remain subdued and negative bias for the Euro until such time in the 1st quarter of the year. As for the EURUSD touching its initial support extensions at 1.2660/80 whereas, the normal 1st reaction for a self-corrective price to go higher is being set-up at the Asian opening towards the European trading sessions. This goes the same with the EURGBP cross and the GBPUSD. Meanwhile, North American traders would wait-it-out for further price action before making any market move at the start of the week where an expected spill over from last week's USD rally would pick-up. For a complete trading report and charting analysis including the USDCHF pair, please visit our website at:  http://www.megatrade11.com/

Moving forward, we do expect increase trading volatility and market action towards the 3rd trading week of this month. The continuation of the rally would have to start building-up after such corrective move along side the European majors. Foreseen to be short lived would really depend on the follow through volumes of market sentiments by major institutions. As retail speculative trades will always be out-paced by major forex hedgers and speculative institutional bank players in terms of volume transactions.