Daily Analysis 2012-07-31

Wall Street opened the trading week on the red territory as NASDAQ shed 0.41%. Dow Jones and S&P 500 lost respectively 0.02% and 0.05% and this indicates for a slight correction to last week's rally. Investors will focus today on consumer confidence data as well on personal spending and personal income data.

EUR/JPY

The Euro is clearly overbought after the sharp rising last week. The currency made a bearish candlestick in the daily chart of EUR/USD and if it slides under yesterday's low, it will ibe an indication for a possible bearish reversal. The Yen, on the other hand, strengthened against the USD yesterday and slid under the important support at 78.25. Therefore, the pair EUR/JPY made a bearish reversal as well. The Euro got the resistance of the 20 EMA on Friday and as a result, a red candlestick appeared in the daily chart. The bullish correction helped the Euro to correct approximately 50% of the recent bearish session, which means that the pair reached proper levels for a bearish reversing. In order to resume strengthening against the Euro, the Japanese Yen will have to break down and close under yesterday's low. If it succeeds, it might strengthen to the level of 94.0 against the Euro.

AUD/JPY

The Australian dollar is currently in a middle of a strong bullish movement against the USD. After it got a strong support at 1.025, the currency rose nearly 250 pips against the USD. The Aussie is now facing the resistance at 1.05 and if it successfully breaks through, it might jump towards 1.07.

The AUD is getting stronger against most of the currencies, including the JPY. Despite the fact that the JPY is gaining power against the USD, the AUD managed to force a break up pattern on the pair's daily chart. The level of 82.35 is resisting the pair and a strong break up might trigger many automatic orders that can lift the pair towards 84.75.

AUD/NZD

We analyzed the pair a week ago and mentioned that it reached a strong resistance in the daily chart. As we expected, stochastic high levels prevented additional break up and the pair corrected down to the support of the 200 SMA. Stochastic levels still indicate for overbuying situation, which means that the bearish correction might continue. If the NZD break down the current support, the pair might fall to 1.285. However, a break up of the 3-days high at 1.30 might push the pair above the resistance at 1.3050.

Daily Analysis 2012-07-30

The financial markets received a strong incentive From the ECB press conference that changed the momentums in both Forex and stock markets. On the beginning of last week it seemed that the Euro was about to slide under 1.20 and that the S&P was going to fall to 1300 points. This was the outcome of high level of concerns regarding the Spanish debt problem. However, everything changed on Thursday as Mario Draghi impressively defended the Eurozone and said that nothing could break it down. Draghi's patriotic speech replaced the pessimism that controlled the markets with optimism and euphoria.

No one can anticipate the Eurozone's future and there is a big question mark above the ability of the ECB to pull the EU countries out of the mass. Yet, it looks like the stock markets resumed trading in uptrend mode. The S&P 500 broke through the recent pick at 1380 points and its next target is the annual high at 1422 points. Nevertheless, the results season is not over yet and may influence the markets during the following week.

EUR/USD

The Euro made first sign for a bullish correction on Wednesday and we estimated then that it would rise towards 1.2325. The currency made the expected short-squeeze and got the resistance we anticipated. The Euro rose 50% of the recent decline session and it might continue towards 1.25 if it keeps the current momentum. However, the general trend here is still bearish and investor will not rush to transfer their investments to the Euro due to the European debt problems. Therefore, this might be an opportunity to sell the Euro. If the currency closes under Friday's low, it might build the bearish reversal pattern and slide downwards to 1.2150.

The markets will focus on two main events during Thursday and Friday. On Thursday, the ECB will publish the interest rate that is expected to remain at 0.75%. On the day after, the important indicator of the Non-Farm payroll change will be published in the US.

GBP/USD

The pound acted exactly as we estimated on the previous weekly analysis. It broke the support at 1.56, slide to the support at 1.5450 and pulled back to the 200 SMA at 1.5730. According to the current pattern, the pound might turnover and slide towards the support at 1.5450. However, it seems that the pound has intentions to continue the bullish momentum. Therefore, if it manages to break through the resistance of the 200 SMA, it might surge upwards to 1.575. The interest rate will be published on Thursday by the central bank of England, 45 minutes ahead the European bid rate announcement.

USD/JPY

Draghi's speech on Thursday helped most of the major currencies to rise against the USD. However, since the Yen had a negative correlation with the US stock markets, it weakened against the American dollar. The JPY failed in breaking down the support at 78.25 and the USD will probably continue strengthening against the JPY if Wall Street continues up. A possible target for a bullish movement may be the resistance of the 200 SMA a t 79.0. The weakening of the JPY and the strengthening of the other major currencies would make it easier to trade JPY pairs (against Yen's direction). A target for a break down session might be at 77.20.

Forex Daily Analysis 2012-07-05

The holiday in the US influenced the currencies market as the low liquidity blocked some the major currencies' momentum against the USD that took advantage of the situation in order to correct some of the recent declines. Most of the traders in the US extend their vacation to the weekend and will resume to the markets just next week, and this might influence the markets as well. However, the following trading days are full with important indicators that might shakeout the markets.

EUR/USD

Currencies are changing momentums almost every several hours these days, mainly because of the low volatility. Therefore, promising patterns might lead to false-breaks and cause quick losses. This means that the technical analysis could be less accurate than usual and therefore necessary adjustments have to be made. The Euro reached a new weekly low yesterday, as the descending triangle pattern was built above the support at 1.24. A break-down of this pattern will probably take the Euro down to the annual low at 1.2287. The reason for this bearish momentum could be the markets' expectations for a lower interest rate announcement today by the European central bank. However, the ECB press conference might have a positive influence on the Euro if the investors get positive signals from the central bank. Either way, the market tend to be extremely volatile during such significant announcements and trading during the moments of the declaration includes high risk.

GBP/USD

The pound fell under Monday's low and triggered many selling orders that pulled it 100 pips down. The currency got the resistance of the downtrend line and created a triangle pattern in the daily chart. This triangle is neither descending nor ascending, which means that there is a strong conflict between the buyers and the sellers. In such cases, the technical trader has to get prepared for both scenarios of break-up and break-down. According to the current momentum, it looks like the pound is going to slide to the support of the uptrend line at 1.5520, as a strong break-down of this support might pull it down to 1.54. Nevertheless, the pound might continue moving between the triangle's edges until it breaks on of them. The official bank rate is published today in Britain, 45 minutes before the European, as a positive reaction by the investors might launch the pound towards the 200 SMA at 1.5750.

OIL

The price of the crude oil reached a psychological of $80 support last week and started correcting up since then. The sanctions against Iran's oil contributed to the speculations regarding the oil's prices and the traders took advantage of that. The oil rose 10% since last week and the weekly charts shows that the oil has risen over 20% on the last couple of times that it reached this support. This means that the current bullish correction might lift it up towards $100. However, if the oil makes the bearish reversal, successful break-down this time might pull it down to the level of $70.