Month: March 2010

By Russell Glaser – A sign that the bearish streak of the EUR/USD may begin to slow is appearing on the daily chart from the Relative Strength Index.

Below the Forex Technical Analysis shows the daily chart using the 10-day RSI. The RSI can be used to show a shift in the direction of the price trend. The 10 day setting is used as it takes into account 2 full weeks of trading data (5 days in a trading week).

By drawing a trend line underneath the rising RSI line, we can see that a break of the rising RSI line provided a good signal for previous price breakout that occurred on March 17th. By drawing a tend line above the downward sloping RSI line, we can see a possible end to the downward sloping price trend as the trend line on the RSI is on the verge of being broken.

While a break of the trend line may not present a signal to buy as when the RSI breaks above the 30 line (as the RSI is typically used) this can be a signal to close any short positions and take profits.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: Forex Yard

The Dollar rallied broadly, while the EUR fell to 10-month lows on Wednesday, as a ratings firm downgraded Portugal, adding to worries over debt sustainability and growth in some of euro zone’s smaller countries. That supported some safe-haven flows into the U.S. dollar.

Economic News

USD – Dollar’s Rally Continues

The Dollar extended gains against most of its major counterparts after a report showed new orders for long-lasting U.S. manufactured goods rose for the third straight month in February. As a result, the USD finished yesterday’s trading session 100 pips higher against the GBP at the 1.4890 level. The greenback also saw bullishness against the EUR and closed at 1.3330.

Yesterday, government reports showed that the U.S orders for long-lasting goods rose in February for a third month, while inventories and backlogs climbed by the most in more than a year, indicating the manufacturing rebound will keep on propelling the U.S. recovery. Analysts said portions of the durable goods report were positive and helped support strong demand for the U.S. dollar, which started earlier in the session.

The other factor that led to the bullish Dollar yesterday was that U.S stocks fell on mounting concerns about spiraling debt in some developed economies, which boosted demand for the USD as a safe-haven currency.

Looking ahead to today, the most important American economic indicator scheduled to be released is the Unemployment Claims at 12:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Fed Chairman Ben Bernanke’s testimony at around 14:00 GMT. The testimony is very important as it will very likely lead to Dollar volatility, and may set the pace for the greenback for the rest of the week.

EUR – EUR Falls to a 10-Month Low Versus the Dollar

The EUR extended its losses to a 10-month low against the Dollar on Wednesday as investors doubted that euro zone leaders would come up with a quick rescue package for debt-laden Greece at a summit this week. By yesterday’s close, the EUR fell sharply against the USD, pushing the oft-traded currency pair to 1.3330. The 16 nation currency experienced similar behavior against the GBP and closed at 0.8950.

Fears that the Greek debt crisis will spread have been the main focus of attention in the markets. Fitch Ratings downgraded its view on Portugal’s debt amid growing concerns about the government’s ability to service its borrowings. There are also concerns that the Washington D.C. based IMF will play a substantial role in helping Greece get a grip on its public finances, underlining the difficulty of European governments to deal with the Greek debt crisis on their own.

For weeks, it seemed that the countries that use the Euro were adamant that they would not look for outside help in addressing Greece’s debt crisis. But the German government’s increasing reluctance to bail out Greece amid domestic opposition has increased the likelihood that the IMF would be called in.

JPY – Yen Drops on All Fronts

The JPY saw a bearish trading session yesterday, losing ground against most of its currency crosses. The JPY fell sharply against the USD, pushing the oft-traded currency pair to 91.95. The Yen experienced similar behavior against the EUR and closed at 122.50.

The JPY’s future trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should pay attention to the news coming from the U.S. and Europe as these economies will be the deciding factors for the JPY’s movement today. This is especially true for the U.S Unemployment Claims at 12:30 GMT. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this will also likely to lead to further JPY volatility.

Crude Oil – Oil Drops as Inventories Rise

The price of crude oil fell 1.5% to $80.20 during yesterday’s trading session. This drop came after a U.S. government report showed Crude Oil inventories rose more than expected in the world’s top energy consumer. The Energy Department reported that crude inventories rose by 7.3 million barrels to 351.3 million barrels last week. Analyst’s expected an increase of 1.67 million barrels.
Oil prices also tracked lower stock prices, which fell after Fitch Ratings said Portugal’s recovery will be slower than other countries in the euro-zone, hurting its ability to repay debt.

Looking ahead, traders are advised to watch the global stock markets and the major economic indicators which will be published from the U.S. and Euro-Zone. They will likely serve as solid indicators for the next movement in oil prices.

Technical News

EUR/USD

The Stochastic Slow on the 4-hour chart indicates that a bullish correction is long overdue for the pair. This sentiment is supported by the Relative Strength Index (RSI), which shows that the pair is deep in oversold territory. Going long may be a good strategy today.

GBP/USD

The Relative Strength Index (RSI) on the 2-hour chart indicates that the pair is currently in oversold territory, indicating an upward correction may be imminent. This view is supported by the Stochastic Slow on the daily chart. Traders may want to go long with this pair today.

USD/JPY

The Stochastic Slow on the 8-hour chart shows that a bearish correction may be forming for this pair. The Relative Strength Index (RSI) also indicates that the pair is deep in overbought territory. Going short may be a wise strategy today.

USD/CHF

Yesterday the pair made a significant breach of the 1.0640 resistance line, rising 100 pips above this level. The pair could continue its recent bullish streak as the daily chart shows the 7-day Relative Strength Indicator trending higher. The 10-day Momentum Indicator also shows the pair moving higher along a sharp up sloping trend line. Traders are advised to stay long on the pair until the trend line is broken.

The Wild Card

Crude Oil

A head and shoulders pattern may have formed on the 4-hour crude oil chart with the downward sloping neck line drawn underneath the price levels of $79.93 and $78.83. The future price move could be estimated by measuring the distance from the head of the pattern down to the neckline, for a price move of roughly 430 pips. Forex and commodity traders may want to place an entry stop sell order below the neckline for the possible breakout.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By eToro – Euro fell under major support levels amid failure of EU members to conclude a rescue plan for Greece. Germany the largest economy in the EU is strongly opposing any sort of a Greek bailout. Latest polls show a large portion of Germans not only opposes any sort of a Greek bailout but actually think Germany is better off without Greece in the Euro zone. With the EU strongly divided ahead of the EU summit on Thursday and Portugal’s credit downgraded by Fitch to AA- , investors crowded heavy bids on the Euro pushing it below the 1.34 support against the Dollar and to an historic low of 1.423 against the Swiss Franc. Many other members of the EU are under debt watch such as Spain Portugal and even Italy, and investors’ willingness to pay a premium for the Euro against the Dollar is starting to fade.

Lack of a safety net, a long term risk for Euro zone growth –The failure of EU members to create a funding safety net not only poses a risk for the Euro exchange rate but for Euro zone economic growth. Since investors have a lack of clarity and feel the Euro zone is unable to be flexible enough to address its debt problem in an orderly manner, spreads on various bonds of EU members are widening. This brings borrowing costs for governments in the Euro zone to surge. For example the spread between Greece’s 10y borrowing costs and Germany’s 10y borrowing costs is 3%, meaning Greece’s borrowing costs are close to two times that of Germany, as German 10y bunds are yielding 3.25%. Now with Portugal credit downgraded and Greece possibly forced to get an IMF load, many EU members that need to rollover vast amounts of debt could suffer the same surging borrowing costs. What is the effect of such a process? Inflation could spike in the Euro zone which could cause the ECB to prematurely raise rates and bring EU growth practically to a standstill. Moreover since investors in the future will not be confident on EU stability, EU members will have to earn investors’ trust by curbing deficits too rapidly and this is of course also negative for growth and risk a double dip recession in the Euro zone. Unless EU members will be able to create a long term solution and a safety net for the EU high debt nations, investors’ belief in the Euro Zone will fade and with it any chance for the EU to gain a stable economy and exchange rate.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

GBPUSD continues its downward movement from 1.5382 and the fall extended to as low as 1.4852 level. Deeper decline to test 1.4784 previous low support is expected later today. A breakdown below this level will indicate that the long term downtrend from 1.6875 (Nov 16, 2009 high) has resumed, then next target would be at 1.4500 area. Resistance is now at 1.5111, as long as this level holds, downtrend will continue.

Written by ForexCycle.com

You don’t have to sift through the latest economic data as if they were tea leaves.

By Editorial Staff

This is an excerpt from Elliott Wave International’s free Club EWI resource, “What Can a Fractal Teach Me About the Stock Market?” by EWI’s president Robert Prechter.

In the 1930s, Ralph Nelson Elliott described the stock market as a fractal — an object that is similarly shaped at different scales. Scientists today recognize financial markets’ price records as fractals, but they presume them to be of the indefinite variety. Elliott found something different:

You see that each “wave” within the overall structure subdivides in a specific way. If the wave is heading in the same direction as the wave of one larger degree, then it subdivides into five waves. If the wave is heading in the opposite direction as the wave of one larger degree, then it subdivides into three waves (or a variation).

Understanding how the market progresses at all degrees of trend gives you an invaluable perspective. No longer do you have to sift through the latest economic data as if they were tea leaves. You gain a condensed view of the whole panorama of essential trends in human social mood and activity, as far back as the data can take you.

OK, now you try it. Figure 3-7 shows an actual price record. Does this record depict two, three, four or five completed waves? Based on your answer, what would you call for next?

Let’s compare your answer with mine. From the simple idea that a bull market comprises five waves, The Elliott Wave Theorist in September 1982 called for the Dow to quintuple to nearly 4000 and on October 6 announced, “Super bull market underway!” The November 8 issue then graphed the forecast for the expected fifth wave up, as you can see in Figure 3-8.

As you can see, Elliott waves are clear not only in retrospect. They are often — particularly at turning points — quite clear in prospect.

Visit Elliott Wave International to learn more about the free “What Can a Fractal Teach Me About the Stock Market?” report.

By CountingPips.com

Economic news out of the U.S. today showed that new orders for durable goods increased for the third month in a row while new home sales declined to a new low in February. Durable goods orders in the United States rose by 0.5 percent in February to a total of $178.1 billion following January’s revised 3.9 percent gain, according to the report released by the U.S. Commerce Department today. February’s advance marked the third consecutive month of increases after October and November registered declines.

Market forecasts had been expecting that durable goods orders would increase by approximately 0.6 percent for the month. Durable goods are products manufactured in the U.S. and considered to last more than three years.

New orders for durable goods excluding transportation increased by 0.9 percent in February following a revised decrease of 0.9 percent in January. This data was better than the market forecasts which were predicting an increase of 0.6 percent for durables minus transportation for the month.

Home Sales fall to new low

New Home Sales in the United States decreased more than expected for the month of February, according to data released by the Department of Commerce today. Purchases of new single family homes fell to an annual rate of 308,000 in February for a 2.2 percent decline from January. This marked the fourth straight month of declines and brings new home sales to the lowest level on record. Revised data showed that new home sales decreased in January by 8.7 percent to an annual rate of 315,000 homes.

On an annual basis, February’s rate of new homes sold was 13.0 percent lower than the February 2009 level. Today’s sales data failed to match market forecasts which were expecting a 1.9 percent increase in sales for an annual rate of 315,000 new homes sold.

Contributing to the decrease in February was a 20 percent drop in new homes sold in the the Northeast while the Midwest registered a 18 percent decline in sales. Sales in the South fell by almost 5 percent while the West saw an increase by 21 percent from January to February.

FOREX: US Dollar jumps higher

The U.S. dollar has been trading higher in the forex markets today against the other major currencies. The dollar has advanced today versus the euro, Japanese yen, Swiss franc, British pound, Canadian dollar, New Zealand dollar and the Australian dollar, according to currency data by Oanda.

The euro has fallen versus the dollar to under the 1.3350 exchange rate today as Portugal’s credit rating downgrade and Greece’s debt situation has weighed heavily on the European common currency. The EUR/USD is down by approximately 150 pips today.

The U.S. stock markets, meanwhile, declined today with the Dow Jones following by approximately 53 points, the Nasdaq decreasing over 16 points and the S&P 500 down by almost 7 points.  Oil has fallen by $1.44 to $80.47 while gold has been unchanged at the $1,103.50 per ounce level.

USD/JPY 1-Hour Chart – The US Dollar surging higher and breaking out of its recent trading range versus the Japanese Yen today. The USD/JPY rose above the 92.00 level for the first time since February 19th and is up by over 150 pips today.

By Fast Brokers – Gold dove back below its highly psychological $1100/oz level and set new March lows after a wave of risk aversion hit the FX markets.  Investors fled to the Dollar after Fitch lowered Portugal’s credit rating.  With Greece’s financial assistance plan still up in the air, another debt scare in the EU has accelerated Dollar flows in risk aversion, highlighted by large gains in the USD/JPY.  Gold has reacted negatively to today’s development since the precious metal tends to have a negative correlation with the Greenback.  However, downside movements in gold have been somewhat limited compared to the selloffs taking place in the EUR/USD and Cable.  Gold has managed to regain its footing before a retest of February lows.  However, we’ll have to see how the trading session progresses since problems in the EU could continue to benefit the Dollar.  U.S. New Home Sales just printed below analyst expectations, which could help buoy gold and deflate the Dollar intraday since it works against speculation that the Fed will raise sooner than anticipated, a Dollar negative.  We notice slight strength in the Cable and EUR/USD in reaction to the news, though we’ll see whether it has staying power.  All eyes will be on the EU summit tomorrow, although expectations have been lowered by persistent rebuttals from Germany.  The EU, UK and U.S. will also through in some data points, making tomorrow’s trading session a bit interesting.

Technically speaking, gold has intraday and February 2010 lows serving as technical cushions along with the psychological $1075/oz level should it be tested.  As for the topside, gold faces multiple downtrend lines along with 2/25 and intraday highs.  Meanwhile, the psychological $1100/oz level could continue to have an influence on gold as long as the precious metal remains within striking distance.

Present Price: $1092.50/oz
Resistances: $1093.37/oz, $1094.92/oz, $1096.18/oz, $1097.26/oz, $1098.10/oz, $1099.32/oz
Supports: $1092.23/oz, $1091.40/oz, $1089.78/oz, $1088.72/oz, $1086.90/oz
Psychological: $1100/oz, February lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Aussie is battling to avoid a retest of 3/22 lows after a wave of risk aversion hit the FX markets in reaction to more negative news from the EU.  Fitch downgraded Portugal’s credit rating, adding onto negative momentum stemming from a lack of cooperation in regards to providing Greece with financial assistance as it implements aggressive austerity measures.  Increasing uncertainty in the EU is weighing down on the Aussie since the RBA will likely deliberate this during next month’s meeting.  Should EU economic conditions deteriorate further, the RBA could be enticed to keep its monetary policy in check, slowing the Aussie’s uptrend.  All of this being said, the Aussie is still outperforming the Euro and Pound by a long shot since Australia’s economic data has been altogether positive so far this year.  Today’s Japanese Trade Balance data revealed strong demand from China, a positive catalyst for the Aussie since China’s post-crisis boom has increased demand for Australia’s commodities.  Meanwhile, it will be interesting to see whether the Aussie can stabilize from present levels, for its uptrend could snap should losses extend in the EUR/USD and Cable.  Investors are locking in Dollar profits right now in reaction to weaker than expected U.S. New Home Sales data.  However, it remains to be seen how far this boost will take us.  The EU summit begins tomorrow surrounded by EU, UK, and U.S. data releases, meaning tomorrow could prove to be an active day as well.
Technically speaking, the Aussie has intraday, 3/22, and 3/9 lows serving as technical cushions along with the .91 and .90 levels should they be retested.  As for the topside, the Aussie now faces multiple downtrend lines along with 3/23 and 3/17 highs.

Price: .9117
Resistances: .9125, .9137, .9145, .9156, .9162, .9169
Supports: .9110, .9101, .9087, .9073, .9061
Psychological: .91, .90, 2010 highs

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The USD/JPY has awoken from its slumber, shooting higher in reaction to a wave of risk aversion hitting the FX markets.  With IMF involvement in Greece’s rescue looking more likely investors sent the Euro tumbling.  Additionally, Fitch lowered its credit rating for Portugal, accelerating risk aversion as investors head toward the Dollar for safety.  The USD/JPY has been a direct beneficiary from today’s developments in the EU, sending the currency pair flying towards its February highs.  The USD/JPY broke through some key downtrend lines in the process, including our top tier running through previous 2010 highs, indicating the USD/JPY could be heading towards the 93.75 level over the medium-term.  This morning’s Trade Balance data showed Japan had a stronger than expected surplus last month.  Export demand is picking up, particularly to China, and this seems to be adding fuel to the USD/JPY’s topside breakout.  U.S. Core DGO data outperformed, indicating U.S. consumption is picking up slowly, a positive development for Japan’s manufacturing base.  Meanwhile, investors are awaiting U.S. New Home Sales data and this number could prove to be a market mover.  Japan will be relatively quiet on the data wire tomorrow, leaving investors to focus on the EU summit.  A key for the USD/JPY will now be to break out beyond February highs, or the currency pair may opt to consolidate earlier gains.

Technically speaking, the USD/JPY faces technical resistance in the form of February 2010 highs and the psychological 92 area.  As for the downside, the USD/JPY has fresh uptrend lines serving as technical cushions along with 2/22 and intraday lows.

Present Price: 91.87
Resistances: 91.96, 92.05, 92.15, 92.24, 92.39
Supports: 91.77, 91.68, 91.58, 91.47, 91.40, 91.28
Psychological: February highs, 92

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable has been tossed below 3/22 lows amid risk aversion stemming from continued uncertainty in the EU.  Investors initially sent the Euro lower with IMF involvement in Greece’s rescue becoming more likely.  The rest of the risk trade followed suit after Fitch downgraded Portugal, igniting speculation that fiscal woes are just the tip of the iceberg with the possibility of contagion on the horizon.  The concept of more PIIGS nations being hit by credit woes instinctively sent investors to the Dollar for safety, knocking the Cable despite a lack of economic data from the UK.  However, the Cable is fighting to stabilize a bit as Darling delivers the UK’s 2010 budget.  Should the projected 2010 budget deficit come in lower than anticipated, this could help buoy the Cable a bit despite thunderstorms in the EU.  The Cable does still have previous March lows in place, meaning the currency pair appears to have stronger near-term support than the EUR/USD, which just experienced a hefty technical setback.  Meanwhile, the U.S. has New Home Sales data on the way, and a better than expected result could strengthen the Dollar further, while a weak number could help stabilize the Cable.  The U.S. also released DGO data this morning which printed mixed, indicating U.S. consumption is recovering slowly.  For the time being, it will be interesting to see how investors react to the UK’s 2010 budget plans as investors dissect Darlin’s address throughout the trading session.  The UK will release Retail Sales data tomorrow along with a few EU and U.S. figures.  However, attention will likely be honed in on the EU’s meeting and any possible solutions for how to handle Greece.

Technically speaking, although near-term supports are certainly wearing thin, the Cable still has 3/10 and 3/2 lows working in its favor.  As for the topside, the Cable clearly faces multiple downtrend lines along with the psychological 1.50 level should it be tested.

Present Price: 1.4924
Resistances: 1.4928, 1.4936, 1.4946, 1.4954, 1.4967
Supports: 1.4914, 1.4901, 1.4893, 1.4878, 1.4871
Psychological: 1.50, March lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.