Wednesday, May 26, 2010

Rolling Back on Risk Positions in Asia

Briefing
The dollar was mixed in the Asian session, marking modest gains versus the euro and other major currencies but unchanged against the yen, as market players in the region rolled back on risk positions, having earlier favoured risk appetite after Wall Street's late recovery.

Euro-yen fell from an early high near Y111.95 to a low of Y110.50, as those early risk positions were reduced. The cross opens into Europe around Y110.80.

Euro-dollar was last at $1.2280, at the low end of a $1.2271 to $1.2389 range.

Dollar-yen tracked other yen crosses lower after opening with modest gains. The pair briefly perked up to a Y90.51 high before sell orders pushed it down, slipping to a low at Y90.00 but was last trading about unchanged, around Y90.20. We are now picking up talk of decent demand interest placed in the area between Y90.15/00, with an Asian reserve manager mentioned.

Fed Bernanke comments were highlighted for the risk aversion overnight, traders reacting to him saying that he doesn't want to provide dollar-swaps on permanent basis. General dollar demand again lifted Asian pairs with the BOK again noted intervening to sell dollars. Equity markets remain in focus, with end of month positioning becoming more influential.

Euro
Euro-dollar opened Asia around $1.2345, the late recovery rally on Wall Street enabling the rate to push higher into the close from intraday lows of $1.2177. Rate moved above the NY high of $1.2353 and punched on to an early extended high of $1.2388 on the early risk appetite. However, early Tokyo quickly reversed this sentiment, selling into euro-yen's recovery. Rate retraced lower, with reported comments from Fed's Bernanke that he doesn't want to provide dollar swaps on a permanent basis, providing the added weight to take rate down to session lows of $1.2271. Rate recovered to $1.2310, as Asian equity markets edged higher.

Rate was slipping back into early Europe, trading back to $1.2275 before market reacted to comments from OECD Chief Economist that the euro has been overvalued for too long (Le Figaro), taking it down to $1.2263. Rate currently trades around $1.2276. Bids reported at $1.2260/50, a break to open a deeper move toward $1.2225/20. Resistance $1.2290/00 ahead of $1.2320/25.

RES 4: $1.2929/50 50% of 12 April decline, High 7 May
RES 3: $1.2731/35 61.8% of 10 May, 38.2% of 12 April declines
RES 2: $1.2715 21-day moving average
RES 1: $1.2673 High 21 May

CURRENT LEVEL: $1.2304

SUP 1: $1.2177 Low 25 May
SUP 2: $1.2135 50% of post-launch range
SUP 3: $1.2035/49 Lows April, Support line 22 Dec
SUP 4: $1.2000 Base of the daily Bollinger band


Yen
Recovery on Wall Street prompted risk appetite into the NY afternoon, with this tone continuing into early Asia before Tokyo opened to counter the move. Strong sales of yen crosses by Japanese exporters and retail accounts (Japanese insurance companies were noted heavy euro sellers, looking to move away from the currency) took euro-yen from early extended highs of Y111.95 to session lows of Y110.50, the move dragging dollar-yen from its early highs of Y90.51 to Y90.00. Euro-yen recovered to Y111.25, as rate tracked Asian equity recovery only to drop back again to Y110.55 ahead of the European open. Rate recovered to Y111.05 into Europe only to ease again to Y110.70.

Rate currently trades around Y110.75. Asian sovereign demand interest between Y90.15/00 helps to buoy this rate into early Europe, the rate having recovered off overnight lows to Y90.35, currently trading around Y90.20. A break of Y90.00 to open a deeper move toward Y89.80/70. Resistance Y90.50, Y90.65/75.

RES 4: Y92.55 Top of Ichimoku cloud
RES 3: Y92.35/45 21, 55-day moving average
RES 2: Y91.45/50 Base of Ichimoku Cloud, 100-day moving average
RES 1: Y91.10 200-day moving average

CURRENT LEVEL: Y90.25

SUP 1: Y89.10 Base of the Bollinger band
SUP 2: Y88.95 Low 20 May
SUP 3: Y88.33 Minor support line
SUP 4: Y87.95 Former low


Cable
Opened Asia close to NY recovery highs of $1.4410 ($1.4407) with early buying extending the risk-on rally to $1.4449. Resistance at $1.4450 able to counter the move with rate then reversing as Tokyo sold yen crosses at their open. Reversal gained pace as risk aversion came to the fore as market reacted to comments from Fed Bernanke that he doesn't want to provide dollar-swaps on a permanent basis. Cable squeezed down to initial lows of $1.4365, recovering to $1.4390/95 before slipping back to post session lows at $1.4356 ahead of the European open.

Further sales into the session extended lows to $1.4350, bouncing back to $1.4400/05. Rate currently trades around $1.4398. Support remains in place to $1.4350, a break of $1.4340 to allow for a deeper move toward $1.4310/00. Resistance $1.4405/15 ahead of $1.4430 with stronger interest toward $1.4450, more behind at $1.4465.

RES 4: $1.4765 21-day moving average
RES 3: $1.4726/41 38.2% & 61.8% retracements
RES 2: $1.4645 50% of 10/19 May decline
RES 1: $1.4548 38.2% retracement of 10/19 May decline

CURRENT LEVEL: $1.4385

SUP 1: $1.4260 Low 25 May
SUP 2: $1.4234 Low 19 May
SUP 3: $1.4131 100% projection of May decline
SUP 4: $1.4080 Current base of the daily Bollinger band

Friday, May 14, 2010

Light Euro Calendar Today - Volume Returns Somewhat After Ascension Day

Briefing
The dollar was narrowly mixed in Asian trade Friday, stuck in tight ranges amid light volumes. Dollar-yen was last at Y92.90, at the upper end of the Y92.51 to Y92.95 range, with offers seen at Y93.00 from exporters capping further gains initially.

Euro-dollar was also higher in thin trade, trading up to $1.2659, the upper end of its $1.2516/59 range, still holding off the much reported option barriers at $1.2500, dropping back to $1.2640 into early Europe.

Cable recovered off early lows of $1.4584, pushing to a high of $1.4640 ahead of the European open, only to drop back to retest the earlier lows into Europe. Kiwi traded with a soft tone through the overnight session, easing from $0.7153 to $0.7110 as market reacted to release of weaker than forecast retail sales data.

Light data calendar through the European morning with US retail sales at 1230GMT ahead of Cap.Ut./IP at 1315GMT the afternoon focus. Equity market performance to continue providing direction.

Euro
The euro recovery to $1.2559 through the Asian session, from early lows of $1.2516, has quickly reversed into early Europe as rate drops back to $1.2518 but meeting strong demand from reported bids placed below $1.2520 and said to extend toward $1.2500, linked to protection of decent sized barriers at the figure ($1.25/1.31 May 31).

Stops are said to have built up below the figure, which if triggered to expose another barrier at $1.2475. If we see a break of $1.2500 expect some profit take buying to emerge to soak up triggered stops on the initial move, as well as further protective demand ahead of the next mentioned barrier interest. Resistance remains in place at $1.2560

RES 4: $1.3100/15 High 10 May, 50% of $1.3692 decline, Low 28 Apr
RES 3: $1.3065 21-day moving average
RES 2: $1.2950 High 7 May
RES 1: $1.2620 5-day moving average

CURRENT LEVEL: $1.2543

SUP 1: $1.2515 Low 6 May
SUP 2: $1.2459 Recovery low 4 March
SUP 3: $1.2390 Current base of the declining Bollinger band
SUP 4: $1.2329 Lows Oct 2008


Yen
Opened in early Europe around Y92.95 and Y116.54 Dollar-yen dipped to Y92.51 in early Asian trade as some early risk aversion impacted the pair. The sell off in cross-yen weighed on the pair and general dollar buying saw dollar-yen rally back to Y92.95. Traders had noted some spec accounts buying near the lows. Offers ahead of Y93.00 have capped throughout the Asian session and saw the pair dip to Y92.66 in early European trade. Japanese names were noted on the offer around Y92.90.

Traders note the daily Ichimoku upper cloud line is providing support coming in at Y92.67 Friday, a close below this level would be seen as negative. Euro-yen had a mixed session overnight trading sub Y116.00 to Y115.93 early on taking out some weak longs before testing lower once again to Y115.88. Bids ahead of Y115.80 level kept the cross underpinned and euro-yen recovered to Y116.70 area where Japanese names were noted sellers once again.

RES 4: Y95.25 Resistance line from 7 Jan
RES 3: Y95.05/09 High 24 Aug, 61.8% retracement of 2009 decline
RES 2: Y94.97 High 4, 5 May
RES 1: Y93.25/54 21-day moving average, High 10 May

CURRENT LEVEL: Y92.91

SUP 1: Y92.20/45 55-day moving average & Top of Ichimoku cloud
SUP 2: Y91.45/55 Tenkan & Base of Ichimoku cloud, 100-day moving average
SUP 3: Y91.20 200-day moving average
SUP 4: Y88.22 Spike low


Cable
Opened Asia around $1.4605, off NY lows of $1.4593, with rate coming under early pressure that eased it to session lows of $1.4572. Recovery into positive territory for Asian equities prompted some risk appetite, with rate edging higher through the balance of the session to $1.4640 ahead of the European open. Sterling came under stronger sell pressure into early European dealing, the rate dropping back to retest the overnight lows, breaking below before basing around $1.4553. Rate recovered to $1.4610, the correction only offering better sell levels with supply taking rate back to $1.4565/60.

Rate currently trades around $1.4570. Support seen to $1.4550, a break to open a deeper move toward $1.4520 ahead of $1.4500 with stronger support noted at the recent lows of $1.4475. Resistance now seen at $1.4610/20, more toward $1.4650. Wednesday's dovish BOE Inflation Report continues to weigh on the pound.

RES 4: $1.5140 21-day moving average
RES 3: $1.5122/26 61.8% retracement of Apr/May decline, Low 28 Apr
RES 2: $1.5055 High 10 May
RES 1: $1.4775 5-day moving average

CURRENT LEVEL: $1.4626

SUP 1: $1.4575 Current base of the Bollinger band
SUP 2: $1.4487 61.8% projection
SUP 3: $1.4475 Low 7 May
SUP 4: $1.4336 76.4% of 2009/10 range


Forex Patterns & Probabilities: Trading Strategies for Trending & Range-Bound Markets (Wiley Trading) 
Beat the Forex Dealer: An insider's look into trading today's foreign exchange market (Wiley Trading) 
The FX Bootcamp Guide to Strategic and Tactical Forex Trading (Wiley Trading) 
How to Make a Living Trading Foreign Exchange: A Guaranteed Income for Life (Wiley Trading) 
Survive And Prosper In The Great Depression Of 2009-2012: A Step-By-Step Guide To Amassing A Fortune Trading Foreign Currencies 

Thursday, May 13, 2010

Dollar Trading Mixed Overnight

Briefing
The dollar traded with a mixed tone in the Asian session, easing against the euro but little changed against the yen. Traders mentioned a lot of strikes in the Y93.00/20 area which helped to contain the rate within Y93.07/29.

Euro-dollar was last pressing up against the overnight highs at $1.2669, up from $1.2613 Asia lows. Euro-dollar offers are now said to be above $1.2685, while bids remain in place on approach to $1.2600, with stops building on a break below there.

Dollar-yen is currently trading at Y93.20, with reported stops above Y93.30 intact.

Sterling trades close to session highs of $1.4869 vs the dollar, with cable last at $1.4865.

The Aussie was the star performer overnight, the currency getting a boost from better than expected jobs data (employment up 33.7k in April, though the unemployment rate edged to 5.4% from 5.3%).

Ascension Day holiday has some European centres closed and expected to weigh on the already low liquidity. Fairly light data calendar, UK trade at 0830GMT, with US import/export prices due at 1230GMT. Fed speakers later in focus. Equity markets seen directional.

Euro
Euro-dollar opened Asia around session lows of $1.2611, the rate having come under strong sell pressure late in the NY session as rate sunk to $1.2616. Strong demand placed ahead of $1.2600 contained the move and allowed rate to recover, the move up meeting Swiss name supply around $1.2640 but able to push on to trigger stops above $1.2650 that lifted rate on, in steps, to an eventual session high of $1.2669 ahead of the european open.

Continued buying into Europe has taken rate up to $1.2682, with rate seen meeting reported offers placed around the $1.2685 level. A move above this area expected to meet stronger sell interest placed toward $1.2700. Demand remains in place to $1.2600 with stops said to be building below. Further demand then noted at $1.2580 with more stops on a break.

RES 4: $1.3120 21-day moving average
RES 3: $1.3100/15 High 10 May, 50% of $1.3692 decline, Low 28 Apr
RES 2: $1.2950 High 7 May
RES 1: $1.2670 5-day moving average

CURRENT LEVEL: $1.2660

SUP 1: $1.2515 Low 6 May
SUP 2: $1.2480 Current base of the declining Bollinger band
SUP 3: $1.2459 Recovery low 4 March
SUP 4: $1.2329 Lows Oct 2008


Yen
The yen opened in early Europe around Y93.22 and Y118.01 vs the euro. Another very quiet session fro dollar-yen overnight, confined to a Y93.07-Y93.29 range. Offers between Y93.30-Y93.50 still capped in Asia although the pair tested higher in early European trade taking out some of the selling interest and printing a high at Y93.46. A quiet session for the crosses too, remaining slightly bid as equity markets faired slightly better.

Euro-yen traded Y117.58-Y118.10 again testing higher in early European trade, traders note some offers Y118.50-Y118.70 with chatter of stops beyond here. One trader observes that the market is still wary of any news from the Euro region and concerns remain over contagion despite the EMU/IMF stability fund. Bids are said to start around Y117.90 with more around Y117.50 and Y117.20

RES 4: Y95.24 Resistance line from 7 Jan
RES 3: Y95.05/09 High 24 Aug, 61.8% retracement of 2009 decline
RES 2: Y94.97 High 4, 5 May
RES 1: Y93.25/54 21-day moving average, High 10 May

CURRENT LEVEL: Y93.22

SUP 1: Y92.20/45 55-day moving average & Top of Ichimoku cloud
SUP 2: Y91.45/55 Tenkan & Base of Ichimoku cloud, 100-day moving average
SUP 3: Y91.20 200-day moving average
SUP 4: Y88.22 Spike low


Cable
Opened Asia around $1.4830, off NY lows of $1.4819, seen after the pound was sold off following the release of the dovish BOE IR. Rate initially dipped to mark session lows at $1.4815 before reversing higher in tandem with euro-dollar as Asian equities pushed into positive territory. Rate edged to a session high of $1.4869 ahead of the European open, with early Europe taking the rate on to $1.4885. Rate currently trades around $1.4875.

A move above $1.4885 to allow rate to edge on toward $1.4900/05, with stops noted on a break of $1.4910 which if triggered targets $1.4930 (50% $1.5046/1.4815). Support seen at $1.4850 ahead of $1.4835/30 and the overnight low at $1.4815. UK trade data due at 0830GMT the morning's highlight but Wednesday's dovish BOE Inflation Report still weighs on the pound.

RES 4: $1.5316 Resistance line 19 Jan
RES 3: $1.5190 21-day moving average
RES 2: $1.5122/26 61.8% retracement of Apr/May decline, Low 28 Apr
RES 1: $1.5055 High 10 May

CURRENT LEVEL: $1.4857

SUP 1: $1.4712 Low 6 May, Base of the Bollinger band
SUP 2: $1.4487 61.8% projection
SUP 3: $1.4475 Low 7 May
SUP 4: $1.4336 76.4% of 2009/10 range

Wednesday, May 12, 2010

Euro Starts The Day Under Pressure - Cable Gains a Buoyant Tone When Cameron Takes His Seat as PM

Briefing
The dollar and yen edged higher in early Asia as equities reversed early gains and the euro continued to loose ground after its recent rally.

Euro-dollar started the day under pressure again, driving the pair off a $1.2668 high, despite dealers noting fairly light orders. The pair hit an early low of $1.2616 as funds continued to sell the euro on rallies, while bids from around $1.2600/590 contained the downside. The pair saw a brief bounce to $1.2640, before retesting the session lows, extending the base to $1.2605.

Dollar-yen saw a fairly choppy morning session within a relatively tight trading range between Y92.50/95, reflecting modest 2-way flows with most trade cross yen driven.

Sterling eased in tandem with the other majors, the initial euphoria over a Con-LibDem coalition taking cable to NY highs of $1.5005 before attention was turned to how the new UK government will handle the UK deficit, with the EU suggested to be unwilling to aid the UK if it gets into crisis.

UK trade data at 0830GMT, EZ GDP at 0900GMT and the Bank of England Inflation report at 0930GMT provide the morning's focus. US trade data is also due, at 1230GMT.

Euro
Euro-dollar opened Asia around $1.2663 with the rate coming under early pressure, as margin houses sold this pair along with dollar-yen and euro-yen as they reacted to the after-hours stop-driven dip in the S&P. Triggered stops on break of $1.2650 provided added weight to take rate down to $1.2615. The dip attracted short term model buyers that allowed rate to recover back to session highs of $1.2668 before faltering in the face of a euro-yen reversal prompted by the negative turnaround in Asian equities. Rate dropped back to $1.2620, edging back to $1.2650 before another wave of selling ahead of the European open took rate to lows of $1.2606. Asian sovereign demand is said to have cushioned the move lower with recovery to $1.2645/50 into early Europe aided by mid east demand. Rate currently trades around $1.2632.

Underlying tone remains bearish for euro but traders warn that the large short positions being held could leave the market open to sharp corrective spikes. Bids remain in place to $1.2600, stops on break of $1.2590. Resistance $1.2665/70, stops above. One trader notes that Asian sovereign demand is now seen placed from $1.2610 through to $1.2580, adding that there is option interest centred on the $1.2600 level, while another adds that stops are seen placed on a break of the figure. Some of the demand reportedly linked to today's German 2-yr note auction (E7bln). Above the offers at $1.2665/70 and stops above, traders seen layered offers from $1.2680 through to $1.2710.

RES 4: $1.3165 21-day moving average
RES 3: $1.3100/15 High 10 May, 50% of $1.3692 decline, Low 28 Apr
RES 2: $1.2950 High 7 May
RES 1: $1.2705 5-day moving average

CURRENT LEVEL: $1.2624

SUP 1: $1.2530 Current base of the declining Bollinger band
SUP 2: $1.2515 Low 6 May
SUP 3: $1.2459 Recovery low 4 March
SUP 4: $1.2329 Lows Oct 2008


Yen
The yen opened in early Europe around Y92.51 and Y116.62 vs the euro. Another quiet session for dollar-yen overnight, trading a Y92.44-Y92.94 range in Asia. Early dollar-yen sales saw the pair down to the low as margin houses liquidated long positions after equity markets came under pressure. Cross-yen remained weak for much of the session trading down to Y116.67 initially as stops sub Y116.80 were triggered, then Y116.57 later in the session again as more risk aversion saw longs liquidated.

Traders report euro-yen is the cross of choice at the moment for the intraday jobbing community and note that some stops for these accounts are placed sub Y116.50 level. Traders also note stops in dollar-yen placed sub Y92.20 with bids between Y92.30-40 offers ahead of Y93.50.

RES 4: Y95.22 Resistance line from 7 Jan
RES 3: Y95.05/09 High 24 Aug, 61.8% retracement of 2009 decline
RES 2: Y94.97 High 4, 5 May
RES 1: Y93.25/54 21-day moving average, High 10 May

CURRENT LEVEL: Y92.51

SUP 1: Y92.10/25 5 & 55-day moving average & Top of Ichimoku cloud
SUP 2: Y91.45/55 Tenkan & Base of Ichimoku cloud, 100-day moving average
SUP 3: Y91.20 200-day moving average
SUP 4: Y88.22 Spike low


Cable
Cable put in a bullish session Tuesday, which combines with a bull-cross in the stochastic study and an upturn in momentum to offer hopes of recovery for the bulls. However, this still risks being a "dead-cat bounce" as the market struggles to hold atop initial support at $1.4860 from the 5-day moving average, while the base of the daily Bollinger band, which is also declining is currently at $1.4760. Bulls need to quickly turn attention back to the $1.5055 high and Fibonacci levels from $1.5122.

Euro-sterling studies remain near the lows and still seek recovery, but this comes as the market rejected the 21-day moving average and reasserted the declining channel, which has dominated the trend since early March. The base of this 'channel' comes in at stg0.8408.

RES 4: $1.5330 Resistance line 19 Jan
RES 3: $1.5220 21-day moving average
RES 2: $1.5122/26 61.8% retracement of Apr/May decline, Low 28 Apr
RES 1: $1.5055 High 10 May

CURRENT LEVEL: $1.4864

SUP 1: $1.4712 Low 6 May
SUP 2: $1.4487 61.8% projection
SUP 3: $1.4475 Low 7 May
SUP 4: $1.4336 76.4% of 2009/10 range

Monday, May 10, 2010

Risk Plays Are Back - Euro Makes Heavy Gains

Briefing
The euro is trading higher into early European dealing Monday, rallying as the EU puts a rescue package in place for eurozone economies. In Asia, the euro initially rallied against the dollar, failed and fell to $1.2808 on news of possible QE from the ECB, before rallying hard to $1.2968 highs.

The euro-yen cross marked an early high of Y119.97 before pulling back to Y118.00 where it then rallied again, this time clearing Y120.00 for a Y120.10 high in late morning trade. Dollar-yen meanwhile was carried higher by the rise in yen crosses, ending the morning around Y92.60, after a Y91.71 to Y92.91 range, and up from Y91.27, where it had ended in the U.S. Friday.

Cable was higher, but gains were capped by the ongoing impasse over the election fallout. Cable was last at $1.4866, having traded to a session high of $1.4907 before pulling back to $1.4855/50.

Developments/fallout from the weekend package will be in focus during the day. Germany trade/current account data at 0600GMT, France IP 0645GMT ahead of the postponed BOE rate announcement at 1100GMT the morning's highlights.

In interest rate markets, June Bunds have opened down 116 ticks as risk-aversion trades are unwound after the European Union finance minister's E720 billion deal. In addition, the European Central Bank would intervene in the government bond markets in a bid to shore up the Eurozone and stop market attacks on heavily-indebted members of the currency club.

In equities, Japan's benchmark stock indices ended Monday's session sharply higher. The Nikkei 225 ended the day higher by 166.11 points, or 1.60%, to stand at 10530.70. The broader-based TOPIX was 12.90 points higher at 944.64.

Spreadbetters are calling European bourse levels higher. Cantor Index last calling the FSTE up 117, the DAX up 175 and the CAC up 159.



Euro
Euro-dollar opened early Asia around $1.2885, the rate marked up from Friday's close of $1.2740 as markets adjusted for the weekend debt package worked out by the EU/IMF. Order books were described as heavy with offers with rate quickly dropping back to $1.2800. Rumours of E500bln stabilization package, along with headline of ECB to announce intervention in markets saw rate spike up to $1.2950 where it ran into willing sellers.

Rate eased to $1.2880 as the EU press conference began. Mentioned intervention in debt markets, not FX, saw rate come under pressure, the rate dropping back to $1.2790, with the result in Germany NRW providing a knock for Chancellor Merkel as she loses her majority in the upper house, also adding weight. Asian reserve manager buys provided the demand to lift rate back to $1.2950, with eventual break taking rate on to $1.2968. Rate eased back to $1.2900 into early Europe before picking up fresh demand that has lifted the rate on to $1.2978. Offers seen placed between $1.2990/00, a break to open a move toward $1.3040/50. Support $1.2900, ahead of $1.2860/50.

RES 4: $1.3365 High 30 Apr
RES 3: $1.3270 21-day moving average
RES 2: $1.3115 Low 28 Apr
RES 1: $1.3041 Fibonacci retracement

CURRENT LEVEL: $1.2927

SUP 1: $1.2700 Bollinger band
SUP 2: $1.2515 Low 6 May
SUP 3: $1.2459 Recovery low 4 March
SUP 4: $1.2329 Lows Oct 2008


Yen
The sharp moves in dollar-yen have left the daily studies mixed with a bear-cross in the slow-stochastic study but momentum turning off lows. The pair has recovered the Ichimoku cloud, which now turns support from Y91.90.

Euro-yen remains well below the base of the Ichimoku cloud despite the recovery and attempt for the daily studies to recover. If bulls can maintain a bounce, the main Fibonacci levels include Y120.21 and Y121.22.

RES 4: Y95.19 Resistance line from 7 Jan
RES 3: Y95.05/09 High 24 Aug, 61.8% retracement of 2009 decline
RES 2: Y93.25 21-day moving average
RES 1: Y92.70 5-day moving average

CURRENT LEVEL: Y92.62

SUP 1: Y91.90 55-day moving average & Top of Ichimoku cloud
SUP 2: Y91.50 100-day moving average
SUP 3: Y91.35 Base of Ichimoku cloud
SUP 4: Y88.22 Spike low


Cable
Opened Asia around $1.4855 from the NY close at $1.4818 and tracked euro-dollar's initial corrective pullback to $1.4764. Rate bounced back to session highs of $1.4907 before easing back to find support above $1.4850 into the Europe open, edging back to $1.4895, currently around $1.4880. Developments in talks to form the next UK government to be watched, with today's postponed BOE policy announcement also in view.

The current political impasse so far being smoothed by reports that talks between the Conservatives and LidDems are going well but market will want to have some definite outcome sooner rather than later. Offers seen placed between $1.4900/10, a break of $1.4915 to open a move toward $1.4935/50. Support seen back at $1.4855/50 ahead of $1.4820 and $1.4800.

RES 4: $1.5358 Resistance line 19 Jan
RES 3: $1.5265 21-day moving average
RES 2: $1.5126 Low 28 Apr
RES 1: $1.4955 5-day moving average

CURRENT LEVEL: $1.4883

SUP 1: $1.4712 Low 6 May
SUP 2: $1.4487 61.8% projection
SUP 3: $1.4475 Low 7 May
SUP 4: $1.4336 76.4% of 2009/10 range 


 Forex Patterns & Probabilities: Trading Strategies for Trending & Range-Bound Markets (Wiley Trading) 
Beat the Forex Dealer: An insider's look into trading today's foreign exchange market (Wiley Trading) 
The FX Bootcamp Guide to Strategic and Tactical Forex Trading (Wiley Trading) 
Forex on Five Hours a Week: How to Make Money Trading on Your Own Time (Wiley Trading) 
Survive And Prosper In The Great Depression Of 2009-2012: A Step-By-Step Guide To Amassing A Fortune Trading Foreign Currencies 

Tuesday, May 4, 2010

Euro Under Pressure Once Again

Briefing
The dollar was mixed in Asia Tuesday making headway against the yen but relatively unchanged against the Euro. Trade was light as Japanese markets are closed today as part of a 3 day holiday in Japan.

The euro is under pressure once again in early European trade down to $1.3171 from the $1.3205 level after spending the Asian session in a $1.3185-$1.3214 range. The early sell off appears to be related to continued concerns over events in Greece and the rest of the Eurozone as investors look to trim their exposure to European risk.

Dollar-yen is rallying early in the European session as reports of option knockouts and stops in the pair starting from Y95.00 running through to Y95.30 ensure that the pair remains bid. Traders note once the Y95.00 level gives way their is not much in the way of offers or resistance till Y96.00

Euro
Euro-dollar opened in early Europe around $1.3207, having been almost flat overnight in Asian trade holding around $1.3200 as the markets moved into the European open. It had been a quiet session for the euro trading in a $1.3185-$1.3214 range, traders noting hedge fund names buying in the early part of the Asian session around the $1.3190-$1.3200 level. Speculators were noted sellers on the rally, said to be reacting to headlines in the Wall Street Journal that Greece's costs exceed bailout.

However the knee jerk reaction was not followed up and the pair settled just above $1.3200. The euro was pulling off of the highs into early European trade as continued concerns over Greece and the rest of the eurozone weighed. Continued speculation of a large barrier located at $1.3100, which is said to be linked to an ACB should ensure there will be plenty of trade ahead of this level with chatter of stops building behind.

RES 4: $1.3510 55-day moving average
RES 3: $1.3464 Channel top 3 Dec
RES 2: $1.3400 High 22 Apr, 21-day moving average
RES 1: $1.3365 High 30 Apr

CURRENT LEVEL: $1.3203

SUP 1: $1.3114/28 Low 28 Apr, 50% projection level
SUP 2: $1.3067/80 Support line from 18 Feb, Bollinger band
SUP 3: $1.3057 38.2% retracement of $0.8232 to $1.6039
SUP 4: $1.3022 Projection calculation from Dec, Jan downmoves


Yen
The yen opened in early Europe around Y94.86 and Y125.31 vs the euro. Dollar-yen was higher once again in early Asian trade, up from Y94.57 to Y94.99 as some more stops were triggered in the pair on a break of Y94.80. Traders report there are more lying in wait starting from Y95.00 through to Y95.30 with very large located at Y95.15 as medium term prop accounts and system funds exit shorts. Sales ahead of the Y95.00 level are said to be linked to option barrier defence whilst more stops build behind.

Euro-yen was mixed after initially rallying early in the Asian session due to the move higher in dollar-yen, trading from Y124.72 to Y125.46. however the strength was short lived as option related offers in dollar-yen and sales in euro saw the cross sold off trading down to Y124.87 in early European trade as some weak longs were flushed out on a move sub Y125.00.

RES 4: Y97.52 76.4% retracement of Y101.44 decline
RES 3: Y96.03 Minor resistance line 27 Oct
RES 2: Y95.14 Resistance line from 7 Jan
RES 1: Y95.05/09 High 24 Aug, 61.8% retracement of 2009 decline

CURRENT LEVEL: Y94.87

SUP 1: Y94.30 5-day moving average
SUP 2: Y93.45/70 21-DMA, Tenkan line of the Ichimoku cloud
SUP 3: Y92.75/81 Low 22 Apr, Minor support line 4 Mar
SUP 4: Y91.60 Low 19 Apr


Cable
Cable pulled back to the 21-day moving average, although the daily stochastic remains soft and the recent bear-cross of the 5 & 21-DMAs is still evident, so this level ($1.5340) may continue to cap recoveries. The recovery also saw the market trade back into the daily Bollinger band, the base of which moves to $1.5170.

Euro-sterling studies are seeking a base as the cross remains within the falling channel, which has dominated from the start of March. The stochastic risks a bull-cross to help bulls target Fibonacci resistance at stg0.8734/65, while the top of the channel meets the 21-DMA at stg0.8736.

RES 4: $1.5595 100-day moving average
RES 3: $1.5580 High 23 Feb
RES 2: $1.5515/22 Bollinger band, High 15 Apr
RES 1: $1.5340 21-day moving average

CURRENT LEVEL: $1.5264

SUP 1: $1.5126/30 Low 28, 6 Apr

SUP 2: $1.5078 61.8% retracement of April recovery
SUP 3: $1.4802 Low 25 Mar
SUP 4: $1.4783 Low 1 Mar

Monday, May 3, 2010

Euro Shorts Squaring Over Weekend

Briefing
Sterling demand was seen into early Asian trade, prompted by the positive showing by Conservative Cameron in the final pre-election debate, which allowed cable to push to early session highs of $1.5366, extending Thursday's recovery to $1.5342.

Month-end fixings are expected to prompt dollar sales, with sterling and the euro predicted by models to be the major beneficiaries.

Euro
Euro-dollar opened the Asian session around $1.3235 and initially dipped to $1.3227 before picking up a bid tone as market reacted to an FT piece suggesting that Greece has accepted the outline of E24bln in austerity measures required to secure EU/IMF debt aid. Along with the strong rally in cable, and early demand for euro-yen (end month/Goto-bi Day), the rate was pushed to an early high of $1.3266 before the move met headwind sales ahead of reported strong offers at $1.3270. Euro-yen reversed tack, a Japanese agricultural bank a noted seller of the cross which weighed back, the move down gaining momentum as traders pared risk on a WSJ report suggesting Federal prosecutors are conducting a criminal investigation into whether GS, or its employees, committed securities fraud in connection with mortgage trading.

Rate squeezed to lows of $1.3223. Rate recovered to $1.3250/55, aided by positive Greek comments from EU Barroso, eased to $1.3235 ahead of Europe before rallying to $1.3260. End month fixings expected to see dollar sales versus euro. Offers $1.3270, $1.3300. Support $1.3225/20.

RES 4: $1.3692 High 12 Apr
RES 3: $1.3495 Channel top 3 Dec
RES 2: $1.3420 High 22 Apr, 21-day moving average
RES 1: $1.3260 5-day moving average

CURRENT LEVEL: $1.3252

SUP 1: $1.3114/28 Low 28 Apr, 50% projection level, Bollinger band
SUP 2: $1.3082 Support line from 18 Feb
SUP 3: $1.3057 38.2% retracement of $0.8232 to $1.6039
SUP 4: $1.3022 Projection calculation from Dec, Jan downmoves


Yen
Opened in early Europe around Y94.06 and Y124.60 Another tight range for dollar-yen overnight trading Y93.89-Y94.19 however traders report decent size flow is going through. Today is the last trading day for April and the weekly and monthly close are seen as being an important indicator for dollar-yen and could have some bearing on the next big move in the pair. Traders note that a weekly close above Y94.30 would be seen as positive for dollar-yen as the weekly Ichimoku cloud line is at Y94.28 and the pair have not closed above the cloud on a weekly basis since July 2007.

We also have the 21 month moving average at Y94.75 and a close tonight above this level would be seen as being pivotal and could open up more topside for the pair. A quiet night overnight for euro-yen with the cross consolidating ahead of Y125.00 traders report interest to sell ahead of this level with stops said to be building behind.

RES 4: Y95.05/09 High 24 Aug, Res line 7 Jan, high, 61.8% of 2009 decl
RES 3: Y94.72/78 76.4% retracement of Aug/Nov decline, High 2 April
RES 2: Y94.65 Current top of the Bollinger band
RES 1: Y94.37 High 26 April

CURRENT LEVEL: Y94.06

SUP 1: Y92.95 Tenkan line of the Ichimoku cloud
SUP 2: Y92.75 Low 22 Apr
SUP 3: Y92.59 Minor support line 4 Mar
SUP 4: Y91.60/67 Low 19 Apr, 61.8% of 18 Mar to 2 Apr rally


Cable
Opened Asia around $1.5330, initially easing to $1.5315 before picking up a fresh bid tone. Conservative Cameron was seen as the 'winner' in last night's pre election debate and boosted hopes that his party could win an overall majority prompted the renewed demand, along with model forecasts suggesting that the pound will be a major beneficiary of month end dollar sales. Rate pushed to a high of $1.5366 before momentum faded, the rate then easing back on cross yen sales with risk positions pared as market reacted to a WSJ report suggesting a Federal investigation into GS. Cable eased back to $1.5320, recovered to $1.5350 before another drop back to retest earlier lows.

Rate then began to pick up a fresh bid tone ahead of the European open, the rate moving through Asian highs into Europe on reported model demand that has taken it on to $1.5381. Move saw euro-sterling break its overnight range of stg0.86295/0.8641, placing pressure on support around stg0.8625. Cable trades back around $1.5365. Offers remain at $1.5380/85, a break to open a move toward $1.5400 ahead of $1.5420. Support $1.5325/15.

RES 4: $1.5810 100-day moving average
RES 3: $1.5580 High 23 Feb
RES 2: $1.5520/22 Bollinger band, High 15 Apr
RES 1: $1.5340 21-day moving average

CURRENT LEVEL: $1.5333

SUP 1: $1.5126/30 Low 28, 6 Apr
SUP 2: $1.5078 61.8% retracement of April recovery
SUP 3: $1.4802 Low 25 Mar
SUP 4: $1.4783 Low 1 Mar


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