Saturday, August 29, 2009

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

August 28th 2009 FXDD Forex Report - Weekend Edition

Posted: 28 Aug 2009 12:57 PM PDT

US Government says Iran not fully cooperating with Nuclear program.

Posted: 28 Aug 2009 11:50 AM PDT

US Government has said that Iran still not fully cooperating with International community with regards to nuclear program. This response seems to be in response to the IAEA report released earlier today which gave a generally positive to neutral report on Iran’s nuclear program.  This may be contributing to the rise in the US dollar over the last 30 minutes.

EURUSD moves below the 100 hour MA. Tests congestive and Fibonacci support

Posted: 28 Aug 2009 11:34 AM PDT

gregmike-04644

The EURUSD has moved below the 100 hour MA at the 1.4299 level. THe pair is approaching the 61.8% retracement at the 1.4282 level.  There is also a whole bunch of lows/highs from this area that should slow the descent.  Additional support on a break comes in against the 200 hour MA at the 1.4265 level.

Another fresher look at the GBPUSD

Posted: 28 Aug 2009 11:13 AM PDT

gregmike-04642

The GBPUSD pair has spent the last hour or so below the 1.6317 level.    The price has also fallen below the close at the 1.6283 level now and the trendline on the daily chart at the 1.6285 area. These will be a key levels to watch today on the close.    The low for the day remains at the 1.6261.  The low for NY is 1.6266.  Watch these levels too.  A break could lead to another scoot lower. 

gregmike-04643

The market is still open to sharp moves up and down. However, the move back below the 1.6317 level, back below the trendline on the daily chart and closing level from yesterday will keep the bears in the game.

EURUSD drops for no real reason. New lows reached but mkt bounces.

Posted: 28 Aug 2009 09:28 AM PDT

gregmike-04641

The EURUSD just fell from 1.4365 to 1.4320 for no apparent reason as the Friday/End of Summer bonanza continues.  The low took out the low for the day and through the 38.2% retacement of the move up from Thursdays low. Of course the market has bounced back from those lows as the market remains in the hands of few and end of week flows continue to dominate. 

I continue to warn that anything can happen this afternoon so be aware but also expect that the moves may be quick.  So be prepared.

August 28 2009 Midday Show

Posted: 28 Aug 2009 09:15 AM PDT

Click here to view the embedded video.

Special explaination of how the close of European markets affects the US forex market.

A thing about Friday’s London close…

Posted: 28 Aug 2009 08:19 AM PDT

I received an email about a comment I made in this mornings Forex video.  The question referred to a comment about “London squaring up for the weekend”.  I thought I would elaborate.

London tends to close up shop at 5:00 PM London time. This corresponds with 12 PM NY time.  Each day you may notice that there tends to be some extra activity between 11:00 AM and 12:00 PM.  Part of this has to do with the “forex fixing” that occurs at 11:00 PM NY time.  Think of it as a benchmark rate for pricing.  Sometimes there is some moves in the currency pairs that may be a result of this fixing.  It can cause some volatility in rates just before and just after 11:00 AM.  

The period from 11:00 to 12:00 is also when European and London traders go home for the evening.  Since traders may not be able to monitor the positions as closely as they would at the office, they tend to clean up some of the positions during this time period.  Why?  There is more risk when you are not monitoring positions.  

The action yesterday afternoon is proof of the risk that can occur when London/Europena traders are in the pubs or at home.   A London trader who was short the EURUSD may have had a big negative surprise when they checked the market from home that evening.    Someone who was long would have been pleasantly surprised.  Whether a winner or loser, the risk was increased.

On Friday’s, risk increases for all as over the weekend the market closes for everyone until Sunday night when liquidity returns.  The potential exists for an event that causes the market to move dramatically from Friday 4:00 PM to Sunday 5:00 PM.  It can be anything from a terrorist attack to a natural disaster to a comment from a key central banker in a Sunday newspaper.    When risk increases, smart traders lessen positions.   When they do this, the supply/demand equation can get out of whack in one direction and then reverse and get out of whack in the other direction.  All of which for no apparent reason.

Today’s moves in the GBPUSD seems to exemplfy this dynamic.  The price has been up and down with little catalyst behnd the moves.  To me it simply seems to be short term flows in a more illiquid end of summer market.  Standard support/resistance levels are not really slowing the moves.  It just does not have the rhythm that the market “normally” experiences - at least of late.    

So traders should remain aware of the dynamics of the daily London close, and in particular the Friday close, and trade accordingly. Normally that means cutting back on positions and be on the lookout for choppy trading conditions.  If you are aware you can prepare and not be surprised. It may frustrate but at least you won’t be as surprised.

I hope this helps further explain this market dynamic.

GBPUSD moves below support now. Choppy trade prevails and raises trading risk.

Posted: 28 Aug 2009 07:32 AM PDT

gregmike-04640

The GBPUSD moved below the last support line as defined by the 100 hour MA and has moved lower (click here for prior post).  The price has now moved sharply lower, below the close from yesterday at 1.6283.  It has also moved below the trendline off the daily chart which came in at 1.6285.  I should say sell against these levels but the confidence in the Friday market has me very cautious.  Risk is increased with the choppy trade. Be careful and be on the lookout for anything.    I will use the 100 hour MA at the 1.6308 level as upside resistance now.
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