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Hello Everyone,
In this email I am going to give you my view on the market for the Asian/London sessions in the market for today, spanning Wednesday the 16th to Thursday the 17th of June 2010.
The swing trade for yesterday’s Asian-London session to SELL the EUR/USD @ 1.2335 traded as low as 1.2274 for 60 PIPS depending on how the trade was managed.
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We are still in a surprise news events environment and being on the right side of a trade is as important as ever as well as to avoid the chop, i.e., trades that can be account killers.
The USD’s weekly breakout close of 88.3 looks to have completely failed and with the USD breaking the 87.4 support level and gapping to 87.0 before continuing its collapse (driving all pairs back into their former breakdown ranges) to 86.0 in an intraday lower high/lower low choppy stair-step fashion as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD. Another advance is no longer predicted if we get a weekly close below 87.0, now looking very likely, as this would qualify as a drop back in the range (aka, failed breakout) and the rising lower bottoms trendline would be violated; and since wedges tend to be terminal patterns longer term, the reversal would be expected to stick. Bottom line, after some chop a resumption of a new USD downtrend would be expected to commence. Caution is still warranted until the drop back into range is confirmed by the weekly close. Either way, volatility gets another boost.
In terms of technical considerations in the EUR/USD, two potentially bullish scenarios are taking place. From a weekly long term standpoint, the main trend is down, but the currency was able to pierce through a retracement zone at 1.2164 to 1.2233. This move most likely took out stops on the way up. The main intermediate term trend will turn up on a move through the1.245 pivot. The new range in the EUR/USD appears to be in the 1.1876 - 1.232 region, and a break back to 1.217 can be expected, which coincides with the prior breakdown lows of earlier in the month and the 38.2% retracement of the last weeks advance. Bullish traders can be expected to try to form a secondary higher bottom at this price. If it holds then look for the start of a major rally. Based on this pattern, watch for the start of a 2 - 3 week retracement with 1.2784 the next potential upside target. In summary, the weekly chart is set up for a strong retracement rally to 1.2784, provided that the Euro holds a test of a minor interim retracement levels. The topping action in the USD can also be confirmed against the bottoming action in the EUR as mirror images of each other and the EUR chart can be seen here http://www.stockcharts.com/charts/gallery.html?$XEU. We will play both ways with a bias now neutral anticipating trades back to defined retracement levels. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
The JPY looked poised to continue its roll after its stall and stop at the 200-day moving average; it then bounced hard at the lower 50-day moving average and is once again challenging the 200-day in a rather large range between these two averages, as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY. The GBP as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP, looks to have a solid bottom in place with the creation of a higher high at 147.2 (a key level discussed earlier) but is no longer showing relative strength as compared to the EUR and in fact looks stalled at its 50-day MA, so expect a pullback or consolidation for a while at these levels.
There are some reports of significance to trade through today, in particular UK retail sales and the US CPI for which traders will position themselves prior to its release early in the US session. Now with the picture clearer still in terms of the USDX and EUR related pairs, we will play some retracements and better continuations. Either way, we are making pips.
The swing trade for today’s Asian-London session is to SELL the EUR/USD in the 1.2300 area with a STOP @ 1.2340 and a TARGET of 1.2170 for 130 PIPS.
That's it for today. Remember that I trade in the Live Forex Trading Room between 1am-6am Eastern Time. I will be hosting my regular 3-4 hour session and assessing and exploiting PIP opportunities as they arise.
Enjoy trading and good luck everyone!
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Risk Warning! Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial 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, and seek advice from an independent financial advisor if you have any doubts. All information posted on this website is of our opinion and the opinion of our visitors, and may not reflect current situations and occurrences. Please, use your own good judgment and seek advice from a qualified consultant, before believing and accepting and acting upon any information posted here or on this website.
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