Forex Analysis – 9th July 2012

  • That Familiar Sinking Feeling Again…
  • Summer Doldrums…
  • A continuation of uptrend after Friday’s pullback?
  • What is going on with the market and plenty more…

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Something I don’t hear traders speak about much anymore is currency personality. It used to be bantered around a lot more in the 80’s and 90’s but it seems almost forgot
now.

If you have sat by your screen for long periods of time watching one currency you soon begin to realise that it has its own personality. Just like a trader has a personality, so does a currency pair. The GBP behaves differently from the JPY, and the EUR behaves differently from the AUD and so on.

Why is this important?

I believe you can actually become in tune with a currency if you trade it often enough. It almost like a sixth sense of what it will do next. You can sense if a breakout is real or not. Although I will trade anything that looks good, I do prefer to trade one currency at a time, and I will trade that currency for months and sometimes years.

I remember one day bumping into a hedge fund manager in London and having a chat with him. He had been a fund manager for over 20 years and of course my immediate thought was, how does he trade, but that wasn’t the most interesting part. He told me that for the last 17 years he had only traded the USD/CHF (Dollar/Swiss Franc). That’s all he watched all day long, but this is where it gets even more interesting. He knew so much about the CHF that he never put so much as an indicator on the chart. He knew how it would react to almost any given situation.

Now I’m not suggesting you take off all your indicators. I’m just saying there’s a lot to be said for picking a pair you like to trade and really getting to know it. You might find this short video interesting:

http://www.bloomberg.com/video/64585338-fx-personality-pairs.html

Oh, by the way – Adrian will be back in his usual spot tomorrow with the latest economic round up.

Mark McRae

Wesley Govender

Wesley
Govender

EXOTIC TRADING

Euro Sinks To New 2-Year Low Against The Greenback

The Euro sank to a 2-year low against the US Dollar in early trading on Monday before making a slight recovery against a basket of major currencies ahead of a meeting of Euro Zone financial leaders later in the day.

Against the Japanese Yen, the Euro reached a 1-month low before rising up once more. The US Dollar also slipped slightly against the Japanese Yen departing from last weeks 2-week high.

=====================

News Watch For EURJPY

=====================

There’s only one High Impact news release left for today so be aware of the following:

12:30pm GMT EUR ECB President Draghi Speaks

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EURJPY Analysis

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The EURJPY pair appears to have bottomed out and we may see potential for a surge upwards as price looks to approach the upper channel trendline. Take a look at the chart below:


Click on Image to Enlargen

As you can see, I’ve inserted a new bearish channel on my chart to highlight the price drop that occurred late last week.

At the start of this week price bottomed out and is now in consolidation. There does appear to be good potential for a pullback/retracement to the upside and my indicators confirm that we may well see price take a step up over the next few bars.

The region that I am most interested in right now is at 98.000. Should price close above this level and I get confirmation from my indicators I will be looking to enter the market with a Buy order.

Potential targets for Buy trades can be found at the 98.500 level and the upper bearish channel trendline.

A Buy trade signal is not guaranteed, so I’m also keeping an eye on the 97.500 level. Should price close below this level we may see another drop. Potential targets include the 97.000 level and the lower bearish
channel trendline.

The trick is to stay on your toes and react to what the market is doing instead of diving straight in. Remember to look to your indicators for further confirmation before deciding to enter any positions.

Take care and all the best for the week ahead.

Wesley
Senior Trader for MTChamps


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Joshua Schultz

Joshua Schultz

After a quickly filled 10 pip opening gap this week it looks like the bullish divergence that we saw forming last week is finally starting to take some shape. I haven’t been given an entry trigger yet but things are getting close. Presently we are finding support at the 1.5460 area. If we get an entry signal and a cross of the trend line we could see a move up to the 200sma on the 4h. We could also see a move up to a longer term trend line from the daily chart.


Click on Image to Enlargen

In the news today we’ve got a couple things to watch out for.

1.11:55am – FOMC Member Williams Speaks – Usd – Medium Impact.

2.7:01pm – RICS House Price Balance – Gbp – Medium Impact.

3.7:01pm – RICS Retail Sales Monitor – Gbp – Medium Impact.

So just one medium impact news release for intra-day trading and two more tonight.

Good luck and safe trading!

Josh
Senior Trader For Profit Day Trading


Toshko Raychev

Toshko Raychev

AUD/USD 09/07/2012

Last week, the pair moved mostly sideways without any clear direction and oscillated around upper Bollinger Band on the Daily chart. This activity clearly showed that there is a reversal coming up. Finally, on Friday the pair exploded to the downside dropping close to 110 pips, breaking major support at 1.02229 and all the lows from the previous days. As a result of this drop, the next support level was hit at 1.01788 followed by an upside retracement with the pair finally coming to rest close to the 1.02229 level. After the market opened for the new week, support at 1.01788 was tested again but the pair has since moved upwards.

On the Daily chart we see that the pair is currently testing the same support at 1.01788 without success and is currently hovering around support and the middle Bollinger Band (Pic1, point A).

MACD is clearly below its Signal line and going down. At the same time it is near previous dump (Pic1, point B).

Stochastic is below its Signal line too and pointing down, almost at the 50 level (Pic1, point C).

On the Daily chart price has been around the middle Bollinger Band and the support level at 1.01788. MACD is almost at the previous dump level and Stochastic around the 50 level so there is great chance for an uptrend continuation today.


Click on Image to Enlargen

The H4 chart situation confirms the reading on the Daily chart. Price is close to the lower Bollinger Band around support at 1.01788 (Pic2, point A). MACD is below the zero level and the Signal line but it is now starting to flatten out (Pic2, point B). Stochastic comes from an overbought area and currently close to the 20 level (Pic2, point C).


Click on Image to Enlargen

According to the Daily and H4 chart analysis we can expect an upside move to the 1.02229 level and if it is broken, price may continue to the next pivot level at 1.02692. Also bear in mind that if we see a clear break down at the 1.01788 level, a further fall can be expected to the 1.01304 level and below.

My analysis for today is to look for long entries confirmed by your indicators with possible targets at 1.02229 and 1.02692, or around the middle Bollinger band on the Daily chart. On the other hand, if major support at 1.01788 is broken, be prepared to sell the pair with a possible target around the 1.01304 support level. Again don’t forget to confirm all your entries with your indicators.

Today there are some High Impact News Release like the ECB President Draghi’s speech, BOC Business Outlook Survey and MPC Member Tucker Speaks. Although they don’t directly affect the AUD/USD, keep an eye on them and don’t trade around the release time to prevent losses.

Happy Trading

Toshko Raychev


Piet
Swart

Piet Swart

This morning I am looking at the USD/JPY 1 hour chart. This pair is bouncing up and down and can’t really make up its mind on which way it wants to go. Due to the strange market reactions the past week or so, as far as I am concern, it is difficult to determine what price is going to do. Again you have to fall back on your price reading skills. My take today will be that price might move in a Bullish direction for at least 20 pips up to the target line area at 79.728. I can’t wait to see what the markets will be doing in this coming week. In the mean time you should always stay focused, be alert and never drop your guard.


Click on Image to Enlargen

Remember, trade with your head and not your "gutfeel".

Till next time.

Piet Swart
Forex Income Map

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