Asian, European & US Sessions

MarketView Ahead

Written by JS T. Alexander | 08 March 2010

A short summary for the week ahead
Keeping it simple without the bias Chart Presentation for now!

Charts Update - as of March 09

Some may and may not agree that the application made in viewing a computer screen chart can create some bias opinion of the market and leaving some technical flows.

The only difference is the different time frames that provides a mixture of false insignificant signals and choosing which time frame is best suitable may also lead to misinterpretation of the true analysis. That is also the very reason why a one page price indicator was included to be able to create a unbiased market interpretation through the currency pairs price behavior.

The U.S. Retail Sales and Consumer Sentiment reports with the economic growth and industrial activity data plus two interest rate decisions from the Reserve Bank of New Zealand and the Swiss National Bank ( SNB ), will have the strongest potential to move the markets in the week ahead.

In preparation for the new trading week, here is a quick look at the technical market outlook that every currency trader may want to consider:

USDX :
The USD has maintained its levels on the high side resting at the 80.40 bp with a resistance price at 81.50 as the 1st objective; a support price at 79.20 on the low side. As long as the USDX does not go below these support prices the medium trend of the USD is still bullish. Any corrective movement would be on a temporary cyclical direction heading lower for the 2nd quarter of the year. Although, the time period could be best anticipated between the end of March or the first two weeks of April 2010. the fundamental reports within this period may support some significant technical attributes on the price behavior before any actual confirmation could be made.

EUR/USD & GBP/USD :
The fundamental economic factors has outweighed even the most technical outlook on the both these major pairs. Going back to basic technical analysis by using quite a few tools most effectively applied are the three (3) Fibonacci methods of retracement, extensions, the fan and the candlestick configuration, momentum and the Williams % Rate has added more depth to the recent movements. Price behavior from our price page indicator was a vital element in speculating the pivotal point on the GBP/USD initial objective of 1.4780 - 1.4880 as the objective together with the Fibonacci Extensions as well as the EUR/USD at 1.3440. Although, the we would not rule out the 1.3380 extension at this time. Adjustments would have to be made along the way as there is no straight ups and downs except a wider trading range could be foreseen as volatility still continues to weigh on the current prices.

EUR/GBP :
Have overwhelmed the market plays and set-ups for the past two weeks where the 0.8655 have been the established major support based on the significant charts from the 4 major time frames where we have averaged the EUR/GBP price closest to the 0.8905-65 levels which happened to be the previous resistance coming from the low of 0.8655 registered last February.

The medium term trend is still intact as price pull back do occur when it touched its resistance of 0.9150 that may have been a short-term double top from the November 29 high of 2009. Momentum and investors shifting towards the cross rates are still favorable to trade as compared with some of the currency majors where investors and traders are still reluctant to create newer and fresh positions towards the end of the first quarter of this year 2010. As a reminder that the true average trading range for these pairs are within a 150-250 pips in between their average price marks. A retracement lower will not also be ruled out as a low for the week would have to be registered as a signal of a short-term price reversal, but not a trend reversal.

USD/JPY & USD/CHF :
The most affected currency pair after the US Jobs data was the USD/JPY reaction which was our secondary choice together with the EUR/JPY as the extreme benefactor as the EUR/USD adjusted its oversold areas and the USD continued recovery that attracted volumes and momentum trading have kept the USD/CHF at a cap not as significant specially with the SNB having felt their presence from the past few months. The process of deduction as to what currency pairs would best suit a potentially viable trade can be derived from a the least expected currency that would lead the market. Being out of the limelight may also have been proven the least likely choice for some investors who happened to be caught in between the major Euro sellers of approximately 12B worth highlighted by the recent Bloomberg reports.

Key levels to look for are the following : USD/JPY resistance at 91.10-20 breakout from a Donchian Channel that may create some initial long positions as a sign that the continuing spill over from a short trading session after the news may create a new momentum. However, the contrary behavior of movements may provide some faults signals of a downturn for then USD/CHF on a day to day basis, but the clearer long term perspective of this pair would still be towards the higher segment after the cyclical pattern of the USDX downturn this 2nd quarter of the year. USD/CHF registered support at 1.0410-20 and a follow through break may temporarily as the channel trend line higher would be supportive for long term upward trend.

AUD/USD :
A major correction was attained for the Aussie when the initial high price was touched at 0.9320-32 in December 2009 and subsequently closed lower at the 0.8990 and moved lower at the 0.8570 low. With most of the reports of a growth in Australia's GDP and interest rate hike have led the currency to continue its trend higher. currently working at the 0.9100 levels may attempt the highs as the resistance prices are being cradled back and forth as a saw to break higher. The probability is high and that volumes may lead the currency pair to do so.

Monitoring the financial futures prices, volumes and open interest plus the traders daily/weekly commitments measuring the market sentiment index may well be a useful technical tool to look at every so often. As markets movements are investor and traders perception that drives volatility in the market place. Due diligence should always be observe and creating any trade plan for the Forex market can not result to wining trades if these combinations are not done appropriately. Trading systems are only as good as the actual research and studies made by strategist / traders as the numbers and position to buy or sell still boils down to the traders inputs in the systems.