Trend Following: Chart OVERLAY ANALYSIS: EUR GBP USD.5 31

This is an update supporting our Market view analysis: OVERLAY ANALYSIS: EURGBP Cross-EURO vs. USD Index Confirms: Breakout dated: May 21,2013

AUD Perspective:

The latest report that Australian retailers have sold lesser goods for the month of December, thus missing most analysts' expectations. While consumer confidence was weaker in December keeping consumers to spend lesser has been the culprit for the weakness.The worse-than expected retail sales numbers shows a mixed economic outlook for Australia contrary to an encouraging trade report released yesterday.
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MegaTrade101.com - The Art of Trading the Foreign Exchange Market with Confidence - AUD Perspective:

Reference: FX Trends & Market Opportunities

Assessing and Identifying Trends

To be able to assess an anticipated major trend, it must be recognizable that such speculative transactions such as the volume / open interest increases during the life of a self reinforcing trend in the market. The prevailing market bias is a trend following market which means that the longer the trend persist; the stronger the sentiment becomes the breath of the market.

It becomes an established trend that has to run its full course of path until such time that the market becomes self-reinforcing. When such process has achieved its objective , the opposite direction may well take place after the full leg has taken place. The cross over points would have been achieved and a possible exhaustion can take place. A similar action has taken place like the price comparison and the current major trend of the US Dollar collapsing on the last weeks' closing of the month of July 2009 as a much clearer example.

Where the opening price levels

In Focus: GBPJPY Cross T-Perspective

The GBPJPY cross rate have been aligned with the USDJPY resilient higher trend and the steadier acceleration of Cable against the USD. On the technical side the recent correlated double top of GBPJPY also weighed heavy leaving the GBPJPY cross to declined at the 125.66 levels.

This was a temporary market squeeze ending the week of November 09 towards the first few days of the following week. This market squeeze is usually termed as a bull-trap; where prices declines and a sudden price reversal would engulf the previous bear prices. A follow-through of this trend is in the making especially when a Price Reversal was established for the USDJPY dated week ending October 19 followed with the Japanese Parliament dissolution last November 16, 2012!

Although, this serves as the first line of support; the critical and psychological price that may attract fresh longs would be still the 125.50/80 range. Which it did as reflected on the succeeding weekly engulfing (bullish signal)candle-bar chart ending the week of November 16.

The significance ...

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.

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Bullish Trend Confirmation: EURGBP & EURJPY Cross Rates - LIVE 10.18

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.

DXY.EURO. GBPUSD. EURGBP Cross 9.07

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

Behavioral Price action vs.

TECHNICAL & FUNDAMENTAL - USDX, EURO & CABLE

Fed Ben Bernanke's comments have been played cautiously with the Fed still ready to do more if and whenever they need to to spur economic growth. Many have a mixed of interpretation but however more downplayed hawkish rather than dovish so to speak.

Reviving the US economy with a well controlled inflationary measures as contrary to a stimulus package of QE3 has been a tireless effort for some analyst to keep strategies on trade analysis based on their respective reports, and sometimes to a point of being overly bias. Meaning, that a report from an FX analyst would reflect their bias trade position in the market.

The reliability of an independent-minded trader/strategist where a trade position is based on a current market trend rather than a price call. Calling a currency price closest to its objective is a true to life market call versus a price call on both sides of the trade without the conviction of the market trend to be. If and whenever a market call of a trend has been made and did not achieve its objective then the analysis based on such a call is incorrect. The call can now be corrected based on the outstanding strategies available for the trader whenever the trade position is a mistake too early or a mistake where the trader has no other alternative but to wait it out until such time it goes to his favor or not. A typical trade can be viewed from our Case Study of the Euro. Where a typical good trade was once placed but was left out and still active in the market could have been simply avoided and corrected earlier.

On the Technical & Fundamental Corner: USDx, Euro & Cable continue on our website: http://www.megatrade101.com/

Trending USDx - Major & Cross Rates

The USD has indeed reacted with the favorable reports on the NFP / jobs figures last week by continuing to move higher and touching its objective at the 80.05 from the low double bottom price of 7/8.09/10 levels.

Now that USDx 2nd bottom has been defined as a higher low for the USD. Of course, otherwise contradicted with another bearish fundamental along the way is another story.

The USD is on its way up with some daily pullbacks as shown on the opening week of March 12. The daily chart formation is neutral to bearish in the near term for the US Dollar. As it is being influenced by the Euro which somehow have curved a bottom low at the 1.3077 but not lower than the previous 1.3025 that served as the crucial support for the EURUSD at this writing. Please refer to our current market conditions where we have described the behavioral pattern and correlation movements of the USDx, EURUSD, GBPUSD and the EURGBP cross rate.

The importance of knowing this significant behavior is in relation to the succeeding patterns and set-ups that would arise in the weeks to come. We are towards the end of the 1st quarter of the year and the opening of the new 2nd quarter month of April. Now, if the cyclical pattern of this behavior would be followed from historical prices; the turning point for the USD would come between the first two weeks of April.

While the Euro's recovery would prove enough confidence in the market, where it has avoided a disorderly default of Greece somehow have settled down. There maybe some dark clouds looming in the air as far as oil prices are concerned, that would add pressure for the inflation numbers may well affect the precious metals for now. Pls. continue http://megatrade101.com/

USDX further decline - a Major Corrective move

USDX WEEKLY

The FOMC dovish report has placed the USD under similar pressure that resulted in moving back lower below the 80.00 basis levels. Sentiments and commitment by the Fed members in keeping rates at its low levels for an extended period of time has been quite definitive. Investor's concern on inflationary pressures are seen even on the movement of the yellow metal as it moves higher for the week at the levels of USD 1728.00 per troy oz. That resulted to the USDX registering a 79.10 slightly above the more important 78.85 bp technical support.

Moreover, the technical perspective for the USDX have been established as a major corrective bearish move within a major uptrend. Recognizing the initial topping out formation in line with two of the major currency pairs in addition with the correlated cross rates, have signified that such a significant corrective move would extend further than most would actually expect.The USDX candlestick chart in Fig.1 shows that the continuation of a decline with daily pullbacks would be seen moving forward as the Tug of war between major players are in play. These movements were seen accordingly for the past couple of days with the Euro, Japanese Yen and the EURGBP cross in particular. Continuing analysis and chart... http://www.megatrade101.com/

S&P Downgrade vs. FX Tech. / Fund. Analysis

Fundamental:

With Standard & Poor’s downgraded the sovereign credit ratings of major 9 Euro Zone countries, in effect sent the Euro further down towards the closing market last Friday. Although, with the limited time left; with Monday being a Martin Luther King holiday, some traders had been pricing in such a possibility.

But a spill over for this short trading week would accelerate trading volatility, as expected for the third trading week of January. The credit rating's downgrade have coincide with our market outlook where the USDX rally would continue its advance. This would be the fuel to trigger this expected rally.

The net effect of negative stocks in the Asian markets have been seen today that may well seen over in the European market. But European leaders have been quick on their responsive statements addressing the structural reform needed to stabilize the crisis including a call to create a European credit rating agencies independent from the US. How this Tug of war have continued has not helped the market one bit. On the brighter side, investors shifting to a more flight to quality investments for the USD have been more favorable now compared from a few months back.

In a recent release by the US Commodity Futures Trading Commission (CFTC)showed that net Non-Commercial futures traders—typically large speculators—were the most net-short Euro against the US Dollar.A clear slow buildup of volumes and open interest for US Dollar bulls will be increasing with wide spread European investors hedging their portfolio and shifting cash flow investments from EURO/Gold denominated assets.

Technical:

The US Dollar largely expected to gain further with the USDX touching a new 81.60 basis pt. high will have to accelerate once the US financial futures open with Globex and ICE leading the initial trading after the MLK holiday. The next target objective for the USDX is at the 82.05/10 which could be achieve within the opening week. Trading activity on Tuesday-Wednesday trading session would be dictated by the US Dollar taking the lead with trading volumes in Asia and the European markets.....

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Forex Trend Following continues...2

In between the reports, the currency majors were at pause while waiting for the next batch towards the end of the week. However,on the fundamental side of the equation; the recent Fed’s Beige Book statements indeed offered a more positive assessment of how the overall Federal Reserve report were widely interpreted.

By stating that US growth was, “modest to moderate” across most of the US states. while manufacturing maintained its expansion. The statement were more or less in line with the recent data and continued to imply that the US domestic recovery remains on track. And with that said, these statements have supported the technical charts for the major pairs.

On the other hand, the USDX again continued its advance after coming from a temporary correction with a low at 80.80 and rebounded back to the 81.50 levels and currently at 81.23 as of this writing. The US dollar advance by at least 1.05% against the British pound. While adding the Weaker than expected trade balance data out of the UK added to the downward pressure for the sterling / pound falling to a low 1.5305/10 range. And likewise awaiting ahead for the BoE interest rate decision expected to remain the same. A further downward pressure would open extensions at 1.5180 as the 2nd objective in line with the USDX higher than the previous established resistance at 82.05/10 basis point.

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US Dollar Index Market Analysis

For the past decade, with more e-trading developments and accessibility to the markets have made it easier to monitor market behavior during market holidays. The up-coming trading period before the Thanksgiving holiday would prove to be one of those times where a handful of institutional and majors players would again be in place. Although with an expected mix bag of market directional movements and the general trend developments into a bullish advance through the year end from thereon as a comparison as far back in 2008 that should not be discounted unless otherwise proven not to follow the cyclical pattern hereunto.



US Dollar Index Weekly Candlestick Chart



However,as for the US Dollar unexpected downward distortion after touching the 79.83 by dropping back down in October for a re-test of the 74.72 low was the appropriate corrective move in preparing for the 2nd leg higher where the market conditions are presently at. The backlash of news reports from both continents have been dragging this lagging recovery which should be respected from the market behavior. As price movements by market numbers doesn't lie. And the only way that we can stay unbias of any market analysis is to always trade with a level playing field in any given position(s) while in the market. For the Technical description & Analysis, please refer to our website at http://www.megatrade101.com/

The coming holiday trading conditions will certainly be a complicating factor for trading the US dollar. For the time-being, focusing our attention on the backdrop for financial strains; with the European market’s are particularly stressed; with both the EU and other major US Financial bank's exposure to the EU debt crisis have been a huge part of this global recovery. Money market funds have significantly reduced exposure to EU banks, though the ill-effects have nevertheless found their way into funding costs in the US system.

These are the underlying issues that we should consider to be critical rather than the ineffective event of risk aversion and appetite in the market place. The coming crucial reports this week; including the 2nd reading of the third (3Q) quarter GDP on TUES NOV. 22, the Fed minutes, the UK BOE MINUTES on WED. NOV. 23; US durable goods,the University of Michigan Consumer Confidence Nov.numbers and personal spending and on the EURO ZONE side would be Germany and the UK's Nov. 24 GDP figures.

All this reports would occur towards before and after the end of the trading week of the Thanksgiving holiday which would provide the market with an ever increasing volatility from lack of liquidity in a thinly traded market to position adjustments and liquidation for the rest of the month of November towards the end of the trading year. However, pay close attention to market behavior as these are the ripe times to consider.

Just a side precautionary note where we would like to quote the words of Gordon Gekko from the movie Wall Street - Money never sleeps..."bulls make money, bears make money...but pigs get slaughtered".

Only the best for your trades!

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.

FX vulnerability

As the market absorbed the news in UK consumer confidence basically remaining unchanged and did little effect on the directional trend lower for the EURUSD from its high of 1.2400 down to the 1.2150 with slight recovery at the present price of 1.2233 as of this writing. the German unemployment which fell lower had neither a real effect as the diminishing risk have marked down as volumes also deteriorated. There is no significant sign of a price reversal for now from the last time it touched the 1.1875 since the week of 6-06. However, that was a good correction as we called it a temporary price reversal , short-lived held true.
Although, the contrary behavioral pattern between the GBPUSD vs. the EURUSD is quite obvious and has indicated that investors had shift hedging strategies from the USDJPY and the USDCHF. With GBPUSD making a high at the 1.5127 and a higher low at the 1.5005 indicating that it still has legs to move higher. while the EURUSD moved lower to 1.2150.

As both Yen and Swiss franc has been in line with the correction of the USDX which made a hold at the price level that we have mentioned in our market view analysis marking at 85.20 low and a swing back higher is what it has been doing currently working at the 85.93. With the USDJPY at the low end of the levels at 88.63 and the USDCHF at our targeted price levels at 1.0820 which happens to be slightly below its Fibonacci retracement level of 50% from the lowest level of .9910 last Nov. 2009 and its recent high of 1.1730 registered last May 2010 No significant changes in the outlook so far.

As some may have noticed that the market view and analysis varies but more often hold our bearings for at least on a medium term basis. Remember, that percentage trading can be your advantage as the market is quite vulnerable to it up and down swings which happens to be good for short term scalpers in the market and day traders.

This goes without saying that the AUDUSD and NZDUSD has made the same where both currency pairs have shown its weakness as the Aussie is currently working at the 0.8526 giving back half of its gains for the past couple of weeks. And the Kiwi has done exactly the same at 0.6925 from its high of 0.7145 and from its previous low of 0.6572 barely three weeks ago which made a quick recovery when it touched those prices.

The overall outlook specially for the precious metals like Gold has made some good corrections lower from the first 2 days of the week that a possible price reversal was in the making however, the bigger picture frame still holds significant legs for some new highs in the near term. But do not discount the possibility of market swings lower as the daily shows some possible exhaustion as lower volumes and profit taking are being made by institutional investors and hedge fund traders.

For now the technicals may prevail over the market as reports are being brushed aside as risk appetite are slowly emerging but our analysis is that the market movements are simply in wait and see attitude as the coming market holiday of the 4th of July is giving some investors and traders that holiday good feeling.

Good Luck and Happy Trading!

Technical Outlook 6-21

The sustainability of the forex majors such as the EURUSD and the GBPUSD to move forward higher has been at a slower pace since the volumes and volatility index have been diminishing to its low levels. The FOMC meeting may be the only meaningful indicator for volumes to increase and while most investors/ traders wait; the vulnerability of the market place is simply to move on a technically motivated market.

This has been true to the fact that the USDX has so far followed to the letter our market out specially after the index touched its initial objective on the 88.78 / 80 basis points which we have been constantly writing about. Now that the corrective mode for the USDX still continues to sustain since Gold has indicated its reinforced trend making new highs from last weeks movements has made money flow shift to the precious metals again. This has set the pace for the USDX to move lower in line with the corrective and pivotal price reversal for the majors like the Pound and the Euro.

Meanwhile, the USDJPY has shown its sensitivity of moving higher and currently working at the 91.25 from a technical double bottom price alignment at the 90.30 which happens to be a higher bottom price and making the symmetrical triangle of the weekly USDJPY chart more visible. This formation has been in the making since the candlestick configuration was setting in place. Contrary to the weekly chart formation of the USDCHF which has already reaffirmed its downward direction. Where currently working at the 1.1075-80 levels, there would only be a temporary correction on the prices but the continuation to move lower would continue after such correction is done.

Favorably, both the AUDUSD and the NZDUSD has been the ideal pairs as the established lows as held relatively at the 0.8150 levels and has now been at the 0.8815-20 maintaining its strength and the Kiwi at the 0.7125 from the 0.6677 key support prices. The psychological key prices on the low moving average of 0.8100 and 0.6600 respectively is now considered to be the base reference to consider for quite sometime.

Best to your Trades and Good Luck!

Weighing Fundamental Vs. Technical

Every trader and analyst gets a kick in anticipating where a pivotal point, trend or price reversal may take place. To a certain point that it is anticipated too early or too late. There are many technical tools that could be use as references to predict such reversal. Although, the most common is from a candlestick formation or a reversal bar, convergence/divergence of a moving average, a breakout from a channel and or a resistance/support prices.

With all these tools; it really depends on the traders choice which is most reliable and dependable where they are most comfortable with. To balance technical analysis and fundamentals may be approached in several ways. However, the current market conditions that the market is experiencing now from several months have weighed more in line with fundamentals rather than the technical. Only the formation after the fact would justify supporting any reports either derived from the economic reports or any politically motivated policies affecting the exchange rate.

The psychological fear factor of long running trend reaching an assumed bottom making the EURUSD just as an example or even the GBPUSD has been a battle for traders and analysts whether to call " nearing a bottom price " or vise verse. Each major pair has their own characteristics and intricacies of behavioral price formations based on historical configurations. Making it a " No one size fits all " as the correlations of exchange rates needs to be considered in the equation. for the time being, trend following strategies are best suited in any trading activity until such time a real occurrence of a reversal could be identified. One of the best guide to follow is the simple rule of reversal pattern which is ; ..." until a new high or bottom has been established it can not be called a reversal is in the making. "

The irony of the matter, is that every one's eagerness to be the first one to call it as " bragging rights " is what makes the difference between a trader and a strategist who has been in the market place for quite sometime. A word of advise : " Do not be an eager beaver in the market place. "

Pls. choose wisely!

Volatility Remains 3

With the upcoming news report on the Durable Goods (MoM) expectations of 1.4, Gross Domestic Product 3.30 from the previous 3.20, with Jobless claims lower outlook at 455k from the previous 471k and the final Michigan Consumer Sentiments this friday of 73.70 may well trigger another volatile sessions for the week ending the 28th of May.
As the rhythm of the USDX is still solid to move higher currently working at the 87.57 basis point high for the June futures contract; while the spot working at the 86.53 would now attempt to retry its original target objective of 88.80 as we have mentioned from our last market view analysis. any combined good report better than expected figures from these week's reports would be the catalyst for the USD to move higher and considering the sustaining volumes and positive sentiments that has been fuelling the trend on a reinforced basis. As the consumer confidence has again supported the continued rise on the USD.

This has prompted the EURUSD and the GBPUSD to move lower and is back down to the 1.2247 as of this writing and the GBPUSD at the 1.4330 slight recovery from their low price levels. No changes has been influential in spite of the technical conditions making the recovery very insignificant. These short-live corrections on both majors are simply price adjustments from the oversold areas.

The technical key market price for the USDX is our main focus as this has always been our core value in analyzing where a pivotal point may occur even on a temporary basis. Although, the actual core market sentiments is still extremely bearish. No fresh incentives are in the market except the possibility of the USD to correct slightly on a daily basis as what has happened during the closing of the last week on the 21th of May trading sessions. This week's reports would be some fresh news other than the spillover sentiments on the Euro Zone market as most investors and traders are fixed on the downward price levels of the Euro and the Pound.

The obvious ripple effect of the Aussie and the New Zealand Dollar as well as the USDJPY being one of the favored pairs to be cross traded as the directional trend for these currency pairs are also defined. The most concerned criteria to watch is the total trading range from their hi/lo prices that would snap back in both directions before the end of this month of May. For now the inital support for the Aussie is at 0.8010 where a probable corrective move would be expected as this could occur due to relative divergence on a daily basis at the 0.8065 mid-price.

Having said that the tendency now is to carefully be prepared for these action in the market as the rapid price swings may be a violent up and down swings.

The USDJPY may find some reaction on the 88.20 price levels which is within its striking distance together with the USDCHF next target at the 1.1880 extension on the extreme high whenever the USDX may reach it 88.80 objective. As most major players and participants from these institutions are capable of playing these extreme price range.

Only the best for your trades and just be cautious as the rapid price swings will always be present.