Hello guys! Welcome to another day of forex trading. My forex pick for the day is an update on the Australian dollar against the US dollar currency pair (AUDUSD) or as some may call it “Aussie”. During my last post on this (kindly check here), I mentioned it could head north once again after a possible rebound from its 7-month trend line seen in the daily chart. Gladly, as the AUDUSD touched the trend, [Read more...]
Bullishness Seen In The Aussie!
Swiss Franc to Revisit Its Historical High Vs. the USD?
The market has been kind of iffy during the past couple of months and the USDCHF pair has been behaving in the same way. Looking at its daily chart, you can see that the pair has winded into a rising wedge pattern after marking an all-time low at 0.9462 back in October 4. Now as you of you might know, a rising wedge pattern is deemed bullish by technicians since it only depicts a temporary rally in prices. If this is the case, then the Swiss Franc could [Read more...]
The New Zealand Dollar To Drop Against the US Dollar?
Hi guys, my forex pick is the NZDUSD pair (New Zealand dollar vs US dollar) or “kiwi” as some may call it. This currency had been going up since May of this year but after making a 2-year high of 0.7976 last November, it started dropping. Right now, I’m bearish on this currency pair as it could break down from a head and shoulders formation in the daily chart with the neckline at [Read more...]
Gold Flirting With Its All-time High Again
The price of gold have been relatively volatile during the past couple of weeks due to the swings in market sentiment. On November 9, gold marked a new all-time high at $1,424.00 per ounce before falling steeply amid the speculation that China will raise its interest rates to place a check on its 4.4% inflation figure for the month of October. A rise in interest rates would likely slow China’s growth and since it is now the number two biggest economy in the world, such would not go reflect in the other countries as well especially its trading partners, hence, boosting the greenback. It’s kind of weird, however, since the price of gold actually rose when the same inflation data in China was released the day before. [Read more...]
The End of the US Dollar’s Rally?
For the past week or so, the US dollar has rallied strongly against its major peers thanks to the drama in Ireland and in the Korean peninsula. Ireland needed about €85 billion ($114 billion) to help service its ballooning [Read more...]
The Aussie Could Head North Once Again
Hey guys, here’s my technical analysis update on the Australian dollar against the US dollar (AUD/USD) or the “Aussie” as some people call it. The Australian and US dollar were at par last month (kindly check this) then an all-time high of 1.0183 was made on November 5. However, the Aussie started declining by a thousand pips to an 8-week low of 0.9584 because of the Ireland banking crisis then followed up by the potential North-South Korea war last week. Fortunately for [Read more...]
EURO Still On An Uptrend Against The US Dollar
Hello traders from all parts of the world! My forex pick for the day is the EURUSD pair or “fiber” as many would call it. As you can see, the Euro has been strong against the greenback since it broke out from the cup and handle formation last September (kindly check here). Afterwards, a bullish symmetrical triangle formed, broke out to follow through the upward momentum and reach the 1.4282 9-month high last November 4 (kindly see it here). However, the Euro now sank against the US Dollar dropping by a thousand pips since the beginning of this Month. Key factors highly involved in demoting the pair’s value include the [Read more...]
North Korea Aids the US Dollar
Anyeonghaseyo! The present political and military conditions particularly in the orient are very shaky given the recent artillery attack to South Korea by its neighbor up north. Yesterday (November 23), the world, especially South Korea, was caught off guard when NoKor bombarded Yeonpyeong Island with artillery shells, killing at least 2 and hurting dozens. SoKor, of course, was then forced to return fire and to scramble their fighter planes for defense. North Korea’s attack, by the way, came after [Read more...]
Medium Term Reversal on the Singapore Dollar?
Good day FX friends! I’m back and kicking once again! Anyway, in today’s forex pick is a technical update on the USDSGD pair – that’s the greenback versus the Singapore dollar. In case you do not know, the Singapore dollar (SGD) has been gradually beating the US dollar‘s ass since March of 2009 much like what Manny Pacquiao was doing to Antonio Margarito in their fight last November 13. Notice, however, that the Sing’s ascent over the US dollar has hastened by [Read more...]
Santa to Send the Philippine Peso Back to P42.00 Vs. the US Dollar?
Roughly a month ago, the Philippine Peso together with many other currencies were trading strongly against the US dollar. If you look at the dollar-to-peso chart (USD/PHP), the peso even reached a high of P41.991 versus the greenback last November 4 and I mentioned this possibility in my previous analysis (kindly check this). However, the P42.00 marker proved to be resilient, at least at that time, as the dollar rebounded off of it. At present, the Philippine Peso is trading back at around P43.70. Several technical factors, though, indicate that the dollar’s rally could be over and the peso could appreciate once more. As mentioned, the peso is exchanging at around the P43.70 level which used to be a former support. [Read more...]
Euro to Get Back on the Bullish Track
Good day ladies and gents of FX trading! In today’s forex pick is the daily canvas of the EURUSD pair a.k.a the “fiber”. The last time I posted on this was when it broke out from the bullish symmetrical triangle formation (kindly see this) and made a new 10-month high at 1.4248. However, as you can see from its chart, the EURUSD has slipped for a fifth straight day today after marking that high. Those who are long on the euro and short on the greenback, however, should [Read more...]
British Pound To Swing Higher
Another breakout alert Forex peeps! But my forex pick is the British pound! If you want to check out my breakout alert on the EURUSD a few days ago, kindly check this. Chart-wise, the Cable or the GBPUSD pair has recently broken out from a cup and handle continuation pattern. A cup and handle pattern, as the name suggests, takes the shape of a cup (a bowl-like price action) with a small handle to its left. The price would most likely head higher especially now that it is able to move past the 1.6000 resistance (where the cup’s rim or the neckline also lies). So judging by the [Read more...]
The Aussie is Finally at Par With the US Dollar!
The Australian dollar is finally at par with the greenback! Just today, the AUDUSD pair touched and even moved above the magical 1.0000 number after breaking out from a symmetrical triangle. Back in October 4, I asked whether the AUDUSD had the legs to reach for the parity level (kindly see it here). At that time, the pair had just broken out from a rare broadening right triangle formation. The pair then continued to move north before moving sideways for almost two weeks. The inevitable occurred and luckily for the Aussie bulls, the pair broke out to the upside. At present, the Aussie is now trading at just above 1.0000, it’s first time in history to be at that level. And based on my technical estimate (gauged by projecting the height of the smaller triangle upward), it could at least reach 1.0150. A more promising target would be as high as 1.0700 which is measured based on the height of the larger broadening pattern.
Earlier today, the Reserve Bank of Australia (RBA) surprisingly hiked its interest rate to 4.75% from 4.50% which effectively pushed the Aussie towards uncharted territory against the US dollar. The central bank sees inflation to rise at a faster pace over the medium term. One tool to prevent a rapid rise in prices is of course to increase the market’s interest rates. The increase makes the Aussie more appealing to investors because of its higher yields compared to the meager 0.25% of the greenback. More robust Australian economy, higher RBA interest rates, talks of additional QE measures by the Fed, plus the overall negative sentiment on the dollar have been working well for the AUDUSD, making it the best candidate for carry trade as of the moment. If these factors remain then the demand for the pair would more likely increase as well.
Breakout Alert! More Upside Seen on the EUR/USD!
Calling all euro bulls! The EURUSD pair or the “fiber” as what some people call it has just broken out from a symmetrical triangle. As you can see from its daily chart of this forex pick of mine, the pair has actually reversed its downtrend when it escaped from a cup and handle pattern. It then continued to trade strong before consolidating into a symmetrical triangle for the last two weeks. Given this recent price action, though, I can say that buying the euro and selling the US dollar at the same time would be a better idea at least from a technical point of view. Such breakout could propel the pair up until it hits some resistance at 1.4250 or even at 1.4300. That’s at least a 200-pip upside in the near term. Not bad! On a different perspective, you might want to chance upon my colleague’s target price in his post.
The remaining days of this week would be crucial for the EURUSD. A high degree of volatility is expected in all currency pairs especially the fiber because of the US Federal monetary policy decision tomorrow and the release of the US’s non-farm payrolls (NFP) report on Friday. There has been talks that the Fed would engage into another non-traditional money printing activities (quantitative easing) in the days to come in its desire to further ease the day-to-day market interest rates in order to encourage more lending and spending. Puff Daddy predicted it correctly – “More money, more problems.” Of course the problem here is reflected on the greenback as its valuation gets diluted by the increase in money supply. Friday’s NFP will likewise create some noise. Based on the recent estimates, about 65,000 jobs were added by US firms in the last month as against the 95,000 that got laid off in the previous period. If this figure is correct, then such would spark optimism among market participants, causing them to continue supporting non-dollar currencies like the euro.
US Dollar Trading At An All-time Low Against the Japanese Yen!
Happy Halloween FX fiends, I mean friends! Indeed, it is very scary at least for the USD as it is now trading at a new historical low versus the Japanese yen. To end the week, the USDJPY surpassed its former all-time low at 80.43 which it set way back in April 1995 and closed at 80.38. As you can see from its weekly chart, the pair has been on a long term downtrend since the latter part of 2007. Based on the Elliot Wave Principle, where prices move in a 5-wave cycle before correcting, the USDJPY pair could be on the final leg of its wave B. If my wave counting is correct, then the pair could rebound for awhile in the coming week or so, marking its wave C, before heading back south to start a new down wave. Given its oversold condition, it could, however, rally until it encounters some resistance at 85.00. Still, the pair would more likely be on track for some more losses because present trend. In any case, a close below its former low at 80.43 at the end of the month would place some more selling pressure on the greenback.
To end the month of October, the US market closed flat with the Dow ending with a mere 0.04% gain and the broader S&P 500 with a 0.04% loss. The US’s third quarter GDP missed its 2.1% target by a hair with a 2.0% growth. Despite the 2.6% increase in household spending, the country’s overall expansion remains subdued and it expected to be the same at least in the near term which brings the country at the realm of another non-traditional monetary easing by the Federal Reserve.
Speaking of the Fed, it will have its monetary easing meeting this coming Wednesday (November 3). The Fed is widely expected to pump more money in the country’s financial system to support consumer spending. Traders will also be on the look out for the US’s non-farm employment report (NFP) on November 5. US firms are expected to have added about 65,000 jobs during the recent month after cutting 95,000 during the previous period. Both expected results from the upcoming two major economic would be bearish for the greenback. An additional easing by the Fed would dilute the USD while the latter would spark some risk taking among investors. Risk taking, as we have been observing during these periods, would go against the dollar given its low interest rate. Nonetheless, expect some fireworks both in the financial market for the coming week. Stay on your toes!
EURO Could Further Strengthen Against The US Dollar
Hello forex peeps, here’s an update on the Euro against the US Dollar. The last time my colleague posted on the EUR/USD was when the ascending channel in the 4-hour chart was still intact (kindly see his post here). By the way, if you want to see his analysis when he made a “buy call” also on the EUR/USD as it had just broken out from the cup and handle formation in the daily chart last September, please see this link. Anyway, the ascending channel in the 4-hour chart may have been broken already but that’s because the pair decided to consolidate sideways. This might be a good thing, because right now, the fiber (EUR/USD nickname) could actually be forming a symmetrical triangle as it moves sideways. Zooming closer to its 4-hour chart, you will see a clearer picture of this area pattern. Symmetrical triangles are naturally neutral regarding which direction it would head but if we factor in the current trend, which is the uptrend, then this formation will most likely be bullish by 90%.
Based on the given symmetrical triangle formation, the EUR/USD could further strengthen against the US Dollar if it breaks out from this area pattern. In case it does, the pair could rise and find some resistance at the 1-month high of 1.4951. If the pair clears out that resistance, the next one could be 1.4579. On the downside, if the triangle pattern turns out to be bearish which is most unlikely, the immediate support could be 1.3700. If the fiber still drops below the 1.3700 marker, the next support could be 1.3335. As the EURO could head further north against the US dollar, in my colleague’s last post suggests that the US dollar could also weaken again not only against the EURO but most currencies (here’s the post).
US Dollar About to Weaken Again
Good day Forex peeps! Here’s a technical update on the US Dollar index or USDX. For those who do not know, the USDX is an index that measures the value of the greenback against a basket of currencies. This basket is composed of [Read more...]
Gold to Resume Its Upward Move
After marking a new historical high at $1,386.82 per ounce back in October 14, gold appears to have lost its upward momentum as it slid back to a low of $1,314.60. In my opinion, however, gold’s recent correction is very much warranted due to the fact that it was already trading at an extreme overbought condition. It also exchanged in a rather fast pace, marking new a new-all-time high after the other in succeeding trading days. In any case, gold may once again resume its upward trend after it found support at the uptrend line and at the $1,320.00 marker. A hidden bullish divergence, where the prices register higher lows and the stochastics marking lower lows, can also be seen. This occurrence suggest that buying interest could again make a comeback. Furthermore, this morning’s bullish gap adds to signs that the demand for this precious metal is indeed increasing once more.
Gold’s rebound was helped by the broad-based selling in the USD when the G20 officials said that it won’t engage into a “competitive devaluation” of their respective currencies in order to promote their countries’ export industry Rather, it said that it would just let the market dictate the forex valuations. So given the US Fed’s openness to do another money-printing scheme (quantitative easing) to encourage spending, traders maybe beginning to shun away from the greenback again. Another event that could place some selling pressure on the USD is when China allows the Yuan to trade more loosely and thus become stronger against the US dollar. Chinese officials could do so by selling more of their dollar reserves in the market. Such, of course, would dilute the USD, making investments in other instruments like gold more attractive.
Aussie Poised to Make Another Run Against the Loonie
Welcome to another week of FX trading! Contrary to my post last October 5 (kindly see it here), the AUDCAD did not encounter any resistance at its previous high at 0.9200. Instead, it broke right above it to form an ascending triangle pattern. In such pattern, buyers are deemed to be the more aggressive than the sellers. Here, buyers continue to buy the Australian dollar despite the increase in its price while the sellers only sell it at a specific price level. Therefore, a break out to the upside is more likely. If it does, it could spring by another 200 pips or so to even surpass the AUDCAD-parity marker (1.0000). The pair’s present uptrend is also suggesting the probability of a move higher. But in case the 1.0000 level proved to be tough to break through and the pair breaks down from the triangle, the previous high at 0.9900 and the uptrend line should provide some support.
On the fundamental side, remember that Australia was one of the very few major economies that escaped a recession. It’s central bank, the Reserve Bank of Australia (RBA), was also the first to raise its interest rates, making 2009 the year of the Aussie. The first quarter of this year, however, belonged to Canada when it posted improvements in its consumption and labor market. And as a result, the Loonie took the driver seat against as the most favored currency at least at that time away from the AUD. The gains, though, in both economies are starting to abate. So between the two, who should the market favor?
You see, Australia has China to back its economy. In case you do not know, Australia is one of China’s major suppliers of raw materials. I would like to mention as well that one of these input materials happens to be gold which is now trading at an all time high. So with China’s economy expanding by 10.3% during the second quarter and is seen to have grown again by another 9.3% during the third, Australia’s export industry at the very least should not have any problem. Now juxtapose this with Canada and the US. It’s been in the news for more than a week now that the Fed is planning to flood the market with more dollars in order to bring down the market interest rate to encourage more lending and spending, thus, stimulating business activity. This only means that the present business condition in the US are very much anemic. Such would of course negatively affect Canada since the US its major trading partner. In other words, poor business condition in the US would also mean the same for Canada.
Aside from the impact of Canada’s and Australia’s major trading partners in their respective economy, the currencies’ interest rates also play a big part why I’m more bullish on the Aussie than the Loonie. The Aussie has a 4.5% interest rate while the Loonie only has 1.00%. This means that if one goes long on the AUDCAD, he could also net 3.5% in interest rate differential as a bonus aside from the potential to have capital gains.
New Historical High For the Aussie. Next, US Dollar Parity!
Good day to you my Forex friends! Guess what?!?! The Australian dollar has recently marked a new historical high over the US dollar. And from the looks of it, it seems that the AUDUSD pair has still a lot of legs left to move higher. As you can see from its 8-hour chart, the pair has been trading on a well defined uptrend for quite some time now. Earlier this week, the pair opened with a bullish gap though this move was invalidated when it fell below the bottom of the gap. Nonetheless, the tide has even turned for the better now as it formed and then broke out from an ascending triangle formation after moving past its previous all-time high at 0.9849. Gauging from the height of the pattern, the pair could run upwards by at least 150 pips more from 0.9900, bringing the 1.0000 marker in sight. As long as the uptrend holds, the Australian dollar would most likely reach parity with the greenback in the near term.
Recent talks of more money printing scheme (quantitative easing) by the US Federal Reserve has reflected negatively on the USD. Fed Chairman Ben Bernanke earlier stated the possibility of another round of quantitative easing or the printing of more money in layman’s term to support the economy by encouraging the public to borrow and to spend. Aiming to reduce the daily market lending rate by increasing the money supply would of course lessen the dollar’s valuation.
Based on the latest survey, retail sales and inflation figures in the US are expected to remain subdued. If these numbers remain flat over the next with the country’s labor market staying weak as well in the succeeding months then it is quite possible for the Fed to indeed do as it is suggesting now.
