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Forex Daily News | Forex Articles | Forex Information
Friday, 26 November 2010 03:08

British Pound Breaks Down

Contributed By: DailyFx

 British_Pound_Breaks_Down

The GBPUSD is failing just ahead of its year+ resistance line. The line is at 16310 this week. For some time, I’ve favored the idea that a triangle is unfolding from the January 2009 low. If this is the case, then the GBPUSD should decline for months towards 15000 in wave d. A more bearish count is shown above. Near term focus is on 15500. 15660 is resistance.

Published in Forex Articles
Thursday, 18 November 2010 11:38

Keeping an Eye on Ireland and Risk Trends after the Critical Break has been Made

Contributed By: DailyFx

The list keeps getting longer. I am seeing so many opportunities out there; and the greater the number of potentials, the harder it is to remain patient. However, patience is key to ensuring that good trades are taken and good entry levels are found. Simply jumping in now while ignoring the natural ebb and flow of the market can get me stopped out or drawn into bad trades that could ultimately be highly correlated (meaning I lose on an entire theme - which would deliver a far bigger loss than expected). We are one day after a critical break in risk appetite trends (as seen on the S&P 500); and the market seems to be far more quiet and making the effort to slowly correct the move. This is very common after a major breakout. A retest of former support as new resistance and vice versa is one of the foundations of trading. Yet, this time around there is a very heavy fundamental slant. We are simply waiting for many different things to fall apart. There is already more than enough there to force the swell in sentiment these past months to collapse; but it looks like we have too many hold outs that want to remain blissfully ignorant to reality.

For live position, I am still in the reduced and long-term long USDJPY position. Today's modest dollar pullback really doesn't alter the bearing on this setup because it is based heavily in fundamentals which means it will take a while to play out. Besides I'm happy to sit still while it is already well enough in the money. New to the game this morning are short AUDUSD and AUDCHF positions. AUDUSD bounced back up to test a short-term descending trendline from the past few weeks and offered me entry on a reduced short at 0.9825. I'll set the stop up 45 points and the first target at 100 (note the skew as I am comfortable with a little more risk here given my larger technical and fundamental outlook). As for AUDCHF, a very consistent falling trend of highs gives me easy entry on a reduced short from 0.9720 and allow me to put up a 50 point stop and 70 point first target.

The pendign column is still huge. It is very tempting to just jump in on a EURUSD and GBPUSD short; but I am waiting for either trend confirmation breaks or retracement to better levels on both cases. For the former I'd like to see 1.3625 and latter 1.5950. A long USDCHF trade above 1.00 is something that I would take even if I have long dollar exposure elsewhere given its fundamental winds. NZDUSD is very similar to AUDUSD; but I still want to highlight its descending trend channel these past two weeks and ptoential break of 0.7650. AUDCAD is still one of my favorite trade possiblities should it break 0.99 and confirm reversal. Then there is GBPCAD with wedge breakout potential, GBPJPY on a pull back to its channel and EURJPY and EURCHF who are staring down their respective range supports.

Published in Forex Articles
Thursday, 11 November 2010 09:52

GBPUSD: A Top Taking Shape?

Contributed By: DailyFx

GBPUSD is stalling below resistance at the midline of a rising channel established from mid-May, with negative divergence on weekly RSI studies hinting bullish momentum is fading and a move lower is ahead. I will look for confirmation on a close below the channel bottom (now at 1.5728) to look for selling opportunities.

Published in Forex News
Thursday, 04 November 2010 10:34

GBP/JPY Classical 04/11/2010

Contributed By: DailyFx

GBPJPY_Classical_04112010

GBP/JPY: A closer look at Ichimoku studies suggests that we are still very much in downtrend, with the market most recently breaking to fresh 2010 lows by 126.45. However, as mentioned in previous commentary, daily studies were looking quite stretched, and despite the break to fresh yearly lows, the latest sharp bounce suggests that overall, the market is very well supported in the 126.00’s on a medium-term basis. From here, we would not at all be surprised to see additional upside towards 135.00, but we prefer to remain sidelined given what is still an overwhelmingly bearish trend.

Published in Forex News
Tuesday, 02 November 2010 12:14

GBP/JPY Classical 02/11/2010

Contributed By: DailyFx

GBPJPY_Classical_02112010

GBP/JPY: A closer look at Ichimoku studies suggests that we are still very much in downtrend, with the market most recently breaking to fresh 2010 lows by 126.45. However, as mentioned in previous commentary, daily studies were looking quite stretched, and despite the break to fresh yearly lows, the latest sharp bounce suggests that overall, the market is very well supported in the 126.00’s on a medium-term basis. From here, we would not at all be surprised to see additional upside towards 135.00, but we prefer to remain sidelined given what is still an overwhelmingly bearish trend.

Published in Forex News
Thursday, 16 September 2010 10:04

False Rebound

Against all expectations the Q2 GDP figures for the UK economy demonstrated a growth of a remarkable 1.1%, one of the highest figures found anywhere amongst the emerging economies. Whilst political parties on both sides of the House debated as to who should receive the credit for such a boost, the real results were being felt across the markets.

As the figures were released, unsurprisingly, sterling took a bounce against both the dollar and the euro. This hike wasn’t solely the result of the good GDP figures for the UK, but also on the back of fears that the stress-testing of euro banks would reveal that some banks weren’t quite up to scratch. These fears were later born out, and sterling looks set to rise further across the coming week.

Economic experts in the UK predicted rather gloomily that the 1.1% growth would be as a good as it gets, pointing to the growth provided by the building and construction sector as a one-off due to catching up on the backlog left behind after the particularly bad weather of the winter.

There is, however, another problem in the long run for the UK economy and that’s the fact that as long as it continues to perform well (or, more accurately, outperform the eurozone) sterling growing stronger is not actually going to be that much of an assistance to the recovery. The UK’s largest trading partner by far is Europe, and the government really needs a weaker pound against the euro to bring in extra trade to the UK and further drive the recovery.

Of course, on current evidence, that simply isn’t going to happen, or not for any time soon, leaving the UK without a major region to export to (a problem that isn’t unique to Britain by any stretch) and relying, to a certain extent, on exports to continue the boost in the economy. Whilst the services sector may continue to perform strongly, there are other places in the world to do business and that business is likely to gravitate away from the UK if it’s much cheaper to do it somewhere else.

So, sterling finds itself in between a rock and a hard place and some people are arguing that it would have been better to join the euro and be in the position of Germany, for example, which has seen exports within Europe increase rapidly over the last decade. Of course, a German bank failed the stress-tests as well, so there are further problems to be dealt with in the eurozone.

It is not an overstatement to say that the strength of sterling will dictate the strength and the extent of the recovery in the UK economy. Regardless of how you trade in the markets, whether it’s directly or through a spread betting company like CMC Markets, make sure you keep an eye on the comparative strength of sterling against the other major currencies, it is guaranteed to have an impact on your markets.

Published in Forex Guides

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