The US Dollar reversed its downward trend on Thursday after Federal Reserve members downplayed the fall of the US currency in the past few months by reminding investors that deflation is still a real threat. The Fed cited the falling prices in the US commercial real estate in their defense of not raising interest rates at this time – a move that is widely seen as keeping the Dollar down for now. Money flows switched hands from the equity markets, which have been on a sustained rally in recent weeks, to the USD as well as the Japanese Yen, the two primary safe-haven currencies. Weakness in the technology sector and a sharp drop in health related stocks attributed to the progress being made on US healthcare reform helped sink stocks Thursday as risk appetite showed its first signs of waning in three weeks.
At 11:00 PM GMT in the forex markets, the US Dollar was up .32% to the Euro to 1.4915, up .6% to the British Pound Sterling to 1.6654, up .9% to the Canadian Dollar to 1.0634, up 1.05% to the Australian Dollar to .9194, up 1.96% versus the Kiwi to .7311 and up .35% to the Swiss Franc to 1.0132. The Dollar did fall today against the Yen by .35% to hold in at 89.01.
The ICE Futures US Dollar index which measures the performance of the Greenback against a basket of six currencies rose by .2 percent to 75.36. The index had bottomed out to a 15-month low of 74.679 earlier in the week. _________________ My forex online Broker: http://www.finexo.com/
Forex News: http://forextradingguru.blogspot.com/
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
Today's trade suggestion:
Another day – another dollar for range traders as the euro has been stuck in the 1.4800-1.5000 range since the beginning of the month. This really could break out either way (as it eventually will) but there are signs that the 1.5000/5050 barrier is going to be tough to break. Notice on the hourly chart that we have the makings of a “descending triangle” with lower highs each time the rally to near the range top takes place. We are currently
butting up against the downward top of the triangle as I write, and I’ll be watching and waiting for signs of reversal on the hourly chart. Target for short trades is the range bottom around 1.4800 and, on a successful break
lower, 1.4650.
Summary:
Sell rallies to 1.4950/60 or at higher resistance levels, target 1.4800 and then 1.4650.
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
Today's trade suggestion:
Another day – another dollar for range traders as the euro has been stuck in the 1.4800-1.5000 range since the beginning of the month. This really could break out either way (as it eventually will) but there are signs that the 1.5000/5050 barrier is going to be tough to break. Notice on the hourly chart that we have the makings of a “descending triangle” with lower highs each time the rally to near the range top takes place. We are currently
butting up against the downward top of the triangle as I write, and I’ll be watching and waiting for signs of reversal on the hourly chart. Target for short trades is the range bottom around 1.4800 and, on a successful break
lower, 1.4650.
Update: Danger signs as the euro is making “higher lows” and has broken the tentative downward hourly trend line. However, I’ll adopt a purely objective stance based on the G7 model, and remain with the bearish direction whilst below 1.5050. This means there is remaining resistance at 1.5000 and 1.5050, where I’ll continue to watch for signals to sell.
Summary:
Sell rallies to 1.5000 or 1.5050 after a clear G7 entry signal, target 1.4800 and then 1.4650
01 Dec (My apologies this should have gone up yesterday...)
Weekly Trend direction: Bullish
Weekly trend reversal level: 1.4800
Key G7 support levels: 1.5000/4980, 1.4920, 1.4820
Counter-trend opportunities:
Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.
Today's trade suggestion:
Interesting week as the JPY strengthened sharply against the euro and the dollar, whilst the euro broke to new recent highs vs. the dollar. This has turned the euro weekly direction bullish and we have a new weekly reversal level at 1.4800. The markets are messy to say the least, but that’s what is to be expected as we near year end. Caution is required and assumptions to be avoided like the plague! Whilst above 1.4800, we’ll look to buy the euro into dips, with first support levels at 1.5000/4980 (the major one – having been the previous range top for several months) Below that we have 1.4920 and 1.4820. Watch and wait for a clear reversal pattern to form before buying and make sure you have firm stops in place! Target for longs is the weekly 78.6% Fibonacci level at 1.5240 and then (if this fails to withstand) 1.6000, the all-time high.
Summary:
Buy dips to 1.5000/4980 or 1.4920 after a clear G7 entry signal, target 1.5240 and then 1.6000.
The US Dollar gingerly retreated from recent gains, after comments from the United Arab Emirates soothed loan default concerns, taking away for now, the flow of safe-haven funds.
The UAE’s Central Bank said on Monday that it would back the banks in Dubai after Dubai World, a private equity company, said it would need until the middle of 2010 to restart payments on its 59 Billion Dollars in debt accrued during the vast and elaborate expansion of Dubai’s infrastructure.
An interest payment of 3.5 Billion that was expected to be paid in December was the first payment to be affected by the declaration.
Some of the losses were stemmed by the Dollar however, and trends were indicating a continued upswing after a senior Dubai financial official was quoted as saying that the “Government of Dubai does not guarantee Dubai World debt” leading investors to question the Central Banks comments.
At 10:45 GMT, the US Dollar was trading down .15% to the Euro to 1.5008, up .03% to the Japanese Yen to 86.54, up .2% to the British Pound to 1.647, down .35% against the Canadian Dollar to 1.058, down .78% versus the Australian Dollar to .9131 and down .2% against the Swiss Franc to 1.0039. The ICE Dollar Future Index was trading at 74.70, close to the 15 month low it reached early last week of 74.170 _________________ My forex online Broker: http://www.finexo.com/
Forex News: http://forextradingguru.blogspot.com/
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
Today's trade suggestion:
Well, the jobs report sure got things going, this time – South, for the euro. We have performed a beautiful “bearish engulfing candle” with a “spike high” on the weekly chart, and this means that we’ll be looking to sell euros this week. Resistance levels are neatly defined above the current price, so it won’t be hard to pick the spot to enter. Watch and wait for a clear G7 reversal pattern before entering, remembering that these thin markets can lead to large retracements. Don’t enter too soon and don’t make assumptions. Key resistance lies either side of the 1.5000 area, with 1.4942 being the first, at the 38% Fibonacci zone. Whilst it’s hard not to be sceptical of last week’s reversal, year-end markets often present ideal technical trading opportunities and this week could provide an excellent opportunity to profit from the euro!
Summary:
Sell rallies to 1.5020/30, 1.4950/4980 after a clear G7 entry signal, target 1.4650.
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
Today's trade suggestion:
7 December:
Well, the jobs report sure got things going, this time – South, for the euro. We have performed a beautiful “bearish engulfing candle” with a “spike high” on the weekly chart, and this means that we’ll be looking to sell euros this week. Resistance levels are neatly defined above the current price, so it won’t be hard to pick the spot to enter. Watch and wait for a clear G7 reversal pattern before entering, remembering that these thin markets can lead to large retracements. Don’t enter too soon and don’t make assumptions. Key resistance lies either side of the 1.5000 area, with 1.4942 being the first, at the 38% Fibonacci zone. Whilst it’s hard not to be sceptical of last week’s reversal, year-end markets often present ideal technical trading opportunities and this week could provide an excellent opportunity to profit from the euro!
Update 10 December: Excellent opportunity it was, and the euro is still moving steadily (but not dramatically) downwards. Key resistance levels, starting at 1.4800, will provide areas to sell into during the rest of this week. Target for the shorts is 1.4620 and then 1.4500.
Summary:
Sell rallies to resistance levels (especially 1.4800/50 after a clear G7 entry signal, target 1.4620.
________________________________________
Weekly Trend direction: Bearish
Weekly trend reversal level: 1.4905
Key G7 resistance levels: 1.4780/4800, 1.4860, 1.4930
Counter-trend opportunities: 1.4500/1.4480
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
Today's trade suggestion:
The euro continued to drop last week, mainly due to a late dollar rally on Friday. Some have called this an “unrelenting” dollar rally, but I could hardly agree with that – this correction is a normal part of the process and we could well see further dollar weakness before year end. However, we’ll go with the flow for now, and look to sell euros whilst below the weekly reversal level (now at 1.4905) resistance levels lie overhead at 1.4780/1.4800 (key) and then slightly higher at 1.4860. Watch and wait for a clear G7 reversal signal before selling, stops above the reversal candles, and target around 1.4680 and then maybe 1.4600. Counter trend longs could be tried at 1.4500/4480 after a reversal pattern.
The US Dollar gained broadly on Friday after a Retail Sales report came in stronger than expected, boosting the hopes, once again, that the US will move to raise interest rates sooner than initially predicted. The US Commerce Department announced that retail sales had risen by 1.3%, a figure that was .7% higher than Forex analyst forecasts. On the same note, another report from the Commerce Department showed that Consumer Sentiment had also risen beyond expectations, adding to the belief that the consumer driven economy was beginning to gain momentum.
Investors are hoping these numbers continue their pattern as it is believed that if by the next Federal Reserve policy meeting in February, this data continues to show improvement, the Fed will likely be compelled to raise interest rates from their near zero level. A rise in the core rates will add to Dollar strength as the US currency will be more expensive to borrow. _________________ My forex online Broker: http://www.finexo.com/
Forex News: http://forextradingguru.blogspot.com/
Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.
Today's trade suggestion:
It’s about time! The euro spent most of the holiday month ranged between 1.4300 and 1.4450, and this morning seems to be the day it’s decided enough. 1.4450/80 is now the key support level, and we’ll look to buy dips to this level during this week. As we have only just broken out, a lot depends on how high and how fast we rally today
and tomorrow, and we may have to adjust the support zone higher before we get a chance to buy. Weekly support lies at 1.4255, and as long as we remain above there, the strategy to buy dips will remain unchanged this week!
Summary:
Buy dips 1.4450/80 after a clear G7 entry signal, target 1.4580.
Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.
Today's trade suggestion:
Despite last week performing a “higher high and higher low”, the candle spike high is a concern for bullish traders. However, this also gives us an opportunity to get into a long position this morning with a tight stop and a
weekly reversal level only 10-20 pips below us at the time of writing this. We’ll know if we are wrong very quickly.
Whilst above 1.4320 I’m looking to buy the euro with a target of around 1.4420 (the 38.2% retracement of the move down from last week’s high) or perhaps even 1.4450 (see chart – previous support and the 50% Fibonacci level). We are still in a consolidation phase with the key medium term support at 1.4220 still holding after 4 weeks of first contact. This week should be a decisive one, probably with a strong break higher.
Summary:
Buy dips 1.4320/50 after a clear G7 entry signal, target 1.4420/50.
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