Tuesday, February 21, 2012

Daily Analysis 2012-02-22

The US stock markets opened the trading week on the red territory as the S&P 500 once again touched the 3-years high, around 1370 points. The stocks started the day strong but started losing altitude after couple of hours. The pattern of strong opening and weak closing has repeating itself for several days, and each time the investors believe that the weak closing would start the expected correction, but the day after starts with a gap-up, so the stocks might continue rising even today in spite of the bearish session yesterday.
EUR/USD
The EUR reached the target we set on the Weekly analysis and completed the "cup & handle" pattern under the resistance at 1.33. In spite the uncertainty in the Greece situation, the European currency keeps rising, though a negative momentum in the US stock markets might support the USD and weaken the Euro. If the pair breaks-through the resistance, the price might jump to 1.35. Nevertheless, the resistance at 1.33 might be too strong now and the pair might correct downwards to 1.31 if it slides under yesterday's low.
GOLD
The gold made the classic bullish reversal pattern and the trade-idea that we brought up on Friday works exactly according to the plan. The idea was to but the gold in case it would break through $1740 and take the profit at the pick of $1765. Many amateurs are waiting for the gold to break-through the "inverted head & shoulders" pattern at $1765, but those who implemented the trade-idea could take profit when the amateurs plan to enter the market. A successful break-up of this pattern might take the gold's price above $1800, though it is much more dangerous to buy the precious metal in such extreme levels.
An interesting point about the "head & shoulders" pattern is that some technical analysis experts claim that the potential of a break-up of the pattern is the distance between the "head" and the "neck.  In this case, it would be the distance between $1600 and $1765, which means that according to this approach the gold might jump above $1900, but this is obviously does not necessary correct.
Silver
The silver follows the gold in the strong momentum of the precious metal. On Friday's analysis, we mentioned that the level of $34 was an important resistance that the silver had to break in order to resume risings. Yesterday, the silver strongly broke this level and it is approaching the first target we set at the 200 SMA, just below $35. Additional break-up of the 200 SMA might take the silver to the 5-months high at $35.65.

Risk Disclosure
Trading and the execution of transactions in currencies, commodities,CFD  indexes and other financial products with or without using  high financial leverage, is speculative trading of high risk and may cause substantial gain or loss proportional to the size of the collateral, up to the total loss of the collateral sum in a very short period. The fluctuation of the prices and rates in the currency markets, commodities, CFD ,indexes and other  financial derivatives are often volatile and there is no accurate   forecasting as per the size of the change, its direction and the time frame in which it occurs.You must consider carefully and seriously if this type of financial activity fits your needs, your financial resources and personal circumstances. Since the risk of losing some of the invested funds or all the funds in a relative short period is high; it is recommended that you use for that purpose funds which you designated for speculative financial transactions of high risk.
 You acknowledge and fully understand that there may be more and other risks which are not detailed or not cotained above

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