FOREXYARD: Forex News Blog

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• USD/CHF Testing Strong Support Level
• Rounding Bottom Pattern Suggests Gold Will Hit $1,420
• Pound and Euro Gain on Increased Interest Rate Expectations
• USD/CHF-Technical Update
• Swiss Franc Benefits from Safe Haven Buying
• Nasdaq 100 May Rebound Today
• USD Likely In Store for a Bearish Day
• Global Unrest Sends Silver and Crude Oil Higher; Volatility Expected to Continue

USD/CHF Testing Strong Support Level Posted: 23 Feb 2011 09:24 AM PST The USD/CHF pair has resumed a downtrend recently, and is currently trading near the 0.9325 level. The pair saw several failed attempts to cross the 0.9300 level over the past couple of months. Now it seems that the strong bearish momentum will take the pair below the support level, which could reenergize the bearish trend. • The chart below is the USD/CHF 1-day chart by ForexYard. • The bearish channel which is currently forming on the chart can be easily detected. The channel began once the pair was trading near the 0.9750 level, and includes a 400 pip slide from the past couple of weeks. • The Slow Stochastic has just completed a double bearish cross, indicating that the downward momentum is still strong. • The MACD has completed a bearish cross as well recently, also signaling that the pair is likely to drop further. • In addition, the RSI is about to fall below the 30 line. If the RSI will indeed slip below the 30 line it will provide yet another sign that the bearish momentum has more room to go. • The pair is currently approaching a very significant support level, placed at the 0.9300 rate. • If the pair will manage to drop below the support level, another sharp bearish move is likely to take place as a result. • The next support levels are located at 0.9300, 0.9260, and 0.9200. • The next resistance levels are at: 0.9340, 0.9370 and 0.9390.

Rounding Bottom Pattern Suggests Gold Will Hit $1,420 Posted: 23 Feb 2011 06:11 AM PST Following the protests in the Middle East during the past month, demand for gold as an alternative investment is reaching new highs. As a result, gold climbed from $1,307 an ounce to the $1,410 level in about four weeks. Due to a mild correction, gold is now trading at $1,402 an ounce, however, what seems to be a rounding bottom pattern in the making indicates that gold might cross the $1,410 level shortly. • The chart below is the spot gold 2-hour chart by ForexYard. • There is a very distinct bullish channel formed on the chart, which has reached its peak a couple of days ago, at the $1,410 level. • The Slow Stochastic continues to point up, despite its high location – above the 80-line. This clearly indicates that the bullish momentum has more steam in it. • The MACD is on the verge of completing a bullish cross. If the bullish cross will indeed take place, this may verify the bullish notion. • In addition, a rounding bottom pattern appears to be forming on the chart (highlighted in the blue line). This pattern means that gold is likely to climb back towards the $1,410 level. • The pattern also indicates that gold has potential to cross the $1,410 resistance level, with potential to reach $1,420 an ounce. • The next resistance levels are located at $1,410, $1,420 and $1,431. • The next support levels are at: $1,394, $1387 and $1,375.

Pound and Euro Gain on Increased Interest Rate Expectations Posted: 23 Feb 2011 05:14 AM PST Both the pound and the euro were trading higher in today's morning trade after the release of the Bank of England Monetary Policy Committee meeting minutes showed additional support for a BOE interest rate hike. Market volatility was noticeably lower as opposed to yesterday's large price swings as traders continue to absorb geopolitical events in both the Middle East and in New Zealand. Today the BOE MPC meeting minutes showed BOE Chief Economist Dale Sentence joined in support of an interest rate hike during the last MPC meeting. This brings the number BOE MPC members who are in favor of an interest rate hike up to 3. The market is currently pricing in expectations for an interest rate increase in May. Upon the release of the voting results the GBP/USD rose to a high of 1.6270. The Cable has been capped by a narrowing range that has held since January 2009. A breach above this level would initially target the mid-January high of 1.6450. Support is found at yesterday's low at 1.6000. Yesterday ECB members Yves Mersch and Nout Wellink both commented on the need for interest rate hikes in the European Union to fight rising inflation and for a return to the normalization of monetary policy. These comments have provided support for the euro versus the dollar. Interest rate futures have also began to price in a rate increase, moving up expectations for a rate increase to the ECB's August 4th meeting from September. Currently the EUR/USD is testing the 1.3750 resistance level and looks to move higher. The 50-day moving average line is crossing above the slower moving 100-day moving average which hints at further moves higher for the pair. Resistance is the February high of 1.3860. Support comes in at 1.3540 off of the rising trend line from the mid-February low. Both ECB President Jean-Claude Trichet and outgoing Bundesbank President Axel Weber will be speaking this afternoon. European central bankers have given a number of hawkish speeches lately and Trichet may try to talk down the inflationary pressures in the EU and the market's increasing expectations for an interest rate hike. US existing home sales are also due up at 15:00 GMT.

USD/CHF-Technical Update Posted: 23 Feb 2011 02:37 AM PST A bearish movement of the USD/CHF cross hasn't received much support as of late. Below, I will demonstrate that the USD/CHF pair has already commenced an upward trend for today, as a bullish cross has taken place on the Slow Stochastic and MACD. In addition, the Williams Percent Range indicates that the price of this cross currently floats in the oversold territory, signaling up pressure. Traders are strongly advised to take advantage of the trend at an early stage. Therefore, why not open long positions at an excellent price? The next resistance level is located at the 0.9430 level.

Swiss Franc Benefits from Safe Haven Buying Posted: 23 Feb 2011 02:36 AM PST Rising geopolitical tensions across the globe have directed safe haven flows into the Swiss franc. The past two weeks have brought increased risk aversion to the financial markets due political unrest in the Middle East which has turned into violent clashes and all out civil war in Libya. Continued protests in Bahrain and Iran threaten stability while at the same time two Iranian naval vessels have passed through the Suez Canal, provoking regional tensions. These events have had not only a psychological impact on the improving global economy, but have caused market players to act accordingly. Oil prices have been sent higher and equities have slumped, as have higher yielding currencies such as the Australian dollar In a search for safe haven assets, traders have moved out of riskier, higher yielding securities. One of the main beneficiaries of these inflows has been the Swiss franc. Since February 11th, the franc has booked significant gains versus both the dollar and the euro. The turnaround in both the USD/CHF and the EUR/CHF has come at significant technical levels. The downward movement of the USD/CHF began as the pair made a double top reversal pattern at a price of 0.9770, a price level that coincides with a 61.8% Fibonacci retracement of the December move lower. The pair is now encroaching on significant support levels. The early February low of 0.9330 and the December 31st low of 0.9300 stand out. Looking at the EUR/CHF, the downtrend resumed as the pair failed to move above the 200-day moving average at 1.3200. Since this failure, the pair has since retraced 50% of the January to February move at 1.2800. Support in the downtrend is found at the early January high of 1.2720 with further support at the swing low on the daily chart at 1.2400. Should the geopolitical events continue to unrest financial markets, the Swiss franc will be a significant benefactor in the search for safe haven bids.

Nasdaq 100 May Rebound Today Posted: 22 Feb 2011 11:55 PM PST Nasdaq 100 Index is once again dropping, and it is currently traded around 2324.25. However, there is much technical data that supports a bullish move for today as described below. Forex traders have the opportunity to wait for the upward breach on the hourlies and go long in order to ride out the impending wave. • The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI) and MACD. • Point 1: The Slow Stochastic shows a fresh bullish cross which may indicate an impending bullish movement. • Point 2: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the oversold territory, signaling upward pressure. • Point 3: The MACD indicates an impending bullish cross, which may signal an upward movement is going to occur in the near future. • The volatile downward movement which occurred prior to this upward correction has generated these indicators, and there appears to be room for this correction to continue. Nasdaq 100 4-Hour Chart

USD Likely In Store for a Bearish Day Posted: 22 Feb 2011 11:29 PM PST Following the bearish turn the US dollar took in overnight trading, traders can expect this trend to continue today as significant news from the UK and US promise to inject volatility into the marketplace. Here is a roundup of the day’s main news events: 09:30 GMT- GBP MPC Meeting Minutes Today’s meeting minutes from the UK Monetary Policy Committee are forecasted to reflect the ongoing debate in the MPC regarding British interest rates. As of late, there has been an increase in support for an interest rate hike. While the MPC is not expected to vote to raise interest rates today, investors are likely to shift their assets to sterling if they feel that a hike could occur in the near future. Any indication from the meeting minutes that an interest rate hike could occur in the near future is likely to benefit the GBP. 15:00 GMT-USD Existing Home Sales Over the last few months, the Existing Home Sales figure has been steadily increasing in the US. The trend has been reflecting the overall growth in the US economy, which has largely benefited the dollar. Today, analysts are predicting the home sales figure to come in slightly below last month’s figure of 5.28M. If true, the dollar may turn bearish as investors are likely to view the figure as a sign that the US economic recovery is beginning to slow down.

Global Unrest Sends Silver and Crude Oil Higher; Volatility Expected to Continue Posted: 22 Feb 2011 01:21 PM PST The geopolitical landscape will continue to make for volatile trading conditions in most major asset classes. Commodities are up sharply on Middle East violence and the Kiwi was down following a 6.3 earthquake in New Zealand. Equities were also lower. Tomorrow's speeches by European Central Bankers and Middle East protests should build on today's increased volatility. The violence in Libya continues with the Gadhafi regime reportedly attacking protesters with tanks, helicopters, and hired foreign mercenaries. Protests continue in Iran and Bahrain as well. This unrest has spread to the commodity markets with both spot crude oil and silver pushing to new highs. The New Zealand dollar was down sharply after an earthquake struck in the nation's second largest city. The NZD/USD has fallen below the 0.7500 support line to a low of 0.7455. Further declines may be in store for the Kiwi. Support looks to be near the 0.7350 level. These geopolitical events will continue to press traders tomorrow as well as a news heavy day. Crude oil should once again be supported by the protests and violence in the Middle East. The $100 price level seems well within reach this week. Silver also may push past its new high of $33.47. The Bank of England Monetary Policy Minutes is expected to show further support from committee members for an interest rate hike and should prove to be supportive of the pound. Initial resistance for the GBP/USD is found at 1.6280. 1.6450 may also come into play. Support is 1.6075 followed by 1.5960. Both ECB President Jean-Claude Trichet and outgoing Bundesbank President Axel Weber will be speaking tomorrow. European central bankers have given a number of hawkish speeches lately. Trichet may try to talk down the inflationary pressures in the EU and the market's increasing expectations for an interest rate hike. EUR/USD resistance is this week's high at 1.3710 followed by the February high of 1.3860. Support is today's low of 1.3520. A move below this level would target the February low of 1.3430.

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