FOREX TRADING

Daily Technical Analysis

EURUSD Outlook

The EURUSD continued its bearish momentum yesterday, bottomed at 1.4303 and closed at 1.4348 after break below 1.4500. The bias remains to the downside targeting at least 1.4250. However, as you can see on my daily chart below we have CCI divergence indicating potential upside minor correction and potential profit taking activity on Friday testing 1.4450 resistance area, but long position is not recommended at this phase. Break below 1.4250 should trigger further bearish momentum towards 1.4170 area and potentially testing 1.4000 support area in longer term point of view.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push higher yesterday, topped at 1.4589 after some good results of manufacturing and services PMI data, but further bullish momentum was rejected as the pair closed lower at 1.4529. This fact should keep my bearish scenario targeting 1.4450 and 1.4250 this week remains intact. On h1 chart below we can see that price still trapped in a range area of 1.4585 – 1.4500 area indicating consolidation but the bias remains to the downside. We need a consistent move below 1.4500 area to continue bearish momentum towards 1.4450 – 1.4400 area today. Immediate resistance at 1.4589 area (yesterday’s high) and the trendline resistance area (red). Break above those area could be a threat to my bearish scenario and lead us into no trading zone.

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Dollar Index At Resistance

4 Hour Chart Flows: Long Price Points: 75.00-75.40, and 77.00 Looking for: A Short wave ii pull-back towards 75.50

Momentum: The dollar index went into Neutral mode on 26th Oct and has held that trend since. The near-term path of least resistance is consolidation around new lows, with long-bounces on weak equity trading days. The weekly close above 76.00 (a signal that buyers are dominating), is bullish and signals a potential momentum reversal.

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USD Higher, EU Bank Worries & FED Rate Hike Speculation

• USD: Higher, wholesale prices rise sharply, Empire manufacturing drops sharply, industrial production rises
• JPY: Lower, Japan’s yield curve steepened to a seven-year high
• EUR: Lower, Austrian bank nationalization, weaker German Zew index
• GBP: Lower, CPI rises near BOE target, house prices fall
• CAD and AUD: AUD lower & CAD mixed, less hawkish RBA policy bias, Canada’s leading indicators rise

Overview

USD traded sharply higher Tuesday supported by concern about European banks, report of weaker than expected German Zew index and less hawkish policy minutes from the December RBA meeting. Austria’s sixth largest bank was nationalized Monday and there are reports that Austria’s fourth-largest bank may soon also be nationalized. Austria’s debt rating is at risk for downgrade. The German Zew index posted an unexpected decline. The decline in Zew index generates concern about the outlook for the EU recovery.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD was corrected higher yesterday. Although bullish correction should not be a surprise for us after significant bearish last week and the bearish scenario remains intact, as you can see on my h1 below, price is forming an ascending triangle formation, which is technically a bullish pattern which potentially could be a serious threat to my bearish outlook, especially if price break above the upper line of the triangle (around 1.4680 area) and violate the trendline resistance with upside target at least around 1.4820/00 area. However, if this ascending triangle bullish scenario fails and price violate the triangle to the downside, expect further bearish continuation towards 1.4530 even 1.4450 today

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USD Lower as Stocks Rise, Risk is Back On

• USD: Lower, pressured by improving risk sentiment as Abu Dhabi comes to the rescue of Dubai debt
• JPY: Higher, manufacturing sentiment improves, CAPEX spending falls at a record pace
• EUR: Higher, Q3 employment and industrial production decline
• CHF: Higher, producer/import prices improved to flat in November
• GBP: Lower, Rightmove house prices post an unexpected drop
• CAD and AUD: AUD higher & CAD lower, commodity prices mixed, Canada’s capacity use dips

Overview

USD traded mixed to lower Monday pressured by improving risk sentiment as equity markets rally in reaction to news that Abu Dhabi has pledged 10bln rescue plan for Dubai debt. JPY outperformed despite report that the improvement in the pace of manufacturing sentiment slowed and CAPEX spending declined at a record pace. JPY was supported by report that the Japanese coalition government agreed to keep bond issuance low ¥44trln. The agreement to keep Japan’s bond issuance below this level will reduce the risk of a downgrade of Japan’s debt rating. European currencies were mixed with GBP pressured by report of an unexpected decline in UK house prices and EUR gains limited by report of a drop in industrial production and continuing uncertainty about the outlook for Greece’s sovereign debt. Commodity currencies were mixed despite the improvement in risk sentiment as crude prices trade lower. USD ended last week trading at one month high supported by improvement in US economic data including better than expected US employment and stronger than expected retail sales. Today’s FX trade seems to be re-linking price direction to risk sentiment with the USD trading higher before the Abu Dhabi news then turning lower in reaction to the Abu Dhabi rescue plan. There was no major US economic data released in today’s trade. Focus turns to Wednesday’s conclusion of a two day FOMC meeting.

Continuing USD gains will hinge on whether the Fed announces details of its exit strategy and drops language in its policy statement pledging to maintain low yields for extended period.

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Forex Technical Analytics

CHF

The pre-planned buying positions from key supports have been implemented with attainment of minimal anticipated target. OsMA trend indicator, having marked low activity of both parties does not give grounds for any amendments to earlier designed trading plans. Therefore, we can assume probability of rate return to 1,0220/40 supports, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term buying positions on condition of the formation of topping signals the targets will be 1,0280/1,0300, 1,0340/60 and (or) further break-out variant up to 1,0400/20, 1,0460/1,0500. The alternative for sales will be below 1,0160 with the targets of 1,0100/20, 1,0040/60.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD continued its bearish momentum on Friday, bottomed at 1.4585 and closed at 1.4613. I am still in short mode for this pair with target at least 1.4450 even 1.4250 this week. The bias is neutral in nearest term and we might see some upside correction after significant bearish last week. CCI just cross the -100 line up on h1 chart suggesting potential upside correction testing 1.4680 – 1.4715 resistance area today. Break above that area could trigger further bullish pressure testing the trendline resistance area (aqua). Break above the trendline should lead us into no trading zone but could be a potential threat to my bearish outlook testing 1.4820/00 area.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD has been consolidating in the last two days, moving in a triangle area as you can see on my h4 chart below. I am expecting a break from the triangle to take us out from consolidation phase and give us clearer direction whether price will bearish or bullish.

A. Bearish Side: Major trendline support breakdown. This fact give us technical bearish reversal view testing 1.4625 and 1.4450.

B: Bullish Side: CCI Divergence.This fact give us a technical bullish view at least testing 1.4820.

My opinion is that the bearish reversal scenario should remains intact with technical target around 1.4625 even 1.4450 but in the process, we might have some minor bullish pressure testing 1.4820 area. However if price break above 1.4820 and closed above that level this week, the bearish reversal scenario triggered by trendline support break could be in a serious threat and from longer term view could be seen as the end of bearish correction and continue the major bullish scenario at least re-testing 1.5140 area before aim for 1.5300.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push lower yesterday, bottomed at 1.4667 but further bearish momentum was limited as price closed higher at 1.4738. The bias is neutral in nearest term but the fact that price still below 1.4820 area for me indicating further bearish pressure is potential with technical target remains around 1.4625 after breakdown below the major trendline support on Monday. Break below 1.4625 should trigger further bearish scenario towards 1.4450 this week. On the other hand, break above 1.4820 should be seen as potential threat to the bearish scenario testing 1.4950 area before aim for 1.5140 area once again.

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No Afternoon Wall Street Nap

In afternoon trade oil and gold are taking a huge trip lower, with oil off from 73.60 to 70.60 in two 30 minute time periods. Gold has reversed from 1145 to 1128 in the same time-frame, just as S&P trade drops from 1095 (the swing point posted yesterday) to test 1088 support. These are small percentage moves in S&P equity trade (0.3%), but are starting to increase towards 1% drops in the commodity markets.

The S&P futures market is holding 1087 support, and now will battle 1095 and then 1105 as target areas for any bullish moves today. The higher the S&P moves, the weaker the Usd will become.

The reaction historically would be to see increased Usd buying, as the move from stocks to bonds takes place, but instead we are seeing the major pairs do nothing more, as yet, than hold near-term support that was put in place in the Asian and European session. If major currency pairs hold 1.4650 on euro, 1.6180 on cable, 0.9000 on aussie, 1.0525 on cad, and 1.0280 on swissy, it will be a very clear signal that the Usd is running out of buying momentum.

We await the New Zealand interest rate announcement and press conference at 15:00 EDT, and look forward to Swiss and U.K. rate decisions on Thursday, all of which have the potential to turn each currency pair upside down as the news/statements/rates hit the wires.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD made a significant bearish momentum yesterday, bottomed at 1.4680 and closed at 1.4702. This fact should be seen as potential further bearish reversal scenario with technical target around 1.4625 and 1.4450 this week. The bias is neutral in nearest term as we might see upside correction. CCI in oversold area and heading up on daily chart suggesting potential upside pullback testing 1.4820 area. As long as price stay below that area, the bearish scenario should remains intact. However, a movement above 1.4820 area could be a serious threat to my bearish scenario especially if price close above that area today testing 1.4950 resistance area.

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USD Higher, Risk Aversion Returns on Credit Warnings

• USD: Higher, supported by a spike in risk aversion as equity markets and commodity prices decline
• JPY: Higher, supported by a spike in risk aversion, Japan announces a new $81bln stimulus plan
• EUR: Lower, Fitch downgrades Greek debt rating, German industrial production unexpectedly declined
• GBP: Lower, concern about UK debt rating and weaker than expected industrial output
• CAD and AUD: AUD & CAD lower, gold and crude prices fall, BOC holds rate policy steady

Overview

The USD and JPY traded higher Tuesday supported by a spike in risk aversion as equity markets decline and weaker than expected industrial production data from the UK and Germany generate concern about a possible double dip recession in Europe. GBP was pressured by a Moody’s warning of possible downgrade of UK AAA debt rating if the UK government does not take action to reduce its ballooning budget deficit. Fitch downgrade of Greece’s debt rating sparked selling of the EUR. Fitch lowered Greece’s long-term foreign currency rating to BBB+ from A- and said the outlook is negative. Moody’s also warned that the US debt rating could be on the verge of a downgrade as well. Concern about UK and US debt ratings added to today’s spike in risk aversion Commodity currencies traded lower in reaction to weaker equity markets and a sharp drop in the price of crude and gold. The BOC elected to hold interest rate policy unchanged as expected and softened rhetoric about the impact of the strength of the CAD. USD weakened in late trade Monday in reaction to what were perceived as dovish comments from Fed Chairman Bernanke. Bernanke said that it is too soon to determine whether the US recovery is self-sustaining and the job market remains weak. His comments may reduce speculation end of an earlier than expected withdrawal of stimulus by the Fed. FX focus has returned to risk sentiment with credit warnings supporting USD in Tuesday trade.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a significant technical movement yesterday by break below my major trendline support (red) as you can see on my h4 chart below. Price retreated to the upside, tested the trendline but able to stay below the trendline so far. The bias is neutral in nearest term as we still need consistent move below 1.4820/00 to continue the bearish scenario, but this fact indicating potential bullish failure and bearish reversal scenario towards 1.4700 and 1.4625 area. CCI just cross the -100 line up on h4 chart so watch out for potential upside pullback testing 1.4905 – 1.4950 resistance area. Break above that area and another movement back above the trendline should lead us into no trading zone as direction would become unclear for me. On the upside, 1.5140/40 area should remains key resistance area at this phase.

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Forex Technical Analytics

CHF

The pre-planned break-out variant for buyers has been implemented with overlap of minimal anticipated target. OsMA trend indicator, having marked essential rise in bullish activity at break of key resistance level, gives grounds favoring bullish direction in planning trading operations for today. Therefore, at this point, we can assume probability of rate return to close 1,0090/1,0110 supports, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for buying positions on condition of the formation of topping signals the targets will be 1,0160/80, 1,0200/20 and (or) further break-out variant up to 1,0260/80, 1,0320/40. The alternative for sales will be below 1,0040 with the targets of 0,9980/1,0000, 0,9920/40.

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