FOREX TRADING

Daily Technical Analysis

EURUSD Outlook

The EURUSD made another rejection to consistently move below 1.4820 key support level on Friday. This fact surely keep the major bullish scenario intact, but the bearish reversal scenario warning showed by double top pattern with peaks around 1.5062 area is also still valid and the bias should remains neutral as market is consolidating now. Overall, this pair has been indecisive in the last two weeks and we need a significant movement above 1.5062 to continue the bullish continuation towards 1.5150 and 1.5300 or consistent move below 1.4820/00 area to confirm further bearish pressure towards 1.4625 and 1.4450 area. Immediate resistance at 1.4965 and the upper line of my bearish channel, which vulnerable to be tested today after rejection below 1.4820. A violation to the bearish channel should be seen as potential threat to the bearish reversal scenario re-testing 1.5062 area.

On fundamental side, we will have many news from Euro zone today (manufacturing and services PMI) and Trichet is going to make another statement which potentially move the market significantly, especially if we have big surprise whether in the numbers or Trichet’s comment. We know the he support a strong Dollar, but the market respond has been mixed so far.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD attempted to push lower yesterday, bottomed at 1.4842 but bearish pressure was limited as the pair closed higher at 1.4915. The bias is neutral in nearest term. My technical focus remains at the bearish channel, which is still valid indicating bearish correction remains intact with the upper line of the bearish channel as key resistance area. As you can see in my daily chart below, the upper line has been doing a good job to keep the bearish correction intact since the rejection to move above 1.5062 area (peaks). Immediate resistance at 1.4965 area. Break above that area could be a serious threat to the bearish correction scenario re-testing 1.5062 area. Initial support at remains at the key support level around 1.4850/20 area.

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U.S. Midday Currency Market Hit By Risk Aversion

The dollar index strengthened across the board in Thursday trade, as the market traded in a classic risk-aversion phase that mirrored a drop in global equity trade. The major pairs headed lower from the start of the Asian session, and continued to so during the following sessions.

The sell-off on the major currencies against the Usd was driven by equity and commodity market trade, which also posted substantial declines. In the current economic climate of questionable global growth, risk aversion means lower stocks, higher bonds, and stronger Usd as Treasury notes are bought.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a bullish momentum yesterday, topped at 1.4989 and closed at 1.4959 after rejected to move consistently below 1.4820 key support area and even after Trichet said that he support a strong Dollar. However, on my daily chart below the bearish channel remains valid and the upper line of the bearish channel provide a good resistance. So I think the bearish correction even a bearish reversal scenario (double top) is still intact. Once again, we need violation to the bearish channel to end this bearish correction and valid break above 1.5062 to confirm the bullish scenario towards 1.5150 and 1.5300

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a significant bearish momentum yesterday, bottomed at 1.4807 but failed to stay below key support area 1.4820, closed higher at 1.4860 and traded around 1.4887 at the time I wrote this comment. As you can see in my daily chart below, it’s a fact that after peaked at double top formation around 1.5062 area the pair keep moving lower in a bearish channel indicating significant downside correction and even potential bearish reversal, especially if we have a consistent move below 1.4820 area with 1.4625 and 1.4450 as technical targets.

Right now, after failed to stay below 1.4820 yesterday, the pair bouncing to the upside with 1.4950 as potential resistance to be tested. Break above that area should trigger further bullish momentum testing the bearish channel. Bearish correction can only be canceled if the bearish channel violated to the upside, but for me the real bullish continuation scenario can only triggered by a movement above 1.5062.

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Daily Technical Analysis

EURUSD Outlook

What a surprise we had yesterday. As you can see in my h4 chart below, after violated the bearish channel, actually this pair had a nice bullish momentum before Bernanke dropped the bomb with his pessimistic comment about economy recovery by saying this words: ‘Today, financial conditions are considerably better than they were then, but significant economic challenges remain. The flow of credit remains constrained, economic activity weak, and unemployment much too high. Future setbacks are possible’ Euro fell after that comment, hit the bottom at 1.4879 as risk aversion came back. I didn’t expected this negative tone but another surprise happened as the Euro recovered quickly, peaked at 1.5015 and closed at 1.4967. I thought that Bernanke’s pessimistic tone will support technical bearish reversal scenario, but it didn’t. I was wrong, but for me nothing is confirmed yet for now. To read Bernanke’s full comment, follow this link below:

Regardless of mixed reaction in the market on Bernanke’s words, technically, the fact that this pair still able to stay above 1.4950/60 right now should continue the pressure on Dollar re-testing 1.5062 today. However for me, only movement above 1.5062 could be seen as bullish continuation confirmation targeting 1.5150 and 1.5300. Immediate support at 1.4920 area. Break below that area could trigger further bearish momentum re-testing key support 1.4850/20 area.

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Positive Equities, And The Dollar Holds On

Overall, after a positive Asian equity trading session, in which the dollar index was pushed to a new low, the currency market started retracing throughout the morning European trade. Interestingly, this is happening on a day that equity markets are trading deep in the green, something that does not happen very often. The recent pattern has been that equity markets trade higher, which pulls the dollar lower.

Over the last two weeks of trading the currency market saw a general lack of momentum and volume, which usually appears near the end of an uptrend, signaling that the market needs a short-term retracement of the dollar selling. The currency market is trading in an overbought condition against the dollar.

Dollar Index Technical View: TheLFB Member Charts

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Daily Technical Analysis

EURUSD Outlook

In my weekly summary on Saturday, I said that in order to complete the valid double top formation, the second bearish channel (yellow) must remain valid. Well, looks like the channel has been violated to the upside earlier today in Asian session as you can see in my h4 chart below. This fact should diminish the double top bearish reversal scenario and the pressure is now more to the upside, but it’s too early to say that double top bearish reversal scenario is over. I think this pair need consistent move above 1.4950/60 to continue upside pressure re-testing 1.5062. A failure to do so could be considered as a false breakout and trigger significant bearish momentum. Only break above 1.5062 should be seen as double top scenario failure and could lead to bullish continuation scenario targeting 1.5150 and 1.5300 area. On the downside, key support level remains at 1.4850/20 area. Break below that area should keep the valid double top scenario intact towards 1.4625 and 1.4450 area.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD had a significant bearish momentum yesterday, bottomed at 1.4821 and closed at 1.4844. The valid double top bearish reversal scenario on daily chart I said yesterday surely now in a good progress as bullish momentum seems exhausted but once again, we need consistent movement below 1.4850 and a clear break below the major trendline support in order to confirm the scenario towards 1.4625 even 1.4450 area.

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Daily Technical Analysis

EURUSD

The EURUSD made another indecisive movement yesterday, still trapped in 1.5062 – 1.4930 range area. As you might already know, I have been paying attention on potential double top formation since the beginning of this week, as you can see in my daily chart below. Here are two double top scenarios I have in mind:

Valid: Double top is a bearish reversal pattern. With 1.5062/50 area considered as the peaks, failure to break above that area would trigger downside pressure, and once price break below 1.4850 the double top bearish reversal scenario is confirmed. Break below 1.4850 might also a violation to the major trendline support (blue) which potentially also trigger bearish reversal scenario.

Failure: A double top formation considered to be fail if price break above the peaks. I like to see it this way: A bearish reversal scenario failure usually produced the other scenario, bullish continuation with technical target remains at 1.5150 and 1.5300

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Daily Technical Analysis

EURUSD Outlook

The EURUSD made indecisive movement yesterday. The pair attempted to push lower, bottomed at 1.4937 but closed higher at 1.4983. I think the pair is now consolidating after significant bullish on Monday. The bias is neutral in nearest term but bullish scenario should remains intact, at least indicated by a bullish channel (yellow) as you can see in my h4 chart below. Immediate support is seen at 1.4930 and lower line of the bullish channel. Break below that area could trigger further bearish correction testing 1.4850 and the major trendline resistance area (blue) and could be a potential threat to my bullish outlook. I still prefer and expect a bullish scenario for this week but I think we need a clear break above 1.5062 to confirm bullish scenario towards 1.5150 and 1.5300. Expected range at 1.4930 – 1.5062.

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Majors Yearly High Swing Point

Overall, the dollar index strengthened throughout the Asian session, but as the market headed towards the European open, the dollar gave up to most of its gains. The pair most affected by the selling was the pound, which plunged 150 pips from the Asian session open. Right now, the currency market is close to the high of the current year, just waiting for a trigger to push the price action one way or the other.

Dollar Index Technical View:

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Daily Technical Analysis

EURUSD Outlook

As I had expected, the EURUSD continued it’s bullish momentum yesterday, topped at 1.5019 and closed at 1.4995. The bias should remains bullish in nearest term re-testing October 26 high, 1.5062. I will be watching any reaction around this area since technically we could have a double top formation if price reject to move above that area, as you can see in my daily chart below. However, a breakout above that area should continue the upside scenario targeting 1.5150 area as a bearish correction/reversal scenario failure could potentially produce the other scenario: bullish continuation. Immediate support is seen at 1.4950 followed by 1.4850 area.

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USD Lower, Stocks Surge, G-20 to Maintain Stimulus

• USD: Lower, IMF says USD still on the strong side, G-20 pledged to maintain stimulus, low Fed yields
• JPY: Higher, Japan tops China as biggest buyer of US debt, reserves rise to a new record
• EUR: Higher, EU Sentix rises, German exports surge, strong German industrial output
• CHF: Higher, unemployment at 11 year high, consumer prices fall, rising risk of intervention
• GBP: Mixed, supported by improving risk appetite
• CAD and AUD: AUD &CAD higher, tracking stocks, risk appetite, higher crude and record price of gold

Overview

USD traded sharply lower Monday pressured by a number of factors which included, stronger global equity markets, a pledge by the G-20 to continue with stimulus and a statement from the IMF that the USD is overvalued. The USD was also pressured by G-20 silence on USD decline. Speculation that the Fed will maintain low yields for an extended period coupled with the G-20 pledge to not withdraw stimulus until the global recovery is secure fueled demand for equities and sparked an improvement in risk appetite.

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Daily Technical Analysis

EURUSD Outlook

The EURUSD made indecisive movement on Friday. On daily chart below we can see that after made a false breakdown on November 03, price now retreat to the upside, traded above the trendline indicating potential further bullish scenario with 1.4950 – 1.5060 as nearest target before 1.5300. Immediate support at 1.4850 – 1.4800 area. Break below that area should diminish my bullish outlook but as long as the pair stay above the trendline, I prefer a bullish scenario.

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