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2009 July

July 31st, 2009 @ 3:17 am by Setyo Wibowo

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The EURUSD bearish momentum was paused yesterday. On h4 chart below we can see that after breakdown from the broadening formation price retreat to the upside but still able to stay outside the broadening formation so far. Technically speaking, a retreat or a pullback after breakout/breakdown is normal and often happen in the market and as long price stay outside the formation, the bearish scenario remains intact.

We have US GDP data today that should be a very important data. A worse than expected GDP should be good for the Greenback and we should see further Euro weakness towards 1.3870 while a better data could cancel the bearish outlook and probably trigger significant strength for the Euro re-testing 1.4336 once again. Good luck :)

eurusd4hchart

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July 31st, 2009 @ 2:14 am by Setyo Wibowo

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EURJPY Forecast
The EURJPY had a bullish momentum yesterday, topped at 134.87 and closed at 134.40. On h4 chart below we can see that technical mess continue as the pair now back above the trendline indicating indecisive, market hesitation and unclear direction. What is the best thing to do in this situation? Nothing. Just stay away from the market until we have a clear direction. Immediate resistance at 134.90. Break above that area could trigger further bullish momentum re-testing 136.08 area. Initial support at 133.20.

eurjpyh4

GBPJPY Forecast
The GBPJPY had a bullish momentum yesterday. On h4 chart below we can see that the rising wedge bearish scenario has failed as the price maintain position convincingly above the trendline. This fact should be seen as potential bullish outlook at least testing 158.60 area. However, CCI about to cross the 100 line down on h4 chart suggesting potential downside pullback testing 157.00 – 156.50 support area. Break below that area should be seen as potential bullish failure.

gbpjpyh4

AUDUSD Forecast
As I had expected, the AUDUSD had another bullish momentum yesterday after corrected lower on Wednesday. Today we have US GDP data that should be very important for us to determine whether we have confirmation on bullish continuation scenario or go back into boring range market or even potential bearish scenario. A worse than expected GDP data should cancel the bullish outlook while a better than expected data should support bullish outlook towards 0.8500 area. Good luck :)

audusddaily

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July 31st, 2009 @ 1:51 am by Setyo Wibowo

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The GBPUSD failed to continued it’s bearish momentum yesterday, topped at 1.6525 and closed at 1.6491. Surely we haven’t seen significant move and clear direction so far, but we have US GDP data today that could be very important data that could trigger significant movement and potential clearer direction. A worse that expected GDP should be good for the Dollar and we should have a bearish momentum testing trendline support as seen on daily chart below, and if the trendline support is broken we should have further bearish scenario testing key level 1.6000. However, a better than expected GDP should be good for the Cable and give us potential bullish scenario re-testing 1.6660 area.  Good luck :)

gbpusddaily

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July 31st, 2009 @ 1:29 am by Setyo Wibowo

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USD/JPY Forecast

The USDJPY had a significant bullish momentum yesterday. The triple top formation has been violated to the upside indicating potential bullish outlook testing 96.50 – 97.00 area. However it’s still too early for bullish outlook in medium term since actually the pair is still below the trendline resistance. The current bullish momentum might be strong enough to test the trendline resistance but until it is broken, the bullish scenario is not confirmed yet. In nearest term, as long as the pair stay above 95.30 area, I prefer a bullish outlook. But once traded below that area, we should see further bearish pullback.

usdjpy4hchart

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July 31st, 2009 @ 12:56 am by Setyo Wibowo

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USDCHF Forecast

The USDCHF had indecisive movement yesterday, formed a Doji on daily chart. As you can see on h4 chart below, the pair attempted to push higher but failed to stay consistently above 1.0922 area. Important range to be watched today is 1.0922 – 1.0800. A breakout/breakdown from that range area should give us a clearer direction. A breakout above 1.0922 should trigger further upside momentum towards 1.1022 while a breakdown below 1.0800 should trigger further bearish scenario back towards 1.0620 area.

usdchf4hchart

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July 30th, 2009 @ 1:33 pm by Matt "NewstraderFX" Carniol

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I’ve been thinking about this for a while and while I can’t say that I’ve read through every trading strategy, what I have found through my years of experience is that in order to make real and lasting profits you need to attune yourself to the Major Fundamental Events (MFE’s) that set the trends-and then get in when price is most advantageous.

When I refer to Major Fundamental Events I’m not just referring to the monthly reports, although those can be used along the way. I’m talking about something that can cause a radical shift, which I’ll explain.

One thing before we start though-these MFE’s may only happen a couple times per year, if that. That’s OK though, because these trades are going to yield 1000′s of pips. One trade may last for weeks or months.

Also, we’re not at the start of an MFE now, at least in my opinion.

As you might have guessed, an MFE can be (and usually is) initiated by the Fed although certain earth-shaking events (the Lehman bankruptcy for example) can certainly do the job. Sometimes several MFE’s can occur simultaneously which is great because those tend to build on each other, strengthening the trend.

The 2 keys for profiting from this are as follows:

1. You have to recognize when an MFE has occurred.

2. You have to understand how markets will be affected after the MFE has occurred and the correlations between the different asset classes (currencies, stocks, bonds and commodities).

The most recent MFE began on March 15, the day of Bernanke’s 60 Minutes interview in which he said the Fed was “electronically” printing money. Go to this page: http://video.google.com/videosearch?…um=4&ct=title# and see the “The Chairman Part 1″ video at about 8 minutes in.

It’s true that economists and commentators were talking about the Fed printing money before the interview because everyone was well aware that the Fed had already expanded its balance sheet (quantitative or credit easing = money creation).  But the Federal Reserve admitting it on national television was a whole different matter in my opinion. The dollar bear market began in earnest from there while stocks, commodities and Treasury yields rose.

In other words, Bernanke created a rally in risky assets because he convinced investors that the value of the so-called safe assets (the dollar and Treasuries) would depreciate.  What also was interesting about this MFE was that none of the so-called experts, including the financial press, picked up on it.

Then again, none of the so-called experts said anything about what would happen to the dollar after Lehman went bust either, including such luminaries as Jim Rogers who’s been a commodity bull forever (and who got crushed in the 2008 commodity collapse) as well as Peter Schiff who also lost his shirt because he didn’t recognize that a dollar-boosting flight to safety would occur after Lehman’s bankruptcy.

Why did Bernanke make the radical decision to allow himself to be interviewed on 60 Minutes? I think that it was because despite all of its previous balance sheet expansion, the Fed to that point had been totally unable to accomplish its goal of boosting stocks and creating some measure of inflation (making commodities more expensive) by weakening the dollar in order to counter the far more dangerous deflationary pressure of the financial crisis. The S&P had made a fresh low just one week before and had declined nearly 58%. No question they were concerned that all of the actions taken to that time could potentially fail, sending the global economy deep into a depression.

By the first week in June, the S&P had gained about 40% from the March low. The dollar had lost thousands of pips to the euro, pound and A$, oil was threatening $70 and yield on the benchmark 10 year Treasury was up near 4%. That created another set of problems for the Fed however, because of the detrimental effect that rising energy prices and interest rates naturally would have on consumer spending and housing (because of rising mortgage rates).

From that point, the Fed began a serious effort to talk up the risks of deflation (while talking down the risks of inflation) and from there, the markets basically went sideways. In other words, just as his efforts to convince investors that the dollar would depreciate helped boost markets, his deflationary concerns helped throw cold water on the rally he created with his printing-dollars comments.

Market correlations are pretty straightforward once you realize something:

When you trade spot forex, you’re trading pairs-GBP/USD for example. When you buy the pound you are simultaneously selling the dollar. When you’re trading currency futures, the contract is listed in euros or pounds or A$’s-there’s no “pair” in futures. However, despite that you’re still “selling” the dollar when for example you buy the euro contract because you are trading in dollars and your contract moves against the dollar.

It’s the same thing for any instrument which is priced in dollars no matter what the asset class is. So when for example you’re buying a stock, for all intents and purposes you are “selling” dollars-your bet is that your stock is going to appreciate against the dollar.

Think of it this way-if an asset class priced in dollars goes up, what does it go up against? The dollar of course. So when all of these asset classes are appreciating, it tends to put downward pressure on the dollar.

It’s the same for the S&P-the S&P is priced in dollars so for all intents and purposes if you are long the S&P you are short dollars.

So think of it this way:

S&P/USD
OIL/USD
GOLD/USD

Or just:

Commodities/USD
Stocks/USD

How about bonds (Treasuries)?

First, by convention, when people say bonds are up or down they are talking about price.

Second, bond prices and yields move in opposite directions for a very simple reason: If you buy a bond today for $1 that yields 2% and yields go up tomorrow, of course the bond you just bought is going to be worth less simply because it yields less.

Stocks and commodities are risky assets while Treasury bonds (and notes and bills) are “risk free.” They’re risk free because if held to maturity your principle and interest are guaranteed by the full faith and credit of the U.S. government. So when the market is “risk averse” (like it was after the Lehman collapse, another MFE)), stocks are sold and bonds are bought.

So in general, stocks and Treasuries are inversely correlated. We saw that after Lehman and we saw it happen again after Bernanke’s little interview.

It all comes down to investors appetite (or lack thereof) for risk, which obviously is heavily influenced by what I call Major Fundamental Events. “Risk aversion” places tremendous upward pressure on the dollar while the acceptance of risk has the exact opposite effect.

That’s why you want an MFE to occur-things can only move one way after one happens and when you recognize it early, you can absolutely make a killing.

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July 30th, 2009 @ 5:25 am by Mihai Marinescu

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Hi guys,

For today just a brief outlook of GU as I see it now before London session:

30jul_gu_h1

On H4 my indicators are turning flat, with slight bearish bias indicating correction but not necessarily reversal back to longs. We are sitting on a key H4 supporting TL @1.6350 & so far it looks like holding. I will be playing the retracement scenario today, buying small for targets up to 1.6480. That is the limit of the upside as far as I’m concerned, at least for today (which doesn’t mean i enter short but I will be exiting longs & stay out). H1 is so far supporting the correction plan with divergences on RoC & stoch while MA’s turn bullish right as I write this. The MA system on M15 gave me the entry @1.6390, stop is now 6368 – however I will need this trade to advance fast in the next hour to get me off the hook.

Elliott-wave-wise I am seeing this move as a flat correction started @1.6346 – the current bullish wave if confirmed & sustained should be the last leg up before an aggressive drop (W3 red on H4).

Good luck! ;-)

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July 30th, 2009 @ 2:37 am by Setyo Wibowo

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EURUSD Forecast
The EURUSD had a significant bearish momentum yesterday. As you can see on h4 chart below, the broadening formation has been violated to the downside and break below 1.4050 suggests potential bearish outlook. This fact should trigger further bearish momentum testing 1.3870 and even key level 1.3750. However CCI in oversold area and heading up on h4 chart so watch out for potential upside pullback testing 1.4050 and 1.4120 resistance area. Break above 1.4120 should be seen as bearish scenario failure.

eurusd4hchart

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