FOREX TRADING

The dollar was slightly more volatile over the past week than usual, and the explanations for this have been getting trickier by the day. As for this week, forex traders are advised to take positions on trades, as a string of data releases coming out of U.S., Europe and Japan are likely to affect the greenback’s main currency crosses.

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Technical Analysis for Major Currencies

EUR/USD

The 1.4375 was able to halt further inclines for the Euro versus Dollar pair to reverse to the downside, in an attempt to gather enough bullish momentum from the pivot support at 1.4250, before rebounding back to the upside to incline on the intraday basis targeting 1.4600 initially. This incline remains as far as 1.4120 is intact.

The trading range for today is among the key support at 1.4020 and the key resistance at 1.4600

The general trend is to the downside as far as 1.4720 remains intact with targets at 1.2120

Support: 1.4250, 1.4170, 1.4120, 1.4070, 1.4000
Resistance: 1.4375, 1.4430, 1.4475, 1.4550, 1.4600

Recommendation: Based on the charts and explanations above, our opinion is buying the pair from 1.4250 to 1.4375 and stop loss below 1.4170 might be appropriate

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US Dollar Consolidation Bound to Yield Breakout This Week

Fundamental Outlook for US Dollar: Bullish

- Conference Board consumer confidence surprisingly surged to a 3-month high in August
- Despite revisions, the University of Michigan’s consumer confidence index fell slightly
- US durable goods orders jumped by the most in 2 years, but excluding autos, gains were muted

The US dollar ended the past week on a mixed note across the majors, losing against the New Zealand dollar, Australian dollar, and Japanese yen, but rising versus the Swiss franc, euro, Canadian dollar, and British pound. Ultimately, this amounted to little more than a continued period of consolidation, as the US dollar index remains above a rising trendline connecting the July 2008 and August 2009 lows. Nevertheless, trading conditions have been extremely difficult, even for those that thrive on range trading, as the low volumes so often associated with the “summer doldrums” create highly choppy price action, and this may remain the case throughout next week ahead of the US Labor Day holiday.

There are a number of indicators due out over the next week that could trigger breakouts for the US dollar. On Tuesday, the ISM manufacturing index is projected to rise above 50 – the point of neutrality – for the first time since January 2008, which would suggest that the sector is finally experiencing a legitimate recovery in business activity. Indeed, the US government’s “cash for clunkers” program has been a boon for the auto industry and for manufacturers in general, but since the program formally ended on August 24, there could be a noticeable drop in output in coming months. Regardless, a strong ISM manufacturing reading would bode well for the US dollar. (more…)

According to a recent report by the Reserve Bank of Australia (RBA), forex volume is down in nearly every major category. “However, turnover declined by over 20 per cent between October 2008 and April 2009 to US$2.5 trillion, to be at its lowest level in over two years, a move reflected in all six markets indicating global, rather than location-specific, causes. The largest markets – the United Kingdom and the United States – experienced the sharpest percentage falls.”

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The Chande momentum oscillator is calculated within preset time interval by the following formulas:

diff = Pi – Pi-1,

where Pi -the price (usually closing price) of the current period;

Pi-1 -the price (usually closing price) of the previous period;

If diff > 0, then cmo1i = diff, cmo2i = 0.

If diff < cmo2i =” -diff,” cmo1i =” 0.” sum1 =” Sum(cmo1,” sum2 =” Sum(cmo2,” cmo =” ((sum1-sum2)/(sum1+sum2))” style=”font-style: italic;”>The CMO Oscillator basic methods of using are : (more…)

Forex trading to today are set to be driven by a batch of data from both the U.S. and Britain. The main release from the U.S. today that traders are waiting for is the Consumer Spending, also known as the Personal Spending report from the U.S. at 12:30 GMT. Estimates put the figure at approximately 0.2% in July, about half the increase of June. Nevertheless, the arise is mainly owed to the cash-for-clunkers program. In spite of this, a positive figure may actually hurt the USD, as such a result could increase risk appetite. Consequently, in order to take advantage of end-of-week market behavior, open your positions in the USD, EUR, and GBP now.

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EUR/USD

Current level-1.4335

EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, presently projected at 1.4134 and 1.3523.

Yesterday’s break above 1.4285 neutralized the negative sentiment and the pair is back in the previous range. We’re rather bearish here for 1.4050 with a risk limit above 1.4367.
Resistance     Support
intraday     intraweek     intraday     intraweek
1.4367        1.4444           1.4285        1.4006
1.4444        1.50+              1.4160        1.3746 (more…)

At earlier this week, President Obama formally nominated Ben Bernanke to a second four-year term as Chairman of the Federal Reserve Bank’s Board of Governors. The response was comparatively quiet, maybe because most pundits had already expected the news. Bernanke himself likely sealed his own re-appointment with the public relations campaign he embarked on last month, ostensibly to offer a rationale for his response to the credit crisis. “In a profound departure from the central bank’s tradition as an aloof and secretive temple of economic policy, Mr. Bernanke has plunged into the public spotlight to an extent that none of his predecessors would have contemplated.” (more…)

Greenback gained ground Wednesday versus the EUR and the British pound, after strong data on orders for new U.S.-made durable goods and new home sales comforted anticipations of an improvement in the economy. The US Dollar traded higher after the durable-goods orders report said orders for July arose by 4.9%, the largest growth in 2 years. Investors will be watching for the new U.S. jobs report today before making significant moves. (more…)

The Euro may see selling pressure in European hours with Germany’s Consumer Price Index expected to show that the annual inflation rate fell for the second straight month in August. UK Nationwide House Prices are also on tap, with forecasts calling for home values to fall the least in 16 months.

Key Overnight Developments

• New Zealand Trade Deficit Narrowed in July as Imports Tumbled

• Australian Business Investment Trumps Expectations in Second Quarter (more…)

Here are Forex Technical Analysis for daily trading :

EUR/USD

Current level-1.4236

EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008).
Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.4134 and 1.3523.

Yesterday’s test of 1.4350 resistance provoked a sharp sell-off to 1.4209 support zone.
Current rebound is corrective in nature and we expect it to be limited below 1.4280 before next leg downwards, to 1.4123. (more…)

Later afternoon trading saw the price of Crude Oil take a nose dive as traders took profit. The price of Oil stalled at the $75 resistance level and fell significantly following the failed breach. Today traders will be tracking the release of the U.S. Crude Oil Inventories data along with the New Home Sales numbers for today’s market direction. (more…)

EUR/USD

Current level-1.4324

EUR/USD is in a broad consolidation, after bottoming at 1.2331 (Oct.28,2008). Technical indicators are neutral, and trading is situated above the 50- and 200-Day SMA, currently projected at 1.4087 and 1.3463. (more…)