Friday, January 28, 2011

Currency market today

In a recap of the week so far as of 9:05AM EST:

AUDUSD had its high on Monday of 1.0022, peeked back above parity on Wednesday with a lackluster 1.0002, and was disappointing in general to its bullish fans all week. The pair closed yesterday at .9891, only five pips less than last Friday but still above its 100 and 200 daily moving average. It's currently attempting a rally. It has reached a high of .9988 this morning, a resistance price. If the current hourly candle closes significantly lower, there will be an evening star formation and a good hint of lower lows to come. Resistance is at .9988, 1.0020/56/77, and 1.0183. Support is at .9887, .9804, .9690, .9612 and .9544/32. Potential price targets in the event of continued lows are .9740, .9490, .9420, .9213 and below.

EURGBP has had a nice week so far, closing yesterday at .8628, 114 pips higher than last Friday's close. It's above all its daily moving averages. With a low yesterday of .8582, it's sitting on key support. Resistance is at .8648 and .8751. I suspect there will be sideways movement going into next week.

EURJPY had its happy day yesterday when it blew through resistance and touched 114.01. It's slipped to a low of 112.67 this morning and this calls into question whether the 10 daily moving average will make it above the 100 and overtake the 200 which it was poised to do. On the weekly chart I pointed out how the pair had overtaken its downtrend resistance line so we'll have to see whether it can pull off additional moves back up to the top of the trading range at 115.69.

EURUSD continued to do generally well this week, reaching a high of 1.3759 yesterday. Thursday's candle was a doji indicating indecision in the market. Elliott Wave interpretations as well as other calculations are bearish for the most part but there is definitely some thrust to this move up. Still, price has to close above 1.3860 for the bulls to continue their excitement. The pair has been hanging about in a fairly narrow range since its high so additonal moves upward are indeed possible. If it can close above 1.3860, 1.4060 and 1.4282 would be the next challenges. I don't expect it to stumble much today but if it does look for support at an overnight hourly hammer candle of 1.3679 and then 1.3637, 1.3573, 1.3500 and 1.3457.

GBPJPY had a splendid week, reaching to a high of 132.67 before it was smacked down to a low of 130.77 this morning, a 50% retracement. I'm glad I grabbed profits yesterday morning. However, given that this pair has broken above its very long term downtrend line on the weekly chart, it's possible there's going to more upside in store. Support is likely at 130.73/58 and 129.52. Depending on momentum behavior if it approaches those levels, I may buy in again. Resistance is obviously the 132.67, an area it's been battering at since last week. Above that is 133.00 and 134.00.

GBPUSD sank Tuesday from 1.6010 to 1.5751 and the close yesterday was 104 pips down from last Friday's. Cable is above the 20, 50, 100 and 200 daily moving average crossing under the 10 this week. It's trying to rally touching 1.5967 earlier this morning. It needs to close over 1.6059 in order to generate more bullish sentiment. A drop to 1.5830 would hint at lower lows to come.

USDCAD was dull, dull, dull this week, hovering between .9912 and 1.0004. It can't stay this dull much longer.

USDCHF has two key prices to watch—.9300 on the downside and .9623, the high on Monday, on the upside. Dropping below the .618 retracement of .9485 was a bummer and at the moment it looks as though it's going to make it back to .9300. If it can get to .9000, it's probable it will use that as a base. Shorting rallies seems the way to go as long as it doesn't close above .9623.

USDJPY managed to close yesterday only 15 pips above last Friday's close despite a rally that took it 83.21 in one bullish hourly candle in early trading Thursday morning in London. Who was responsible for letting the horses out of the barn that hour, I wonder. Despite a continuation triangle yesterday on the hourly chart, the pair plunged back to a low of 82.06 this morning. There's hope for this pair if it can hold above 81.85.

© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.

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