Month: June 2010

By eToro – The Euro tested support at 1.2150 before rebounding to the 1.2245 level.  With rumors circling about French credit rating downgrade, the Euro should remain under pressure. Click here to read the full daily Review

Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro depreciated sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2110 level and was capped around the $1.2310 level. Today’s intraday low represented a new four-year low and the common currency moved lower as eurozone unemployment reached its highest level in April since June 1998, at 10.1%.  These data are the latest indication the eurozone sovereign debt crisis is having a profound impact on the labour market.  The continued depreciation of the euro means more traders are viewing the common currency as a funding currency for carry trades.  Dealers also dumped the common currency on escalating concerns Europe’s credit woes would lead to larger-than-expected losses at regional banks.  Yesterday, the ECB warned  that eurozone banks could face as much as €195 billion in additional loan losses over the next eighteen months on account of the financial crisis.  The ECB also reported it increased its purchases of eurozone government bonds.  ECB member Nowotny said the ECB’s bond purchase program will continue until there is financial stability in the eurozone, adding there “is no quantitative goal.” Yesterday, ECB member Weber said monetary policy has been expanded to include new measures “that I continue to see in a critical way due to the stability risks.”  Weber also yesterday called for “heightened alertness.”  There are also reported tensions between Germany and France with the former possibly complaining the latter is not doing enough to bail out their eurozone member partners.  The ECB reported banks deposited €305 billion with it overnight.  Other data released today saw EMU-16 May PMI manufacturing tick lower to 55.8 while German provisional May unemployment was lower by 45,000 and the unemployment rate came in at 7.7%.  Also, May PMI manufacturing improved to 58.4 and German April retail sales were up 1.0% m/m and off 3.1% y/y.  French data released today saw April producer prices up 1.0% m/m and 4.0% y/y with May PMI manufacturing lower at 55.8.  In U.S. news, data released today saw May ISM manufacturing decrease to 59.7 while the ISM prices paid index fell to 77.5.  Also, April construction spending improved 2.7% m/m.  Chicago Fed President Evans yesterday reported that targeted asset purchases are more effective at addressing financial crises than straight injections of cash.  Some Fed-watchers are expressing concern that the Fed may be too dovish in calculating that the full rate of employment is now between 5% and 5.3%.  If the Fed waits until the unemployment rate gets that low before making material adjustments to short-term interest rates, it could risk fueling inflation.  Euro offers are cited around the US$ 1.2620 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.55 level and was capped around the ¥91.25 level.  Risk aversion returned to the market after the long holiday weekend in some trading centers as traders deliberated a slowdown in Chinese economy activity and a worsening fiscal situation in Europe.  Bank of Tokyo is now forecasting the euro may weaken to US$ 1.16 by the fourth quarter and some policymakers are concerned that additional euro weakness could lead to too much appreciation of the yen.  Prime Minister Hatoyama’s popularity has reached a new low, less than two months before parliamentary elections.  The Social Democratic Party left Hatoyama’s coalition government this weekend in opposition to Japanese approval to relocate a U.S. base within Okinawa.  Bank of Japan Governor Shirakawa yesterday reported “…the greatest challenge Japan’s economy is facing now is the decline in the potential growth rate as well as the shrinking of the population and sluggish productivity growth underlying this.”  Speaking about the global increase in fiscal spending, Shirakawa added “Fiscal policies are not a cornucopia.  Policymakers should work to appropriately conduct policies so as to maintain sufficient market confidence.  In this regard, current events seem to have served as a ‘wakeup call’ to many countries.”  Regarding inflation, Shirakawa added “Concerning inflation-targeting, there are expectations that expanding the central bank’s balance sheets would help Japan escape deflation and cause inflation rates to rise.  But the central banks of Japan, the U.S., and Europe have expanded balance sheets only to see drops in inflation rates.  Expanding central bank balance sheets does not immediately cause prices to rise.”  Regarding economic growth, Shirakawa noted “Japan’s economy is making firm progress toward sustainable growth.  We need to be mindful of upside and downside risks.”  Data to be released in Japan overnight include the May monetary base.  The Nikkei 225 stock index lost 0.58% today to close at ¥9,711.83.  U.S. dollar offers are cited around the ¥96.85 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥109.75 level and was capped around the ¥112.30 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥133.10 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥77.45 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8306 in the over-the-counter market, up from CNY 6.8278.   Dealers expressed concern about a sharper-than-expected decline in May PMI manufacturing that saw the May level decline to 53.9 while the HSBC manufacturing PMI measure weakened to 52.7 from the revised prior reading of 52.7.  Honda Motors reported its automobile production in China will remain halted until at least 3 June on account of a strike.  People’s Bank of China lifted yields on one-year bills for the first time in four months as inflation is picking up and the central bank is attempting to absorb excess cash from the money market.  A PBoC adviser warned China’s property problems are more severe than the U.S.’s real estate problems.  Spreads on Chinese property company bonds are widening away from U.S. Treasuries.

£

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4615 level and was supported around the $1.4435 level.  Sterling partially moved higher on account of its current retention of its AAA credit rating.  In contrast, Spain’s credit rating was downgraded last week and the U.K. media today reported France could lose its vaulted rating as well.  Data released in the U.K. today saw May PMI manufacturing remain unchanged at 58.0, beating expectations.  Cable bids are cited around the US$ 1.4220 level.  The euro depreciated vis-à-vis the British pound as the single currency tested bids around the £0.8320 level and was capped around the £0.8475 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1730 level and was supported around the CHF 1.1525 level.  Data released in Switzerland today saw Q1 gross domestic product climb 0.4% q/q and 2.2% y/y while May PMI defied expectations and rallied to 66.4, up from the prior reading of 65.9.  April retail sales data will be released tomorrow.  Swiss National Bank member Leuthard on Friday said Switzerland is interested in a “stable euro,” adding the central bank’s euro reserves have risen to 52%.  SNB has undertaken significant franc-selling intervention this year to address the depreciation of the common currency.  U.S. dollar bids are cited around the US$ 1.1420 level.  The euro lost ground vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4155 level while the British pound gained ground vis-à-vis the Swiss franc and tested offers around the CHF 1.7050 level.

Forex Daily Market Commentary provided by GCI Financial Ltd.

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DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By Fast Brokers – Gold nearly tested $1225/oz during the Asia trading session as investors divested from the risk trade amid rising uncertainty concerning a slowdown in China.  China’s manufacturing PMI printed below analyst expectations and property sales declined by 70% in coastal cities month over month.  Li Daokui, a member of China’s central bank policy committee, suggested that China’s property bubble could be worse than America’s due to the possibility of social unrest.  For further analysis on this topic, you can read my blog post last week ‘Year of the Tiger’ at www.blogs.fastbrokers.com/matthew.  Since China has been a driving force in the global economic recovery, the concept of a slowdown in China favors safe haven assets, such as gold.  Meanwhile, the ECB warned that EU banks could write down another $240 billion in losses due to adverse economic conditions.  The combination of negative news from China and the EU has given gold a boost and if the trend continues the precious metal could soon be testing May highs.  Meanwhile, investors will be looking to see how U.S. manufacturing fared last month and whether U.S. equities can avoid a large selloff even though futures are in the red right now.

Technically speaking, gold faces technical barriers in the form of intraday and 5/18 highs.  Additionally, the psychological $1250/oz level should serve as a solid technical barrier should it be reached.  As for the downside, gold has multiple uptrend lines serving as technical cushions along with 5/25 and 5/21 lows.  Furthermore, the psychological $1200/oz area now becomes a technical cushion.

Present Price: $1220.00/ oz
Resistances: $1222.00/oz, $1224.54/oz, $1226.80/oz, $1229.56/oz, $1232.22/oz
Supports:  $1219.16/oz, $1217.10/oz, $1210.36/oz, $1208.18/oz, $1205.26/oz.
Psychological:  $1200/oz, $1250/oz

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The Cable is struggling to break free of its near-term topside barriers as the EUR/USD tumbles towards its May lows with negative psychological forces hitting the FX markets from the EU to China.  The FTSE is down over -2% along with DAX and CAC after China’s manufacturing PMI release came in below analyst expectations, igniting speculation of a slowdown in China amid tighter real estate policies.  Li Daokui, a member of China’s central bank policy committee, suggested that China’s property bubble could be worse than America’s due to the possibility of social unrest.  For further analysis on this topic, you can read my blog post last week ‘Year of the Tiger’ at www.blogs.fastbrokers.com/matthew.  Additionally, the ECB warned that there could be another $240 billion worth of writedowns at major EU banks in the pipeline.  Speaking of pipelines, BP is down over -12% today after the U.S. government estimated that the oil leak could go unplugged until August.  Public discontent is rising over the adverse affects from the spill and investors likely expect BP will have to foot a large portion of the bill.  Hence, after a calm week it seems negative psychological headwinds are picking up again.  The Cable is holding up relatively well considering the extent of the pullback in the Euro, and till be interesting to see if the GBP/USD can hold May lows.  UK Manufacturing PMI came in about in line with analyst expectations and investors are still waiting on Halifax HPI.  Attention will now shift to the U.S. with its own manufacturing PMI number ready to hit the wire.

Technically speaking, the Cable faces multiple downtrend lines along with intraday and 5/28 highs.  Additionally, the psychological 1.45 area could continue to serve as a solid barrier over the near-term.  As for the downside, the Cable has support in the form of intraday and 5/20 lows.  Furthermore, the psychological 1.42 level could serve as a technical cushion if it’s reached.

Present Price: 1.4467
Resistances: 1.4498, 1.4521, 1.4543, 1.4584, 1.4626, 1.4671
Supports: 1.4432, 1.4409, 1.4387, 1.4359, 1.4326, 1.4301
Psychological: 1.42, 1.45, May 2010 and February 2009 lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The EUR/USD is tumbling lower and it seems May lows are about to give way.  European equity markets are deep in the red as negative news from China delivers a blow to the risk trade.  China’s manufacturing PMI figure came in below analyst expectations, fueling fears of a slowdown in the orient as the government tries to deflate its real estate bubble.  Li Daokui, a member of China’s central bank policy committee, suggested that China’s property bubble could be worse than America’s due to the possibility of social unrest.  For further analysis on this topic, you can read my blog post last week ‘Year of the Tiger’ at www.blogs.fastbrokers.com/matthew.  Meanwhile, the ECB announced that it expects there to be approximately $240 billion in writedowns at European banks.  The ECB was also cautious in its statement, pointing out that fiscal problems and austerity measures could damage banks more than expected.  The combination of negative news and data from China and the EU seems to be sending the EUR/USD towards a new leg down and possible test of its highly psychological 1.20 level over the near-term.  The Although the EU has its unemployment rate number on the way, more emphasis will likely be places on America’s manufacturing PMI release.

Technically speaking, the EUR/USD is now testing the patience of May lows and could send head towards the depths of April 2006 lows.  Meanwhile, the EUR/USD does have the highly psychological 1.20 level in play should the pullback accelerate.  As for the topside, the EUR/USD faces multiple downtrend lines along with 5/31 and 5/28 highs.

Present Price: 1.2155
Resistances: 1.2170, 1.2196, 1.2234, 1.2251, 1.2268, 1.2280
Supports:   1.2146, 1.2120, 1.2098, 1.2080, 1.2064, 1.2050, 1.2035
Psychological: May 2010 highs and lows, March 2006 lows, 1.22, 1.20

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – The USD/JPY is sinking back towards 90 as investors divest from the risk trade with the EUR/USD tumbling below May lows.  Hence, despite problems in Japan’s government, the Yen is flexing its status as a safe haven once again.  Hatoyama has hinted that he is considering stepping down as 60% of voters say they want him to resign.  Though the possibility of a breakdown in Japan’s government is eroded a bit if the Yen’s value as a safe haven, the USD/JPY’s negative correlation with the risk trade doesn’t seem to be under threat for the time being.  However, investors should keep a closer eye on Japan’s news wire for any new developments regarding Hatoyma.  Meanwhile, analysts are clamoring over the slowdown in Chinese manufacturing, which could in term deliver a blow to Japan’s shaky manufacturing base.  Li Daokui, a member of China’s central bank policy committee, suggested that China’s property bubble could be worse than America’s due to the possibility of social unrest.  For further analysis on this topic, you can read my blog post last week ‘Year of the Tiger’ at www.blogs.fastbrokers.com/matthew.  In addition to negative developments in China, the EU is being hit by a fresh set of psychological headwinds after the ECB announced it expects EU banks to writedown another $240 billion in losses.  European equity markets are under pressure today in wake of the news and U.S. equity futures are in the red as well.  Investors are currently waiting on America’s manufacturing PMI figure, and it will be interesting to see whether the USD/JPY can avoid a retest of 90 should the EUR/USD’s downturn accelerate.

Technically speaking, the USD/JPY still faces multiple downtrend lines along with 5/19 and 5/31 highs and psychological 92 level.  As for the downside, the USD/JPY has technical supports in the form of multiple uptrend lines along with 5/26 lows.  Additionally, the highly psychological 90 level should serve as a solid technical support should it be tested.

Present Price: 90.75
Resistances: 90.77, 90.88., 91.03, 91.26, 91.50, 91.67
Supports:  90.64, 90.55, 90.35, 90.20, 90.11, 89.99, 89.79
Psychological:  .90, .92, May lows

(click chart to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Greg Holden – The recent trend which has been forming on the AUD/NZD daily chart appears to have come to an end today. After a month of consolidating towards the 1.2400 price level, the New Zealand Dollar (NZD) seems to have gained the upper hand. The pair breached out of its consolidation trend in a downward direction and currently trades near 1.2350. Our technical indicators, as detailed below, seem to suggest that this downward momentum could sustain itself for the next few days.

The indicators I’ve used here are the Relative Strength Index (RSI), the Stochastic (slow), and Auto Trendlines.

The area of the chart indicated by Point 1 shows us the Auto Trendlines which were superimposed onto the chart using this new indicator and clearly displays the break-through point taking place yesterday. A breach such as this typically indicates that the new direction of the currency pair will be in the same direction as the breach for a number of the subsequent candlesticks.

The RSI at Point 2 demonstrates that the pair currently floats in what is considered neutral territory and points downward. We can deduce from this that there is no strong pressure in either direction and the current movement will likely continue until such pressure becomes evident.

The Stochastic (slow), indicated by Point 3 in the chart, shows that a bearish cross formed a few days back and what we are now seeing is the correlating downward movement. Since this indicator has yet to drop below the 20 line we can assume that the momentum for this pair remains downward.

AUD/NZD Daily Chart

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Analysis by Finexo.com

Upcoming Sessions (all times GMT)
• GBP Manufacturing PMI (08:30)
• CAD BOC Overnight Rate (01:00)
• USD ISM Manufacturing PMI (02:00)

Overnight economic figures hindered any hopes of a relief rally in the short run. Recent sell offs across global over the past few weeks have succeeded in holding investors on the sideline, while major institutions and central banks assess the potential damage of the most recent correction in equities. The US dollar and gold have emerged as the safest bets in the immediate future, as both continue to benefit from “risk aversion”.

EURUSD
The Euro continues to fall against the greenback, extending its largest monthly drop in over ten years against American currency. The European currency lost 7.4% against the USD in May, its sixth straight monthly decline, as the 16-nation currency has been unable recover from the region’s debt crisis. Any indication of a recovery in the price action is immediately followed by a sell off supporting the argument that all attempts at recovery are simply new opportunities to short the flailing currency

Support/Resistance 1.2200/1.2333

AUDUSD
The Australian Dollar extended losses overnight after RBA governor, Glenn Stevens, opted to hold the nation’s benchmark rate at 4.50% and signaled that the central bank may keep borrowing costs unchanged in coming months. Rising concerns about the global economic recovery and Europe’s sovereign debt crisis have hurt the Aussie. The currency fell 8% against the USD in May – its worse monthly performance since January 2009.

The Australian currency has suffered proportionally to the loss in global risk appetite and will most likely continue to suffer barring any major change in investor sentiments.

Support/Resistance 0.8195 0.8420

Forex Market Review & Analysis by Finexo.com

Disclaimer: Trading the foreign exchange (Forex) carries a high level of risk, and may not be suitable for all investors. All information and opinions contained on this website are to be used for general informational purposes only and do not consitute investment advice.

By Forex Yard – Rumors have been mounting steadily regarding the upcoming interest rate decision by the Bank of Canada (BOC), due at 13:00 GMT. It appears that a number of analysts have begun to expect an increase in value for the loonie even if the BOC decides to keep rates steady. Can this be?

Monetary policy decisions are complicated matters which weigh multiple factors of economic growth and future prospects. When a central bank acts, it typically does so cautiously. Should the BOC hold rates steady it may not necessarily be due to any inherent weakness, or foreseeable danger for the Canadian economy, but rather a fear of being the first major economy to hike rates, especially during a period of rampant risk aversion.

In this case, a decision to keep rates where they are is not necessarily a danger to the value of the CAD. Also, the subsequent rate statement should help further a natural sell-off of the USD/CAD, helping raise the value of the loonie in the immediate aftermath. The speculation is that this pair is heading downward unless a sudden burst of risk aversion emerges once more, or if market sentiment declines, which both seem less likely given recent news from the region.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Source: Forex Yard

Today’s U.S. Manufacturing PMI data release is set to dominate trading between the Dollar and its major currency pairs. A number of other factors are also likely to impact the forex market today, such as the German Unemployment Change and Canadian Overnight Rate at 7:55 GMT and 13:00 GMT respectively. Traders may find good opportunities to enter the market following these vital announcements

Economic News

USD – ISM Manufacturing PMI on Tap

The Dollar was little changed against most of its major counterparts during yesterday’s trading session on a renewed bout of risk aversion. This comes prior to the release of a key government report on the U.S. labor markets due this Friday. As a result, the USD fell slightly against the EUR, pushing the oft-traded currency pair to 1.2300 levels. The dollar experienced similar behavior against the GBP and closed at around 1.4510.

As the U.S. economy stabilizes, currency traders have started to focus more on fundamentals such as economic growth and short-term interest rates. That shift, just getting underway, could weaken the soaring USD in the coming months. A stronger currency is important to the U.S. because it entices foreign investors to invest in U.S. bonds that finance the nation’s record budget deficit. The downside is that it may restrain profit growth at companies with international sales by making U.S. exports more expensive.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the ISM Manufacturing PMI at 14:00 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders should pay close attention to the market as there is an opportunity for traders to capitalize on the fluctuations which are likely to follow this release.

EUR – EUR Keeps Steady Rates against U.S Dollar

The EUR stabilized against the dollar on Monday but remained under downward pressure after Fitch Ratings downgraded Spain’s credit rating, refueling concern about Europe’s debt woes hurting the global economy. By yesterday’s close, the EUR rose slightly against the USD, pushing the oft-traded currency pair to 1.2300 levels. The 16-nation currency did see some bearishness as well as it lost around 80 pips against the GBP and closed at 0.8460.

Spain’s downgrade by Fitch ratings agency on Friday followed a similar move by S&P last month, and analysts said the reaction from currency markets had been limited as the move had been widely expected. But many say the EUR is poised for more losses after its dramatic tumble this month given that structural problems remain in some euro zone countries, while uncertainties about the scope of the debt crisis in the region will keep investors jittery.

The European single currency is on track for a hefty 7.7% decline against the dollar in May, in what would be its sixth straight monthly fall and the biggest percentage drop since January 2009.

JPY – Yen Trades near a One Week Low versus the USD

The yen traded near its weakest level in more than a week against the dollar as gains in stocks spurred demand for higher-yielding assets and after Japan’s Social Democratic Party left a three-way coalition government.

The Japanese currency, which rose against most of the major currencies this month as Europe’s credit crisis drove investors to safe haven assets, declined earlier yesterday after a poll showed more than half the nation’s voters want Prime Minister Yukio Hatoyama to resign.

Overall, the JPY dropped about 70 pips vs. the Dollar and the USD/JPY pair has peaked at the 91.48 level. The Yen also saw a downtrend against the Euro and the Pound as well. Yet by the end of the day, the Yen managed to correct some of its losses.

OIL – Oil Recovers, Climbing Above $75 a Barrel

Crude oil rose above $75 a barrel after the dollar declined slightly against the EUR, bolstering the appeal of commodities as a hedge against inflation. Oil, like other commodities, is priced in dollars so when the U.S. currency weakens, commodities become cheaper for investors holding other currencies.

Oil dropped on May 28 after Fitch Ratings’ decision to strip Spain of its AAA credit rating pushed the euro lower. A report tomorrow in the U.S., the world’s biggest energy user, will probably show the nation’s manufacturing expansion slowed for the first time in three months.

Technical News

EUR/USD

The pair has experienced a bit of a consolidation since reaching a low of 1.2150 last week. As such, the price has climbed close to the bearish channel that has formed on the daily chart. A trade setup to go short on the EUR/USD is forming as the price moves closer to the upper boundary of the channel. Going short at a trend line can be one of the best ways to enter into a trending market.

GBP/USD

The price of the pair is approaching the daily chart’s downward sloping trend line that began in late April. This also coincides with the 20-day simple moving average. This may be a good time to enter short on the pair with a price target at the swing low on the daily chart of 1.4230.

USD/JPY

Currently the pair is testing the daily chart’s 91.30 resistance level. This level is also close to the 20-day moving average line which could make this resistance level even more significant. Traders may find this a good price to enter short on the pair.

USD/CHF

The 4-hour chart shows a descending triangle pattern has formed on the 4-hour chart. The pattern begins at the swing high on the 4-hour. As the previous trend was a bullish, we can expect the pair to break out of the consolidation pattern to the upside.

The Wild Card

Gold

A resumption of the bullish trend can be seen on the daily chart by drawing a sharper sloping speed line from the long term upward sloping trend line. The price has paused at the resistance level of 1217.50 level. A break of this price level could propel the pair to its next resistance level of 1225. This may be a good opportunity for forex traders to go long on gold.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.