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| EUR/CHF – Long Term Trade with the Trend Posted: 05 Nov 2010 02:32 AM PDT
For the past 2 months the EUR/CHF has made a correction in the long term downward trend. But the failure of the pair at the 200-day moving average line shows the upward momentum has stalled. This presents an opportunity to trade with the long term trend. The EUR/CHF corrected more than 50 % of the late May to early September move. A signal to enter the trade may be taken from two places. The first may be a close below the 20-day moving average line. This moving average line previously served as a nice support during the correction and could also later act as a resistance in the future. The second signal may be given when the RSI (14) breaches below the rising trend line. The first support level (S1) is found near 1.3460, the 38.2% Fibonacci retracement level from the late May to early September move. A protective stop can be placed above the significant technical barriers of the 200-day simple moving average, the current downward sloping trend line, and the 61.8% Fibonacci retracement level of the late May to early September move. The stop should be located just above the August pivot of 1.3920. This would give a risk of roughly 350 pips. Should the pair close above this level it would signal a shift in the long term trend to the upside. Traders can target a level above the swing low for the pair at 1.2760. This would give a potential profit of approximately 700 pips and a decent profit to risk ratio of 2 to 1.
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| Dollar Weakness in Focus for Non-Farm Payrolls Posted: 04 Nov 2010 11:48 PM PDT
The highly anticipated Federal Reserve meeting did not disappoint, causing much market turmoil as the Fed announced it will purchase $600 billion additional debt over the next 8 months. The announcement sent the USD plunging versus riskier currencies and especially commodities, pushing the price of gold to record highs and crude to around $87 a barrel. The USD is going to remain the focus for today as well with the release of the highly anticipated Non-Farm Payroll data and Unemployment rate. Today's data will likely set the tone for dollar trading for the near future. Some of today's main events PPI Input – GBP – 9:30 GMT This is a leading indicator of consumer inflation. Inflation affects interest rate policy and therefore a highly followed indicator. PPI is expected to show a modest increase from the previous month. A result that is as expected or higher will likely prove beneficial for the GBP as it will stoke expectations of an increase in the interest rate. Non-Farm Employment Change and Unemployment rate – USD – 12:30GMT One of the most anticipated events of the 1st week of the month is the U.S employment data. Unemployment remains the main hurdle to U.S economic recovery and therefore is a highly watched indicator. The expectation, supported by Wednesday's ADP Non-Farm data, is for a modest job gain. However, yesterday's release of the unemployment claims showed an increase in claims. If the result is less than expected the dollar will likely see further downward pressure. Pending Home Sales – USD – 14:00 GMT The housing sector, which was the underlying reason for the financial crisis, remains one of the main drags on the economic recovery. Some improvement was seen recently, however, the expectation for this indicator is a slight decline. A better than expected result may provide the USD a much needed boost. |
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