Knowing Forex

Technical Analysis for April 15, 2011

2011-04-17T01:01:00.000+08:00

EUR/USD Intraday Technical analysis 2011-04-15

The spot rates approaches the upper limit of its medium-term bearish channel to 1.4520. A break of these levels would free up significant potential and begin a rising trend.

According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 1.4520 with a 1st objective of 1.4610, then 1.4650. A break in 1.4490 would invalidate this scenario.

Performed by Albert Fitoussi, Analytical expert
InstaForex Companies Group © 2007-2011

GBP/USD Intraday Technical analysis 2011-04-15

The spot rates approaches the upper limit of its medium-term bearish channel to 1.6410. A break of these levels would free up significant potential and begin a rising trend.

According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 1.6410 with a 1st objective of 1.6520, then 1.6550. A break in 1.6380 would invalidate this scenario.

Performed by Albert Fitoussi, Analytical expert
InstaForex Companies Group © 2007-2011

GOLD Intraday Technical analysis 2011-04-15

Gold is approaching the intermediate resistance of its medium term bullish channel to 1479 suggesting a decline in the short term. However a break of these levels would reach the upper limit of this one in 1489.

According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 1479 with a 1st objective of 1489, then 1492. A break in 1477 would invalidate this scenario.

Performed by Albert Fitoussi, Analytical expert
InstaForex Companies Group © 2007-2011

USD/JPY Intraday Technical analysis 2011-04-15

The spot rate approaches the upper limit of its medium-term bearish channel to 83.80 suggesting a decline in the short term. However a break of these levels would free up significant potential and begin a rising trend.

According to previous events, the market indicates a bullish opportunity as soon as the spot rate will have broken its resistance in 83.80 with a 1st objective of 84.50, then 84.80. A break in 83.60 would invalidate this scenario.

Performed by Albert Fitoussi, Analytical expert
InstaForex Companies Group © 2007-2011

The USD/CHF technical analysis and trading recommendations for April 15, 2011

4-hour timeframe

Overview:

The franc price is still in the downside movement, the formed sell signal is strong and confirmed, since the Chinkou Span fixated below the price graph and the price is below the Ichimoku cloud, there are no signs of correction. Thus, at the moment the first target for the downside movement is 0.8905 – the second support level, as the price managed to pass the first one. If this level is passed the second target will be the third support level at 0.8750. Downside movement remains while the price is below the Kijun-sen (0.9000), if the price fixates above this line it is recommended to cut short positions, as the current signal would weaken. The Chinkou Span is below the price graph, which confirms the current sell signal and indicates bearish sentiment. The Bollinger bands show the beginning of the downside movement, the lines are diverging and directed down. The MACD is ascending, however we do not see any upside movement; the price is steadily declining, thus we can ignore this indicator.

Trading recommendations:

Currently it is recommended to trade down with target at 0.8905 and further to 0.8750. Stop Loss should be placed above 0.9000.
In addition to technical image, one should take into account the fundamental data and the time of their release.

The chart annotation:

Ichimoku indicator:
Tenkan-sen - red line
Kijun-Sen - blue line
Senkou Span A - light brown stipple line
Senkou Span B - light purple stipple line
Chinkou Span - green line

Bollinger Bands indicator:
3 yellow lines

MACD indicator:
The red line and the histogram with white bars in the indicators window.

Performed by Stanislav Polyanskiy, Analytical expert
InstaForex Companies Group © 2007-2011

The EUR/USD technical analysis and trading recommendations for April 15, 2011

4-hour timeframe

Overview:

The euro is still observing a buy signal, however a sideways movement is in advance, which is demonstrated by the Bollinger Bands, therefore it is recommended to resume trading up after the correction ends. The formed buy signal is strong and confirmed, since the Chinkou Span fixated above the price graph and the price is above the Ichimoku cloud. Thus, at the moment the first target for the upside movement is 1.4599 – the first resistance level. If this level is passed the second target will be the second resistance level at 1.4713. Upside movement remains while the price is above the Kijun-sen (1.4440), if the price fixates below this line it is recommended to cut long positions. The Chinkou Span is above the price graph, which confirms the current buy signal and indicates bullish sentiment. The Bollinger bands show the ending upside movement, the lines are not diverging and directed sideways, which is also a beginning of the sideways movement. The MACD is ascending, which indicates current upside movement, which is probably limited by the sideways channel.

Trading recommendations:

Currently it is recommended to trade up with target at 1.4599 and further to 1.4713. Stop Loss should be placed below 1.4440. Long positions should be opened after the Bollinger Bands start to diverge to the upside.

In addition to technical image, one should take into account the fundamental data and the time of their release.

The chart annotation:

Ichimoku indicator:
Tenkan-sen - red line
Kijun-Sen - blue line
Senkou Span A - light brown stipple line
Senkou Span B - light purple stipple line
Chinkou Span - green line

Bollinger Bands indicator:
3 yellow lines

MACD indicator:
The red line and the histogram with white bars in the indicators window.

Performed by Stanislav Polyanskiy, Analytical expert
InstaForex Companies Group © 2007-2011

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Forecast for April 13, 2011

2011-04-17T00:15:00.000+08:00

USD/JPY Daily Forecast for April 13, 2011

DAILY FORECAST :

Today the USD/JPY has been trading between the 5 periode Moving Avarage and the 20 periode Moving Avarage and in the range between 83.59 and the 84.21 levels. These two levels have a potential to be tested by this pair today, but if we look at the daily charts, the Stochastic studies is still in a Bearish Mode; so we predict that today the pair will test the support at 83.59 and the 3 days low at the 83.48 level. On the other hand, if the Resistance 84.21 can be broken by this pair today, the USD/JPY will test the 84.50 as the first target and the 84.71 as the second target.

Performed by Arief Makmur, Analytical expert
InstaForex Companies Group © 2007-2011

EUR/USD Daily Forecast for April 13, 2011

DAILY FORECAST :

Today this pair has a chance to trade in a sideways situation, because yesterday it closed in a range between the April 8th / 2011 high and low bar. It seems the EUR/USD will be trading between 1.4437 and the yesterday's high at 1.4518, if the yesterday's high can be broken out, this pair will test the next Resistance at 1.4550; however, because the Stochastic Studies is in "overbought" area, there's a chance the pair will get some correction or retracement, if the 1.4434 can be broken, it will have a chance to go down to 1.4422 as the first target and the 1.4378 as the second target.

Performed by Arief Makmur, Analytical expert
InstaForex Companies Group © 2007-2011

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Stock Markets for April 13, 2011

2011-04-16T23:59:00.000+08:00

Wheat review for April 13, 2011

By the end of CBOT trades the prices for May futures on wheat declined by 6 ¾ cent (1.7%), by 7.52 ¾ US dollars per bushel. The US meteorological service forecasts precipitations in the region of the Great Plains which improves expectations of the market regarding the quality of winter wheat harvest.

However, other regions of wheat cultivation (Texas and Oklahoma) are expected to get less moisture than needed that is why rainless weather will be unfavourable for harvest. Yet, traders’ attention has been focused on the news about rain in Kansas and Nebraska since there are concerns over precipitations in other US states which is to brighten the situation with harvest. Under all these circumstances traders decided to close part of long positions.

Besides, as exports data showed, The Middle East countries continued buying American wheat, in smaller volume though. It exacerbated the concerns over demand decline of demand due to high prices.

Performed by Vladimir Donin, Analytical expert
InstaForex Companies Group © 2007-2011

Cattle review for 13 April, 2011

Futures on cattle grew on Wednesday amid purchases for lowered prices. Earlier futures dropped to their lows for week and a half. By the end of CME trades, April futures on cattle increased by 0.60 cent (0.51%) up to 1.1827 US dollars per pound. June contract closed with a gain of 0.17 cent having thus constituted 1.3302 US dollars per pound.

Futures increased amid weakening US dollar which has been intensifying the expectations of export demand growth, even though import demand showed decrease.

Dropping US dollar makes futures less expensive for those who operate with other currencies.
Another source of support for the market is the growth of prices for lean pork. They rose amid the prospects of seasonal decline in supply.

Market participants consider that futures growth may well continue after last week large-scale sales. On the other hand, cash prices for beef tend to decrease in mid-April as more meat comes to the market. Prices fall is indispensable for demand to grow. At the same time export sales can support the market. Yet, many traders have been expressing concerns over high wholesale prices possible to have an opposite effects.

These concerns exacerbated shortly after the US Agriculture Department announced the wholesale prices for beef to have grown by 0.43 cent per pound.

Performed by Vladimir Donin, Analytical expert
InstaForex Companies Group © 2007-2011

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Review for April 14, 2011

2011-04-16T23:16:00.000+08:00

USD Review 14-04-2011

USD againts Major Pair Review :

The USD Dollar weakened againts almost all major pairs except the GBP that traded in a ranging situation againts the USD. Againts the EUR, CHF and the YEN, the USD is still in a downside situation.

USD Againts Commdoll :

Againts the Commodity Dollar Pair, the USD still looks weak as well, event againts the CAD and the AUD, the USD strengthened slightly, but the bearish pressure for the USD is still in advance.

Conclusion :

Because the USD still has a bearish pressure in almost all Major Pair and the Commodity Dollar, we predict for today that the USD will be still in a downtrend situation againts all the major and the comdoll pair.

Performed by Arief Makmur, Analytical expert
InstaForex Companies Group © 2007-2011

EURO Review 14-04-2011

EURO Againts Major pair :

The Euro Pair won againts the USD and the GBP pair, but againts the YEN and CHF pair, the Euro Dollar declined.

EURO Againts Commdoll :

Againts the AUD, it seems the Euro Pair traded in a ranging situaion (red: the Buyeers and Sellers its equal), the Euro got a temporary winning side before the pair came back into the sideways range; However the Euro Pair is still a winner againts the Loonie, However againts the Kiwi, the Euro Pair is in a losing situation.

Conclusion :

Because againts the majors only two Euro Dollar wins and with the two other the Euro Pair loses, againts the Comdoll one pair is in a sideways movement, the other wins, and the rest lose, we predict based on all the facts that we've already mentioned above, the Euro Pair is now in the "Overbought" situation .

Performed by Arief Makmur, Analytical expert
InstaForex Companies Group © 2007-2011

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Wave Analysis for April 15, 2011

2011-04-16T22:27:00.000+08:00

AUD/USD Elliott wave count and Fibonacci levels - April 15, 2011

AUD/USD is developing potential wave 5 of medium term uptrend - colored royal blue in the chart. To confirm wave 5 break above 1.0580 is needed. On smaller timeframes this wave consists of A-B-C subwaves (colored magenta in the chart) with subwave C still developing. The targets of the upmove are Fibonacci expansions off 0.9709-1.0313-1.0204 (waves 1-2), 1.0204-1.0580-1.0389 (waves 3-4), 1.0389-1.0538-1.0457 (subwaves A-B).

Resistances:

- 1.0577 = contracted objective point (COP)
- 1.0606 = objective point (OP)
- 1.0621 = COP
- 1.0698 = expanded objective point (XOP)

If the price keeps declining the immediate supports will be Fibonacci retracements of 1.0457-1.0558, 1.0389-1.0558, 1.0204-1.0580.

Supports:

- 1.0508 = .50 retracement
- 1.0496-93 = confluence area of .618 and .382 retracements
- 1.0474 = .50 ret
- 1.0454 = .618 ret

Overbought/Oversold

Assuming that the medium term trend is up (wave of a larger degree is now up), it's preferable to look for longs when the Detrended Oscillator goes below the zero level (current prices) or gets into the oversold area (20-30 pips below the current prices - this roughly corresponds to 1.0508 Fib support).

Performed by Roman Molodiashin, Analytical expert
InstaForex Companies Group © 2007-2011

GBP/JPY Elliott wave count and Fibonacci levels - April 15, 2011

GBP/JPY is developing corrective wave 4 of medium term uptrend - colored royal blue in the chart. Wave 4 has 2 subwaves within it (A-B), and subwave B is still developing - colored magenta in the chart. The targets of the upmove are Fibonacci retracements of 139.93-135.19, and expansions (if the price goes higher than 139.93) off 122.49-133.04-130.18 (waves 1-2), 130.18-139.93-135.19 (waves 3-4).

Resistances:

- 137.00 = .382 retracement
- 137.56 = .50 ret
- 138.12 = .618 ret
- 140.73 = objective point (OP)
- 141.22 = contracted objective point (COP)

If the price keeps declining the immediates supports will be Fibonacci retracements of 130.18-139.93, 122.49-139.93, and expansions off 139.93-135.19-136.96.

Supports:

- 135.06 = .50 retracement
- 134.03-133.90 = confluence area of COP and .618 retracement
- 133.27 = .382 ret
- 132.22 = OP

Overbought/Oversold

Assuming that the wave of a larger degree (corrective subwave B) is moving up it's preferable to open long positions when the Detrended Oscillator gets below the zero level (current prices) or into the oversold area (10-30 pips).

Performed by Roman Molodiashin, Analytical expert
InstaForex Companies Group © 2007-2011

EUR/USD wave analysis for April 15, 2011

In general, as expected, during yesterday’s trading the EUR/USD currency pair declined to the correction level 38.2%; afterwards it made an attempt to resume growth by reaching the 45 figure level by the end of the day. Therefore, the price has most likely completed the formation of the 4th wave (in the 5th). If so, then such resumed growth of the price has indicated the beginning of the 5th wave (in the 5th), at the same time targets for this 5th may be located in a quite wide range from the levels located slightly above the 45 figure level and up to the 1.4700 level.

Performed by Alexander Dneprovskiy, Analytical expert
InstaForex Companies Group © 2007-2011

USD/JPY wave analysis for April 15, 2011

Yesterday the USD/JPY currency pair continued to decline and tested the correction level 50.0% during the European session. At the same time, all downside movement initiated April 6 obtained the characteristics of a five-wave structure. Therefore, we might assume that inner wave structure of the 4th wave will become more complex and prolonged. Simultaneously, we should not eliminate the option supposing the resumption of downside movement of the pair in the direction of the levels located below the 77 figure level.

Performed by Alexander Dneprovskiy, Analytical expert
InstaForex Companies Group © 2007-2011

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Fractal Analysis for March 03, 2011 (Daily Strategy)

2011-04-16T21:33:00.003+08:00

GBP/USD Bearish Outlook , March 03, 2011 (Daily Strategy)

GBP/USD

Today, the important levels for British pound - United States dollar pair are 1.6365 (1st resistance) 1.6345 (fractal) , 1.6331 (fractal) 1.6296 (daily pivot).
An impulsive descendant movement can take place after the breakout of 1.6240

Now, the pair's downwards potential is stronger than ever, we predict a downwards movement towards the first, support monthly level around 1.6050.

Performed by Gerardo Porras Palomino, Analytical expert
InstaForex Companies Group © 2007-2011

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Fundamental Analysis for April 15, 2011

2011-04-16T02:29:00.004+08:00

The Fundamental Market Review for April 15, 2011

EUR/USD has been moving in a side diapason, yet, the EUR prospects appear to be brigher. So far the high of 1.4502 was registered for this currency pair with the low remaining at the level of 1.4440. However, the US dollar still lacks the opportunity to strengthen. Hopes for further increase in the interest rates on the part of the European central bank together with constant requests for buying Euro amid falling of Asian central banks and sovereign investment funds are likely to support the Euro at a high rate.

The ongoing debt problems of Portugal, Greece and Ireland serve for investors to remind of real risks related to the single currency. Moody’s rating agency cut the rating of Ireland from Baa3 to Baa1 and left its forecast negative. As the agency representatives inform, on Thursday Greece’s central bank governor George Provopoulos announced that debt restructuring will not be a solution to debt-related problems of the country. He added that Greece should step up reforms. "As I have often stated in the past, debt restructuring is neither necessary nor desirable--as it would create more problems than the ones that it would attempt to solve," Provopoulos said in an interview with Dow Jones Newswires. Member of the ECB's Executive Board Gertrude Tumpel-Gugerell claimed on Friday that the ECB believes in the capability of Greece to continue implementing the consolidation programme and in its ability to implement it without debt restructuring.

Investors expect a rather significant microeconomic statistics to be published today. It is to include the data on the US securities bought by foreigners, net capital inflow and national industrial production.

Performed by Natalia Grigorieva, Analytical expert
InstaForex Companies Group © 2007-2011

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Scandi Daily 10.29

2009-10-30T09:50:00.000+08:00

OVERVIEW – Despite the rate hike in Norway on Wednesday, the krone was very well offered on the back of some broad based currency liquidation and paring back of risk. The regional currencies were underperformers across the board with the krona getting hit even harder, on a less attractive yield differential and ongoing concerns over exposure to Eastern European markets and weaker than expected domestic data. The krona has been very tied to risk sentiment and any continued reduction in risk appetite should continue to weigh on the Scandi. The Nok should also come under some more pressure as investors’ interest rate expectations within the region become less aggressive. While the Norges Bank has been in a position to be able to raise rates, they also need to be conscience of rising asset prices and the threat of a double dip global recession. This is a point that has resonated with investors over the past few days.

Eur/Nok fresh yearly low last Thursday by 8.24 but we feel that the market is finally now exhausted and on the verge of some major upside over the medium-term. The latest break back above 8.40 now confirms and should accelerate gains towards 8.50-60. Only back below 8.30 would delay.

Usd/Sek traded down to a fresh yearly low by 6.75 on Monday ahead of the latest sharp reversal. Despite the underlying downtrend, our view is nevertheless constructive at current levels and favors USD appreciation over the coming weeks. We contend the market is attempting to carve out a major base rather than in the process of some bearish consolidation. A break back above 7.10 should confirm bias and get things moving.

Usd/Nok has now officially carved out a meaningful low by 5.50 with the market racing higher on Wednesday to trigger a double bottom formation. The break back above the neckline at 5.66 now opens a measure move upside extension towards 5.80 over the coming sessions. More gains are seen on a break above 5.87. Setbacks should now be well propped ahead of 5.60.

Gbp/Nok finally showing signs of recovery after basing out by 8.82 in the previous week. Daily studies show plenty of room for additional corrective upside, and we look for a push back towards 9.50 over the near-term. Setbacks should now be well supported ahead of 9.20.

Nok/Jpy as had be warned, the market was well overextended above 16.50 and the price has since collapsed into the well defined range. Deeper setbacks are now seen towards 15.50 over the coming sessions.

Written by Joel Kruger

Currency Crosses: Technical Outlook

2009-10-30T09:41:00.000+08:00

The EURNZD has rallied through 7 month trendline resistance and focus is now on 2.0750. The Yen crosses have fallen rapidly from recent highs and the larger bullish patterns are in question.

Euro / British Pound

The EURGBP fell below .8985 but the decline may still be a 4th wave correction (I still favor a 5th wave advance through .9416 and maybe .9807). Levels that could offer additional support are the 50% retracement of wave 3, which is at .8934 and the wave i of 3 high at .8843. Coming below .8703 would signal that the larger trend is probably down.

Euro / Swiss Franc

“There is little to say about the EURCHF technically and there will not be until the pair breaks from the triangle. The fight between bulls and bears wages on in a triangle that has been underway since October. Triangles are typically continuation patterns, so a downside break seems more probable. Still, forecasting is an exercise in probabilities rather than certainties so jump the gun at your own risk. Pushing through either the top of bottom line triangle line would present a breakout opportunity.” The triangle count shown above is bearish but a bullish outcome is possible too. Wave a would be A and wave B would be a triangle.

Euro / Canadian Dollar

A head and shoulders top has been unfolding since January 2008. The left shoulder was complex with 2 shoulders. H&S patterns tend towards symmetry and I suggested last week that the EURCAD would rally to 1.6330 in order to form another right shoulder. This scenario remains on track.

Euro / Australian Dollar

Euro / New Zealand Dollar

Last update was that “the EURNZD has bounced from a downward sloping line extended from the 6/22, and 8/14 lows (line also cuts through 3 days this month). RSI has not confirmed the low (divergence), which leaves the downtrend weak technically and at risk of reversing.” The EURNZD blasted through the multi month resistance line today, confirming a reversal. Look to buy dips. Support is 2.0240, 2.0110, then 2.0000.

Euro / Japanese Yen

Despite the significant decline in such a short amount of time, focus remains on the larger triangle pattern. The next level of potential support is just above 132. It certainly is possible that the rally from 129 is the last leg of strength that this pair sees in some time and that action since the Spring is distributive. Whichever way the EURJPY decides to break in the coming weeks/months, the move should be substantial.

British Pound / Japanese Yen

The larger pattern depends on how the price pattern in the circled area is interpreted. Treating that as a triangle and 5th wave thrust would indicate that the 5 wave rally from 139.68 is wave A of an A-B-C correction. Treating the circled area as wave A and B of an expanded flat would indicate that the 5 wave rally is wave C and that a corrective rally is over. The bigger picture is unclear but 147.05 is support (both structural and the 100% extension of 153.30-149.13. 149.60/80 is resistance.

Swiss Franc / Japanese Yen

The CHFJPY exceeded its 2009 high (barely), which was 91.56. This fact should not be overlooked because the EURJPY failed to exceed its high (139.17). This sets up a possible non-confirmation and potentially significant downside reversal. Nothing is confirmed at this point of course. 87.20 is potential support.

Canadian Dollar / Japanese Yen

I am unsure of the action since early June but a triangle (similar to the EURJPY but lagging) could be unfolding. The pair has dropped into a congestion area defined by 83 and 84.30. Expect support at the lower end of the range.

Australian Dollar / Japanese Yen

New Zealand Dollar / Japanese Yen

The NZDJPY reversed from a line drawn off of January, April, and June highs and is now testing channel support / that has held since the low as well as the 50 day SMA. The battle lines are drawn. Points to expect resistance are 66.60, 67.10, 67.60, and 68.05.

Written by Jamie Saettele

Scandi Daily 10.28

2009-10-29T05:58:00.000+08:00

OVERVIEW – There is a slew of data out in the region today with Swedish consumer confidence and retail sales kicking things off, followed by the Norwegian unemployment rate. However all of this will no doubt play a second fiddle to the more anticipated Norges Bank rate decision due out later in the day at 13:00GMT. The overwhelming consensus is that the Norges Bank will become the first European central bank to raise rates since the onset of the global financial markets crisis, with a 25bp hike to 1.50%. The Norwegian economy has been exceptionally strong throughout the global recession and this has now put the Norges Bank in a position to need to raise rates. One senior economist says that it is a “trade-off between the need for higher rates to curb the acceleration in home prices and the strength in private consumption” and “the effect of the krone exchange rate on consumption.” Norway will need to proceed with caution, especially with the timing of today’s decision coinciding with a global market sentiment that has now turned for the worse.

EURSEK DAILY

Charts created using Bloomberg – Prepared by Joel Kruger

Eur/Nok fresh yearly low last Thursday by 8.24 but we feel that the market is finally now exhausted and on the verge of some major upside over the medium-term. Aggressive players can get long at current levels, with a break back above 8.40 accelerating. Only back below 8.30 would delay.

Usd/Sek traded down to a fresh yearly low by 6.75 on Monday ahead of the latest sharp reversal to set up a bullish outside day formation on Monday. Despite the underlying downtrend, our view is nevertheless constructive at current levels and favors USD appreciation over the coming weeks. We contend the market is attempting to carve out a major base rather than in the process of some bearish consolidation. Monday’s bullish reversal day should get things going but ultimately a break back above 7.10 will be required to officially shift the structure.

Usd/Nok is in the process of consolidating just off of the yearly lows by 5.50. However, given the medium-term stretched technical studies, we favor the risks for significant upside over the coming weeks with the market now in the process of attempting to carve out a meaningful base. Any additional setbacks should therefore be limited with the latest break and close back above the 20-Day SMA helping to reaffirm bullish outlook.

Nok/Jpy as had be warned, the market was well overextended above 16.50 and the market has since put in a bearish outside day on Monday. Look for the reversal day to mark a top by 16.63, with deeper setbacks now favored back towards initial support by 16.00 over the coming days. Only back above 16.63 negates.

Written by Joel Kruger

Scandi Daily 10.27

2009-10-27T18:30:00.013+08:00

OVERVIEW – The developments in price action over the past 24 hours have been most interesting, with US equities and currencies coming back under pressure and the USD benefitting across the board. While most have attributed the moves to some natural profit taking from an overextended market, others have begun to once again weigh the risks to the prospect for a double dip type global recession. The wide spread consensus is that the Norges Bank will indeed raise rates on Wednesday by 25 bps to 1.50%, but the Norwegian central bank may grow a little more anxious with oil prices retreating and risk aversion back on the rise. Any threat of shift back into a contractionary market environment will surely bode unfavorably to central banks looking to adopt a more restrictive monetary policy. As such, while the local economy has indeed outperformed and separated itself throughout the global downturn, the Norges Bank also needs to be careful that it doesn’t unnecessarily expose itself to a premature and overly restrictive policy shift. Looking ahead, the calendar is all Sweden centric with the release of producer prices and household lending data at 8:30GMT.

USD/SEK DAILY

Charts created using Bloomberg – Prepared by Joel Kruger

Usd/Sek traded down to a fresh yearly low by 6.75 on Monday ahead of the latest sharp reversal to set up a bullish outside day formation. Despite the current underlying downtrend, our view is nevertheless constructive at current levels and favors USD appreciation over the coming weeks. We contend the market is attempting to carve out a major base rather than in the process of some bearish consolidation. Monday’s bullish reversal day should get things going but ultimately a break back above 7.10 will be required to officially shift the structure.

Usd/Nok is in the process of consolidating just off of the yearly lows by 5.50. However, given the medium-term stretched technical studies, we favor the risks for significant upside over the coming weeks with the market now in the process of attempting to carve out a meaningful base. Any additional setbacks should therefore be limited with a break and close back above the 20-Day SMA to reaffirm bullish outlook.

Written by Joel Kruger

Forex Options and Futures Support Calls for US Dollar Bottom, Euro Top

2009-10-27T15:04:00.001+08:00

Forex Options and Futures markets show US Dollar sentiment at near-record bearish extremes against almost all major counterparts, and one-sided positioning suggests that the USD is near a major turning point. Today’s US Dollar pullback may in fact be the start of a bigger reversal. The key difficulty remains the timing of said turnaround, as US Dollar-bearish sentiment has remained extreme for quite some time now. According to our Senior Strategist, the Euro/US Dollar’s break below 1.4980 is the first sign of a top.

Volatility expectations have jumped considerably on recent US Dollar losses. We typically see important market turns when volatility is at or near its peak. Of course, guessing the peak for Forex Options Market implied volatility levels is a feat onto itself. As it stands, we recognize that the US Dollar may continue lower through short-term trading. Yet every further USD short only increases the likelihood of an important market corrections and-by extension-a Dollar recovery.

Euro/US Dollar Forex Options and Futures Forecast

Futures positioning shows that Non-Commercial traders (typically large speculators) had become extremely net-long the Euro against the US Dollar. In fact, said speculative positioning is was previously the most long it had been since the Euro traded near 1.6000 in early 2008. We consistently warn that extreme positioning and sentiment can and does remain extreme for extended periods of time. Yet it is interesting to point out EURUSD has set a noteworthy top.

British Pound/US Dollar Forex Options and Futures Forecast

Futures and Options sentiment paint a distinctively different picture for the British Pound against the US Dollar, as traders had actually grown extremely short the GBP against the USD. The GBPUSD very recently rallied on aggressive speculative short covering, and indeed Net Non-Commercial short positioning went from -65,346 contracts to -43,318 through the week ending October, 20. This fairly substantial shift is perhaps only the earliest stage of a larger unwind.

US Dollar/Japanese Yen Forex Options and Futures Forecast

Forex options markets show that traders are the most bullish the USDJPY (Bearish the Japanese Yen) in the past 90 trading days, while the longer-term trend in price shows we are in a fairly clear downtrend. The FX options market sentiment extremes suggest that we may have hit a USDJPY top and it is likely to continue its longer-term correction. The major caveat is that Futures positioning actually shows speculators still fairly short the USDJPY (long Yen), and a pullback in speculative interest could fuel a USDJPY rally. The mixed signals give us a fairly neutral bias on the USDJPY.

US Dollar/Canadian Dollar Forex Options and Futures Forecast

Traders have grown extremely net-long the Canadian dollar (short the USDCAD) through recent trade, with FX Futures data showing sentiment at its most bullish since the pair traded near parity. We have continued to call for a USDCAD reversal, and the very recent rally suggests we may have set a substantive USDCAD bottom. It stands to reason that a further unwind in positioning would result in further Canadian dollar losses (USDCAD rallies).

US Dollar/Swiss Franc Forex Options and Futures Forecast

Non-Commercial futures positioning on the US Dollar/Swiss Franc pair remains the most bearish in nearly 5 years-pointing to clear sentiment extremes. Swiss Franc long positions (USDCHF shorts) outnumber short positions by a over 20,000, and it is little surprise to note that the USDCHF trades very near parity. Yet the last time net-long CHF positions grew to this level was in December, 2004. At that point the USDCHF set an important low. Watch for further rallies.

Australian Dollar/US Dollar Forex Options and Futures Forecast

New Zealand Dollar/US Dollar Forex Options and Futures Forecast

The New Zealand dollar/US Dollar pair is quite similar to the AUDUSD, with significant sentiment extremes leaving the door open for near-term declines. As of several weeks ago, Net Non-Commercial positioning on NZDUSD futures remained the most net-long since the pair set noteworthy tops in July, 2007.

Written by David Rodriguez

Currency Crosses : Technical Outlook

2009-10-27T13:18:00.007+08:00

Near term, expect decent sized setbacks in Yen crosses. EURJPY support is concentrated near 135 and GBPJPY support at 148 and 147.

Euro / British Pound

Barring a break below .8995, I maintain that a 4th wave low is in place at the confluence of the 38.2% retracement of wave 3 / Elliott channel support / previous 4th wave extreme. A move to a new high in wave 5 (above .9416) is favored. .9075 is potential support

Euro / Swiss Franc

Euro / Canadian Dollar

Euro / Australian Dollar

We viewed short term price action last week and concluded that “a rally above 1.6310 would break a series of lower highs, at least in the short term. This would be the first sign of a bottom.” The EURAUD has yet to break that level but additional reversal evidence can be gleaned from the weekly chart. A hammer (or key reversal on a bar chart) formation occurred last week and weekly RSI is below 30. Failure to hold the low would expose 1.5920/1.6040.

Euro / New Zealand Dollar

The EURNZD has bounced from a downward sloping line extended from the 6/22, and 8/14 lows (line also cuts through 3 days this month). RSI has not confirmed the low (divergence), which leaves the downtrend weak technically and at risk of reversing.

Euro / Japanese Yen

3 waves up from 129 look complete in the EURJPY. As such, a 4th wave is probably underway towards 134.75-136.10 (former 4th wave area). The 38.2% retracement of wave 3 is at 135.10 (lower portion of the zone). I’ll be looking for signs of a low near 134.75-135.10 in order to get long for wave 5, which will probably carry the EURJPY through 139.20 (new 2009 high).

British Pound / Japanese Yen

I wrote Friday that “5 waves are clear from the 139.68 low so one would expect to find support in the former 4th wave, which is 147-149.40. The larger pattern depends on how the price pattern in the circled area is interpreted. Treating that as a triangle and 5th wave thrust would indicate that the 5 wave rally from 139.68 is wave A of an A-B-C correction. Treating the circled area as wave A and B of an expanded flat would indicate that the 5 wave rally is wave C and that a corrective rally is over. Given the USDJPY pattern (along with the EURJPY), the former seems more likely. Near term, weakness is favored regardless in order to correct the 5 wave advance.” Favor weakness near term with support coming in at 148.10 then 147.00.

Swiss Franc / Japanese Yen

The CHFJPY is in the same position as the EURJPY. Favor weakness in wave 4 down to 88.80-89.70 before a push to a new high.

Canadian Dollar / Japanese Yen

A new high (above 90.41) is expected eventually since the decline from there is viewed as a complex correction (a-b-c-x-a-b-c). As suggested last week, wave 4 may be unfolding as a triangle or flat (flat seems more likely). Coming under 85.91 would expose 85.30 (100% extension of what is wave a of 4). Only a drop below 84.23 would suggest that a more important top is in place.

Australian Dollar / Japanese Yen

Daily RSI(14) has rolled over from above 75 and the rally from 76.30 can be treated as a completed 5 wave advance. Also warning of at least a setback is RSI divergence at the high. Initial support is 82.80, then 82.05.

New Zealand Dollar / Japanese Yen

The NZDJPY reversed from a line drawn off of January, April, and June highs. Daily RSI has rolled over from an overbought condition. Favor at least a drop to test support, which is now 66.40. A longer term top would be signaled by a break below the support line extended from the February, July, and October lows.

Written by Jamie Saettele

Scandi Daily 10.26

2009-10-26T15:36:00.000+08:00

OVERVIEW – This week’s monetary policy decision from the Norges Bank comes into focus, with the Norwegian central bank widely expected to raise rates by 0.25bps to 1.50% on Wednesday. The decision will be watched closely with the Nordic bank to emerge as the first European central bank to boost rates since the onset of the global financial markets crisis. Many will also be watching the close relationship between the NOK and SEK which could diverge significantly in favor of the NOK, especially after the Riksbank disappointed many hawks in the previous week by leaving rates on hold and maintaining their accommodative outlook well into 2010. Monday’s calendar is light with the only release coming in the form of Swedish trade balance at 8:30GMT.

Eur/Sek continues to consolidate off of the 2009 lows from August and we contend that the market is in the process of carving out a medium-term base. Any setbacks are expected to be well supported ahead of 10.05, with a break back above 10.45 to confirm basing prospects and accelerate gains.

Eur/Nok fresh yearly low last Thursday by 8.24 but we feel that the market is finally now exhausted and on the verge of some major upside over the medium-term. Aggressive players can get long at current levels, with a break back above 8.40 accelerating. Only back below 8.30 would delay.

Usd/Sek remains under pressure for now, with the market still locked in an intense downtrend and breaking to fresh 2009 lows towards 6.75 thus far. However, we continue to retain a constructive outlook at current levels, with daily studies looking stretched and warning of a short to medium-term reversal. Look for a break back above 6.84 on Monday to help reaffirm outlook.

Usd/Nok is back under pressure with the market matching the previous week’s trend/2009 lows by 5.51 ahead of the latest minor bounce. However, daily studies are looking stretched and we would not rule out the potential for the formation on a double bottom by 5.50, with a break back above the 5.67 area neckline to confirm and accelerate.

Gbp/Nok finally showing signs of recovery after basing out by 8.82 in the previous week. Daily studies show plenty of room for additional corrective upside, and we look for a push back towards 9.50 over the near-term. Setbacks should now be well supported ahead of 9.00.

Nok/Jpy continues to extend gains now through the latest barriers by 16.50. However, daily studies are showing overbought and we would recommend that bulls proceed with caution. Short-term support comes in by previous resistance at 16.50 and a break below this levels would warn of a bearish reversal.

Written by Joel Kruger

FX Correlations

2009-10-25T09:36:00.001+08:00

The following is our monthly correlations update for October. As we have stated time and again, correlations between different currency pairs will inevitably shift over time. Therefore, it is of utmost importance to keep abreast of these fluctuating relationships to fully understand your trades and portfolio. Below are the one-, three-, six- and twelve-month correlations for the seven major currency pairs. Additionally, we have included the six-month trailing correlation for the majors against the EURUSD for a different view of correlation.

In order to be an effective trader, it is important to understand how different currency pairs move in relation to each other (and in conjunction to other markets). There are a few reasons why this is significant, but most importantly, it allows traders to understand their net exposure. Such exposure goes well beyond merely buying or selling too much of a single currency against its various counterparts. There are fundamental links underlying the market which wax and wane depending on what the prevailing concern in the market happens to be. Comparing and contrasting a portfolio made of EURUSD and AUDUSD against one comprised of EURUSD and AUDUSD highlights this development. Evaluating the correlations amongst the majors today against what they were just a few months ago or a year ago, we can see that there is far less consistency. What is the difference between those periods and today? Risk appetite. Just a few months ago, demand for return and lack of financial turmoil was offering a boost to all securities that were particularly high or low on the risk scale. A year ago, things were exactly the opposite with all-consuming fear driving all markets lower. Today, the outlook for capital appreciation has leveled off and the binding influence of risk trends has begun to breakdown. Nonetheless, we can see the market is ready to revive its ties. Holding its reserve currency status the US dollar has seen its anti-risk role shift against currencies that are at different levels of the scale of return. In turn, the correlation between EURUSD and AUDUSD price action over the past month has cooled (0.74). At the same time, the Swiss franc’s relative role of safe haven hasn’t prevented significantly diminished the tight relationship of EURUSD and USDCHF price action (-0.94) – suggesting economic links are still a primary force in Forex speculation.

For evidence of the ebb and flow in risk’s influence over price action, we can see its correlation rise and fall over time. Establishing a base line of a six month trailing correlation, we saw last month the EURUSD and USDJPY correlation was tightening (-0.22) with a shift in risk trends towards growth concerns and a changing of the guard so to speak amongst the yen and dollar for the title of top safe haven. This was during the period when risk appetite was generally rising. Look back to the six months through March in comparison; and the dramatic change in risk trends essentially anchored the correlation near zero (0.08). Overall, having this knowledge will allow traders to effectively diversify and manage their portfolios over time.

Regardless of your trading strategy and whether you are looking to diversify your positions or find alternate pairs to leverage your view, it is very important to keep in mind the correlation between various currency pairs and their shifting trends.

FX Correlations (data as of 10/01/09)

Written by Jamie Saettele

FX Technical Weekly

2009-10-25T09:17:00.003+08:00

The US dollar languishes at its lows against most major currencies but the USDJPY has built a strong base and additional strength is expected

EURO / US DOLLAR

Joel: Rallies have now extended well beyond 1.5000, with the market eyeing next figure support by 1.5100. The overall bullish structure remains firmly intact and any intraday dips are expected to be well supported ahead of 1.4830. Next key topside resistance comes in by 1.5240, the 78.6% fib retracement off of the major 2008 high-lows and we look for this level to be tested over the coming days. Short-term and medium-term technical studies are however looking stretched and any moves beyond 1.5240 are seen limited in favor of a major USD corrective rally. But for now, only back under 1.4830 would negate constructive outlook. Our model is currently running a short position from 1.5010 (stop 1.5110) but the trade has not held up well in the strong trending environment.

Jamie: After trading to 1.5060 the EURUSD has come off slightly, but a drop below 1.4940 is needed to signal a trend change. Keep in mind the larger 5th wave channel that we’ve focused on for weeks. That line is at 1.5086 Monday and increases 11 pips per day. In the event of additional upside, there are measurements concentrated at 1.5185.

BRITISH POUND / US DOLLAR

Joel: While the rally of the past few days has been impressive, the overall structure still looks quite toppish and we would expect to see the recent surge above 1.6500 to stall out at any moment. A closer look at the daily chart is quite revealing, with the market showing some strong internal resistance between 1.6665 and 1.6745 (former shoulder resistance of major h&s top). As such, we recommend looking to fade upside extensions into this area in favor of some bearish resumption. Look for a break back below 1.6485 to reaffirm outlook.

Jamie: After trading to a high just below 1.6700 (the high was made close to the 61.8% extension of the 1.5707-1.6404 advance), Cable has plunged. Former supports are now resistance at 1.6484, 1.6530, and 1.6607. The decline could be a series of 1st and 2nd waves, part of a leading diagonal, or a 3 wave correction. Price action since 1.6750 could also be in the mold of a triangle. There are many possible counts right now but most point lower from here. 1.6450 short was triggered this week. Move risk to 1.6600.

AUSTRALIAN DOLLAR / US DOLLAR

Jamie: The AUDUSD reversal off of channel resistance (albeit unorthodox channel resistance) combined with momentum considerations (overbought + divergent) on multiple times frames put the pair at risk of at least a setback if not an outright reversal. Coming under .9181 would confirm as much.

NEW ZEALAND / US DOLLAR

Joel: Despite overbought readings on both the daily and weekly charts, the pair remains very well bid with the market continuing to surge to fresh 2009 highs on a daily basis (0.7635 on Wednesday). Next key resistance comes in by 0.7765, which represents a weekly high from July 2008. A break above 0.7765 will then expose an eventual retest of the critical 2008 highs by 0.8215. Intraday dips should continue to be well supported ahead of 0.7400, with only a break back below 0.7350 to threaten the bullish structure. The 10-Day SMA (0.7480) has been very supportive throughout much of the up-trend and bears would need to see a close below this level at a minimum to start to think about the potential bearish reversal and break back under 0.7350. Our model is short from earlier in the week at 0.7510 but the trade has been underwater for most of the time since inception.

Jamie: On the daily, the NZDUSD has tested (multiple times) and failed at a line extended from the 8/14 and 8/23 highs. In assessing the wave count, the rally from .7076 looks to be the final subdivision (wave 5 of c of Y). Since the high at .7640, the pair has marked time. A drop below the support line extended from .7250 and .7350 would be the first sign that a top is in place.

US DOLLAR / JAPANESE YEN

Joel: Our shift to a bullish outlook on Wednesday (based on 10/20-Day SMA positive cross) has paid off, with the market breaking the recent consolidation and accelerating through the 50-Day SMA and Upper Bollinger. Next key resistance comes in at 92.55 (21Sep high) which also coincides with the Ichimoku cloud bottom. Any pullbacks are now expected to be well supported ahead of 90.00. Weekly studies also confirm and show the formation of a base by 88.00.

Jamie: Either a triangle or complex correction is underway since December 2008. The next leg should be up towards 101.50 (maybe even above). Since the low at 88.00, a series of 1st and 2nd waves is visible. If this count is correct, then an exceptionally strong USDJPY rally is underway now. Move risk on the long to 91.20.

Written by Jamie Saettele

FX Technical Weekly

2009-10-25T08:13:00.004+08:00

Dollar strength towards the end of the week may mark the beginning of a reversal pattern. The best looking trade though is long USDJPY, as the pair has broken through a short term head and shoulders pattern. The development fits with a longer term wave count.

EURO / US DOLLAR

Joel: The structure remains quite constructive on the monthly chart, with the market having put in 6 consecutive monthly higher lows and potentially now looking for a seventh. The price has also traded above the 61.8% fib retracement off of the major 2008-2009 high-lows, and next key resistance after 1.5000 is not seen until 1.5240, the 78.6% fib retracement off of said move. For now, 1.4175 is critical longer-term support and needs to be broken to end a sequence of consecutive monthly lows and put the pressure back on the downside. Until then, buying dips should be the preferred long-term strategy.

Jamie: Focus remains on the top of the channel from early July (5th wave channel, more on that below), which is at 1.5034 Monday. The channeling nature of the EURUSD since July suggests that the push above 1.4847 is likely wave of 5 of v of C. Wave count and momentum readings suggest a top, but not until a drop below 1.4820 would it be wise to attempt a short.

BRITISH POUND / US DOLLAR

Joel: Difficult to determine whether we are in the process of attempting to carve a major lower top in the 1.7000 area ahead of the next drop below 1.3500 or are looking for a higher low ahead of a fresh upside extension beyond 1.7000 and back towards the 2 handle. For now however, at a minimum, it looks as though the market wants to trade lower with sights set on the 1.5000 area over the coming weeks. This, after the triggered major h&s top by 1.6000 on the weekly chart. As such, any rallies towards 1.6500 should be aggressively sold into.

Jamie: The GBPUSD has returned to and exceeded the head and shoulders neckline that was broken in September. Resistance extends to a line extended from the August and September highs, which is at 1.6456 Monday. The next move will be to position short against 1.6746.

AUSTRALIAN DOLLAR / US DOLLAR

Joel: The market has now exceeded the critical psychological barrier at 0.9000 to trade well into the 0.9200’s thus far. However, at this point, daily and weekly studies are showing overbought to suggest that the current trend will be unable to sustain itself. As such, we recommend looking for opportunities to fade the latest surge, with a break back under 0.9000 to confirm topping prospects.

Jamie: The AUDUSD has exceeded .9200 and I’ve mentioned in recent days/weeks that levels to watch are .9200, .9270, and .9325 (these are former support levels from 2008). These levels make a large zone where a reversal could occur. RSI (14 day) is above 74 but not as high as it was at the June high, when it was above 75 (divergence still exists). Price action carved out an outside day Friday, which is a reversal warning.

NEW ZEALAND / US DOLLAR

Joel: The intense rally has finally reached critical psychological barriers by 0.7500, which also coincides with the major 78.6% fib retracement off of the 2008 high-lows. With daily and weekly studies severely overbought, looking to sell at current levels is the recommended strategy. However, we would wait for some form of confirmation to establish any short position. There is some solid support by 0.7250 and a break of this level will confirm our outlook.

Jamie: The NZDUSD continues to look heavy, especially on hourly charts. Dropping under .7250 would break the series of higher lows and indicate that a top is in place. Like the AUDUSD, Friday’s price action made an outside day (which warns of a reversal).

US DOLLAR / JAPANESE YEN

Joel: Remains locked in a very well defined downtrend from 2007 with the market putting in a series of lower highs and lower lows. A fresh lower top is now sought out by the 2009 yearly high at 101.45, to be confirmed on a break below the matched 2008/2009 trend lows at 87.15. Any rallies are classed as corrective and although the market is currently in the process of bouncing out from the recent lows by 88.00, we look for gains to be well capped ahead of 95.00. No trading is recommended at current levels.

Jamie: I presented this longer term bullish count earlier in the week. Either a triangle or complex correction is underway since December 2008. The next leg should be up towards 101.50 (maybe even above). The break above 90.43 confirms a short term inverse head and shoulders reversal and sights are on a Fibonacci extension at 92.80.

US DOLLAR / CANADIAN DOLLAR

Joel: Although the market has undergone some steep setbacks since the onset of 2009, we contend that the longer-term structure is constructive from here. Although we had not anticipated a dip below the 1.0500 area, the latest setback into 1.0200 seem to have found a bottom which could now signal the start to a major upside push over the coming weeks. Thursday’s strong bullish outside day could very well prove to be the catalyst.

Jamie: “1.0317, which is the 61.8% extension of 1.3068-1.0782/1.1730, has been reached. 1.0375/1.0400 is short term resistance and a rally above 1.0527 would begin to suggest that a bottom is forming. Additional objectives are .9914 and .9444.” After dipping below 1.0300 (which has been a significant pivot since 2008), the USDCAD has rallied. It is possible that an important low is in place. Exceeding 1.0527 would warrant a strategy of buying dips.

US DOLLAR / SWISS FRANC

Joel: Has extended declines in 2009 to fresh lows by 1.0115 thus far ahead of the latest minor bounce. Despite the downtrend, we contend that the market is very close to carving out a higher low above the multi-year lows below parity, ahead of some fresh upside back above 1.1000 over the medium to longer-term. Although the 78.6% fib retrace off of the major 2008-2009 move has been slightly breached, the 1.0100 area could be an ideal spot for the higher low to take form. Ultimately, inability to hold above 1.0000 on a weekly close basis will however negate recovery prospects.

Jamie: The USDCHF has dropped to a new low and is probably completing wave v of C (just as EURUSD is in the process of doing). 1.0037, the 100% extension of 1.2303-1.0367, is a potential reversal point. Trading above 1.0362 would suggest that a low is in place.

Written by Jamie Saettele

Speculative Canadian Dollar Longs Indicate Extreme

2009-10-25T07:22:00.011+08:00

Latest CFTC Release Dated October 20, 2009:

The COT Index is the percentile of the difference between net speculative positioning and net commercial positioning measured over a specific number of weeks (either 52 or 13). A reading close to 0 suggests that a bottom is forming and a reading close to 100 suggests that a top is forming. The readings are for the actual currency, not the currency pair. For example, a reading of 100 on the Canadian Dollar suggests that the Canadian Dollar is close to a top (USDCAD close to a bottom).

Readings of 95 and higher as well as 5 and lower are in boldfaced red type to indicate potential market extremes. For example, an increasing index is bullish until the index is extreme (near 100), at which time the risk of a reversal or pause in the trend increases.

US Dollar

No change from last week “Speculators continue to pile on shorts. The red line (speculative positions) is near the record levels that were reached in 2008. Positioning is clearly extreme and a turn will come with a sentiment extreme. The question is whether or not that happens sooner than later.”

Euro

Specs trimmed longs slightly but the EURUSD remains strong. Still, last week, the difference between speculative and commercial positioning was the highest that it has been since January 2008. A roughly 600 pips drop accompanies that extreme. These are the types of conditions that precede a reversal.

British Pound

COT warned of a bearish sentiment extreme and the GBPUSD rallied roughly 1000 pips from its low. The difference between specs and commercials remains large.

Australian Dollar

No change from last week – “AUD speculative long positions are the highest since mid July 2008 – which was when the AUDUSD topped at .9850. Futures traders are heavily long and have been since mid-August. Reversal alarms are blasting – the only thing missing at this point is the reversal.”

New Zealand Dollar

No change from last week – “NZD longs are not as extreme in the historical context as the AUD longs, but positioning is the most onesided October 2007. A reversal is expected soon.”

Japanese Yen

No change from last week – “Yen longs were extreme the past several weeks, which warned of a turn. That turn has occurred so favor the downside in Yen (upside in USDJPY).”

Canadian Dollar

No change from last week – “CAD longs are the highest since June 2008. The CAD made an important top against the USD at that point. The weekly candle pattern made a hammer, which is a bullish reversal pattern. Favor selling the CAD (buying USDCAD).”

Swiss Franc

No change from last week – “Swiss Franc longs are at their highest level since December 2004. That was a time that marked a significant high in the CHF (USDCHF low). Expect the same here.”

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (published Friday evenings), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates.

Written by Jamie Saettele

Large Speculators are Too Short US Dollars

2009-10-25T06:27:00.012+08:00

Latest CFTC Release Dated September 22, 2009:

US Dollar

Euro

British Pound

Australian Dollar

New Zealand Dollar

Japanese Yen

Canadian Dollar

Swiss Franc

Jamie Saettele publishes Daily Technicals every weekday morning, COT analysis (Monday), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.

Written by Antonio Sousa

Swiss Franc Long Positions Highest Since December 2004 (COT)

2009-10-25T05:30:00.025+08:00

COT data is yet another piece of the puzzle that warns of a USD low. EUR, AUD, NZD, CAD, and CHF long positions are at their highest levels in year(s). Previous instances of one sided positioning led to reversals.

Latest CFTC Release Dated October 13, 2009:

US Dollar

Speculators continue to pile on shorts. The red line (speculative positions) is near the record levels that were reached in 2008. Positioning is clearly extreme and a turn will come with a sentiment extreme. The question is whether or not that happens sooner than later.

Euro

The difference between speculative and commercial positioning is the highest that it has been since January 2008. A roughly 600 pips drop accompanies that extreme. These are the types of conditions that precede a reversal.

British Pound

WOW. Speculators were certainly betting on a British Pound collapse. Short positions on Sterling reached an all-time high. Of course, this data is current as of Tuesday, which was before the GBPUSD rally. The numbers were the same last week too, so COT made a good call on the GBPUSD low. Next week’s numbers will reflect the rally (decreased number of shorts…probably significantly).

Australian Dollar

AUD speculative long positions are the highest since mid July 2008 – which was when the AUDUSD topped at .9850. Futures traders are heavily long and have been since mid-August. Reversal alarms are blasting – the only thing missing at this point is the reversal.

New Zealand Dollar

NZD longs are not as extreme in the historical context as the AUD longs, but positioning is the most onesided October 2007. A reversal is expected soon.

Japanese Yen

Yen longs were extreme the past several weeks, which warned of a turn. That turn has occurred so favor the downside in Yen (upside in USDJPY).

Canadian Dollar

CAD longs are the highest since June 2008. The CAD made an important top against the USD at that point. The weekly candle pattern made a hammer, which is a bullish reversal pattern. Favor selling the CAD (buying USDCAD).

Swiss Franc

Swiss Franc longs are at their highest level since December 2004. That was a time that marked a significant high in the CHF (USDCHF low). Expect the same here.

Jamie Saettele publishes Daily Technicals (majors) every weekday morning, COT analysis (Friday, market close), technical analysis of currency crosses on Monday, Wednesday, and Friday (Euro and Yen crosses), and intraday trading strategy as market action dictates. He is the author of Sentiment in the Forex Market. Follow his intraday market commentary at DailyFX Forex Stream.

Written by Jamie Saettele

British Pound Continues to Outperform, Japanese Yen Loses Ground.

2009-10-22T08:12:00.005+08:00

The British pound surged higher following the Bank of England Minutes and remains the best performing currency against the greenback, while the Japanese yen continued to lose ground following the rebound in market sentiment.

The British pound surged higher following the Bank of England Minutes to remain the best performing currency against the greenback, and the currency may continue to retrace the sell-off from the previous month as policy makers hold an improved outlook for the economy. The GBP/USD has rally 230+pips on the day and has moved nearly 160% of its daily ATR, and the lack of momentum to break above 1.6650 may lead the pair to fall back below 1.6600 as it remains overbought. Nevertheless, as the pound-dollar remains support by the 100-Day SMA (1.6354), we may see the pair continue to rally over the remainder of the week as economists forecast 3Q GDP to expand 0.2% from the three-months through June, and may work its way towards 1.6700 to test the September high for near-term resistance.

The USD/JPY advanced for the second day and the Japanese yen is the worst performing currency against the greenback next to the Canadian dollar, and the exchange rate may continue to push higher over the week following the rebound in market sentiment. However, as the dollar-yen fails to push above the previous week’s high (91.33), we may see the pair continue to hold a narrow range over the week as it search for a top, and the lack of momentum to mark higher highs could lead the USD/JPY to pare the advance from earlier this month. Nevertheless, as the Bank of Japan maintains a cautious outlook for the domestic economy and expects the region to face headwinds going into the following year, growth concerns may stoke increased speculation for a currency intervention as global trade conditions remain weak.

Forex Options and Futures Point to British Pound, US Dollar Recovery.

2009-10-22T07:50:00.008+08:00

Forex Options and Futures markets show US Dollar sentiment at near-record bearish extremes against almost all major counterparts, and one-sided positioning suggests that the USD is near a major turning point. The key difficulty remains the timing of said turnaround, as US Dollar-bearish sentiment has remained extreme for quite some time now. The key exception is USD positioning versus the British Pound, and recent corrections in price suggest that the GBPUSD has set a major medium-term bottom.

Futures and Options sentiment paint a distinctively different picture for the British Pound against the US Dollar, as traders have actually grown extremely long USD versus its UK counterpart. Indeed, Net Non-Commercial positioning just recently hit its most bearish in history—emphasizing GBP bearish extremes. CFTC COT data is always delayed by at least 4 days, but the spike in Forex Options risk reversals suggests we are in the midst of a reversal. Given such overwhelmingly bearish positioning, we can foresee further GBPUSD rallies as traders cover their short positions.

Impressive Japanese Yen rallies (USDJPY declines) have led to similarly impressive positioning in futures markets, with Non-Commercial traders the most heavily net-short USDJPY since it last traded below 90. Yet more recent shifts show traders have pulled back in their JPY-long bias, and forex options risk reversals actually shows sentiment is near its most JPY-bearish in the past 90 trading days. The net sentiment reading is admittedly fairly unclear, and we may need to wait for further clarification before making a concrete Yen forecast.

Traders have grown extremely net-long the Canadian dollar (short the USDCAD) through recent trade, with FX Futures data showing sentiment at its most bullish since the pair traded near parity. Yet forex options markets have grown near-neutral the USDCAD, and the sudden shift in FX Options hints at the beginning of a short-term reversal. It is always extremely challenging to pick tops and bottoms on sentiment extremes, but we would argue that USDCAD risks remain to the topside through the coming months of trade.

Non-Commercial futures positioning on the US Dollar/Swiss Franc pair remains the most bearish in nearly 5 years—pointing to clear sentiment extremes. Swiss Franc long positions (USDCHF shorts) outnumber short positions by a over 20,000, and it is little surprise to note that the USDCHF trades very near parity. Yet the last time net-long CHF positions grew to this level was in December, 2004. At that point the USDCHF set an important low and rallied over 1000 pips in 10 months. Past performance is not a guarantee of future results, but the likelihood of a USDCHF bottom is high.

We continue to call for a sustained Australian dollar pullback, as sentiment has remained extreme for quite some time now. Non-commercial futures traders remain the most net-long the AUDUSD since the pair traded above 0.90, but the timing of said retracement remains extremely challenging. Forex options market sentiment previously hit major extremes and has since moderated. Our earlier calls for AUDUSD pullbacks were clearly premature and highlight the difficulty in timing trades on sentiment extremes. Yet we believe that extreme sentiment increases risk of pullbacks.

The New Zealand dollar/US Dollar pair is quite similar to the AUDUSD, with significant sentiment extremes leaving the door open for near-term declines. As of last week, Net Non-Commercial positioning on NZDUSD futures remained the most net-long since the pair set noteworthy tops in July, 2007.

Written by David Rodríguez, Quantitative Strategist

GBPCAD Long Term Bullish Opportunity

2009-10-13T07:50:00.015+08:00

GBPCAD Long Term Bullish Opportunity - Opportunities through the more exotic currency crosses are often overlooked. This week, we are highlighting a long term opportunity in the GBPCAD. Technical evidence suggests that a significant low formed in November 2007 and upside potential significantly outweighs the risk.

From a technical standpoint, the GBPCAD may have formed a significant low. Notice on this monthly chart that the low in November 2007 (1.9011) spiked below a support line that is drawn off of the September 2000 and March 2006 lows. Price has held above that line since. The indicator plotted below price is a 60 period momentum oscillator. 60 months is 5 years so what this indicator tells us is how far in either direction price has deviated from its 5 year average. In November 2007, the indicator made a spike low near 5,000 (5,000 pips below its 5 year average). The 1992 low also formed after price had fallen 5,000 pips below its 5 year average. Momentum has turned up from a level that previously signaled a significant low.

This is the same line that was plotted on the monthly chart. As mentioned, price has held above the line since November. Since then, the GBPCAD has pushed through the 200 day SMA; another sign that a major low is in place.

Indicator studies such as momentum and averages help identify potential opportunities, but these tools are insufficient for pinpointing entry points and defining risk. The Wave Principle makes possible the determination of accurate entry points while taking on appropriate risk. From the May 2008 low, the GBPCAD rallied in 5 waves without making a new high (ended below the March 2008 high). Therefore, we know that the trend is up. A correction was expected and has occurred. It is possible that the corrective is over at 1.9919 (notice the red line at the center of the triangle…this indicates support from congestion). A deeper correction is possible but a long term bullish bias is warranted against 1.9288. Bullish targets will be approximated as the trend matures, but expect a test of the 2006 high near 2.35 in the year(s) ahead.

Written by Jamie Saettele, Technical Currency Strategist

FOREX

2008-07-18T22:49:00.040+08:00

WHAT IS FOREX?

Forex or popularly known as Foreign Exchange is one of the world’s popular for money exchange system.

Forex is the world’s trading currency market where currencies are trade and bought by merchants in Forex world. In the early 2000, Forex market was introduced and opened to exclusive members only where money starting as USD10 millions is required for them to participate in joining in the market.

In the beginning forex was a particular market for banking, Investment Institution and influence individual (high net worth individuals) such as George Soros. But now because of strong influence of the internet and worlds economy, forex market is now opened for individual investors like you.

So how is it that someone who at first have no knowledge in economy knows and understand how forex systems works..For your information, to generate great income is so easy.!!!

WHAT ACTUALLY DOES FOREX MARKETING DO?

The answer is simple, Forex marketing is a place for currency trading transaction. In other words, forex marketing is the place where currencies are sold and bought and convert to other currencies.

An example USD1 = RM3.30

There are still many and maybe people like you perhaps still does not know what is actually happening in forex market. In stock marketing, let’s say that you have little share that you invest in one big company as much as USD10/share for one lot. Even thou you invest little in that company you are an “owner” of that company. That goes the same for what is happening in forex. If you bought X currency for USD1000 that means you already have little portion of the X economy.

FOREX IN SAFETY MARKET!

Forex market is not controlled by under any country or controlled by Central Exchange, Forex market will not be closed just incase there should be a terrorist attack and natural hazard.
Forex is available in 24/7, You are in full control to invest in anytime.
No need to pay commission, You don’t have to pay commission for middleman to trade in forex trading.
Easy to gain profit by just a click of a mouse.
In general, trading by little modal allows you to do business 200 times the amount.

FOREX IS THE BIG MARKET IN THE WORLD!

Forex marketing is a place where USD1.95 trillion is being trade everyday. It is easy to generate income in this market. As a beginner, you don’t have to be very ambitious to gain profit. I believe that you can gain great income in a couple of months.Forex trading (foreign exchange) is one of the biggest market that exist in the entire world and it is growings fast and one of them is a Forex Tracer and Forex Assassin.This forex will be guarantee to gained a profitable income.