Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
ForexCT Afetrnoon Market Thoughts – 5th May, 2011
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
By Russell Glaser
As expected both the Bank of England and the European Central Bank held their based lending rates steady as all eyes turn to today’s ECB press conference where a potential signal for next month’s ECB interest rate increase could come.
Commodities continue to trade lower, influencing equity markets with European bourses in the red. Silver prices dipped below the $38 level for the first time since early April. Speculations abound that the recent reversal in silver prices may be a signal for a market turn. The FTSE is down 0.7%, highlighting the risk-averse trading environment.
In volatile trading, the best FX performer has been the Japanese yen with the USD/JPY falling below the 80 yen level for the first time since the G7 intervention in March. The USD/JPY continues to move south of this key level, increasing the risk of future acts of intervention in the FX markets by the Japanese Ministry of Finance to weaken the yen.
The Canadian dollar is also reversing with the greenback strengthening. The USD/CAD reached as high as 0.9773, its highest level since mid-April.
Traders’ attention now turns to the ECB press conference where all eyes will be on ECB President Jean-Claude Trichet. The key words to follow during Trichet’s speech are “Strong vigilance”. This should be the signal both economists and traders are looking for. An increase to future ECB rates would be a catalyst for the euro while a pause in the ECB tightening cycle should trigger a sell-off in the euro.
The EUR/USD is currently trading at 1.4820 prior to the press conference. The first resistance is found at yesterday’s high of 1.4940 with a target at the 2009 high of 1.5140. Support comes in at the bottom of this week’s consolidation pattern at 1.4750, followed by 1.4630.
Forex Market Analysis provided by ForexYard.
© 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: ForexYard
Today’s data releases out of Europe and the United Kingdom regarding short-term interest rates will likely be predominant in today’s market valuations and traders would be wise to keep an eye on policy statements. The buck is still weakening from the rate differentials, but dovish statements from Europe today may close part of that gap.
The US dollar experienced bearish results yesterday as traders began to shift away from the greenback following a string of negative data sets which underlined the weakness of the dollar versus its primary rivals. The USD initially moved lower against the safe haven Swiss franc and Japanese yen yesterday on global concerns, while stocks and commodities began to trade flatter in anticipation of a bounce.
The USD lost most of its recent gains against the EUR yesterday following the release of ADP non-farm employment data that revealed sluggish growth in the job sector of the US economy. With Friday’s NFP figure on the way, traders appear to have lost some optimism about the support of the greenback. The US economy also published a disappointing manufacturing report which showed further weakness growing in global industry.
The issue of American interest rates remains ever-present in economic analyses lately; leading many speculators to claim that this recent return to safety may leave the dollar exempt from the shift, as it usually is during times of uncertainty. Today’s data releases out of Europe and the United Kingdom regarding short-term interest rates will likely be predominant in today’s market valuations and traders would be wise to keep an eye on policy statements. The buck is still weakening from the rate differentials, but dovish statements today may close part of that gap.
The euro appears to have gained against its currency rivals yesterday regardless of the European Union and International Monetary Fund’s (IMF) announcement for a bailout of Portugal. The data releases published over the last several days have pushed many traders away from riskier assets, but the EUR has fought through the pain and appears poised to continue through today with interest rate decisions from the euro zone and Britain.
The bullishness may end up being short-lived, however, as investors returned temporarily to safe haven investments in expectation of an al Qaeda reprisal following bin Laden’s death this weekend. Portugal’s bailout was structured as expected and should not have a lasting impact on the region’s currency value. The bullishness on the EUR today was a continuation of a previous sentiment towards the EUR/USD, but dovish statements by the ECB today could undo much of these recent gains.
As for today, the euro looks like it may make further gains as trader sentiment shifts around the data releases out of the region. The major news today is the interest rate decision expected at 12:45 GMT, shortly after a similar announcement from the Bank of England (BOE) at 12:00 GMT. The rate statement by ECB President Jean-Claude Trichet is expected for 13:30 GMT. Rates are expected to be held steady by both, but any dovish statements like Trichet’s a few weeks back may hurt the value of the euro in the days ahead.
The JPY has been trading with largely positive results since yesterday as investors turn their focus elsewhere amid global reactions to the death of Osama bin Laden. After reaching upwards of 82.75 on Monday, the USD/JPY quickly dropped to a daily low of 81.00 by Tuesday evening, but so far the pair has remained stable between the two prices with minor downticks in favor of the yen.
With Japan celebrating Children’s Day, amid Golden Week, liquidity throughout the region will be somewhat lower. The JPY could gain from this absence as the rest of global traders shift towards Europe, as well as safe havens, amid strong data releases like today’s interest rate decisions out of Europe. As for today, the JPY will be absent from the market again, meaning global investors will continue to focus their attention elsewhere, creating mixed results for the yen. But the recent shift into safe havens following expectations of an international reprisal from al Qaeda in response to bin Laden’s death has helped lift the yen and should continue to do so for the remainder of the week.
The prices of Crude Oil ended Wednesday lower as traders largely began to speculate an imminent reprisal from al Qaeda following Osama bin Laden’s death. The result has been a moderate dip in stock prices, also weighing on the price of assets like oil, silver, gold, and a variety of industrial metals. The biggest gainers on the day were the Swiss franc and Japanese yen, making strides from the shift in sentiment.
Recent events have made speculating about oil prices more difficult. The plummeting value of the US dollar should have helped lift oil prices, but the commodity remains in free fall for the second consecutive day. Rising stockpiles in the United States, reported yesterday, may have helped fuel the shift away from oil as rising inventory tends to suppress price hikes. As for the rest of the week, oil prices actually appear on the downside, with targets near $107 a barrel in sight.
Over the past few days the EUR/USD pair has been trading within a restricted range, between the 1.4750 and the 1.4950 levels. Currently, as a bearish cross is taking place on the 1-hour chart’s Slow Stochastic, it seems that the pair might be on its way towards the 1.4750 level.
After falling about 300 pips since the beginning of the week, the cable has stabilized near the 1.6500 level. In addition, as the 4-hour chart’s RSI has crossed the 30-line and continues to point upwards, it seems that a bullish move could take place today, with the potential to erase recent declines. Going long with tight stops might be the right strategy today.
The USD/JPY continues with its free-fall, and is currency trading near the 80.40 level. In addition, as all oscillators on the daily chart are providing bearish signs, it seems that the downtrend is likely to continue today, with potential to reach the 79.00 level.
A very accurate bearish channel has formed on the daily chart, and the pair is currently trading in the middle of it. Nevertheless, a bullish cross taking place on both the daily and the 4-hour charts’ Slow Stochastic, suggests that a bullish correction may occur. Going long might be the right choice today.
Crude oil fell about 650 pips over the past few days and is currently trading near $109 a barrel. However, as both the MACD and the Slow Stochastic on the 1-hour chart are providing bullish signals, and as the 4-hour chart’s RSI is pointing upwards, it seems that crude might begin to correct its losses today. This might be a good opportunity for forex traders to catch the bullish correction at its beginning.
Forex Market Analysis provided by ForexYard.
© 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.
EURUSD broke consolidation on up side and reversed from daily resistance (1.4935) and retraced 61.8% (1.4837) of 1.4774 to 1.4739, extesnion1.4982-1.5039, also up trend line pass there. EURUSD break of 1.4809 supports next will be 1.4741 on intraday. In EURUSD strong resistance is at 1.4887, if break of this resistance further going up side toward 1.4983 on intraday. EURUSD won’t break of 1.4887 resistances then possible going down side toward 1.4729 as minor support, otherwise up trend remain same. EURUSD reversed 78.6% (1.2984) extension 127.2% (1.4750), 161.8% (1.5350) of 1.4288 to 1.2579 still in progress.
New High: 1.4883, 1.4966, 1.4910.
New Low: 1.4718, 1.4801, 1.4745.
Pivot Point: R3-1.5011, R2-1.4948, R1-1.4909, PP-1.4847, S1-1.4784, S2-1.4745, S3-1.4682.
| Latest | EURUSD |
| Last | 1.4830 |
| High | 1.4939 |
| Low | 1.4773 |
| 5 day | 1.4825 |
| 10 day | 1.4723 |
| 20 day | 1.4566 |
| 50 day | 1.4241 |
| 100 day | 1.3828 |
| 200 day | 1.3595 |
Being support by 1.6431, GBPUSD rebounded from 1.6451, suggesting that a cycle bottom is being formed on 4-hour. Further rise would likely be seen in a couple of days, and target is at 1.6745 previous high. However, a breakdown below 1.6431 support will indicate that the uptrend from 1.5936 (Mar 28 low) has completed at 1.6745 already, then the following downward movement could bring price back to 1.6250 zone.
Now that the uncertainty that comes with the constant threat of defeat of the previous minority government has been set aside for at least the next four to five years, the Canadian dollar is quickly establishing itself as a top choice for investors. Canada has had a succession of minority governments over the past seven years but with the emergence of a Conservative majority government following Monday’s federal election, investors are expected to once again turn to Canada and the Canadian dollar as choice investment opportunities.
Known as the “loonie” for the waterfowl depicted on the back of the one dollar coin, the Canadian currency is expected to gain from strong fundamentals and the stability of a government that no longer faces the constant threat of being tossed out of office by a collection of the opposition parties. This new political landscape, together with Canada’s reputation of sound fiscal management that saw the country through the recession better than most of its contemporaries, is earning Canada rave reviews on the markets.
Only days after the election, PIMCO’s Bill Gross, who manages the world’s largest mutual fund with assets exceeding US$240 billion as of the end of 2010, offered a rousing endorsement for both Canadian and Australian bonds. Gross suggested that rather than U.S.-denominated securities, his clients should look at some of the developing economies with “more pristine” balance sheets and higher interest rates. On the other hand, Gross noted that “if AAA quality is your requirement, then Canadian or Australian bonds may also fit your horizon.”
The Loonie’s Bullish Forecast
After contracting by 0.2 percent in February following four straight monthly gains, a recent Bank of Canada report stated that the economy will likely return to growth in the second quarter. Early estimates are for an annualized rate of growth of two percent for the three months ending in June; The International Monetary Fund was even more bullish on Canada predicting the economy will grow by 2.8 percent for the year.
As usual, it will be the export of in-demand commodities that drives this growth and Canada is well-positioned as a leading supplier of goods ranging from oil and energy, to copper and wheat. The one cautionary aspect is that the U.S. accounts for roughly 70 percent of Canada’s exports and while growth is slowly returning to the U.S., prospects for a full recovery south of the border are far from a done deal.
This realty is less of an issue today than it would have been twenty years ago as Canada has forged strong trading relationships with other countries in recent times. Most notably, many of the emerging Asian economies are particularly eager to acquire the goods and resources produced by Canada and this has opened up additional export market opportunities. Coincidently, this is just one of the reasons why Canada was able to get through the recession in reasonably good shape and this will continue to serve Canada well as the global economy continues to expand.
Finally, with the level of growth being predicted, the prospect of an interest rate hike certainly comes into play and the Bank of Canada has already said it expects inflation to be near the Bank’s target of 2 percent. If the Bank does raise rates late in the year, demand for the loonie will grow and several analysts have suggested the Canadian dollar is in line for gains against most of the major currencies and the U.S. dollar in particular. ING has suggested the loonie could strengthen from the current 95.25 cents to the U.S. dollar to 92 cents by the end of the year.
Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog
Are the bears about to take control of the shares of SM Prime Holdings, Inc. (SMPH)? I am confronted with this question now because it appears that SMPH is indeed primed (no pun intended) for a major correction in the near term.
In my opinion, there is a good chance that the bears might take over SMPH’s driver seat. As you can see from the chart above, SMPH has rallied quite handsomely after hitting a low of just about PHP 10.00 from a high of PHP 13.16. After bouncing off the said low, SMPH has sprung back to life as it reached the PHP 12.00 level. The PHP 12.00 resistance, though, seems to be holding pretty well. On a closer look, the PHP 12.00 marker happens to perfectly fall in line with the 61.8% fibonacci retracement level using the aforementioned high and low points as swing high and low. Moreover, the recent run-up in prices turns out to form a rising wedge pattern. As some of you might know, a rising wedge is considered as a bearish formation for technical analysts since it merely represents a temporary rally in prices.
If such is the case and a breakdown from the rising wedge occurs then SMPH could immediately fall towards PHP 11.00. A breach of that level could further send it down to PHP 10.00. On the positive note, a move past PHP 12.00 could send it towards the PHP 13.00 area.
More on LaidTrades.com …
Swiss Franc Strongest Of Currencies Basket
The Swiss Franc is topping the relative strength daily chart as can be seen below.
USD/CHF, in particular, is in a decisively strong downtrend due in part to differing interest rate expectations for the US dollar and Swiss franc. The safe haven status of the Swiss franc is also proving to be important in the current climate.
The Swiss Franc has also seen major gains against sterling with a breakout of recent lows looking ominous for the pound.
However, todays price action has printed a doji on USD/CHF which could be indicating a temporary loss of momentum after the recent unidirectional moves to the downside.
For further updates please see this Forex trading analysis blog.
David Banister- www.MarketTrendForecast.com
Last August I told my subscribers to prepare for a monster rally in Silver, which at the time of my forecast was $18.73 per ounce. I drew up a chart and predicted a huge rally to $29 an ounce, and we ended up at $31 or so just a few months later. This was entirely a crowd behavioral move that I foresaw in advance, based on patterns that R.N. Elliott developed in the 1920’s and 1930’s. My theory was besides the crowd pattern (a 20 month odd Triangle consolidation), that investor’s would begin to view Silver as “Poor man’s Gold” and buy it. Literally, the idea is as simple as investors will simply think that “Gold is too expensive, but silver is cheap”. That is the explosion power that is behind this move from $19 to $50 an ounce since late August 2010.
Below is the original chart I sent to my subscribers outlining this triangle pattern and the likely move:
After Silver ran hard and fast, it left a lot of talking heads on CNBC and everywhere else scratching their heads and wondering what just happened. If you learn and understand the basics of Elliott Wave Theory, you can begin to foresee what is about to happen and stop scratching your head all the time. Watching the analysts on CNBC is like watching the Monday morning quarterbacks following an NFL Sunday. After that massive silver run from $18 to $31, it was time for a correction and I called for $25 to $26.50 as likely in a normal pessimistic crowd wave 2 pattern down. Once that completed, I sent my subscribers the chart below outlining another Bull wave to $39-$45 per ounce:
Silver then eventually ran to $45 per ounce in April of 2011 and had a brief spike to near $50 to test the all time highs just in the past week or so. The action has been wild since then, because after a wave pattern from $18 to $31, then back to $26, then up to $47… the crowd will begin to turn mildly pessimistic in a current “wave 4 “ correction pattern. This is when you will begin to hear excuses for Silver dropping, including believe it or not blamed on the death of Osama Bin Laden. In truth, whatever happens near term to explain the current correction in Silver is simply Monday morning quarterbacking. Using the current days headlines to explain the action that I already know is coming. Other excuses are the change in margin requirements on silver contracts and the squaring of positions at end of month etc.
I expect Silver to correct to the 40 to $42.75 areas based on my Fibonacci work and Elliott Wave views, and after this 4th wave consolidation we will see a surge to as high as $60 per ounce. Any pullbacks in Silver should be bought here and same with the Silver stocks post haste. Below is my latest chart forecast on Silver:
If you would like to stop scratching your head, get more comfortable where the markets are heading in both Gold , Silver, SP 500 etc in advance, then take a look at www.MarketTrendForecast.com, and take advantage of a 24 hour coupon special to subscribe, or just sign up for the occasional but not always timely free updates. Our subscribers learn and earn!
By David Banister- www.MarketTrendForecast.com
