he Gold & CHF Correlation by GoLearn Forex

USD/CHF:

The Swiss Franc has a positive correlation to Gold.  Thus, as Gold appreciates so does the CHF and vice versa.  When the Gold rush of 2009 began the CHF participated in the precious metal’s appreciation.  However, the correlation broke down as Gold broke its all time high.  In the below Chart the CHF hesitated as it broached Dollar parity while Gold enjoyed near new daily highs.  We would have expected the CHF to enjoy new highs, in line with Gold, once breaking parity with the Greenback but that did not transpire.

INSERT CHART CORR

The CHF like most of the G-10 is currently holding at very volatile handles.  During the Dollar’s initial rally the Franc closed just above the 50 day MA and has since surpassed it.  Currently the CHF has breached S1 at 1.0278.  In the Chart below we have drawn a Fibonacci Retrace from the CHF low on April 20^th, then trading at 1.17. We used the CHF high on November 26^th, with a handle at .9918 to complete the Fibonacci range.

INSERT CHART CHF

The Fibonacci Retrace puts the 23.6% retrace level at 1.0350.  The 100 day MA is also converging on the same level.  If the Swiss Franc takes out the FIBO 23.6% level and closes below the 100 day MA this would trigger an additional short CHF entry.  A close below the 50 day MA at 1.0163 would generate a long CHF entry.

There are a number of moving parts to watch when trading this pair.  Gold has been hit hard during this Dollar rally and most analysts felt a retrace was imminent given the metal’s stellar rise.  However, most analysts also forecast Gold to retain most if it’s appreciation given the high level of demand.  This view may shield the Franc from massive depreciation.  However, if the CHF takes out the 100 day MA prior to Gold firming then we would expect to see significant price action.

Pound Range Bound Since May by GoLearn Forex

GBP/USD:

The Greenback continues to rally and we are approaching pivotal handles across the G-10.  The GBP has been range bound since the end of May, so much so, that it is the worst performing currency against the Dollar amongst the G-10 since May 25^th. Currently the 100 day MA is sitting above the 50 day MA which is indicative of a falling price environment.

The Pound is currently trading at 1.6276 and the 50 SMA is sitting at 1.6404.  A close below the 50 SMA generates a strong Short entry signal.  In addition, using the Fibonacci Retrace from the Cable’s low on March 11^th at 1.3657 to the Cable’s high at 1.7043 on August 5^th brings to the forefront some important levels.

INSERT CHART A

The 23.6% Retrace level sits at 1.6244 just 30 pips from the current mark.  The close today likely below the 50 SMA coupled with a breach of the 23.6% level may send the GBP free falling to the next Fibo level of 38.2% or 1.5749.

There are a number of trading indicators that are used for ranging markets versus trending markets.  The MACD is a common and important tool for traders as it more easily identifies momentum and changes thereto.  In the Chart below the red vertical line highlights the crossover of the Average versus the MACD, representing a shift in momentum.

INSERT CHART B

Another indicative technical pattern we use are lower lows, lower highs and vice versa.  As you see on the chart above we have been trending down within the range.  More importantly we have reached a succession of lower high and lower lows.  The more the pattern repeats itself the greater the confirmation of the move and the more likely it is to continue.

The combination of MA’s, Fibonacci’s, MACD, and technical patterns identifies potential entry points, momentum, and profit targets.

What If the Dollar Takes Off?  By GoLearn Forex

NZD/USD:

We are not suggesting the Dollar bulls are running wild, however, every rally in hindsight has a defining moment.  Every trader on the street is aware that when the Dollar bulls get set free they are going to come charging.  Even if you are a skeptic to the end just the mere massive unwinding of the carry trade would rocket the Greenback.

Our pick would be the NZD and here 3 reasons why:

Performance – Going back to March 9^th, 2009 through December 7^th, 2009 the top performing G-10 currency (on a percentage basis) against the Greenback has been the Kiwi.  It is up 47.24% which is quite shocking given the New Zealand economy is not among the largest of the G-10. To put some perspective on it the EUR is only up 19.59% and the GBP 20.57%

INSERT CHART A

Technical – There are 2 obvious technical reasons that stand out to us.  A) A pattern we look for are lower lows and lower highs and vice versa.  In the chart below we have depicted the initial emergence of this pattern. B) The Kiwi is already trading below its 50 day MA and on the verge of taking out its 100 day MA, a more significant breakout level than the 50 day MA, which many other G-10 currencies have yet to crack.

INSERT CHART B

Commodities – The Kiwi benefits from rising commodity prices as it is a commodity currency.  Commodity prices are quoted in USD so as the Dollar strengthens commodity prices cheapen.  If commodity prices cheapen so will the NZD.

Combine these three factors and you may see significant price action on this pair.  Of course if the Dollar rallies all currencies will be on their heels but as a trader you are looking for the best trade, and this may be it.  We define the best trade as the one with the best risk to return ratio.

Dollar Bear Ready for Hibernation? by GoLearn Forex

The Greenback has been offered across the board since March 2009.  As long as risk did not rear its ugly head investors were
selling the dollar in favor of better yielding assets.  When risk showed up at the Market’s doorstep the Dollar was right
there with it ready to regain market control.  We saw this a week and half ago when Dubai spooked the market with a needed
debt restructuring.

The pattern we have seen for the last 9 months has been  equities advancing as the dollar slides.  Equities would advance on
positive (or at least less negative) economic data. The correlation between increasingly better news and the Greenback was
therefore negative. When normal markets are in control positive news typically strengthens a currency.  What we witnessed
Friday may be an early indicator that the Dollar bear is finally ready to hibernate.

Friday brought us 2 very important prints from the U.S. The first was the Change in Nonfarm Payrolls and the Unemployment
Rate.  The Change in Nonfarm Payrolls fell by just 11k and the Unemployment Rate fell from 10.2% to 10%.  This is obviously
positive news for the U.S economy and the Global economy as well. Stock’s advanced, but this time the Greenback would not
yield any ground instead it posted gains on all its G-10 rivals.  The Dollar move was positively correlated with the
economic news, something not seen in 9 months.  There was a tangible shift in market sentiment regarding the timing of a
potential rate increase.  Originally, forecasts were  calling for an increase in Q4, however, analysts now think it may come
sooner.

It is not by coincidence that a number of pairs slid almost exactly to Support levels before firming against the Dollar.  A
breakthrough of support would most likely trigger a massive Dollar rally, something the market is not whole heartily a
believer in at this point in time.  Rather, the move on Friday was one of caution as it may be the first signal the Bull is
getting ready to run.

Let’s analyze current key technical levels and what the trading implications are:

EUR – Friday’s close put the EUR right at the 50 SMA.  The 50 SMA has been holding as support for nearly 9 months.  An
entire candle below the 50 SMA would trigger a Short EUR entry while  a quick  bounce off of support levels would trigger a
a resumption of our EUR Long

INSERT EUR CHART

AUD – Similar to the EUR, the 50 SMA has been holding firm support.  Therefore, a Short AUD  entry would be triggered
with the appearance of an entire candle below support.  We would resume a Long AUD position with a bounce off of support.

INSERT AUD CHART

GBP – The Cable has been trading the range but has not dipped below the 50 SMA since mid September at which point it
gave up over 4.5% to the Dollar.  As with the EUR and AUD, an appearance of entire candle below the 50 SMA would trigger a
Short GBP entry.

INSERT GBP CHART

Obviously one occurrence hardly represents an entire shift in trend, however, a shift in trend starts with one occurrence.
Continue to monitor the correlation between economic news and the Dollar.  In addition pay special attention to support and
resistance levels on the majors, as a breach of S&R may signal future changes and should be capitalized on.

Good News for the Greenback Finally Pushes Gold Down a Few Pegs by GoLearn Forex

Gold tumbled on Friday as better than expected Unemployment and Nonfarm Payroll figures helped prop up the Greenback.  Gold
fell 5.1% during intra-day trading to a session low of 1,150.  Crude Oil was mixed on Friday as it originally bounced higher
on the positive news, however, it gave up its gains and then some as the Dollar firmed throughout the day. Both Gold and Oil
are quoted in Dollars ,so as the Dollar strengthens it sends commodity prices lower.

Global Equity Markets advanced Friday finishing the week in positive territory.  The DJIA added 22.75 points to close at
10,388.90. At the moment Equity Futures are pointing lower ahead of the open.  Economic data releases will be on the lighter
side for Monday although the remainder of the week will yield some interesting price action as Canada, New Zealand,
Switzerland, and the U.K  are on deck for rate decisions.

The DXY soared to highs not seen since early November as the DXY touched 75.911 during the  Friday session.  Traders were
unwinding some bets and covering shorts as the positive employment data gave rise to concerns that the U.S Federal Reserve
may raise rates sooner then later.  With little economic data due out today do not expect much price action.

Important Forex Events for December 7, 2009

EUR    ECB President Trichet Speaks
CAD    Building Permits (MoM)    Forecast  1.00%    Previous  1.60%
USD    Fed Chairman Bernanke Speaks
AUD    Current Account     Forecast      -17.00B    Previous  -13.30B

Analysis by http://www.golearnforex.net