EURUSD Survives Dubai Scare – What Next?  By GoLearn Forex

EUR/USD:

Now that the EUR has safely breached resistance and survived the Dubai scare let’s take a look at where the EUR may be heading next. In order to project forward we must first look back at where the EUR has been.  In the Graph below you can clearly see the period of complete market turmoil, commencing July of 2008. Over the next year notice the ensuing volatility represented by the white circle.  The area in the red box shows a steadier trend emerging in June 2009.  This is further evidenced by price cleanly riding up the 50 SMA in yellow.

INSERT CHART EUR1

I drew a Fibonacci Projection from the low indicated by Box A to the high indicated by Box B on the Graph below.  These points are significant because they are inflection points that began the EUR rally.  Additionally, they are located in the area of volatility circled in white above.  Fibonacci makes sense and order from disorder and chaos.  Therefore using these points for the basis of the projection is taking chaos or what we refer to as volatility and making order and sense from it which is the period of time represented by the red box above. View the results in the Graph below.

INSERT CHART EUR2

The Fibonacci’s Projections land on almost precisely the last 3 resistance levels and highlights past price action resistance points as well.  The FIBO 138.2% level at 1.5048 was struck in October when the EUR finally broke the psychological 1.50 barrier.  It was tested again in November before finally being taken out a few days ago.

So where is the EUR headed next? Based on the Fibonacci Projections we expect to meet resistance at 150%, which coincides with previous support levels as indicated by the 2 blue circles back in May and June of 2008.  If the Fibonacci 150% level is taken out then the next point of resistance is the 161.8% or approximately 1.55.  You can see the congestion at that level starting in May 2008 and lasting through June 2008.

Since the 50 SMA has been holding such strong support for this EUR move our new Long entries would trigger near the 50 SMA (buying on the dips). If we breach the 150% Fibonacci level then we would increase our Long and look to take profit near 1.55.  However, in order to enter a short we would need to see an entire candle appear below the 50 SMA.  This is an occurrence that has not taken place in months.

INSERT CHART EUR3

Good News Give the USD a Slide – by GoLearn Forex

The Dollar tumbled Tuesday falling just south of 74.30 on the DXY.  The Kiwi was the big winner advancing 1.38% followed by the Pound at 1.03%.  Meanwhile the JPY was the only major to lose ground to the Greenback as an emergency meeting of finance minister in Japan was convened to discuss the JPY’s continued strength.

The Dollar slide was triggered by a wave of positive economic data releases.  On the home front, contracts to purchased existing homes jumped 3.7% unexpectedly.  ISM figures remained above the critical 50 level.  Couple the data releases with positive Black Friday and weekend sales as well as Dubai shoring up its debt facility payments and we had the ingredients for a massive Global Equity Market rally.  It will be a quiet Wednesday for economic releases.

Oil finished the day up just over a dollar a barrel to 78.37.  Gold closed at 1,196.60 up $20 from the day before. In intra-day trading Gold broke 1,200 before retracing, although futures are pointing up this morning so 1,200 should be no barrier today.

Upcoming Forex Events for December 2, 2009

EUR PPI (MoM) Forecast   0.10%  Previous  -0.40%

USD ADP Nonfarm Employment Change Forecast  -148.00K  Previous  -203.00K

USD Beige Book

AUD Retail Sales (MoM) Forecast  0.50%  Previous  -0.20%

Analysis by http://www.golearnforex.net

Moving Averages Are Not So Average by GoLearn Forex

Moving Averages – they are not so average

EUR/USD and USD/CHF

On Thursday of last week we saw the EUR and CHF finally break near term resistance.  The EUR cleanly sliced through 1.50 and took out near term resistance around the 1.5055 handle.  The CHF finally broke parity with the Dollar after struggling for weeks.

The very next day the Dollar was saved by the news coming out of Dubai. Risk aversion was on as traders unwound short Dollar positions to cover themselves.  We discuss Moving Averages a fair amount especially since the 50 SMA has acted as support for such an extended period of time and for a number of currencies such as the EUR and CHF.

The CHF touched .9918 on Wednesday only to give back its gains on Thursday.  In the Chart below notice the CHF low on Friday as fear penetrated the market place.  As a sense of calm returned the CHF was again bouncing off the 50 SMA, as support held again.

INSERT CHART CHF

The EUR easily breached resistance last Wednesday when the DXY hit new lows for the year.  As you can see on the Chart below it closed just below the Fibonacci Retrace level of 76.4%.  The very next day the EUR gave back all its gains as the market was reeling from the news of the day.

As details emerged and fear stirred recent wounds in the market the EUR plummeted again. Notice the level the EUR hit before retracing its losses on Friday.  The 50 SMA again held support for the EUR.

INSERT CHART EUR

The moral here: Do not discount these as just “average” lines.  Even if you question the indicative validity of a moving average the very fact that institutional traders monitor these levels makes them exceptionally important if for no other reason.

Mixed Day for Global Equity Markets After Dubai’s Announcement by GoLearn Forex

It was a mixed day for the Global Equity Markets on Friday following Dubai’s debt default announcement the day before.  The markets in Asia continued to sell off while in Europe they apparently felt the exposure was sufficiently contained.  In the U.S on Friday after returning from Holiday the day prior, it was the DJIA’s turn to take some risk off the table as it closed lower by 154.48 points to 10,309.92 Opening session futures are pointing positive in premarket hours.

The United Arab Emirates (UAE) Central Bank issued a statement indicating they would offer financing to the local and foreign banks at 50bp over the 3month local benchmark rate.  This facility offered by the U.A.E C.B will ensure liquidity and restore some confidence in the market.

On the economic data docket for Monday we have a number items set to print out of the U.K.  However, forex traders will be analyzing Black Friday sales numbers as well as the ensuing weekend figures.  Currently, net sales figures look to be on par with last year.  Additionally for Monday, Euro-zone CPI will hit the wire as will Canadian GDP.

Upcoming Forex Events for November 30, 2009

EUR     CPI (YoY)      Forecast   0.40%  Previous  -0.10%

CAD    GDP (MoM)    Forecast  0.40%  Previous  -0.10%

USD    Chicago PMI    Forecast  53.00  Previous  54.20

AUD    Interest Rate Decision Forecast  3.75%  Previous  3.50%

The ’09 Gold Rush Continues by GoLearn Forex

Global Equities Market futures are pointing slightly higher for Wednesday’s open.  The DJIA finished lower after a mixed day on Wall Street, losing 17.24 points to close at 10,433.71.  The Fed conceded in minutes released yesterday that a weak dollar may be fueling unwarranted speculation in the markets and that the weak dollar needs to be monitored for fear of creating inflationary conditions.

The DXY was mixed as it responded to the equity market’s whiplash. The Gold rush of 2009 continues at it made new intra-day highs bouncing off 1,180.20 before closing at 1,169.40.  Oil gave up some ground to close at $76.45 a barrel.

We are expecting lighter than normal volumes today ahead of the U.S Holiday on Thursday although there will be a lot of economic data published tomorrow.  Headline data prints will focus on U.K GDP and in the U.S; Crude Oil Inventories, Initial and Continuing Jobless claims, and New Home Sales.

Upcoming Forex Events for November 25, 2009

GBP GDP (QoQ) Forecast  -0.30%  Previous  -0.40%

USD Core Durable Goods Orders (MoM) Forecast  0.80%  Previous  0.90%

USD Initial Jobless Claims Forecast  500.00K  Previous  505.00K

USD New Home Sales Forecast    408.00K  Previous  402.00K

EUR, GBP and AUD Support and Resistance by GoLearn Forex

Key Levels of Support & Resistance

EUR, GBP, & AUD

As the market continues its sideways movement it is a good idea to keep cognizant of important key levels of S&R as well as the 50 SMA and 100 SMA.  When markets move sideways for an extended period of time ensuing price action on a breach of major S&R or an MA can be quick, therefore you want to be in a position to execute.

INSERT AUD CHART

AUD key levels of Resistance are as follows; .9300 , .9500, and .9650.

AUD key Support levels are the 50 SMA which is currently at .9038.  The next support level is at .8890 which was the prior low and also represents the 76.4% Fibonacci Retrace level going back to July of 2008.

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The EUR is in between 2 key levels of Resistance with the lower level handle at 1.4870 and the near term Resistance at 1.5055.  If we break near term Resistance at 55 then we expect the 76.4% Fibonacci Retrace level from July 2008, at a handle of 1.5165 to stand as the next key Resistance level.  Looking north just a bit further  1.5345 would represent R4

INSERT EUR CHART

A candle appearing below the Support level of the 50 SMA would signal a Short EUR entry. A very strong Short EUR signal would be a close below 61.8% Fibonacci Retrace level from July 2008, which is perfectly in sync with the prior low at 1.4621

GBP is sitting between 2 near term Resistance levels.  We have R1 at 1.65, R2 at 1.66 and R3 at 1.70. the 100 day MA is sitting at 1.6404 and in line with the important Fibonacci Retrace level of 38.2% from November of 2007.

INSERT CHART GBP

When a 100 SMA is above a 50 SMA, as it is with the Cable, it is usually indicative of a falling price environment.  A close below the 50 SMA,currently at 1.6340 would generate a near term Short Pound entry.  The next level of Support at S2 is 1.6130.  A breach of S2 would more than likely send us south of 1.60.

The longer price spends consolidating between 2 points the more price action we expect to see when a breakout finally occurs. It is analogous to a spring placed in a box.  The longer the spring and the more coils one forces into a confined space the more resistance the spring builds.  Conversely, a short spring in the same space has less potential energy.  Break open the box and the larger spring is going to move quicker and further than the smaller spring.  Therefore the longer we consolidate price into a range the more price action we expect to see when it finally breaks key levels of Support and Resistance.

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Analysis by http://www.golearnforex.net