Thursday, May 31, 2012

Technical analysis of Gold

The gold is trading near weekly support around 1530 dollar. During the last 3 weeks the gold reached 3 times that area and bounced back closing above 1530 level. Yesterday, gold created a daily bullish candle, suggesting that the power of bears is losing momentum while bulls seems to be determined to protect 1530 level. Today, with major news from the US, gold has a chance to gain momentum toward a bullish move. A buy order can be placed above yesterday’s high with protective SL below 1530. First strong resistance is at 21 daily MA. Another strong resistance is likely to appear around 1625 dollar.

Wednesday, May 30, 2012

USDJPY Analysis: Fade Moves Until Friday

 Spain’s banking demise has triggered a week long risk off move in the Forex markets. As would be expected, the Japanese Yen has been gaining overall on its safe haven status. While the moves in Yen crosses such as the EURJPY and GBPJPY may continue to have follow-through downward momentum, the USDJPY could be a bounce candidate. As can be seen in the chart below, the USDJPY is dropping out of its two week long triangle formation. While such moves can often trigger a sustained breakout move in the direction that a Forex pair trades out of the triangle, fundamental news could hamper the technical moves in the USDJPY.

Friday, May 25, 2012

CNBC "Stocks Unloved," Is it Time to Buy?

When the mass media gets overly optimistic or pessimistic about the stock market, its usually a good contrarian sign that things will turnaround soon.  Traders have even coined the phrase “Magazine Cover Indicator” about the phenomenon.  The most famous case was the 1979 BusinessWeek magazine with the cover title of “The Death of Equities.”  The timing of the article was just as US stocks hit their lows and went on to rally for the next 20 years.

Thursday, May 24, 2012

How can we trade the bearish divergence in the GBP/NZD?

The GBP/NZD reached a daily resistance around 2.1038 level. The technical indicators, like the daily RSI, are showing a clear overbought area. But the fact that pair created a daily Macd divergence during the last trading sessions is a possible sign to a correction. Therefore any attempt to break the resistance will be dangerous to trade on the long side. So, how can we trade the bearish divergence in the GBP/NZD? One of the main keys to success in trading is patience. Wait for the pair to retest the resistance’ then we’ll look for 2 things. One, the slope of the Macd histogram should be lower than the previous day. The Second sign that we will look for will be a bearish candle on the daily chart closing below 2.1038. If this scenario will fulfill, then the entry point to a short position will be below daily low. SL should be place above daily high and TP could be place near the support level at 2.0600.

Tuesday, May 22, 2012

GBPUSD Analysis: CPI & Fibonaccis

UKCPI Figures are slated to be released today with the Bank of England than holding its Inflation Report shortly afterwards.  With the GBPUSD falling below 1.6000 support to a low of 1.5725 last week we decided to take a closer look on potential moves the pair could make following the figures.

Friday, May 18, 2012

Facebook IPO, Can They Copy Amazon?

Its not Forex, or CFDs, but with the rise of interest from clients and friends about the Facebook IPO, CM Trading figured it would throw its two cents on the IPO..

From day one of Facebook’s IPO process, the emphasis has always been about how they will monetize mobile.  Specifically, how can they get away with increasing ads without alienating their users. From much of the company’s rhetoric though, it has seemed that they aren’t in much of a hurry to really push the mobile ad revenue stream as it goes against Mark Zuckerberg’s vision of being a company that is about its users first.  It was also stated as such in their latest S-1 filing where they presented the conflict of increased ads with their company culture.  As such, investors banking on the chances of suddenly seeing popup ads every time they check Facebook on their I-Phone will most likely be disappointed.  (While we are mentioning mobile devices and the I-Phone, for a pure play on riding mobile growth, shares of Apple continue to look much more appealing than Facebook).  However, that doesn’t mean that Facebook shares will be dead in the water either.

Thursday, May 17, 2012

Will Gold Find a Floor? UBS Comments

Things keep getting worse for prices of Gold lately.  The precious metal is currently in one of those “perfect storm” moments where it is unable to flex either its Safe Haven status muscles or catch a break as a commodity. This is being seen as recent news from Greece and the EU of further financial crisis was unable to lift prices of Gold.  In fact, the opposite was true as prices of Gold fell below its 1630 support levels last week and traded side by side lower with the falling Euro.  Similarly, the metal was unable to gain on the weekend news that China reduced its Reserve Requirement Ration by 0.5% to stimulate domestic demand.

Tuesday, May 15, 2012

Is gold worth buying?

Gold is reaching major support area around 1530. The support is from 26 of September low and 29 of December low. On a shorter time frame (H4 charts), there is a bullish divergence of the MACD indicator. The divergence is signal to a turning point in the price of gold. A buy order can be placed above 1560 with SL below daily low at 1547.90. The first target will be 1575 level and final target for a bullish move will be the resistance area around 1625. If this trade fails, look to buy again around that level when the right setup is created.

Monday, May 14, 2012

Forex Traders Rotating Towards the GBP

In Forex trading they like to say that for every winner there is a loser.  Currently, the UK Pound appears to be one of the big winners at the Euro’s expense.  At 0.7982, the EURGBP has traded to its lowest levels since 2008.  Even against the US dollar, the GBPUSD has bucked the overall safe haven buying trend of May, as the pair has formed solid support just above 1.6000.

Friday, May 11, 2012

USD / JPY Daily technical analysis:

The usd/jpy has reached a critical support area around 79.50. The pair is creating a bullish divergence on the MACD Histogram indicator, suggesting a coming up move. Just to make it clear, a divergence is when prices are going in the opposite direction of an indicator (see daily chart). On the weekly chart we can see a Doji candlestick closing above the 21 MA. Now, if the weekly session will close like this, a break of weekly high will trigger a bullish move. The target for this move will be, first 80.55 and finally 81.75. Therefore, watch for the closing of the weekly candle, and if this scenario will happen SL should be placed below 79.40.

EURUSD Analysis

 With the EURUSD squarely falling below its 1.3000 support base, the next move for Forex traders is debating how far down it could go.  What seems to be unanimous is that technical are clearly against the EURUSD at this point, and barring a move back above 1.3000, and creating another base at that level, conditions favor the short side.

Thursday, May 10, 2012

Did the GBP complete the correction?

The GBP was one of the strongest currencies during last weeks. The pair reached 1.63 but failed to continue the up move and eventually started a technical correction. The pair dipped yesterday to a medium term support level around 1.6060. The support is from 02/04 daily high combined with 50% Fibonacci retracement to the up move starting from 1.5818 to 1.6300. On intraday charts we are seeing a clear channel. A break of the channel, confirmed by technical indicators, could define if the correction is over or open the door to a deeper down move to the strong support level around 1.60.

Wednesday, May 9, 2012

Will the greenback is about to lose momentum or…

The answer to that could be in the technical analysis of USD/CAD.

The USD/CAD is reaching a strong resistance around 1.0050 level. The level can be spot on the weekly and daily charts. The technical indicators favor further momentum for the dollar. On the weekly chart there is a possible break of the RSI 50 level with MACD shifting to positive territory and stochastic pointing up. On the daily graph, the indicators are positive too and have a way to go up. On the other hand, upper Bollinger band gives additional resistance around 1.0050 area.

Possible EURGBP Short Trade

The EURGBP is back near Monday's lows.  With the GBPUSD holding steadily above 1.6100 and the EURUSD falling back below 1.3000 this morning, the EURGBP looks set to keep moving lower.  A possible play would be to short the EURGBP at current levels of 0.8040, with a target of 0.8000.  Also, rather than entering a standard stop loss, this short can be exited if the EURUSD trades back above 1.3000 and reestablishes support.  

USDJPY Is the Next Move to 79.00?

I keep staring at this USDJPY chart. Demand is there at 79.60, but.... Gold had support at 1630; broken yesterday.  EURUSD at 1.3000, broken Monday. Is the USDJPY the next one to drop? Risk/reward wise probably not the best idea to short now on anticipation of a move lower (this pair can be very stubborn), but the technicals are showing selling pressure becoming more aggressive.  Therefore, could be a downside breakout candidate if it trades below 79.55. 

Tuesday, May 8, 2012


EURUSD: Bounced off its lows yesterday as buyers stepped in bid the EURUSD back above 1.3000.  However, the pair failed to close its gap from yesterday’s close.  This sets ups resistance going forward this week at 1.3065, followed by 1.3085.  With the lack of follow through buying to close the gap, it could trigger profit taking from yesterday’s short term buyers.  Forex traders should keep their eyes on the 1.3000 level to see if it continues to be supported.

Are you a Gold Bug? Jim Rogers and David Einhorn Are

Are you a gold bug? Views on whether to be in or out of gold are always a hotly contested subject.  Currently though, for of the happenings in the EU, on again off again US QE3 reports, Chinese slowdown, and BoJ intervention, Gold hasn’t done much of anything in the past few months.  Overall, since mid February, the precious metal has traded mostly between 1630 and 1690.  This lack of direction in Gold has caused an increase of chatter of what will be the next move.

Monday, May 7, 2012

Forex Techncial Analysis

EURUSD: Opened the week below 1.3000 on weekend election results in the EU.  Momentum for the rest of the week could be contingent on where we close today; above or below 1.3000.  As the chart below shows, the pair has been in a 4 month trading range between 1.3000 and 1.3500.  Therefore, even with the current Euro weakness, the pair may need to see much more selling pressure to bring the EURUSD out of its range.  

Friday, May 4, 2012

ECB Meeting Review

Going into Thursday’s ECM Interest Rate Meeting, our thought were that no matter what the results of the meeting, it could have either a positive or negative effect on the Euro.  Our theory was that a rate cut, although it would probably lead to initial Euro weakness could be ultimately seen positively.  The idea being that Forex traders would prefer seeing the ECB being proactive.  On the other hand, if the ECB stayed pat, it could be seen as raising more doubts towards the EU’s financial crisis and lead to a weaker Euro, even though such interest rate news is usually currency bullish.

NZDUSD & DJIA Analysis

As discussed two days ago, the kiwi went out the trading range by breaking the 0.81 level. The break is confirmed by the weekly RSI that broke the 50 level. Looking on the weekly chart, there is also a clear brake of the 21 week MA. The move came with the release of the unemployment rate. Next support area is around 0.7965, at 50% Fibonacci retracement of the last up move from 0.7460 – 0.8470. The theoretical target is around 0.7885.

Thursday, May 3, 2012

Forex Technical Analysis

EURUSD: Fell apart yesterday but has since found rising support above 1.3100 (see chart).  Looking ahead, its all about “will it or won’t it” be able to cross above its current 1.3170 resistance.  A break above could trigger momentum to the 1.3200 figure. However, after failing to trade above yesterday’s bounce high this morning, the pair is vulnerable to additional selling pressure if its support breaks. Important: Keep an eye out for today’s ECB meeting as it could be a catalyst to a breakout higher or lower.

Wednesday, May 2, 2012

EURUSD Technical Analysis

The Euro is extremely weak against the US Dollar today. The pair broke 2 daily lows around 1.3205 and a rising trend line on the 4 hour chart. The brake is confirmed by the indicators. Daily Stochastic show a clear cross down and 4H RSI crossed the 50 level. Current support is around 1.3155 (21 days MA). This clear brake could open the door to a move all the way down to 1.30 support area. If retested again, 1.32 level can be an aggressive entry point to a medium term down move. Protective SL should be placed above the last high around 1.3280. Note that tomorrow ECB will announce his rate decision, and after the surprise from Australian Central Bank, anything can happen.

Tuesday, May 1, 2012

NZDUSD Analysis

The kiwi is still trading in a range among 0.81 - 0.8285. Watch for a break of this channel that couldlead to a 200 pips move. Major economic news for the NZD/USD this week will be unemployment rate and of course NFP on Friday. Each one of the news mentioned has the potential to trigger a break.

AUDUSD Sinks on RBA Cut

The Reserve Bank of Australia laid an egg on the Australian Dollar this morning after it surprised Forex traders and lowered its interest rates at its current MPC Meeting.  The 0.25% cut to 3.75% marks two months in a row of interest rate cuts and signals a message to traders that the RBA’s global economic outlook isn’t that rosy.  Even as the US continues to be humming along with its slow but steady growth, and the UK’s Bank of England signaled possible monetary tightening,  we are seeing BRIC countries continually warning about the future.