Tuesday, November 2, 2010

FOREXYARD: Forex News Blog

FOREXYARD: Forex News Blog

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EUR/USD – Triangle Pattern Trade

Posted: 01 Nov 2010 08:42 AM PDT

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Volatility in the EUR/USD has fallen off and the pair has created a triangle pattern on the daily chart. The following analysis shows traders how to trade a breakout of the consolidation pattern including predefined levels for limits and stop orders.

Looking at the daily chart for the EUR/USD, an ascending triangle pattern has formed. The upper boundary begins at the height of the uptrend at 1.4157 and the lower boundary begins at the mid-October low of 1.3697. Multiple points of contact have been made with the boundary lines with the most recent coming today during the morning hours of the European trading session.

As the previous trend is up, we should expect the pair to break to the upside. A breakout higher from an ascending triangle pattern typically performs better than a breakout to the downside.

However, this rule is not set in stone and the trade can also be played in the opposite direction should the pair break below the lower boundary.

Finding a price target for the triangle pattern is relatively easy. Traders should measure the distance of the base of the triangle, approximately 450 pips. Therefore, a limit order can be placed roughly 450 pips from the price where the pair moves above or below the boundary lines.

Traders will want to be patient and wait for confirmation that the price has broken outside of the boundary lines before opening a position in any one direction. Trading inside the triangle has its risks and is not recommended.

To protect against a false breakout traders should include a protective stop. A stop to the downside can be placed below the support level at 1.3800. A stop to the upside can be placed above the resistance level of 1.4000.

EURUSD Triangle

Spot Gold – Technical Correction Might Be In Place

Posted: 01 Nov 2010 02:16 AM PDT

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For the past couple of months gold proved to be one of the most exciting trading instruments in the market. The commodity, which is considered to be quite volatile as is, has turned into a leading investment, especially due to the lack of certainty in the market, and the unstable condition of the leading economies. Gold has recently advanced to $1,365 an ounce, gaining over $40 per ounce in merely 3 days. However, several technical indicators suggest now that a bearish correction might be impending.

• The chart below is the Gold 4-hour chart by ForexYard.
• The chart shows that after a 3-days rally, gold has been range-trading around $1,360 an ounce.
• The bullish rally continued for as long as gold remained above the Bollinger Bands‘ higher boarder. Yet now, gold has dropped below the higher band, indicating that the bullish move has reached its peak.
• A bearish cross of the Slow Stochastic also suggests that gold might see a bearish correction soon.
• The RSI is pointing down at the moment. If the RSI will drop below the 70-line, it might verify that a bearish move is inevitable.
• Gold's next support levels are located at: $1,356, $1,347, $1,341 and $1,335.
• Resistant levels are: $1,365, $1,370, $1,381 and $1,386.

gold 01 11

USD/JPY Spike Raises Questions about Possible BOJ Intervention

Posted: 31 Oct 2010 07:22 PM PDT

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This week is expected to be heavy with economic news and traders will want to stay tuned with the rumblings taking place in the US and Japan over further currency interventions. Early this morning, the currencies from both countries experienced a rapid spike which quickly receded.

Some speculations have hinted at an intervention by the Bank of Japan (BOJ), but as of this morning no confirmations have been given. Traders will definitely want to keep an eye on what transpired during the Asian market hours, but may also wish to follow today's leading events.

9:30 GMT: GBP – Manufacturing PMI

Britain's Manufacturing Purchasing Manager's Index (PMI) is a leading indicator of economic health based on business conditions as seen from the perspective of purchasing managers. If this figure comes in line with expectations, or higher, the pound may experience some modest bullishness, continuing with its latest trend.

14:00 GMT: USD – ISM Manufacturing PMI

Similar to Britain's PMI figures, the US Institute of Supply Management (ISM) will be surveying American purchasing managers to gauge business conditions in the US. As with the British PMI data, if the American counterpart's figures come in line or above expectations, the USD may pare some of its recent losses, but long term pressure will likely remain constant without a significant difference.
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