Monday, January 2, 2012

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

The Forex Week Ahead for the week of December 2nd 2011

Posted: 02 Jan 2012 07:28 AM PST

Week Ahead in Trading Webinar rebroadcast with Greg Michalowski

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The Forex Week Ahead for January 2nd 2011

Posted: 02 Jan 2012 06:23 AM PST

Euro firmer after Eurozone December manufacturing PMI comes in at 46.9.

Posted: 02 Jan 2012 01:02 AM PST

1-2 Calender

Posted: 02 Jan 2012 12:08 AM PST

USDCHF ends the year at the midpoint of the move down from the 2010 high

Posted: 01 Jan 2012 11:09 PM PST

2011 saw the USDCHF spend most of the year moving lower as a flight into the safety of the CHF kept the USDCHF trending to the downside.   Then on September 6th the Swiss National Bank made a stand, pegged the EURCHF at the 1.2000 level and the USDCHF soared higher.  The pair ended the year up by 0.4% and testing the 50% of the move down from the June 2010 high at 1.1729. That midpoint retracement level comes in at the 0.9396 level.  The year ended just below this level.

Going into 2012, this 0.9396 level will be a key level to get above and stay above if the pair is going to continue to move higher. If it is able to push through, the December high at 0.9546 followed by the 100 week moving average at the 0.9613 level will be the next key targets for traders.

 

If on the otherhand, the market decides to continue to take profit against the key resistance level and the price dips below – and stays below the 0.9396 and 0.9613 levels- look for corrective potential to dominate in the new year. The downside targets off the hourly chart come in at 0.9305 and below that 0.9248 (see chart below).

USDJPY ends 2011 by moving below the 100 day moving average. EURJPY closes below 10 year low.

Posted: 01 Jan 2012 09:50 PM PST

The USDJPY ended 2011 below the key 100 day MA at the 77.16 level. The move below this level starts the new year with a bearish bias.  Traders will be looking for more downside momentum which will next target the 76.56 low from Mid November and then the all time low at the 75.56 level. That low was reached in October 2011 and led to intervention from the Bank of Japan on October 31st.  The sharp rally at that time saw the price move above the 38.2% of the move down from the 2011 high, but only for a single day.  Sellers reemerged and the pair spent most of the final two months of the year in a narrow 76.59 to  78.26 range.

If the price moves back above the 77.16 level, traders who are short, will likely cover.  A move toward the two month high at 78.26 could be expected in response. Keep an eye on this level as the new year begins.

Of course, the Bank of Japan would prefer not to have their currency get too strong after the rally in the JPY in 2011.  However, the pair – which was subject to the weakness of the dollar for the most of 2011 – is now subject to EURO weakness as 2012 is started.  The EURJPY fell to a new 10 year low last week (below 99.87) and was down the most of the JPY pairs in 2012 (-8.2% – see chart below).

That pair also fell below the bottom trendline at 99.82 on the monthly chart (see chart below).   With the price closing Friday at the 99.60 level, traders will likely use the 99.82/87 as their upside stop.  Stay below this level in the new year and traders will be forced to keep the pressure on the pair.  If the price decline below this key level fails, and the price moves back above the 99.87 level, look for a relief rally and for a big sigh of relief from the  Bank of Japan.

GBPUSD ends an up and down December with a sharp rally.

Posted: 01 Jan 2012 09:29 PM PST

The GBPUSD ended an up and down December with a short covering rally. The rally was started after failing to develop and keep downward momentum on the break of the December low at 1.5403 on Thursday.  The January 2011 low of 1.5405 was also near this key level and gave traders a reason to buy on the quick failure.

The up and down December still needs to develop the next trend for the pair. If I were to put a bias, it would be to the downside as the price ended below the 100 hour MA currently at the 1.5535 level (blue line in the chart below) and also near the low for 2011.  However, the price can change the bias to bullish by moving above the 100 hour MA this week and then the 200 hour MA at the 1.5600 level currently (green line).  This should open the door for further upside momentum with a target of the high for December at the 1.5772 area.

On the downside, if the price can stay or move below the 100 hour MA, a move below the 1.5400 level should open the door for lower levels.  The low for 2012 came in at the 1.5270 and would be a major downside target for the pair in early 2012.

So although things are bearish at years end, the door remains open for a quick change on a rally above close resistance.

EURUSD ends the year near the lows for the year.

Posted: 01 Jan 2012 08:35 PM PST

As the year moved toward the end, sellers pushed the price of the EURUSD below the low level of the year reached way back on January 10th 2011 (at the 1.2873). The price moved below this level on Thursday, but could only stay below the level for 30 or so minutes before a rally ensued. From there, profit taking buyers and a pretty good short squeeze, sent the price higher on Friday morning.  However, the rally stalled at the 100 hour MA (see blue line in the hourly chart below).

From there, the EURUSD had a steady move lower and closed near trendline support on the hourly chart at the 1.2930 level (see chart below). A move below this level – and staying below this level on Monday – will be needed to keep the downside momentum going in the new year.

If the price should break the 1.2930 level, traders will be looking for the 2nd break of the 1.2873 level (low from January 10th 2011) to entice further selling pressure and momentum.  If that momentum develops, a move toward the bottom channel trendlines which come in at the 1.2653 level and then the 1.2460 level (see daily chart below) will be the next targets for traders.

If the pair cannot breach the 1.2873 level and stay below this key level, a move above the 1.3025 level and then the 1.3100 area would not be welcomed by sellers.  I would expect shorts to cover above these levels and re-evaluate the situation.

Longer term, the bias is down for the EURUSD as the year begins. The weekly chart below has the price below the 61.8% retracement of the move up from the 1.1876 low reached in 2010.  This low was reached at the time of the 1st Greek bailout.  The retracement level comes in at the  1.30462 level.  The price also ended the year not far from the low for 2011.  Most analysts and traders expect further selling into 2012.

The only thing that seems to be able to derail the downside momentum is the overwhelming bearishness as the year begins.  When too many traders are bearish, it can lead to a move the other way.  However, unless the price can get above the 1.3025 level and then 1.3100, expect sellers on rallies.

 

Gold starts the week with the bulls looking for continued momentum

Posted: 01 Jan 2012 07:53 PM PST

Last week, gold fell sharply – falling through trendline support that dated back to the 2008 low (see weekly chart above).  The move below the trendline should have solicited selling presssure.  It did for a while, but the price quickly moved back above the trendline and that led to buying on Friday.

As we head into the new week, the price now has support against the old trendline at the 1550-54 area.  Holding above this level, keeps the bulls in control and should lead to further upside potential.  If able to hold support, the next key target needed to keep the bulls in charge would be at the 1620/1628 area where the topside trendline and 200 day MA (green line in the chart below) are found.   The ability to breach this level would be encouraging for the bulls and could reestablish the upside momentum.

On the downside a break of the 1550-54 area would likely frustrate the buyers and would next target the 38.2% retracement  of the move up from the 2008 low (see chart above) at the 1447 level.
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