Forex Analysis – 10th July 2012

  • No Knoose Is Good Knoose…
  • Will the Dollar Continue Gaining Strength?
  • AUD/USD set for a dip and plenty more…
  • Is the market getting back to “normal”…

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Downtrend likely to continue

Today the Euro fell to a near two year low, following a meeting of Euro zone finance ministers which had offered no positive surprises. The Australian Dollar dipped on the release of disappointing Chinese import data.

Adrian Jones

Adrian Jones

Hi {!firstname_fix}

Euro zone ministers have agreed to grant Spain until 2014 to reach its deficit reduction targets, in exchange for further budget savings and had set the guidelines for an aid package for Spain’s ailing banks.

However, no apparent progress was made by them as regards the activation of the Euro bloc’s rescue funds, in order to intervene in bond markets and thereby bring down the spiralling borrowing costs for Spain and Italy.

After the European Central Bank had cut interest rates last week and on the back of a renewed rise in Spanish bond yields back above the critical 7% level, seen as unsustainable in the long-term, the Euro has taken a hit.

Analysts agree that investor concerns over Spain’s fiscal health and the Euro zone’s sovereign debt crisis remain.

Reports due out today from the Paris based national statistics office, are expected to show that industrial production in France and Italy has shrunk as Europe’s debt crisis undermines growth.

It appears that there is still a long way to go before the stage is reached at which policymakers will be ready to act, especially as relates to potential bond purchases in the secondary market. The outcome of the Euro zone finance ministers’ meeting highlights a seeming lack of urgency on the part of policymakers according to many traders.

This in turn results in a weaker risk appetite and translates to a stronger Yen and Dollar, with many analysts predicting that the Euro’s overall trend toward the downside is likely to continue in the days ahead.

The Euro had dipped 0.2% to $1.2287 earlier today, close to a two year low of $1.2225 hit on Monday. The Euro was also down 0.3% to the Yen at 97.70 Yen, close to a one month low of 97.48 Yen touched yesterday.

The Greenback dipped 0.1% to 79.50 Yen. It remains range bound between 79.08 Yen to 80.10 Yen since late June.

Disappointing Chinese trade data saw the Australian Dollar slip 0.3% to $1.0174.

China’s imports in June had grown at half of the expected pace. This underscored concerns that China’s economy and domestic demand are slowing rapidly, notwithstanding export growth being slightly better than expected.

China remains Australia’s single largest export market and the health of China’s economy always influences the commodity currency.

All the best!

Adrian Jones

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Wesley
Govender

EXOTIC TRADING

Finance Ministers Leave The Euro Hanging

The Euro dipped lower but remained relatively steady close to the recent 2-year low in early trading on Tuesday after yesterday’s meeting of Euro Zone finance ministers offered little respite for the troubled currency.

Meanwhile, the Euro went on to reach a 1-month low against the Japenese Yen, before rising back up. Most analysts still favor the Yen to strengthen further against the Euro as the Yen looks to retain its safe-haven status.

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

News Watch For EURJPY

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There are no High Impact news releases scheduled for the EURJPY pair until Thursday when we can expect at least three announcements that will affect the Yen currency pairs.

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

EURJPY Analysis

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

The EURJPY hovered close to the lows formed yesterday but the pair now looks poised to explode. Take a look at the chart below:


Click on Image to Enlargen

As you can see, price fell into a range after forming a new low. The range is typically identified by the sideways movement of price over the last few bars.

The good news for us is that the longer this kind of activity continues the closer we get to seeing price break free from its shackles and attempt to form a new trend.

Yesterday we were paying close attention to the levels at 98.000 and 97.500 to see whether price would find the momentum to break out but as you can see, these levels were tested with no significant breakout in either direction during our trading hours.

I have inserted two green horizontal lines at the new swing low and swing high that was formed overnight and I will be monitoring these levels for potential break-
outs in either direction.

These levels serve as ideal trigger levels because price has attempted to breach the support/resistance levels and failed, thereby forming the new swing high and swing low.

This now provides us with two regions that will give as a clue as to whether price has the momentum to break through and continue in a certain direction or not.

If price surges upwards and closes above the upper horizontal trigger line we may look to enter with a Buy order. On the other hand, if price falls and closes below the lower horizontal line we may then consider entering the market with a Sell order.

Remember to confirm all entry signals with readings from your indicators.

Potential targets for Buy trades can be found at the 98.500 level while targets for Sell trades will be around the 97.000 level.

Right now we cannot tell which way price will go but by identifying trigger levels in this manner, we can highlight areas where price action will give us clues as to where the market is going to go.

I’ll be monitoring this pair closely over the next few bars and give you an update soon. Until then, take care and all the best for the week ahead.

Wesley
Senior Trader for World Class Trading Stars

Joshua Schultz

Joshua Schultz

Well, we have a couple things we need to be watching out for today. There is a lot of resistance just above where price is at and this could very well keep price from moving back upwards. We’ve got the weekly pivot, the 200sma and the 55ema all in the same area. The weekly pivot is sitting at 1.5556 and the moving averages are just 11 pips above that at 1.5567. We do have some hidden bearish divergence and if we can get a close past the trend line we could see a fall down to R1 at 1.5392 which would be a nice weekly move. My indicators are also moving into overbought territory so we could see a nice move out of this. Further upside momentum could see a touch of the 200 and 55.


Click on Image to Enlargen

The daily chart is very well directed and we’re in a technical down trend still so that’s nice to see as we’ve moved away from the moving averages here as well.


Click on Image to Enlargen

In the news today we have just one medium impact release today for the Gbp at 10:00am – NIESR GDP Estimate.

Good luck and safe trading!

Josh
Senior Trader For Profit Day Trading

Toshko Raychev

Toshko Raychev

AUD/USD 10/07/2012

Yesterday the pair didn’t fulfill expectations for an uptrend continuation and instead continued its fall below major resistance at 1.01788 however couldn’t break it clearly as we didn’t see it close below this level.

On the Daily chart the pair ended by forming a Pin bar with its low wing just touching the Middle Bollinger Band.

Today price has oscillated within the range of Yesterday’s Pin bar and again around the Middle Bollinger Band and resistance at 1.01788 (Pic1,point A).

MACD is below its Signal line and heading downwards (Pic1,point B).

Stochastic is slightly below its middle 50 level and Signal line, pointing downwards (Pic1,point C).


Click on Image to Enlargen

What could be expected from the Daily chart reading is a bounce from the Middle Bollinger Band and a possible uptrend continuation. This though will have to be confirmed by a break upwards of Monday’s and Sunday’s highs at around 1.02110.

The H4 chart confirms the Daily chart analysis for a possible upwards move today and a continuation of current uptrend.

Price is oscillating around the Lower Bollinger Band and major resistance at 1.01788 showing a chance for an upside move soon (Pic2,point A).

MACD is moving from below the zero level to the upside, increasing its value and has already crossed up its Signal line(Pic2,point B).

Stochastic is oscillating around its middle 50 level for the last four candles, showing indecision (Pic2,point C).


Click on Image to Enlargen

My analysis for today is to look for possible long entries and expect a strong upwards move if the 1.02229 level is broken upwards, with a possible Take Profit Target around the next major resistance level at 1.02692. On the other hand, if we see a clear break downwards of major support at 1.01788 there could be short opportunities with possible Target support at 1.01304 and below. This possibility is confirmed by the H4 Stochastic moving below its Signal line and 50 level, pointing downward. So, be aware of this major level at 1.01788 and of course confirm all your entries with your indicators.

Today there aren’t any major news releases anticipated that could affect AUD/USD for there to be some unexpected moves in the market.

Happy Trading

Toshko Raychev

Piet<br />
Swart

Piet Swart

This morning I am looking at the AUD/USD 1 hour chart again. It seems like the market is slowly but surely getting back to “normal”. My system is indicating that we might see a Bearish movement of 20 plus pips. Price could move down to the target area at 1.01993. With the right entry point we could gain a few pips from this pair. 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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