Forex Analysis – 23rd July 2012

  • Will The Euro Slide Off Our Charts Completely…
  • It’s a Slippery Slope…
  • AUD/USD will retracement continue and plenty more…
  • ——————————————

    Europe’s debt crisis worsens

    The Euro started the week under pressure today, as
    it fell to a near 12 year low to the Yen and record
    lows to the Australian Dollar, amid fears that Spain
    may eventually need a full sovereign bailout.

    Adrian Jones

    Adrian Jones

    As concern escalated that Europe’s debt crisis is worsening, the Euro has touched the lowest level in more than 11 years to the Yen.

    The Euro also continued its decline against the Dollar, as a surge in Spain’s 10 year note yields toward a Euro era low has dimmed the outlook for an auction on Tuesday of bills maturing in three and six months.

    Spanish bond yields have hit their highest levels on lack of market confidence, even after the Euro zone finance ministers on Friday approved the terms of a loan of up to 100 billion Euros to aid Spain in recapitalising its banks.

    Also weighing on the Euro was a report in Germany’s “Der Spiegel” magazine yesterday, which suggested without citing sources, that the IMF may not take part in any additional financing for Greece.

    Greece’s international creditors, the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), are due to arrive in Athens tomorrow amid doubts that Greece will meet its commitments and growing resistance among Euro area states, especially Germany, to put up more funds should it fail to do so.

    It seems inevitable to many that the IMF will stop paying rescue aid to Greece, because it is already becoming apparent that Greece will not be able to fulfil its promise to cut debt to 120% of annual economic growth, in Euro terms, by 2020.

    Earlier today, the Euro bought 94.77 Yen and against the greenback, it hit a 25 month low around $1.2103.

    I expect the Yen to remain strong among the major currencies as, with such strong risk aversion in the market, it is the Yen and the Dollar that are expected to keep gaining against risk currencies.

    The safe-haven U.S. Dollar and Yen have found good support. The Dollar index has risen by 0.3% to 83.69 and the Yen and Dollar have strengthened against most of their major peers on increased demand.

    The Yen rose 0.4% to the Dollar and earlier the Dollar fetched 78.19 Yen, marking a seven-week low.

    Gains in the greenback have remained limited ahead of data that economists say, will show that U.S. economic growth has slowed. This is fanning speculation that the Federal Reserve will ease monetary policy further, thereby debasing the currency.

    The Fed is due to hold a two day policy meeting starting on the 31st of July.

    The Euro has stretched its losses against the Australian Dollar so far this month to more than 5%, and was earlier trading at A$1.1671.

    The Aussie was down 0.6% to $1.0310, even after talk of more stimulus from the Fed and diversification of central banks’ currency holdings. The outlook for the Aussie in the short term hinges on consumer inflation figures due out on Wednesday.

    Benign inflation data could take some momentum from the currency if it raises speculation of another RBA interest rate cut.

    All the best!

    Adrian Jones

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    Euro Down To 11 And A Half Year Low, Yen On The Up

    The Euro defied all odds and went on to slide against the Japanese Yen and a basket of other currencies, hitting its lowest level in more than 11 and a half years in early trading on Monday.

    The drop came after pressure mounted over fears that Spain may require a full sovereign bailout.

    The news was welcomed by the Japanese Yen which went on to gain more than one percent during the Asian Session, with the troubled Euro hitting its lowest level since November 2000.


    News Watch For EURJPY


    There are no High Impact news releases scheduled for the EURJPY today, but look out for German data due out tomorrow at 7:30 am GMT.


    EURJPY Analysis


    The EURJPY sank to an all new low since the start of the Asian session but the down move may be coming to an end. Let’s take a look at how we will approach the pair this week:

    Click on Image to Enlargen

    As you can see, price has been driven downwards by events unfolding in Europe and since bounced off the lower bearish channel trendline.

    At the moment, the outlook remains bearish so we are currently looking for a possible re-entry signal to the short side but there may be a slight possibility that we could be presented with a counter trend trade signal.

    There are two key areas that we now need to monitor. The first area is at the 94.250 level. Should price close below this level we may look for Sell trade entry signals. Potential targets for Sell trades can be found at the 94.000 and the 93.750 levels.

    The second key level we need to keep an eye on is at the 95.000 level. Should price surge upwards and we get a close above this level we may look for a Buy trade entry. Potential targets for Buy trades can be found at the 95.650 level and the upper bearish channel trendline.

    Remember that in either scenario we need to check our indicators for confirmation of the trade before diving in to any trades.

    We’ll have to wait and see how the pair decides to behave over the next few bars so sit tight and an entry should present itself soon.

    Take care and all the best for the week ahead!

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    Joshua Schultz

    Joshua Schultz

    The Cable Gbp remains extremely weak after Friday’s cliff diving excursion. We were expecting a drop down to 1.5590 but fell just short of that with a low of 1.5610. At the moment we’re at 1.5538 so congratulations to everyone who held on over the weekend for our target. If price continues to drop we could see a test of support at 1.5456 or 1.5425.

    Click on Image to Enlargen

    We’ve got no high impact news today to muck up anyone’s plans. Presently we’re half way down to 1.5456 and we’ve fallen quite a bit so keep an eye out for pull backs and continuations.

    Good luck and safe trading!

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    Toshko Raychev

    Toshko Raychev

    AUD/USD 23/07/2012

    This past week the pair continued its strong uptrend by more than 200 pips. During this trend continuation, it consequently broke three major resistance levels 1.02692, 1.03183 and 1.03724, almost hitting the next 1.04603 resistance level. Then on Friday, as our indicators show, it fell by almost 60 pips and closed near the 1.03724 level.

    Today the pair opened below the 1.03724 level and has moved downwards breaking the1.03183 resistance level and is currently oscillating near the Daily Middle Bollinger Band ( Pic1, point A).

    The Daily MACD is just still above the zero level and the third lower high swing point just crossed down its Signal line and decreased its value ( Pic1, point B).

    The Stochastic here has already crossed down its Signal line and the 80 level, moving downwards ( Pic1, point C).

    Click on Image to Enlargen

    From The Daily chart readings today – the price being at major resistance at the 1.03183 level, the MACD below its Signal line moving downwards, and the Stochastic below the Signal line and going clearly downwards, we can expect recent downward retracement to continue.

    On the H4 chart the situation looks slightly different.

    The price here is on the resistance level at 1.03183, almost on the H4 Lower Bollinger Band ( Pic2, point A).

    The MACD is below its Signal line for several bars, has crossed down the zero level at the previous candle and is clearly moving downward ( Pic2, point B).

    The Stochastic is in an extreme oversold area below the 10 level and moving sideways toward its Signal line ( Pic2, point C).

    Click on Image to Enlargen

    The H4 readings – the price is near the H4 Lower Bollinger Band and on the major resistance level at 1.03183, the MACD is below the Signal line and zero level, and the Stochastic below the 10 level and moving to the Signal line, show that today we can see some minor upwards movement before a downward retracement.

    My analysis for today is to look for possible long entries, at first just above the resistance level at 1.03183, with a possible target around 1.03724 level, then to sell around this same 1.03724 level with possible targets at the 1.03183 and 1.02692 levels. Don’t forget that all entries must be confirmed by your indicators to be valid.

    Bear in mind that if we see a clear break down of 1.03038 (the previous H4 candle low) there is strong possibility for a strong downwards move to the 1.02692 level and below.

    Today there was only one High Impact News release that would affect the AUD/USD pair directly – PPI q/q, but it has already been released so we can trade we that knowledge.

    Happy Trading

    Toshko Raychev

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