FOREXYARD: Forex News Blog

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• Technical Update – Spot Gold Head and Shoulders Pattern
• Gold Falls Following Chinese Data
• GBP/USD – Technical Signal
• GBP/JPY Continuing 6-Month Bearish Channel
• USD Forecast to Maintain Gains Today

Technical Update – Spot Gold Head and Shoulders Pattern Posted: 20 Jan 2011 08:43 AM PST The daily chart for spot gold shows a head and shoulders top reversal pattern whose neckline was breached today, setting the stage for a potentially sharp drop in the value of spot gold. The left shoulder takes shape in mid-November with the head forming in early December at the all-time high of $1,431. The right shoulder formed in early January. A rising neckline can be found underneath the left and right shoulders. This line was breached earlier today following a selloff in spot gold. Estimating the price move from the reversal pattern brings a potential decline of $92. Measuring from today's breach of the neckline targets the mid-June high of $1,265. This level coincides with the 61.8% Fibonacci retracement from the July low.

Gold Falls Following Chinese Data Posted: 20 Jan 2011 06:49 AM PST Gold prices continue to slide though remain inside a consolidation pattern. Chinese economic data and a stronger dollar have traders bidding the commodity lower. Yesterday China released GDP data that rose faster than expected. 2010 GDP for China rose by 9.8%. Economists had forecasted an increase of only 9.3%. Yearly CPI was also released at 4.6% on expectations of 4.7%. Following yesterday's release of less than forecasted yearly inflationary data, spot gold has been trading lower. Traders may be taking profit in long gold positions as expectations increased for further Chinese policy moves meant to slow down the fast paced Chinese economy and weaken inflationary pressures. Should the Chinese decide to take further steps to limit inflation by raising bank capital requirements, reducing loan allotments, or an increase to interest rates, this may negatively affect the price of commodities such as gold and silver. A stronger dollar also may have played a role in the recent declines for spot gold. Yesterday the greenback paired its losses versus the euro as the EUR/USD has been unable to continue its recent upswing. Spot gold prices have been locked in a period of consolidation for the past 4-months, but today the price appears to have moved below this pattern. The next support line appears at the $1,315 level. This chart pattern also resembles a head and shoulders reversal pattern.

GBP/USD – Technical Signal Posted: 20 Jan 2011 04:01 AM PST The Cable has put in a solid performance this year, booking gains of 2.4%. The pair looks to continue its ascension towards the falling trend line off the August 2009 high. Looking at the weekly chart, the GBP/USD has traded between a defined triangle pattern with the lower line rising off of the 2008 lows and the upper line declining from the August 2009 high. As the pair begins to appreciate during January of this year, a new higher target level takes shape. As such, traders should target the upper line of the triangle which comes in this week at 1.6180. A breach above this level would target 1.6560, where falling trend line off of the November 2007 high is found. Rising weekly stochastics and last week's candlestick that closed with a shaved head support more gains in the pair. Support for the GBP/USD is located at 1.5340. GBP/USD – Weekly Chart

GBP/JPY Continuing 6-Month Bearish Channel Posted: 20 Jan 2011 12:00 AM PST The long-term trading pattern on the GBP/JPY appears to reveal a distinctive bearish channel over the past six months. The pair recently climbed to the upper border of this channel and now appears to be continuing within its range-trading behavior. We can see on the chart below that the pair touched the range's upper border and quickly bounced off. The Stochastic (slow) has a bearish cross followed by a descending price movement, supporting the notion of a downward correction to this latest upturn. The MACD also reveals what appears to be an impending bearish cross above the 0.0 line and the Relative Strength Index (RSI) is falling rapidly out of the over-bought region. All of these indicators support the notion of a bearish GBP/JPY with a short-term target at 129.00 and longer-term price targets near 128.00 and 125.00 over the coming months. GBP/JPY – Daily Chart

USD Forecast to Maintain Gains Today Posted: 19 Jan 2011 11:30 PM PST The US dollar was able to make substantial gains against most of its main currency rivals in overnight trading. Whether or not the greenback will be able to maintain its bullish trend will likely depend on a batch of US data set to be released today. Here is a roundup of today’s main events: 13:30 GMT: USD – US Unemployment Claims The weekly unemployment figure is considered to be one of the key indicators of US economic health. The last few weeks have shown an increase in the number of people filing for first time unemployment insurance, which has led to a sharp decline in the value of the dollar. Today, analysts are predicting the unemployment number to come in at 422K, which if true would signal a sharp decline from last week’s figure of 445K. Assuming the predictions are true, the dollar is likely to see substantial gains as a result. 15:00 GMT: USD – US Existing Home Sales The Existing Home Sales figure measures the annualized number of existing residential homes sold over the last month. Along with the employment level, housing data is considered one of the primary gauges of economic health, and this report consistently leads to market volatility. Today’s figure is expected to come in at 4.88M, which if true would signal an increase from last month’s figure of 4.68M. An increase in the number of home sales should boost confidence in the US economic recovery, which would likely lead to gains for the USD.

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