FOREXYARD: Forex News Blog | |
- EUR/USD – Ascending Triangle Pattern
- Traders Favoring High Yielding Currencies in FX Trading
- European Economic Improvement to Boost Swedish Krona
| EUR/USD – Ascending Triangle Pattern Posted: 14 Sep 2010 03:37 AM PDT
The EUR/USD is caught in a range trading environment and has headed lower from the resistance level that forms a consolidation pattern beginning in mid-August. Traders should be looking to short the EUR/USD now that the upward movement has ceased following negative German economic data. As the pair's trend has ceased and volatility has fallen sharply, an ascending triangle pattern has formed on the daily chart. The left leg of the triangle is a horizontal line above the highs of the consolidation pattern and the right leg is formed from rising lows. The EUR/USD made a false breakout to the downside previously on September 9th, trapping many traders who tried to short the pair prematurely. However, an opportunity exists to short the pair while still in the consolidation pattern. Triggering today's move lower was the release of negative economic data from Europe. The German ZEW Economic Sentiment report came in far below the market's expectations. The release for the month of August was -4.3. Economists expected the survey to register a reading of 14.9. This is a sharp drop off from July's numbers where the report was released to a positive 15.8. Worries that this could be the beginning of an economic slowdown in both Germany and the European Union prompted selling of the EUR/USD. Germany is the EU's largest economy and this adds to fears of continued weak economic activity in the US which contribute to selling of the euro and buying of the dollar. Following today's bearish economic data from Europe, an opportunity may be exist to short the EUR/USD now that the price has bounced off of the upper boundary line of the triangle at the resistance level at 1.2920. Traders can enter short with a first target at the lower boundary line of the ascending triangle pattern. A limit order can be placed above the support of 1.2680. Also a protective stop should be placed above the resistance line of 1.2920 to defend against a breakout to the long side should the pair reverse and turn upwards. More conservative traders may not want to trade inside the triangle pattern and will prefer to wait for a breakout of the triangle pattern to initiate a trade. If so it may be worthwhile to be patient and to wait for a breach below 50% Fibonacci retracement level at 1.2600 and the bottom of the triangle pattern at 1.2585. Further support is found in a range between the mid-June high of 1.2465 and the 61.8% retracement level of the bullish correction for the pair at 1.2430.
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| Traders Favoring High Yielding Currencies in FX Trading Posted: 14 Sep 2010 01:09 AM PDT
The day ahead is busy with data releases, and many of them of high importance to markets. Foremost will be U.S. retail sales and the ZEW sentiment, but also of interest will be the British CPI and U.S. Business Inventories. 8:30 GMT: GBP- CPI Contrary to the U.S. and Europe, Britain saw the annual rate of inflation rise above the 3% target. CPI dropped gradually to 3.1% and is now expected dip to an annual rate of 2.9%. This is expected to weaken the Pound. 9:00 GMT: EUR – German ZEW Economic Sentiment The important German ZEW Economic Sentiment is the highlight among market events that will shape the EUR/USD trading this week. This survey of 350 analysts and investors always rocks the euro. In the past 4 months, it has shown significant drops, short of expectations, reaching 14 points last month, still in positive territory, meaning small economic optimism. Another drop is expected now which means the pair has the potential of falling below $1.2660. 12:30 GMT: USD – Core Retail Sales/ Retail Sales The retail trade report for August could be slightly stronger than expected. This major consumer gauge recovered last month after terrible falls beforehand. Retail sales are predicted to rise by 0.4%, exactly like last month, and core retail sales will probably rise by 0.3%, slightly better than last month's 0.2% rise. Any result will rock the markets. 14:00 GMT: USD – Business Inventories Data on business inventories for July will add the retail component to those already known for wholesale and factory inventories. A better than expected data will rock the greenback. |
| European Economic Improvement to Boost Swedish Krona Posted: 13 Sep 2010 12:57 PM PDT
News released from Europe today showing increased economic forecasts for European growth will have a positive impact on the Scandinavian economies and in turn help to strengthen the Swedish krona. Today the European Commission increased its estimate for gross domestic product in the European Union. The commission believes that Europe's economy will grow by 1.8% as opposed to the commission's previous estimate of 0.9%. The upgrade comes despite a warning of potential slowing growth in the EU economy during the second half of 2010. The slowdown and any additional weakening in European GDP may be caused by deteriorating fiscal conditions and the ending of government stimulus programs. The European economy will be powered by export growth in Germany. The German economy may benefit as well from the weakened euro as a weak euro can make German imports more competitive abroad. Countries that use the euro are expected to expand economic activity by 1.7%. The implications for the Swedish Krona should be a positive. The European Union contains 7 of the 9 largest trade partners for Sweden. Any increase in European growth should directly affect growth in the Swedish economy. Looking at the technicals for the USD/SEK, the pair continues to trend lower. An intermediate trend line begins at the highs in early June. The trend line has two points of contact in late August. The downward trend is confirmed by the 20-day simple moving average that is sloping sharply lower. The previous target remains the same at 7.0400 (S1). Resistance comes in at the pullback beginning at 7.1950 (R1), followed by the completion of the bullish correction at 7.3350 (R2).
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