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  • An Insight Of USD/CHF Price Action

    The strong downtrend which had started from the week of May 31, 2010 had taken USD/CHF from 1.1731 to 0.7069 during the week of August 8, 2011. The recovery to 0.9315 from the low of 0.7069 had a very strong momentum and had come as quite promising but then the momentum slowed down even though the pair managed to touch 0.9972. The resistance came just shy of the psychological level of parity i.e. 1.0000 but also just 22 pips above of the 61.8% retracement of the great fall from 1.1731. Since then the pair has been in a very volatile sideways range between the 38.2% retracement support and 61.8% retracement resistance level. In fact we can say that this sideways price action has been in place for over 2 years.

    USD/CHF's journey during the past three and a half years

    (click to enlarge)

    And then the story reverses - Highs going lower and so the bottoms

    Let's have another look on the same chart:

    (click to enlarge)

    This is evident that The first resistance during the recovery was a minor one at 38.2% retracement level. The break came soon and the pair, then found resistance below the 50% retracement level. Till USD/CHF finished the 61.8% retracement, the peaks were going higher and the lows were too. The story seems to have reversed from there. The peaks started going lower and so the bottoms too. However, the one thing which was keeping the pair in check was the support at 38.2% Fibonacci retracement level. The price action was contained above that support.

    What's new

    The 38.2% retracement is at 0.8849. The pair had touched 0.8832 before a recovery to 0.8959. The price did not sustain much below 0.8849, but nevertheless it was a break. And then sometimes initial small indication end up in big moves.

    The larger picture and what is expected

    Let's have the larger view of the historical price action of USD/CHF during past 10 years.

    (click to enlarge)

    It is clear that the pair has been is a strong downtrend for over 7 years now. The failure at the 61.8% retracement and then the recent slight break below the above mentioned support may have very strong implications for a continued downtrend. It is not just that USD/CHF might have just finished the consolidation by retracing to 61.8% level and finding the resistance below the parity level but another look tells us that the previous support trend-line seems to have turned into a resistance trend line.

    The recent jump

    (click to enlarge)

    The bearish sentiments have been there in the larger picture but have started coming back into the near-term picture as well. Some further gains towards the 55-day EMA i.e. 0.9020 can not be ruled out but a strong resistance will be expected there. This resistance will be a combined effect of the following 3 forces:

    1. 55-day EMA
    2. The short-term trend line resistance
    3. The psychological resistance of 0.9000 ranges.

    Expected Resistances

    (click to enlarge)

    In fact the gains can even extend to 0.9060.

    With the above resistance if the prices fall below 0.8849 again and manage to sustain below it for sometime then a drop towards 0.8568 to 0.8630 support and then lower can be expected. Considering the overall price -action we do not rule out the possibilities of a fall even towards 0.8240 or more in the days to come.

    Safe Haven and "The Safe Haven"

    The U.S. dollar and the Swiss franc both have been in the safe haven currency category for long. It is clearly evident that the dollar is losing the grounds the franc in this battle for the status of "The safe haven currency".

    Connect to the author on Google+ at +Himanshu Jain or at www.forexabode.com/

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Dec 19 6:48 PM | Link | Comment!
  • GBP/USD Again At The War-Front

    By Himanshu Jain (Forex Abode)

    For quite some time we have been talking about the long-term resistance and support trend lines for GBP/USD. We have been talking for quite some time because these trend lines have been in place for quite some time and that is over past 4 years. There was a break of the support trend line during February 2013 and after that the GBP/USD support line had turned into resistance but then during the mid-September the pair had come back into the normal range i.e. between these old support and resistance trend lines and has been staying there since then. There have been many efforts to break over the resistance but all failed. Now the pair is once again trying to break over and this time the effort seems to be rather aggressive. Let's look at the weekly charts as follows:

    GBP/USD weekly chart with resistance and support trend lines

    (click to enlarge) Please note that the above chart is not covering the past 4 years and for that refer to the chart on one of the old updates as per the hyperlink mentioned above.

    A closer look of the weekly chart

    (click to enlarge)

    What to expect?

    As we mentioned above that the recent attempts to break over this resistance have been very quick and none of the failures has brought any reversals as on the previous occasions. This makes the possibilities of a break quite high this time. A break over the recent 1.6260 would confirm a failure of this trend line resistance and such a move should take GBP/USD towards the next psychological range of 1.6500. However, if another failure takes place at 1.6260 then a drop towards 1.6060 or more can not be ruled out.

    Further resources

    Find more resources about other currency majors at including GBP/USD at www.forexabode.com

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: The article reflects the views of the analysts of ForexAbode.com and should not be taken as an investment advice. Forex Abode and SeekingAlpha will not accept any liability for any direct or indirect losses because of any investments or trades made because of this opinion.

    Nov 25 6:27 PM | Link | Comment!
  • Currency Pairs In Focus - Current Outlook

    Currency pair

    Near-term Outlook

    Comments

    USD/JPY

    USD/JPY has again found resistance by 200-day moving average. The recent low did not test the previous low and a head and shoulder pattern seems to be forming on daily chart. Support is expected at or over 97.80 and if that holds then a break of 200-day moving average resistance is expected. Such a move should bring further gains towards 99.38 to 99.67 resistance zone.

    EUR/USD

    1.3461 was the low of recent sideways move and hence a support level from where the pair had jumped to 1.3803. The recent break of 55-day EMA and this support has brought short-term bearish outlook. If resistance below 1.3524 holds then further consolidation may come towards 1.3340 to 1.3389 support zone. A break above 1.3524 may bring some more gains towards 1.3565.

    USD/CAD

    USD/CAD is in a volatile sideways mode on daily chart. The weekly chart still has uptrend but the momentum is losing. Resistance near 1.0495 is critical. If this resistance holds and any break below 1.0398 support takes place then further drop towards 1.0320 to 1.0360 support zone can be expected.

    AUD/JPY

    The pair has been continuously finding support at 55-day EMA. This support combined with the fact that AUD/JPY had completed the 61.8% retracement of the strong upward gains from 74.47 to 105.43 indicate that we can see some further gains in the coming days. The support at 92.66 is critical for this outlook. Any break below 92.66 may bring further fall towards the support zone of 91.40 to 91.80.

    GBP/USD

    We expect resistance near 1.6120 and if that resistance holds then we will expect GBP/USD to fall towards 1.5894 to 1.5905 support zone. The support at 1.5894 is critical and any break below that should bring deeper consolidations towards 1.5740 or more.

    EUR/GBP

    EUR/GBP had failed just below 61.8% retracement of the fall from 0.8769 to 0.8332. Further downward move towards the first support in the range of 0.8374 to 0.8378 is expected. If this support fails then a retest of 0.8332 support will be expected. 0.8332 support is very critical and in case that does not hold then deeper decline towards 0.8225 or more may come.

    www.forexabode.com

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Nov 06 5:51 AM | Link | Comment!
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