Breakout: The 4H EUR/GBP chart shows a market that is extending a breakout above a consolidation range roughly between 0.84 and 0.8515. The market is not trending, as reflected by the relatively flat moving averages in the 4H chart. The bullish outlook should probably be limited at the moment to

Read more….

Ascending triangle, bullish biases: USD/CHF has been bullish in May, but since it found resistance around 0.9750 it has been forming an ascending triangle. This congestion pattern reflects a market consolidating with bullish bias. The RSI has held above 40 after tagging 70 and also shows maintenance of bullish momentum.

Read more….

The dollar is back in the ascendency today as we lead up to the key event that ALL eyes will be on: Fed chairman Bernanke’s testimony to Congress at 1500 BST/ 1000 ET. USDJPY is close to the top of its range at 103.30, while the dollar index has also

Read more….

On Tuesday Dollar/Yen traded within 75 pip range. The currency couple appreciated from 102.11 to 102.89 yesterday, matching the positive money flow sentiment at nearly +7%, closing the day at 102.42. This morning the Dollar lifted slightly further against the Yen, reaching 103.00.

Read more….

1.29 resistance: The EUR/USD rallied from just below 1.28 up to 1.29 by the 5/21 Asian session. After several failed attempts it fell and tested the “central pivot area” 1.2840-1.2850. Although the market has stalled, it remains bearish. A break above 1.2940 might be needed to establish a bottom an

Read more….

Lower UK inflation: The April inflation data for the UK came in at an annual rate of 2.4%, which was lower than forecast of 2.6% and was much lower than March’s 2.4%. The GBP weakened across the board and the EUR/GBP rallied sharply. The 1H EUR/GBP chart shows the reaction

Read more….

Resistance: The GBP/USD rallied to about 1.5275 during the 5/20 session. There was a local resistance pivot and was coincident with a projected falling trendline. The USD gained overnight during the 5/21 Asian/European session. The pound lead the way falling against the strengthening greenback as GBP/USD made new lows below

Read more….

The bias here is positive above 1.2840-50 support area and I favor a rise towards 1.2940 and 1.3020. Crucial on the downside is 1.2840 and initial minor resistance is projected at 1.2900.

Read more….

By Michael Trinkle, ForexTraders

If there is one thing that traders appreciate, it would have to be repetition. The world of technical analysis is built upon repeating cycles and patterns, the primary strategy that provides a clue as to what might transpire in the near-term future. As soon as repetition is recognized, however, you must act quickly. Once the herd takes notice, it is time to move on, since their pounding hooves will dampen even the strongest impulses of the market to repeat itself. Strategies lose their power when everyone tries the same thing.

Ever since the European debt crisis burst upon the scene in its full glory back in May of 2010, the Euro has been on a rollercoaster ride that refuses to quit. The fear of an expanding crisis drives the valuation down, while any hint that a solution might be at hand drives the value back up again. This tragedy, comedy, or whatever descriptor you wish to attach to the situation has been locked in a repeating cycle for three years, reminiscent of that hilarious movie “Groundhog Day”.

Veteran traders often counsel beginners to avoid the bad habit of trying to pick reversal points in the market. “Make the trend your friend” is the intuitive advice given. In other words, prepare for a reversal or breakout by recognizing the signals, and once the market confirms your interpretation, go for it. For the past few years, the Euro has fallen sharply during the summer months, and this summer portends to be more repetition on the way. Let’s take a detailed look at a weekly chart for the “EUR/USD” currency pair:

Another piece of veteran advice for traders is to step back and review a long timeframe chart to make sense of the long-term trends at play. In this case, we have chosen a weekly chart that includes 2011 to the present day. Fibonacci lines have been added for the major downward move that occurred over the period, with additional annotations to provide further guidance.

The rollercoaster nature of the Euro pricing behavior is apparent. The previous summer drops in 2011 and 2012 are noted by the blue boxes “1” and “2”, and 2013 seems headed in the same direction at this stage. Here are a few more brief observations of a technical nature regarding the Euro’s travails:

• The general trend over the period is in the downward direction, as suggested by the 100-Week EMA (the gradually curving red line in the middle of the chart);
• The Average True Range (ATR) indicator also indicates a downward trend, as volatility has diminished. Officials in Europe have approached each crisis quickly and developed a temporary fix, but the market yearns for a solution that will actually produce sustained GDP growth in the region. The EU has been in recession for the last three quarters of 2012, and data for the first quarter is due out shortly. A negative 0.1% is the current guesstimate;
• Try as it might, the Euro has been unable to mount a charge strong enough to break completely through and move beyond the imposing Kumo Cloud that hovers over the weekly candlesticks;
• A rather prominent Head-and-Shoulders formation has been under development over the past several months. The neckline and head have formed within key Fibonacci levels, while the final shoulder may be classified as still “in process”. The Euro is currently hovering under $1.30, but if the “H&S” holds true, then a breakout down to the $1.18 level is definitely within the realm of possibilities.

What is happening behind the scenes to cause such pricing behavior? The fact that the market perceives that there is no end in sight to the crisis conditions in Europe is the reason for the overall downward trend shape. Greece is only one member state. Spain, Portugal, and Italy may be next, but the recent financial debacle in Cyprus was more Greek related than anything else. Austerity programs have not borne fruit, and the general thinking is that a weaker Euro would be the best cure for current ailments.

A few of the most respected forex hedge fund managers have been predicting parity with the greenback for several years, only to be countered by actions from central banks to prevent the inevitable crash from ever taking place, at least on an immediate basis. The United States and Japan have both been conducting major quantitative easing programs, and foreign exchange reserve managers have bolstered the Euro by shifting funds away from the weakening dollar.

What are traders to make of this situation? Summer seems to be the time for shorting the Euro, if repetition is in the cards. A solid break below the 23.6% neckline may be all the market needs to force the Euro to more expected valuation levels.

This has been a special report by Tom Cleveland, Forextraders.com

More articles from ForexTraders….

By Michael Trinkle, ForexTraders

Key Fundamental Forex Events for the Week of May 13th through May 17th

The following table lists the key economic data and other events that came out during the week of May 13th through May 17th, with release times displayed for the GMT time zone.

The list also indicates how much each release deviated from the market consensus forecast upon release, as well as what the affected major currency pair or pairs did after each event or set of events.

Monday, May 13th

• 1:30pm USD Core Retail Sales -0.1% versus -0.1% expected. The currency rose.
• 1:30pm USD Retail Sales 0.1% versus -0.3% expected. The currency rose.
• 11:45pm NZD Retail Sales 0.5% versus 0.9% expected. The currency fell.

Tuesday, May 14th

• 10:00am EUR German ZEW Economic Sentiment 36.4 versus 39.5 expected. The currency fell.
• 10:30am AUD Annual Budget Release noted that, “In response to difficult global conditions and the sustained high Australian dollar, this Budget charts a pathway to return to balance in 2015 16 and to surplus by 2016 17, improves the sustainability of Australia’s public finances and builds on Australia’s record of fiscal and economic strength. This Budget delivers $43 billion in savings to return the budget to surplus and fund key nation-building reforms.” The currency fell.

Wednesday, May 15th

• 9:30am GBP Claimant Count Change -7.3K versus -3.1K expected. The currency rose.
• 10:30am GBP BOE Governor King said that, “Today’s projections are for growth to be a little stronger and inflation a little weaker than we expected three months ago. That’s the first time I’ve been able to say that since before the financial crisis” The currency rose.
• 10:30am GBP BOE Inflation Report noted that, “CPI inflation remains above the 2% target and is set to edge higher over coming months. Inflation is likely to stay above the target for much of the next two years, bolstered by external price pressures and administered and regulated prices. But inflation is expected to fall back to around 2% in the latter part of the forecast period, as external price pressures fade and a gradual revival in productivity growth curbs increases in domestic costs.” The currency rose.
• 1:30pm CAD Manufacturing Sales -0.3% versus 0.6% expected. The currency rose.
• 1:30pm USD PPI -0.7% versus -0.6% expected. The currency rose.

Thursday, May 16th

• 3:00am NZD Annual Budget Release noted that, “The NZDMO continues to focus on extending the duration of the Crown’s debt portfolio and is considering launching two longer-dated bonds as part of the 2013/14 bond programme. Possible maturities being considered include an April 2027 nominal and a September 2030 inflation-indexed bond.” The currency fell.
• 1:30pm USD Building Permits 1.02M versus 0.94M expected. The currency fell.
• 1:30pm USD Core CPI 0.1% versus 0.2% expected. The currency fell.
• 1:30pm USD Weekly Initial Jobless Claims 360K versus 332K expected. The currency fell.
• 3:00pm USD Philly Fed Manufacturing Index -5.2 versus 2.5 expected. The currency fell.

Friday, May 17th

• 1:30pm CAD Core CPI 0.1% versus 0.2% expected. The currency fell.
• 2:55pm USD Preliminary University of Michigan Consumer Sentiment 83.7 versus 77.9 expected. The currency rose.

Saturday, May 18th

• 4:00pm USD Fed Chairman Bernanke has not yet spoken. Hawkish = good for currency.

Technical Recap for the Majors This Week

EURUSD:

Forecast: Mildly Higher
Actual: Lower from a 1.2977 open to a 1.2828 close.

USDJPY:

Forecast: Higher
Actual: Higher from a 101.77 open to a 102.87 close.

GBPUSD:

Forecast: Mildly Lower
Actual: Lower from a 1.5355 open to a 1.5199 close.

AUDUSD:

Forecast: Lower
Actual: Sharply lower from a 1.0007 open to a 0.9735 close.

USDCAD:

Forecast: Mildly Higher
Actual: Higher from a 1.0111 open to a 1.0277 close.

NZDUSD:

Forecast: Mildly Lower
Actual: Lower from a 0.8288 open to a 0.8074 close.

More articles from ForexTraders….