FOREXYARD: Forex News Blog | |
- EUR/JPY- Technical Update
- Technical Tip – GBP/USD Consolidation Pattern – Bias to the Upside
- Bullish On Crude Oil
- GBP/CAD Approaching Long-Term Convergence Point
- US Crude Oil Inventories Expected to Show Weak Demand
| Posted: 09 Feb 2011 09:17 AM PST
This pair's sustained upward movement has finally pushed its price into the over-bought territory on the 8-hour chart's RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave. The next support levels are found at the 112.50, 112.20 and 112.05 levels.
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| Technical Tip – GBP/USD Consolidation Pattern – Bias to the Upside Posted: 09 Feb 2011 06:09 AM PST
Since making a double top last week, the GBP/USD has consolidated its gains and is encroaching on significant short term support prior to the BOE interest rate announcement tomorrow. A downward sloping resistance line from the 1.6280 on the daily chart has kept in check any further gains as the short term rising trend line off of the January 7th low draws near. While the consolidation pattern resembles a cross between a bullish flag and a downward sloping wedge, we will refrain from identifying the pattern by name. As the current trend is rising, the bias for this play will be to the upside. A breach above the falling resistance line would first target the double top at 1.6280, followed by the November 2010 high at 1.6870. Support for the GBP/USD comes in at 1.6000, a level that coincides with the rising trend line from the January low as well as the 20-day moving average. Further support will be found at 1.5820 near the 100-day moving average. Also 1.5750 may come into play.
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| Posted: 09 Feb 2011 05:16 AM PST
Following an increase in Chinese interest rates the price of crude oil quickly fell. But as fast as the price dropped, spot crude oil prices quickly regained traction as traders shrugged off Chinese monetary policy tightening and bid prices higher. This may show there is technical support for spot crude oil prices as well as other fundamental forces at work. Yesterday the price of spot crude oil fell as low as $85.70 before recovering to close at its opening day price of $87.35. The cause of the early selling was due to an interest rate increase from China as the PBOC raised the base lending rate by 25 bps to 6.0%. One explanation for the fast recovery in the price of spot crude oil may be the market has already priced in a tightening of monetary policy in China. This is the third interest rate increase since October and it is not expected to be the final rate hike. The Chinese authorities have made it very clear their intention to fight inflationary forces. It is possible these interest rate prices have been largely priced into assets by traders. Today will bring the release of US weekly crude oil inventories. Expectations are for an increase of 2.2M barrels. Technical support also appears on the daily chart following yesterday's price decline. The low of yesterday's candlestick coincides nicely with the rising trend line from the August lows. The slow stochastic oscillator looks to be moving higher, indicating a potential rise in the price of spot crude oil. As such, resistance is found at Monday's high of 89.50, followed by this year's high of $93.00. Support comes in at $85.00, with further support at the 200-day moving average at $82.00.
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| GBP/CAD Approaching Long-Term Convergence Point Posted: 08 Feb 2011 11:25 PM PST
As was highlighted in yesterday's article, the British pound appears positioned to undergo a technical downward correction to its latest upswing. The GBP/CAD appears to also support such a perspective. The GBP/CAD has been trading within a long-term downtrend since late January 2007, when the pair peaked at 2.3566. Since that time, the pound has given significant ground to the loonie, currently trading at 1.5965, a 32.2% loss in value over the past four years. What I would like to emphasize here is not that this downtrend is coming to an end, but rather that traders should not expect it to come to an end anytime soon. As per our technical analysis, this pair has recently touched the long-term trendline and begun its downward cycle. The Relative Strength Index (RSI) shows the price gradually cascading downward, supporting the cyclical downturn. The Stochastic (slow) also shows what could be a bearish cross above the 80 line; a solid indication of impending bearishness. As you can see below, the pair recently found a support line which has created a convergence triangle. The convergence point of this relatively new formation looks to be just barely above the 1.5500 price line, which represents our impending target. Such convergence formations have historically meant that the pair will continue its long-term trend once reached. As such, traders may want to anticipate a stronger downward movement once the 1.5500 price line is breached in the coming weeks. GBP/CAD – Weekly Chart |
| US Crude Oil Inventories Expected to Show Weak Demand Posted: 08 Feb 2011 11:00 PM PST
The EUR rebounded from a two-week low against the greenback on Tuesday after a Chinese interest rate hike fueled concerns over its growth. Additionally, demand for commodities prompted traders to unwind bets against the US currency. As for today, there are several important events coming out of the U.S. and Europe, especially the U.S Crude Oil Inventories report. These events always provide for extreme market volatility in the major currency pairs. Traders may find good opportunities to enter the market following these vital announcements. Here are today's leading events: 15:00 GMT: Fed Chairman Bernanke Testifies Federal Reserve Chairman Ben Bernanke is due to deliver a testimony on the economic outlook and monetary and fiscal policy of the United States before the House Budget Committee in Washington D.C. There is the possibility that Bernanke will comment on a number of developments in the region and hint at future Fed policies. Speculators will attempt to use those statements as a gauge of direction for the USD in the coming weeks and adjust their positions accordingly. Therefore, this testimony will likely create volatility as it gets underway. 15:30 GMT: Crude Oil Inventories Analysts are predicting today's figure to come in around 2.2M, which if true, would signal a slight drop from last week's figure of 2.6M. While this might lead some traders to believe that demand is going up in the US, and they should therefore go bullish on oil, 2.2M is still a very high figure, suggesting demand has so far failed to pick up in the world's leading oil consumer. |
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