Weekly Technical Update: Greenback Strength Re-emerging

Last week, it the USD crosses such as the EUR/USD and GBP/USD were showing signs of reversal after greenback dominance for end of 2009 and most of 2010 so far. However, by week’s end, the greenback prevailed, and we may have to start thinking of USD-bullish outlooks in the coming weeks. There was some risk appetite to start the week, but that evaporated by the end, dragged by Greece’s uncertain plan of action for its sovereign debt. Let’s take a look and see what we can expect in the coming weeks.

EUR/USD Signals Continuation Decline

Daily and 4H: The EUR/USD has failed to finish development of a rounded bottom as price action was rejected from going above 1.3850. As that important powerline held, the market declined.

The daily stochastic shows a crossover(reversal signal), and the 4H time-frame shows crossover in the oversold zone (bearish continuation).

There is support at 1.3450. A pullback therefore could be expected to spring from this previous low, but a bearish attempt after a weak rally has a good chance to breaking.

Then the intermediate outlook is bearish towards the 1.30/1.31 level.

If no break below 1.3450 occurs, continue to stalk the pair as it is bound to exit its consolidation zone between 1.3450 and 1.3850.

GBP/USD Signals Bearish Continuation

Daily and 4H: The Sterling is also showing weakness against the greenback after a couple weeks of sideways, slightly upwards correction. The market was not able to break and stay above the 1.5350 area, and a very sharp decline is developing.

Looking at the 4H time-frame, the decline has broken important support levels and is now testing the 78.6% retracement level.

The strength of the current decline is suggestive of further bearish continuation.

Looking at the daily, the next support is at 1.44/1.45, where important fibonacci levels coincide.

USD/JPY Indecision Near Resistance

Daily and 4H: This week, there was a reluctance of the market to follow the existing downtrend and head towards 87.00. But there is also a lack of bullish commitment which is needed to break above the declining trendline seen in the Daily.

The 4H time-frame shows a sideways range roughly between 90.0 and 89.80/91.0. A close below 90.0 in the 4H time-frame should have bearish implications, especially if confirmed with a break below the 89.50 powerline.

A close above 91.0 is a bullish indication, but needs further rally to confirm. The market is very undecided about this pair, so ability to break the 89.50 or 91.0 levels will be indicative of new direction. A bearish implication will have higher probability of follow through than a bullish indication, as the long-term trend has been bearish.

USD/CAD In Retracement Rally

Daily and 4H: This morning, better than expected Canadian fundamentals gave the CAD a boost, and the USD/CAD pair dropped from 1.0190 to 1.0070 in the 3 hours around the release of retail sales and inflation data for Canada. A break below the 1.0070 would have been a strong indication of an attempt to the 1.0 parity level.

There was definitely a volatile reaction, but there was an equally strong rejection from the market, keeping the pair above the 1.0070 area.

This suggests there is some bullish forces that will try totest the 1.02 area. If the market breaks the current 4H 50SMA and the 1.02 area, a target would be the 1.0370 area, which is 50% retracement of the latest downswing, and just above the 38.2% retracement of 2 previous downswings.

This 1.0370 area will hold as resistance if the market is to maintain the intermediate bearish outlook towards 1.0.

There may be some reversal signals, but the market continues to be in a bearish mode with the SMA50 diverging further from SMA200 in both daily and 4H time-frame. Therefore, continue to treat any the current rally as a pullback and look for its completion at 1.0370 if not 1.0200.

EUR/GBP Stalking Possible Pullback

Daily and 4H: The EUR/GBP pair broke its intermediate term uptrend earlier this week. and has continued to decline until hittin the 0.8915 area Friday.

Remeber the EUR/GBP is in a congestion pattern. Therefore, although the current rally could be the start of the 3rd impulse wave of a rally, it could very well be just a pullback.

This is where the 4H time-frame might offer more detail. The current rally should top off around 0.9050 if the long-term congestion mode is maintained. Then a decline towards 0.8850 is suggested.

Otherwise, if the market continues to rally, and breaks above 0.9150, we have a major bullish signal.

Weekly: The weekly shows a swing projection towards 0.96.

AUD/USD:0.92 Awaits Another Test

Daily and 4H: The AUD/USD has reached the swing projection of 0.9200, rallying to 0.9250 before topping and declining. The declining trendline has held to end this week.

Price action is bearish in the short-term, and there might be a test of the 0.9075 (38.2% retracement.

A break below that, and coincidentally the rising support would suggest a decline towards the 0.86 low (but note that the market has not cracked the rising 200SMA yet in the daily).

The nearest anticipation would be for bottoming action near 0.9070, then another attempt to crack the high at 0.9250. A break above 0.9250 will be a long-term continuation signal.

GBP/JPY: Couter-trend Rally Tops, Bearish Continuation?

4H and Daily: The GBP/JPY has completed the second leg projection in a retracement rally. The market rallied almos tto the projection of 139.50, rejected after reaching 139.40.

The daily time-frame shows stochastic crossover, and price action reversal signal. The 4H time-frame shows an attemp top break the rising trendline. If this succeeds, and a pullback follows to confirm a breakout, a swing projection seen in the daily, targets the 128.20 area.

Capital Market Services, L.L.C.
www.cmsfx.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. CMS will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

Foreign currency trading is not conducted on an exchange. CMS is acting as a counterparty to its clients’ transactions and as a result, CMS’ interests may be in conflict with its clients. Since CMS acts as the buyer or seller in the transaction one should carefully evaluate any trade recommendation provided by CMS or any of its solicitors. Foreign currency trading involves a substantial risk of loss and may not be suitable for all investors.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

This was basically a week of continuing consolidation, except for the USD/CAD which is looking seriously at the parity scenario. The coming weeks may be crucial as the markets test important powerlines. We have short-term consolidations/corrections in pairs such as EUR/USD, GBP/USD, EUR/GBP, and GBP/JPY. But we are also testing long-intermediate-term consolidation in USD/JPY, EUR/GBP, and AUD/USD as well.

EUR/USD Test of Rounded Bottom

Daily: The EUR/USD pair continues to be supported above the 1.3450 support. This week, the market closed above 1.35 and appears to be creating a rounded bottom.

Today’s rally so far heightens that probability but is still premature to call it a reversal signal. The market needs to break above the declining trendline preferably followed by a pullback. This would confirm a reversal and a target could be the 1.42 area, which is the support from a consolidation zone.

4H: The 4H time-frame shows the market in a current swing breaking out from a triangle pattern. A swing projection is to the 1.3820 area, and the market is nearing.

The completion of the rounded bottom is tested here. If the market can eventually break above 1.3820 during this current bullish cycle, the market may go to 1.42.

However the momentum is overbought so there might be a slightly correction in the near-term. Then if the market breaks above, get ready for a pullback to confirm.

GBP/USD: Still at the Station

Daily and 4H: Not much has developed for the GBP/USD since last week. The pair remains in consolidation like a train staying in the station.

This week the market was supported above 1.4850 and another leg up was started.

By Friday, this attempt has not shown much strength yet, as it still remains below the 1.52 top from the previous leg up.

The market can break the 1.52 and still see resistance near the 1.53/1.5350 area.

Looking at the daily, we see that this area is also coincident with a declining trendline.

If the pair can break above that, and confirm with a throwback, the market can continue to rally to test the important powerline at 1.56/1.57.

Otherwise, the market rejects the bullish attempt, and continues to consolidate. A break below 1.48 would suggest a move to 1.45/1.44.

USD/JPY To Test Resistance

Weekly and Daily: The USD/JPY was stronger this week and continues a rally that would soon test a long-term declining trendline at 91.50.

Basically, a break above that, with further confirmation from a break above the previous 92.30 top, can suggest bullish outlook.

Otherwise, continue to be bearish since the established trend has been bearish the last couple of years.

The stochastic in the weekly is bullish at the moment, but is bearish in combination. The two higher tops are not confirmed with price action, showing that a stronger reversal attempt was not reflected by price action; this is bearish.

The 87.00 projection needs to be re-assessed. Perhaps instead of declining channel, the market will enter a sideways channel for a while before a bullish mode is taken.

USD/CAD Eyes Parity

4H: The USD/CAD attemped to rally but was quickly subdued in the last session. Looking at the 4H time-frame, we see that the signal was spotted prematurely, and the same candle that would have broken above the declining resistance, actually closed back within the channel.

The market instead continued to however above 1.02 until the European session got underway.

We see in the 4H time-frame a near-term projection to 1.01. This is a conservative patterns breakout projection, but considering the overall bearish mode, let’s see what other targets are viable.

Daily and Weekly: The daily chart shows the continuation of a swing past 100% projection of the previous. If this is a butterfly, it is extending the second retracement leg.

Fibonacci projection shows that just above the parity level, there is a confluence of the 161.8% projection of the previous leg, and 138.2% extended retracement of the previous 1.02-to-1.0750 rally.

The weekly shows that the 78.6% retracement level is just below the parity level. If the market breaks below 0.99, it may continue declining until it tests the major low at 0.91. It is still a bit premature, but a confirmation would be a failed bullish attempt after a rebound from the parity level.

EUR/GBP Congestion Pattern

Daily and Weekly: This week, the EUR/GBP attempted a rally, but remains in the consolidation context.

This consolidation comes after a strong push from the 0.87 area. This push is now testing a declining resistance. We can see this resistance as part of a large triangle in the weekly chart.

If the market breaks above this 0.9150 resistance, a move towards 0.96 is possible as a swing projection, first seeing resistance from the previous top at 0.94.

On the otherhand, a decline would be a C-wave within this larger correction pattern.

The daily shows that a decline may be imminent, but may need confirmation from a break below 0.90. This would completed a double top.

The next test is the 0.8850 powerline, which was the resistance of the previous consolidation area. If that breaks, the market may come down to the 0.87 area to test the rising support of the triangle pattern.

Consider that the EUR/GBP has been bullish before this triangle, so if there is bottoming at 0.87, it is very likely a bullish attempt from there will break above the triangle.

But also be ready for the opposite scenario, as a break below 0.87 would spell a decline to 0.84 area, a swing projection.

AUD/USD:Almost 0.92, Resistance Holding for Now

Daily and 4H: The AUD/USD rally was projected to 0.92. The market missed it barely, touching 0.9190. The 4H time-frame shows this is the first non-higher top in the recent channel rally, and the stochastic is showing some signs of exhaustion.

BUT before we jump on the reversal, there are a few tests for the bearish attempt. Current, the near-term signal is a break below 0.92, then a break below 0.9060.

A decline would still see support near the 0.90 area, which is probably coicident with the rising trendline in the 4H.

At the moment monitor the topping action and see what kind of bearish attempt follows. It would not surprise me to see a break above 0.92 next week, unless the bearish attempt is sustained. Look for bottoming action for a decline at 0.9060. If a bullish attempt follows that, a break above 0.92 is likely.

GBP/JPY: Couter-trend Rally Continues

4H and Daily: The GBP/JPY is in a second leg up in its recent correction rally.

Immediately we can see a swing projection to the 139/139.50 area. This is coincident with the SMA200 in the 4H chart, and tests resistance levels both flat and declining.

It would also be a completed bearish Gartley at the 61.8% retracement level, seen in the daily chart.

Weekly: The weekly chart shows how bearish the GBP/JPY since 2008. A swing projection continues to 130.50 or 78.6% retracement. If the current rally is indeed a correction. Get ready for an intermediate bearish outlook in the coming weeks toward 130.50.

Capital Market Services, L.L.C.
www.cmsfx.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. CMS will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

Foreign currency trading is not conducted on an exchange. CMS is acting as a counterparty to its clients’ transactions and as a result, CMS’ interests may be in conflict with its clients. Since CMS acts as the buyer or seller in the transaction one should carefully evaluate any trade recommendation provided by CMS or any of its solicitors. Foreign currency trading involves a substantial risk of loss and may not be suitable for all investors.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.

Bollinger bands will help you to predict big trending moves, act on big trend reversals and finally, time trading positions with greater accuracy for bigger profits.

Here we have related Bollinger bands to the currency markets (as it is here that they are most useful) – but they are useful in all financial markets.

What are Bollinger Bands?

Developed by John Bollinger, Bollinger bands are volatility bands drawn around a simple moving average.

You calculate Bollinger bands using the standard deviation of price over the same period as moving averages and plotted as lines above and below the moving average.

As moving averages have been traditionally used to identify the underlying trend, Bollinger bands combine this with the volatility of the individual market (or the standard deviation) – to plot a trading envelope.

The distance between upper and lower Bollinger bands reflects the volatility of the market traded.

As prices force themselves away from the longer-term average, the standard deviation rises – and thus the bands will fluctuate in varying amounts, away from the average.

Why Bollinger Bands Work

In any market, the value of currency traded tends to rise slowly over the longer term.

Prices may spike short term, but will normally dip back to the longer term moving average (the centre band) – which represents realistic value.

The volatility of the outer bands therefore gives us an indication of how volatile prices are – and how far away price is from longer-term value.

Most price spikes are caused as much by trader psychology, as the supply and demand backdrop – and this scenario is reflected in the concept of Bollinger bands.

Why are Bollinger Bands so useful?

Bollinger bands perform three major functions for traders:

1. Spotting a Breakout and New Trend

Markets move between low volatility trading ranges, to high volatility trending moves.

When a market makes trades in a narrow range, the Bollinger bands will narrow together and this shows a market with extremely low volatility – however this is a warning that a high volatility trending move is likely to follow.

When prices break above or below the upper or lower band, it is an indication that a breakout and trend is about to develop – traders will then take a position in the direction of the breakout, and try to ride the trend.

2. Timing Entry Levels in a Trend

We all know long term currency trends last for months or years – but we need to get in at the best risk / reward level.

Bollinger bands will help get you in to the trend and time your entry.

All you do is watch for dips toward the centre band – and enter in the direction of the trend – it really is that simple!

To time your entries with greater accuracy, and filter out “false” breaks we recommend using a momentum indicator – such as stochastics, to confirm the move.

3. Spotting Market Reversals

When the price touches the top of the band, a sell is generated, and prices should revert back to mean, or the middle moving average band.

If the price touches the bottom of the band, traders can buy a currency, assuming that it is oversold, and will rally back towards the top of the band.

The spacing, or width of the band, is dependent on the volatility of the market, but gives traders a clear indication of where prices will go, and when to enter.

A Word of Caution!

Bollinger bands are a useful tool – but need combining with other indicators, as with any single indicator, they should not be used in isolation.

We personally feel Bollinger bands should be used with basic charting, to get the big picture – and the best timing indicator is the stochastic as stated, to filter out “false” signals

By Malika Sharma

Swing Trading indicators are what the professional traders use. Indicators support the professional traders on their decision making technique. The banks and the professional traders use the indicators to the maximum achieving better results. The stock charts need to be well described through the use of indicators. Generally, an indicator perfectly complements the stock charts. Try to be careful while placing a large number of indicators on a single stock chart as it might result into complicated charts to read and analyse. Some of the indicators which are usually used by the traders are namely moving averages, stochastic indicator, and relative strength indicator.

Moving averages are considered to be the most traditional and widely accepted type of an indicator. They are preferred as they easily help in identifying the trends. The professionals of the trading industry want to have a view of the trends for the long terms. This could be best viewed by using 150 and 200 moving averages. These type of moving averages are normally used when you are about to place an indicator on the stock chart. Identifying the trends is one of the purposes of the moving averages while the other reason is to have a brief knowledge about support and resistance areas.

Stochastic indicator is something like a thermometer used for your body. It simply leaves you with a rough idea of the current market and its state. You need to know about the future of the market. It could be sometimes overbought or sometimes oversold. If the indicator shows the reading above 80, it signifies the overbought condition. If the indicator shows the reading below 20, oversold has occurred. Signals are not the medium to show the levels of price action or support and resistance. But they are shown by the levels on the indicator just like a mark.

One of the other indicators which are often used to measure the trend of the market is the relative strength indicator. Many bank traders love the term ‘Relative Strength Index’. Just like the stochastic indicator, the relative strength indicator is all about measuring the price action level along with the identification of the conditions like the overbought and oversold condition. Here the reading range is a little different than the stochastic indicator. Here the reading below 30 shows the oversold condition while the reading above 70 talks about the overbought one.

These indicators ultimately show the momentum of the current market and the future market. Overall, trend identification is the prime basis of decisions which are to be made regarding the swing trading. Price action levels have to be viewed and understood. Falling in the category of memory management, price action levels show you the way of investing for the stocks. The stocks may be from the commodities, Forex or any other market. Indicators on the stock charts add to the simplicity of it. Understanding problem resolves as the indicators provide you with a better level of understanding which is needed to trade for stocks in swing trading.

For more information, visit our site. We have several pages and ebooks containing information about trading that can be downloaded swing trading strategies.

Article Source: http://EzineArticles.com/?expert=Malika_Sharma
http://EzineArticles.com/?Swing-Trading-Indicators-to-Get-More-Knowledge&id=3693150

Daily Technical Analysis

EURUSD Outlook

The EURUSD still trapped in range area of 1.4450 – 1.4250 yesterday. I think the best strategy remains to short around 1.4450 or to long around 1.4250 with tight stop loss. Bullish scenario will be confirmed by a close above 1.4450 today targeting 1.4600 – 1.4800 this week while bearish confirmation will be confirmed by a close below 1.4250 targeting 1.4127 – 1.4000 area this week.

GBPUSD Outlook

The GBPUSD attempted to push higher yesterday, topped at 1.6239 but further upside momentum was rejected as price closed significantly lower at 1.6088. On h4 chart below we can see that price is trapped in range area of 1.6250 – 1.6040 indicating consolidation. We need a break from that range area to see clearer direction. I prefer a bearish scenario but I will let the market decide then just react accordingly. Break above 1.6250 should trigger further bullish momentum towards 1.6450 while break below 1.6040 should trigger further bearish momentum towards 1.5920 – 1.5832.

USDJPY Outlook

The USDJPY was corrected lower yesterday, bottomed at 92.18 and closed at 92.50. I think this is a normal correction and I still prefer a bullish scenario with technical target remains around 94.00/50 area. Only a movement below 91.90 area or violation to the bullish channel can be seen as serious threat to my bullish outlook and trigger further bearish momentum.

USDCHF Outlook

The USDCHF didn’t make significant movement yesterday. Price unable to consistently move above the bearish channel to continue bullish scenario. On the other hand, support area at 38.2% Fibo retracement around 1.0280 area still did a good job preventing further bearish pressure. I still prefer a bullish scenario as I still consider the bearish movement as correction. So I think 1.0280 area is a good place to long but with only tight stop loss below it targeting 1.0400 – 1.0450 area. Consistent move below 1.0280 area should be seen as a serious threat to the bullish outlook.

EURJPY Outlook

The EURJPY made indecisive movement yesterday, formed a Doji on daily chart indicating consolidation. Price attempted to push lower, but the lower line of the bullish channel did a good job preventing further bearish attack, keep the bullish scenario intact with technical target remains around 134.50 area. Immediate support at 132.80 area. Break below that area a violation to the bullish channel should be seen as potential bullish failure and could trigger significant bearish momentum testing 132.15 support area.

GBPJPY Outlook

The GBPJPY was corrected lower yesterday, bottomed at 148.64 and closed at 148.81. This fact should lead us into no trading zone but the nearest bias is bearish targeting 147.15 area. On h4 chart below we have a rising wedge formation, which is a bearish pattern especially if price break below the lower line of the rising wedge. Immediate resistance at 149.30 area. Break above that area should trigger further bullish momentum testing the upper line of the rising wedge. Break above the upper line of the rising wedge should be seen as bearish scenario failure thus trigger further bullish scenario towards 153.22 area

AUDUSD Outlook

The AUDUSD had a significant bullish momentum yesterday. On h4 chart below we can see that price is now moving inside the bullish channel indicating bullish view remains intact. The bias is bullish in nearest term targeting 0.9230. However CCI in overbought area and heading down on h4 chart suggesting potential downside pressure testing 0.9075 support area. I will be watching any reaction around that area before make any decision today. Break below 0.9075 area could trigger further bearish momentum re-testing the lower line of the bullish channel once again.

FX Instructor LLC
www.fxinstructor.com

The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

Daily Technical Analysis

EURUSD Outlook

The EURUSD has been consolidating in range area of 1.4450 – 1.4250 in the last two weeks. I am expecting a break on either side to see clearer direction. The bearish scenario was interrupted since the violation of the bearish channel (red channel) but the bullish momentum also still limited so far. For me, nothing is confirmed. While conservative traders may stand aside in this situation, aggressive traders still can use range trading strategy, which is to short around 1.4450 or to long around 1.4250 with only tight stop loss. Break above 1.4450 should confirm the bullish scenario at least testing 1.4600 – 1.4800 area this week while break below 1.4250 should trigger further bearish momentum re-testing 1.4170 – 1.4127 area before aim for 1.4000 area.

GBPUSD Outlook

The GBPUSD made significant technical movement by violated the bearish channel to the upside. However price retreated lower, moving near the upper line of the bearish channel. As long as price stay above the bearish channel, the bullish reversal scenario still potential. The bias is neutral in nearest term. Key resistance level at this phase is 1.6250 area. A valid break above that area should be seen as bullish confirmation targeting at least 1.6450 area this week. Bullish scenario potential will be canceled by another movement inside the bearish channel or below 1.6000 – 1.6040 area which could trigger further weakness for Sterling re-testing 1.5920 – 1.5832 area.

USDJPY Outlook

The USDJPY continued its bullish momentum on Thursday, topped and closed at 93.13. On h4 chart below we can see that price still moving convincingly inside the bullish channel indicating strong bullish momentum. The bias remains bullish in nearest term targeting 94.00/50 area. Break above that area should lead us into a new bullish phase targeting 97.75 in longer term. Immediate support at 92.50. Break below that area should lead us into no trading zone in nearest term but I am still in buy mode for this pair.

USDCHF Outlook

The USDCHF didn’t make significant movement on Thursday. On h4 chart below, we can see that after had bullish momentum since December 04 and topped at 1.0507 price has been consolidating lower, move in a bearish channel, but bearish momentum found a good support around 38.2% Fibo retracement around 1.0280 area. I think we are in no trading zone now. Do not rush jump into the market. The bearish correction will be considered over only if the bearish channel violated to the upside, targeting 1.0700 this week. On the other hand break below 1.0280 area should be seen as bullish failure and trigger further bearish momentum targeting 1.0150 area.

EURJPY Outlook

The EURJPY had a bullish momentum on Thursday, topped at 133.58 and closed at 133.49. On h4 chart below we can see that price breakout above the trendline resistance area indicating potential further bullish momentum targeting at least 134.50 area. CCI just cross the 100 line down on h4 chart so watch out for potential downside correction testing 132.15 area. Break below that area and a movement back below the trendline should be seen as bullish failure lead us into no trading zone as direction would become unclear for me

GBPJPY Outlook

The GBPJPY continued its bullish momentum on Thursday, topped at 150.68 and closed at 150.38. On h4 chart below we can see that price has convincingly break above the trendline resistance, indicating potential bullish scenario targeting 153.22 area. Immediate support at 148.95. Break below that area should lead us into no trading zone but I still prefer a bullish scenario at this phase

AUDUSD Outlook

The AUDUSD is at critical phase now. On h4 chart below we can see that the bullish momentum was able to break above the trendline resistance (red), but price retreated to the downside, slipped below the bullish channel which is also indicating limited bullish momentum. I think we are in no trading zone now. I have two scenarios. Bullish: If price able to stay above the trendline and back inside the bullish channel targeting 0.9060 area. Bearish: If price back below the trendline, targeting 0.8860 area.

FX Instructor LLC
www.fxinstructor.com

The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

EUR/USD closed higher due to short covering on Monday as it consolidated some of this month’s decline. The mid-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning bullish signalling that sideways to higher prices are possible near-term. Closes above the 20-day moving average crossing are needed to confirm that a short-term low has been posted. If its renews this month’s decline, the 38% retracement level of the 2008- 2009-rally crossing is the next downside target.

USD/JPY closed slightly lower due to short covering on Monday as it consolidates some of this month’s rally. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but remain neutral to bullish signalling that sideways to higher prices are possible near-term. If its renews the rally off November’s low, October’s high crossing is the next upside target.

GBP/USD closed higher due to short covering on Monday as it consolidated some of this month’s decline. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near-term. If its extends this month’s decline, October’s low crossing is the next downside target. Closes above the 20-day moving average crossing would confirm that a short-term low has been posted.

USD/CHF closed lower due to long covering on Monday as it extends last week’s decline below the 10-day moving average crossing. The mid-range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are turning bearish signalling that sideways to lower prices are possible near-term. Closes below the 20-day moving average crossing are needed to confirm that a long-term high has been posted. If its renews this month’s rally, the 38% retracement level of the 2008-2009-decline crossing is the next upside target.

HY Markets
http://www.hymarkets.com

Weekly Technical Commentary

USD/JPY

Chart Levels:

Support 88.00..87.35..86.00..84.82.
Resistance 89.80..90.80..91.35..92.33.

This week: →
This month: ↘

The sharp rally from a multi-year low at 84.82 has turned into ‘triangle’ consolidation. The US dollar is no longer oversold and most elements of this chart still suggest a short USD/JPY position. Long term while below 92.00 downside pressure is maintained, while the closer we get to 85.00 the more the authorities will be tempted to intervene. In fact the early December high at 90.78 might in fact be a new lower interim high. Decent futures volume over the last two weeks suggests many are cutting out of stale positions ahead of expiry and year-end. These will have to be re-built next year.

EUR/USD

Chart Levels:

Support 1.4585..1.4445..1.4280..1.4180.
Resistance 1.4770..1.4845..1.4900..1.5145.

This week: →
This month: ↗

Over the last two weeks the Euro’s drop has been bigger than most this year, admittedly against a background of fairly contained FX moves. It is undoubtedly corrective, here and in a whole raft of other major currencies. Therefore we shall be looking for the daily Ichimoku ‘cloud’, combined with medium term Fibonacci retracement support, to help form an interim base over the next fortnight, here and in the others too, as this is a USD move. Note that all elements on this weekly chart point to a core long Euro position. Futures volume over the last few weeks has been close to record highs, suggesting many are throwing in the towel before delivery and year-end. As with the yen, they will need rebuilding next year.

GBP/USD

Chart Levels:

Support 1.6200..1.6100..1.5900..1.5700.
Resistance 1.6400..1.6600..1.6800..1.7044.

This week: →
This month: ↗

An eighth consecutive week consolidating just under the top of a very large Ichimoku ‘cloud’, but note that moving averages have crossed to a short position. Excellent futures volume last week suggests many are squaring up. Hopefully before the end of this year a weekly close above the top of the ‘cloud’ might add some much-needed bullish momentum, while a break above this year’s high at 1.7044 is needed to set off the next big rally, forcing many into short-covering and reviewing their outlook. As we expect Sterling to do better than many other currencies next year, albeit slowly, Cable should lead the way to generalised USD weakness.

EUR/GBP

Chart Levels:

Support 0.8980..0.8895..0.8833..0.8750.
Resistance 0.9070..0.9125..0.9155..0.9240.

This week: ↘
This month: ↘

Slow work but Fibonacci resistance and the top of a large daily Ichimoku ‘cloud’ nudged Euro/Sterling marginally lower as all and sundry write off UK plc. One worry is that the ‘cloud’ thins dramatically at Christmas; another surprise is that momentum remains stubbornly bullish. These conflicting signals bring with them the possibility that prices might move broadly sideways, in a yet to be determined band, for many more months and while above the pivotal 0.8400 the risk of sudden sterling weakness against the Euro remains. Despite this we feel that the intermediate trend, over the next couple of months, is for this pair to drift down towards 0.8500 again, probably with much sideways consolidation at the 0.8750 level.

EUR/JPY

Chart Levels:

Support 128.75..126.95..125.65..124.35.
Resistance 130.65..131.00..132.00..134.55

This week: ↘
This month: ↘

Back down to the lower edge of the broad band that has held for most of this year and which now coincides with the lower edge of the huge weekly Ichimoku ‘cloud’. The Euro is not oversold against the yen and momentum is steadily bearish, while weekly moving averages still suggest a short position. Hopefully we will get the decisive weekly break now in super-thin year-end markets. We expect a similar effect with all other Yen crosses with these dragging each other lower. Probably in Q1 2010 this cross will re-test key support just under 115.00, and then move sideways.

GBP/JPY

Chart Levels:

Support 143.00..142.00..140.00..139.25.
Resistance 145.65..146.50..149.00..151.60.

This week: ↘
This month: ↘

Retreating from the top of the ‘triangle’ formation so that prices are now trading just under the lower edge of a massive weekly Ichimoku ‘cloud’. Weekly moving averages still point to holding shorts and hopefully the neat series of descending weekly highs will be maintained so that we drop below 38% Fibonacci support very late this week or later this month. Sterling is not oversold against the yen though momentum is only just bearish. A monthly close below 140.00 would probably cause a sudden slide to the 130.00 area. Being the yen cross closest to the record low 118.80 of January 2009, GBP/JPY may have less downside scope than others.

Mizuho Corporate Bank

Disclaimer

The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.