FOREXYARD: Forex News Blog

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• Silver Corrects Gains, Might Fall To $35.0 an Ounce
• Canadian Economic Recovery Beating Out Forecasts
• Technical Tip – AUD/USD Bullish Flag Pattern
• Commodities Look to Book Further Gains this Week
• Bearish Move Predicted for EUR/CAD
• Crude Oil Rally to Continue; Gold Rebounds to $1,437 an Ounce

Silver Corrects Gains, Might Fall To $35.0 an Ounce Posted: 07 Mar 2011 09:55 AM PST After going through an extraordinary bullish trend, silver prices have begun to show downward corrections as of today, dropping almost 100 pips. Silver peaked today at an all-time record high of $36.72, however, once American equity markets have opened, a bearish correction took place, pushing silver to as low as the $35.87 level. • The chart below is the spot-silver 2-hour chart by ForexYard. • Silver has climbed rather steadily over the past couple of weeks, gaining from $31.65 an ounce to the $36.72 level. • Nevertheless, it is clear to see that the bullish channel has been breached today after the commodity fell below $36.30 an ounce. • In addition, a bearish cross of the Slow Stochastic is signaling that the bearish correction has more steam in it. • The RSI has recently fell below the 70-line – which usually indicates a trend shift. This indicates that the bearish correction may be a relatively long-lasting move. • The MACD looks about to complete a bearish cross as well. If the bearish cross will indeed take place, it will probably validate that the bearish move has more room to go. • The next support levels are located at the $35.85, $35.50 and $35.00 levels. • The next resistance levels are at: $36.30, $36.75 and $37.00.

Canadian Economic Recovery Beating Out Forecasts Posted: 07 Mar 2011 06:00 AM PST The release of a 3.3% growth in Canada's GDP for Q4, 2010, appears to show moderate strength returning to Canada's economy, above what was previously expected. A surge in exports due to increased economic activity in the United States, as well as heightened global demand for industrial metals and crude oil, has helped support Canadian economic growth. High oil prices are also feeding a strong uptick in the Canadian dollar (CAD). The USD/CAD pushed below its 23.6% Fibonacci level (weekly chart), its lowest price since Feb. 2008. This descent well below parity has helped boost Canada's buying power in world markets, but will eventually gouge its exports. For the time being, Canada is reaping the benefits of healthy growth. USD/CAD – Weekly Chart The Loonie's pairing against other currencies, however, reveals not only healthy growth, but stability. Versus the Japanese yen and Swiss franc, two global safe-havens, the CAD has found solid support from its 23.6% Fib level and is trading in its most stable range between this line and the 38.2% resistance level. This has granted Canada a relative advantage against these two financial powerhouses and further enhanced its economic foundation. CAD/JPY – Weekly Chart CAD/CHF – Weekly Chart A number of economists have expressed recent concern for this surge in economic growth, however. This is because Canadian exports will begin to confront challenges brought on by its doggedly-persistent currency growth and seemingly-weaker output in industrial production. Though this sentiment weighs on speculation, three other forces strongly support the recent boom in Canadian optimism. The first is export growth, which was at its highest growth level in over six years. The second is consumer spending which has been increasing beyond forecasts over the past twelve months, with the exception of last month's 0.1% lower-than-forecast figure. The third is inflation which remains at or above desired levels, according to the Bank of Canada (BOC). Analysts appear unanimous in the judgment that Canada's recovery is confirmed and running ahead of forecasts. However, many have conditioned this judgment with a concern that the Loonie's surging growth rate may hinder exports over the next two quarters. And, as expressed above, the relatively lower output in Canada's industrial sector has raised flags among many investors. Nevertheless, the CAD appears to be a solid investment over the next several months.

Technical Tip – AUD/USD Bullish Flag Pattern Posted: 07 Mar 2011 05:25 AM PST The Aussie dollar looks set to move higher as the AUD/USD has formed a bullish flag pattern. Following the rise to last week's high at 1.0184 from 1.000, the AUD/USD has consolidated its gains in the form of a bullish flag pattern. This afternoon the pair made an attempt to break out of the pattern but failed to build on the momentum and retreated back inside the consolidation area. Traders should be looking to go long on the AUD/USD following a confirmation of the breakout above the 1.0200 level. An estimate from the chart pattern suggests a two cent move on the breakout which would set the target at roughly 1.0370. This is above the all-time high of 1.0255 which will serve as a resistance level on the way higher. In case of a false breakout, a protective stop should be placed inside the flag pattern near the 1.0140 level. This trade setup allows for a decent profit to risk ratio of 2.83. Support for the AUD/USD is found at Friday's low of 1.0070. The lower line of the flag pattern should also prove to be supportive. Below this lies the support of 0.9960.

Commodities Look to Book Further Gains this Week Posted: 07 Mar 2011 01:29 AM PST Record commodity prices have been a sharp reminder of how uprisings in the Middle East are playing out in the commodity markets. Currently crude oil, gold, and silver all stand at their 2011 highs. Violence continues in Libya with an all-out civil war being fought in the streets as rebel groups are confronted by Libyan security forces loyal to Col. Muammar el-Qaddafi. Reports of government forces using helicopters, and tanks backed by air support have raised the level of violence in the region. Rebel leaders have since confirmed their commitment to upholding the previous regime's oil contractual obligations. In Yemen, a reported 200,000 protestors demonstrated on Friday, requesting for President Saleh to resign. In Saudi Arabia, a day of rage has been planned but the calls for protests have been met by sharp comments from government officials. Officially the government has banned all protests have said any attempts to gather and protest will be dispersed by security forces. The instability of some of the largest oil producing nations has caused a spike in not only spot crude oil prices but also in gold and silver as well. These events appear to be prolonged and will continue to pressure commodity prices higher on the instability in the region. Spot crude oil prices have spiked and have since moved above a key retracement level. Last week's close was above the 61.8% Fibonacci retracement at $103.75 from the collapse in crude oil prices in 2008. As such, new targets for spot crude oil prices may be found at the $110 level and $122. Gold continues to make new highs with the price action in February displaying a sharp rising trend that has eclipsed the recent consolidation pattern from late October to early February. Last week's close above the previous all-time high of $1,431 hints at further gains for the commodity. Support comes in at $1,431 and $1,392, as well as the range between the mid February highs and the mid-December low between $1,367 and $1,360. Earlier today spot silver pushed to a new all-time high above the $36 level and looks to continue to rise. A strong trading session on Friday led to the weekly candlestick closing as a shaved head, indicating momentum is to the upside. Any move lower in the commodity could fall to $34.30, with further support locate in a range between $31.60 and the January high of 31.20.

Bearish Move Predicted for EUR/CAD Posted: 07 Mar 2011 12:53 AM PST The euro has seen significant upward movement against its Canadian counterpart over the last several months. The EUR/CAD pair, currently trading just above the 1.3580 price line, has gone up over 800 pips since January. Technical indicators are now showing that the pair is due for a downward correction, providing forex traders an excellent opportunity to open up short positions at a great entry price. We will be analyzing the EUR/CAD 8-hour chart, provided by ForexYard. The technical indicators being examined are the Stochastic Slow, Williams Percent Range and Relative Strength Index. 1. A bearish cross has formed on the Slow Stochastic, indicating that a downward correction may be forthcoming in the near future. 2. The Williams Percent Range, currently right around the -15 level, has entered overbought territory and is pointing down. Traders can take this as a clear sign that a bearish move is likely to occur. 3. Finally, the Relative Strength Index has crossed the upper resistance line and is currently at the 80 level. This lends further evidence to our original claim that a downward correction will occur in the near future. EUR/CAD – 8-Hour Chart

Crude Oil Rally to Continue; Gold Rebounds to $1,437 an Ounce Posted: 06 Mar 2011 11:29 PM PST It is now safe to say that the past month's most lucrative investment has been crude oil. Traders that opened a long position for oil on February 16th bought it at around $85 a barrel. If they kept the position open, they can now sell it at over $106 a barrel, marking a 24% profit in merely three weeks. The reasons for the massive bullish trend are widely known; first there is the unrest in the Middle East. The protest which was initiated in Tunisia continued to Egypt and eventually reached the oil producing nation of Libya. The fighting between the Libyan rebels and troops loyal to Muammar Qaddafi continues, and for now Libya has cut output by as much as 1 million barrels a day. If this were not enough, U.S. employment reports released on Friday have shown that the labor market in the U.S. is finally recovering. The economy added 192,000 jobs last month, with 222,000 in job gains from private employers. In addition, the unemployment rate declined to 8.9 percent, the lowest since April 2009. The positive data has boosted speculation that demand for energy in the U.S. will increase as well, and thus providing another excuse for oil prices to soar. Another "winner" of the recent events is gold. In times of uncertainty, gold is traditionally boosted as an alternative investment. Since January 28th gold climbed from $1,320 an ounce to its current price of around $1,435. Here are today's leading news events: • 12:00 GMT, European Central Bank President Trichet Speaks – Trichet has already hinted last week that the ECB will hike interest rates in April. If Trichet once again refers to a rate hike, the market is likely to respond with higher demand for the euro. • 13:30 GMT, Canadian Building Permits – This report measures the change in the total value of new building permits issued during January. If the end result will beat projections for a 1.8% increase, the CAD is likely to strengthen against its major currency rivals.

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