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Forexpros.com Daily Analysis - 20/07/2011
Historically, the British Pound and its pair with the US Dollar, the popular “cable”, have been among the most volatile of all currency pairs. Recently, though the GBP/USD does not move as much as it once did. These days, even the EUR/USD has better daily trading ranges.
This process of contraction is probably best visible on the weekly chart of the GBP/USD. Following the panic of 2008, when this pair had dropped all the way to 1.3545, the price has been moving largely sideways. We can see how the movements have been getting smaller, with falling ATR.
The current Average True Range reading for this chart is the lowest in years, showing 275. In addition, the MACD also oscillates around the zero line, which confirms this trendless environment. Because this situation can last for many more weeks, perhaps months, those who trade trends should probably look for opportunities elsewhere.
Of course, that does not mean that the GBP/USD will remain like that forever. Eventually, the volatility will return prompting this pair to start moving in line with, or closer to, its historical norm. Until such time, shorter-term charts of the GBP/USD are a better choice.
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Disclaimer:
Trading Futures and Options on Futures and Cash Forex
transactions involves substantial risk of loss and may not be suitable for
all investors. You should carefully consider whether trading is suitable for
you in light of your circumstances, knowledge, and financial resources. You
may lose all or more of your initial investment. Opinions, market data, and
recommendations are subject to change at any time.
Forexpros.com Daily Analysis - 19/07/2011
Following weeks or relative inaction, the USD-JPY finally sprang to live last week. The price found solid resistance at the 100 SMA, around 81.60, and sold off for the next few days, closing below the critical 80.00 level. Before the trading stopped for the week, the lowest point reached was 78.45.
The USD/JPY touched that level twice, on two consecutive days, forming a possible “tweezer bottom”, well-known candlestick reversal pattern. Here this formation indicates a probability of a bullish reversal, even though the tweezer bottom is not regarded as a “strong pattern”, like a hammer or an engulfing line.
It formed in a general location, which supports the possibility of a reversal. The price has almost reached the 78% Fibonacci retracement level of the 76.12-85.52 dominant upswing, often a level where the trend reverses. It does not project how far the price should move from here, only that a probability for a change in trend direction has increased.
Unfortunately, tweezer bottom needs addition confirmation from the price action itself, meaning a bullish day. So far, there is none. Instead, the small dojis signal indecision. We need to see a more directional day, which will likely determine the next price swing in the USD/JPY.
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Disclaimer:
Trading Futures and Options on Futures and Cash Forex
transactions involves substantial risk of loss and may not be suitable for
all investors. You should carefully consider whether trading is suitable for
you in light of your circumstances, knowledge, and financial resources. You
may lose all or more of your initial investment. Opinions, market data, and
recommendations are subject to change at any time.
Forexpros.com Daily Analysis - 18/07/2011
Commodity Currencies Will Be Bought Once S&P Consolidation Completes
The markets are consolidation as Japan was closed for holidays. But looking from a little bit larger perspective we may see dollar shorts soon, especially if commodities will remain bullish. The main reason for lower dollar is also a stock market, where S&P500 shows corrective price action on a daily. We are monitoring a triangle consolidation, and once this will complete, majors will rally. At the moment, wave E) of (4) still not done, as shown on the attached chart below.
Once the stocks will find buyers, commodity currencies such as Australian and Canadian dollar will find the support.
Aud/Usd Comments:
Aud/Usd bounced sharply higher at the end of June from 1.0389, where corrective wave (4) appears complete. Well, first impulsive leg found highs just below 1.0800 region, which was wave 1/A as labelled on the chart. As such, current price action must be corrective, with wave (c) underway that may test 1.05 once again, before uptrend resumes. We can also see a blue trend line in that area, that will also tend to react as a support.
Usd/Cad Comments:
After a sharp reversal from above 0.99, Usd/Cad made a nice corrective a-b-c pull-back within wave 2) that found the top at the trend line connected from 2011 lows. From there we can see an impulsive qualities, and if our count is correct, then pair should hit much lower levels in days ahead, as wave 3) appears to be underway with minimum targets seen at 0.94.
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Disclaimer:
Trading Futures and Options on Futures and Cash Forex
transactions involves substantial risk of loss and may not be suitable for
all investors. You should carefully consider whether trading is suitable for
you in light of your circumstances, knowledge, and financial resources. You
may lose all or more of your initial investment. Opinions, market data, and
recommendations are subject to change at any time.