FOREXYARD: Forex News Blog

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• USD/JPY – Declining Wedge Pattern
• Swiss KOF Barometer on Tap Today
• Crude Oil – Range Trading Continues

USD/JPY – Declining Wedge Pattern Posted: 29 Sep 2010 08:22 AM PDT A distinct declining wedge pattern has formed on the monthly USD/JPY chart that could signal a reversal of the downward trend. The wedge pattern is defined as a triangle pattern with both trend lines that are pointed in the same direction. This falling wedge has both lines pointed to the downside with the upward boundary line falling at a faster slope than the lower boundary. When a declining wedge pattern forms, it indicates the shorts are weakening in strength and perhaps the bulls will take over with a reversal of the trend. Because this is a declining wedge, we should expect the price to breakout to the upside. As the long term trend is clearly to the downside, traders will need to be extra patient before taking a long position. There is a need to wait for a clear signal that a breakout to the upside has occurred. Next month the price could test the resistance level at 90.80. A close above this on a monthly basis would confirm the breakout. However, there is always a chance the pair will surprise the market and break to the downside. Traders should eye a breach below the 82.80 level for a sign of a continuation of the downtrend.

Swiss KOF Barometer on Tap Today Posted: 29 Sep 2010 12:32 AM PDT The US dollar continued to trade bearish against its main currency rivals yesterday, as worse than predicted economic indicators renewed suspicions that the Fed will soon begin a stimulus program to boost the greenback. Following the disappointing news, the USD/CHF pair fell to its lowest level since March of 2008. Today, news from both Switzerland and the US may give the dollar a chance to recoup some of its earlier losses. Here is a roundup of the day’s main news events: 09:30 GMT: CHF KOF Economic Barometer The KOF Economic Barometer is a monthly indicator designed to predict the direction the Swiss economy will take over the next six months. It is widely considered to be a highly significant economic release, and consistently leads to volatility among CHF pairs. This month, analysts are forecasting a slightly lower figure from last month’s release. Should the barometer come in around its predicted level 2.12, the greenback may be able to regain some of the substantial losses it took against the franc yesterday. 14:30 GMT: USD Crude Oil Inventories After seeing some fairly significant gains last week, crude prices have fluctuated over the past few days. Today’s US inventory figure may help oil prices move up again. Most analysts are forecasting a decrease in US stockpiles from last week, which if true, means that demand is up. Typically higher demand equals higher prices. Should the report come in at its predicted level of around -0.4M, traders may want to enter into some long positions with oil.

Crude Oil – Range Trading Continues Posted: 29 Sep 2010 12:27 AM PDT For the past 3 weeks crude oil prices have been fluctuating between $73.50 a barrel to $78.00 a barrel. This means that the market has acknowledged that for the time being, this price represents the real value of crude oil. Currently, crude oil is floating in the middle of the range, trading at $76.60 a barrel. • The chart below is the crude oil 4-hour chart by ForexYard. • The flat form of the MACD is a great reflection of the steady trading of crude oil. Once the MACD will begin moving towards a certain direction, it will signal that the range might be coming to an end. • In the meantime, a bullish cross of the Slow Stochastic is indicating that crude oil might see a bullish move today. • The next significant resistant level is located at the $77.15 price. If crude oil will cross the $77.15 level, it is likely to reach towards the $78.00 as well. • If crude will fail to cross the $77.15 level, it might drop to the $76.00 support level. • The next support levels are at the $75.50, $74.60 and $73.55 levels. • Traders are also advised to pay special attention at 14:30 GMT, when the U.S. Crude Oil Inventories report is scheduled to be released. Usually this release creates heavy volatility in crude oil trading, and traders should be prepared.

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EUR/USD – New Price Target Posted: 28 Sep 2010 02:30 AM PDT The EUR/USD is currently testing a technical resistance level that once breached should solidify the rising trend and a retracement of the December to June bearish trend. During the Japanese trading session on Monday the EUR/USD tested and failed to break 1.3510 (R1), the 50% retracement level of the previous bearish trend that spanned from December to June. Following the failed breach the pair has fallen to the price of 1.3400. Should the EUR/USD close above the 50% level, the next technical target would be found at the 61.8% Fibonacci retracement at 1.3890. Support for the EUR/USD comes in at the height of the June to August bullish move at 1.3330 (S1).

JPY May Gain from Industry Growth; BOJ May Intervene as a Result Posted: 27 Sep 2010 08:13 PM PDT The US dollar has been declining steadily against all of its currency rivals since the opening of this week's market. As of early Asian trading this morning, the buck has seen a view positive corrections, but little which would indicate a reversal to yesterday's movements. Today's economic news may add a boost to the greenback if the American consumer confidence figure at 14:00 GMT comes above expectations. Here is a recap of the day's events: 8:30 GMT: GBP – Current Account - This report measures the difference between imported and exported goods, services, income flows, and unilateral transfers during the previous quarter. It has a direct correlation with the demand of the country's currency, the British pound. Current expectations are for a reading of -9.6 billion pounds. If the actual figure is more positive, the pound sterling could see some bullish movement today. 14:00 GMT: USD – CB Consumer Confidence - The Conference Board's (CB) Consumer Confidence indicator is a gauge of economic sentiment among private households in America. It surveys roughly 5,000 households about their confidence regarding the economy and has a positive correlation with consumer spending, and thus demand for the greenback. This report has maintained a reading between 50.0 and 60.0 for the past few months, if today's report falls within this range, as it is expected to do, then the impact on the greenback may be positive, but minimal. 23:50 GMT: JPY – Tankan Manufacturing Index - This report is one of the few pieces of economic data which Japan releases publically. It is a measure of the health of Japan's manufacturing sector. A reading over 0.0 is a sign that manufacturing is healthy and growing; below 0.0 indicates the opposite. Expectations are for an increase from a reading of 1.0 to 7.0 from the previous release, which could lead to further strengthening of the JPY, and therefore has the potential to provoke the Bank of Japan (BOJ) into further monetary intervention.

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• Gold Prices Outperform
• USD May Bounce Back Vs. Danish Counterpart
• Scandinavian Currencies See Major Gains vs. Safe-Haven Dollar
• Platinum Hits Another Record High

Gold Prices Outperform Posted: 27 Sep 2010 08:12 AM PDT The price of spot gold continues to rise, moving closer to the psychological level of $1,300 as the dollar falls out of favor. During the European trading session on Monday, spot gold prices held close to their all-time high, trading at $1,200, from an opening day price of $1,2981. The price continues to be buoyed by overall dollar weakening that intensified following last week's announcement by the Federal Reserve. The release of the Federal Reserve Open Market Committee meeting minutes declared the Fed's willingness to enact further quantitative easing measures to help stimulate the US economy. The chance of further quantitative easing was increased on Friday in a speech by Fed Chairman Ben Bernanke. The Fed chief noted the effort to reduce unemployment has been significant. Despite the lengths the Fed's has gone to, the quantitative easing has not reduced rising US unemployment numbers. Last month the US unemployment rate rose to 9.6% from 9.5%. The easing of monetary policies in the US has been a major contributor to the rise in the price of spot gold. As a steady stream of dollars continue to increase in the markets, inflation fears are rising given the lack of commitment by central bankers to reduce the amount of dollars available. As the dollar continues to fall out of favor with traders, market players have looked to other instruments to act as safe havens such as the Swiss franc and the Japanese yen. However, none of these instruments are able to keep up with the strong appreciation that has been seen in the price of spot gold. Gold prices are up over 400% since 2001. Looking at the weekly chart, since the price of spot gold rose from the $685 resistance level in October of 2008; the price is up 90%. A rising trend line follows the rise in the price. The price of spot gold has made a push above its previous high at $1,265 (S1) and reached a new all-time high last week, trading at $1,299. The next support level falls at the July low at $1,156 (S2). $1,300 should act as the next resistance level because it is a big round number that traders tend to focus on and therefore set their limit orders near this level. Should the $1,300 price level be breached, traders will want to target the $1,400 level for spot gold prices.

USD May Bounce Back Vs. Danish Counterpart Posted: 27 Sep 2010 03:23 AM PDT Over the last two weeks, the US dollar has been dropping at a steady rate against the Danish krone. Since the 12th of September, the USD/DKK pair has fallen almost 3500 pips, to its current level of 5.5375. As we will see through a variety of technical indicators, the pair may have hit a low point and has the potential for a significant upward correction. We will be looking at the 8-hour chart provided by Forexyard. The technical indicators being examined are the Stochastic Slow, Relative Strength Index (RSI) and Williams Percent Range. 1. The Stochastic Slow has recently formed a bullish cross, meaning that an upward correction is likely to occur in the near future. 2. This theory is supported by the Relative Strength Index, which is currently right around the 20 level. Typically anything below the support line at 30 is a sign of the pair being oversold. Traders can take this as a sign that a bullish move may occur. 3. Finally, the Williams Percent Range, currently at the -90 level, is well into oversold territory. This lends further support to our original theory that upward movement is likely to occur.

Scandinavian Currencies See Major Gains vs. Safe-Haven Dollar Posted: 27 Sep 2010 03:15 AM PDT Following last week’s Swedish parliamentary elections, the Swedish krona continues to make gains against its US counterpart. While the elections initially caused some investor concern regarding the stability of the Swedish government, the krona has managed to maintain its gains vs. the greenback going into this week’s trading. Currently the USD/SEK pair is trading around the 6.8080 level, down over 2700 pips from a week ago. The dollar has not faired significantly better against the other Scandinavian currencies. USD/DKK has fallen over 1600 pips while USD/NOK dropped 1850 pips in the same period of time. Analysts attribute the dollar’s losses to positive global economic news which has caused investors to shy away from the safe haven currency. The Scandinavian kroner saw decidedly more mixed results against the euro in the past week. While positive economic news has led to a drop in value for the greenback, the euro has seen gains across the board as investors move to riskier assets. Both EUR/SEK and EUR/NOK have been range trading over the last week. While both are currently in a downtrend, they are likely to see an upward correction in the near future. EUR/DKK on the other hand has been trading at a relatively steady rate for some time now. Currently at 7.4485, the pair is currently up around 30 pips from this time last week. This week, the Scandinavian currencies will likely move according to news out of the US. Traders will want to pay particular attention on Thursday, when the weekly US unemployment claims will be followed by a testimony from Fed Chairman Bernanke. Should the news reflect continued growth in the US economy, the dollar is likely to drop. If so, betting on the Scandinavian kroner may pay off.

Platinum Hits Another Record High Posted: 27 Sep 2010 02:02 AM PDT Platinum advanced to a new record high, as prospects for a further decline in the dollar ‎boosted investor demand for precious metals as alternative holdings. Platinum prices jumped ‎‎$10.10 to $1,632 an ounce on Monday reaching its highest level since May 18th. Technical ‎indicators show there are good chances platinum prices will increase further with a potential ‎price of $1675.00 in sight. ‎ The chart below is the Platinum 4-hour chart: ‎- The technical indicators used are the Bollinger Bands, the MACD , the Relative Strength Index ‎‎(RSI) and Fibonacci retracement lines.‎ As we can see in the chart, the price is currently testing the 100% Fibonacci retracement level ‎and may possess the momentum to break past.‎ ‎- The RSI is above 60. It could either mean that the price is in a lasting uptrend or just ‎overbought, in which case a correction could occur (look for bearish divergence in this case). ‎ ‎- The MACD is positive and above its signal line. The configuration is positive. ‎ - A tightening of the chart's Bollinger Bands confirms the bullish volatility in the pair.‎ ‎- The next resistance levels are placed at the 1675.5 and the 1692.5 levels. ‎- The next support levels are placed at the 1620.50 and the 1609 levels.‎

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