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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.

Stocks Of Filinvest Land Preparing To Climb Again?

Hello guys, welcome to another day of trading! Here’s an update on the stocks of Filinvest Land Inc. (FLI as its ticker symbol) which is one of the leading residential property developers in the Philippines. I posted this stock pick of mine last September 14 when it had been going up after breaking out from the 1-year symmetrical triangle formation (kindly see that post in this link). The stocks have now been consolidating for more than a month after the run. As it moves sideways, there is a possible mini-triangle formation setting up on the chart. We could expect this 2-month triangle to be bullish as it’s coming from an uptrend. If FLI is indeed bullish and breaks out from the triangle, it could head up but would encounter some selling pressure at the 1.50 peso resistance. In case that gets breached, the next resistance it could aim for is 1.68 pesos. On the other hand, if the stocks breakdown from the pattern which is more unlikely to happen, the immediate support could be 1.31 pesos. If that marker fails to hold the price from further dropping, the next support could be the 19-month uptrend. Regardless, like I always say, as long as the uptrend remains intact, I’d stay bullish on this overall. Have a great day!

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...]

DMC Stocks Up 1,950% In 2 Years!

Hi everyone, that’s right! The title states it clearly! Before, I mentioned the stocks of JG Summit Holdings gaining 1,600% in less than 2 years from 1.58 pesos to an all-time high of 27.00 pesos (kindly see this link) and that was remarkable but what’s awesome are the stocks of DMCI Holdings, Inc. For those who do not know, this company operates four subsidiaries each one engaging in a different business such as general construction services, mining, investments and power generation. They are involved in both private and government projects. Anyway, DMC (its stock symbol in the Philippine Stock Exchange) was valued at 1.86 pesos back in October 28, 2008 and since then, it had gained 1,951% when it reached an all-time high of 36.30 pesos during the last trading session. However, it closed at 35.95 pesos which makes it a 1,932% increase to be exact. I remember posting about DMC when it was duck diving during the 2008 financial crisis (kindly check this link) but as we can see now, it had made a huge turnaround.

The stocks of DMCI Holdings, Inc. started its bull run on November of 2008 when some analysts said the bear market was about to reverse. From then on, the DMC stocks just kept on continuing to climb until now. However, in my technical analysis, the last daily candle formed on its stock chart could be bearish as it gapped up during the opening of the trading session and closed weak. In case the stocks drop, a significant support could be the 2-month uptrend. If that trend breaks and the stocks further decline, the next support could be 32.70 pesos. If the 32.70 peso marker still doesn’t hold on, the next support could be the 9-month uptrend. Personally, I think a minor correction would be healthy for the stocks before the ascend continues. However, if the bulls are too strong, the stocks will just keep on rising but could encounter some selling pressure at the 36.30 peso all-time high. If that price mark gets cleared out, the next level to be looked at is the 40 peso psychological resistance. Above all, as long as the uptrend remains intact, I’d stay bullish on this.

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.

Mc Donald’s Earnings Lifted Its Stocks To An All Time High!

Hello ladies and gents! Here’s my update on the world’s largest hamburger fast food chain. Yesterday, Mc Donald’s Corporation reported a jump in their net income for the 3rd quarter of 2010. Earnings were $1.29 a share, up by 12% year to year. Solid margins and a 4% increase in overall sales maximized the profits (probably because of the happy meals lol =). On the other hand, the US market over all was terrific. The US unemployment claims dropped by 23k to 452k. This data signals a recovering economy. Positive earnings result from Amazon, Caterpillar and American Express played a major role in brining the market higher and propelled most stocks to climb. Also, the Dow Jones Industrial Average was at an all-time high since May of this year.

In my technical analysis, the Mc Donald’s stocks tapped the 7-year ascending channel’s resistance yesterday. The all-time high that I mentioned in my previous Mc Donald’s post during the start of this month (kindly check this) has been breached and a new one at $79.48 was set. If the stocks successfully break above that level, the next resistance that it could aim for is $85 or even the $90 psychological resistance. Personally, the 7-year ascending channel looks pretty tough and won’t easily break unless the market’s very bullish or there is a good chart setup. If the stocks bounce off the resistance and drop, the significant support could be the 14-month uptrend. If that trend doesn’t hold the stocks from further declining, the next marker could be the 7-year ascending channel’s support. Above all, I’m still bullish on Mc Donald’s as long as the uptrend remains intact.

Shares of HP to Go North Bound?

Good day stock market lads! Here’s a technical update on the shares of Hewlett-Packard Company (HP). HP’s shares or HPQ as they are traded in the New York Stock Exchange appear to be bound for a move north after declining to a low of just below $38.00 during the last week of August. After finding some support at the $38.00 level, it then rallied and moved on to form whats appears to be a cup and handle pattern. As some of you might know, such formation usually indicates a likely bullish reversal. Therefore, if and when HPQ is able to make a move past the neckline around $43.00, HP’s shares would more likely hit $48.00 or even $49.00. A failure to break the neckline, on the other hand, could send the company’s stocks back to its low at $48.00.

Hewlett-Packard Company, by the way, is a US-based multinational IT corporation. The company specializes in both hardware and software computer development and manufacturing. Its line of products include personal computers and notebooks. In August 6, its CEO, Mark Hurd, resigned from his office amid claim of sexual harassment by actress Jodie Fisher. While he was not found guilty of the said claim, several expense-irregularities were found during the company’s investigation. His resignation then led to a broad-based selling of the stock (represented by the long red candle on August 6).

Coca-Cola Nets!

Hello people! The Coca-Cola Company, one of the largest producers of carbonated soft drinks which is sold to more than 200 countries around the globe, posted a 2010 3rd quarter net income of 2.1 billion dollars which is up by 1.9% compared to the same period a year ago. Their world most famous soft-drink, Coca-Cola and other beverages boost their sales and brought home the favorable numbers. Its positive income report propelled the stocks (KO in the New York Stock Exchange) to move higher yesterday by 0.6% to $60.34.

In my technical analysis, the $59.45 resistance has been cleared out last week as the stocks ascend. By the way, if you want to check my last post on this, kindly click this link. Anyway, the next resistance the KO stocks could encounter is $61.90 then after that is $65.59. In any case the stocks fail to rise, the immediate support could be the 3-month uptrend. If that uptrend gets broken, the next support could be $57.22. If that support still fails to hold the price from further falling, a strong support could be the 18-month uptrend.

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.

Oriental Peninsula Resources Group To Make Another Move?

Hello traders! My Philippine stock pick for the week is Oriental Peninsula Resources Group, Inc. or ORE as listed in the Philippine Stock Exchange. Oriental Peninsula is a Philippines-based holding company which is involved in mining activities. By the way, I had a post on this last May when the price was still around the 2-peso area (here’s the link). Anyway, in my technical analysis, there is currently a small symmetrical triangle forming in the ORE stock chart. However, I’m not sure if the formation is already set for a move since the pattern still looks premature and we will only find out if the breakout/breakdown occurs. Symmetrical triangles are generally neutral in terms of which direction it would head. However, as the triangle we see in ORE is coming from a 7-month uptrend, the pattern is most likely bullish and the stocks could breakout. If a break above the triangle’s resistance takes place, the next marker could be 3.35 pesos. If 3.35 pesos gets taken out once again, there could be some selling pressure at the next resistance at the 3.40 peso all-time high dating back from December of 2007. Then after that could be the 4.00 peso psychological level. On the downside, if the the symmetrical triangle breaks down, the immediate support could be the 8-month uptrend. If the stocks slip and drop below the uptrend, the next support could be the 3.00 peso price mark. Above all, as long as the uptrend remains intact, I’d stay bullish on this.

Google Soared By 11.19%! More To Go!

Happy weekend stock market enthusiasts! The US market or at least the NASDAQ ended this week with a bang after a magnificent performance by Google. In case you missed it, the shares of Google (GOOG) soared by 11.19% following a jump in the company’s net income. Net profit expanded by 32% to $2.17 billion, which translates to $6.72 per share, from $1.64 billion during the previous year. Given this figure, the web search giant is proved to be benefiting very well from its advertising channels which now includes display and mobile. Internet advertising, by the way, has risen by $6.15 billion or 11.8% in the US alone from a year earlier.

Technically, GOOG made a bullish gap soon after the company’s third quarter income result hit the news. In the process, the stock broke above its previous high near $600.00, converting this level to support. But given its present overbought condition, it may move sideways for awhile before resuming its journey towards its next target around $630.00. If it ranges, the support at $600.00 should keep it from falling. A break below, however, could send it back to the bottom of the gap. Nonetheless, the momentum in a breakaway gap is usually strong that the stock will most likely continue its move north.

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.

The Geppy’s Bearish Setup

Hello forex friends! What I have here is the daily chart of the British Pound versus the Japanese Yen (GBP/JPY) or Geppy as its nickname). In my technical analysis, this currency pair is leaning towards the bearish side as it has been declining in a downward channel for a certain time now. Furthermore, there is a descending triangle formation setting up inside the channel and could be bound for a breakdown soon. If the Geppy breaks below the support of the said triangle, the pair could duck dive and tap my conservative target price of 120.00. If it further drops below 120.00, the next marker could be the downward channel’s support. On the bullish note, if the descending triangle seen on the Pound versus the Yen fails to breakdown but instead breaks out on the upside, it could rise and hit my target price of 140.00. This however is less likely to happen as the pattern is coming from a downtrend and descending triangles are naturally bearish. In any case 140.00 gets cleared out, the next resistance could be 145.00.

Dow Jones Industrial Average Updates

Hello guys, seems like many of you who trades in the US stock market are enjoying a long weekend because its the Columbus day today (Monday) and US banks are closed in observance for this so expect a slow moving trading session. Anyway, as a follow up on my technical analysis on the Dow Jones Industrial Average (^DJI) last September 22 (kindly see this link), I present to you my updates. As we can see, the index has broken out from the 3-year resistance line 2 weeks ago and last week, the 11,000.00 psychological level has also been cleared as well. Right now, the ^DJI could continue to head north but would experience some selling pressure at at 11,309.00 which is the 2-year high. If the index is able to moves pass above its 2-year high, the next resistance could be 11,933.50. On the other hand, in case the index experiences a short term correction as investors take profits, the significant support could be the 18-month uptrend. If the trend line gets broken furthermore, the next support could be the 10,000.00 psychological level. Still, as long as the uptrend remains intact, the bulls are most likely in place.

The days ahead could be shaky for the US stock market as well as for some Currency Pairs because of the following: 3rd quarter earnings report of publicly listed companies are on its way; Fed Chairman Ben Bernanke will be speaking on Wednesday to participate in a panel discussion about business innovation; Many key data are going to be released by the US on Thursday such as the Producer Price Index, International Trade Balance and Unemployment Claims at 13:30 (GMT); On Friday, the Consumer Price Index, Retail Sales, Core Retail Sales and the Preliminary UoM Consumer Sentiment will be out as well at 13:30 (GMT) so expect an increase in market volatility during these periods. Also, these data are important to follow because it determines how the US economy is doing at present.

Bullish Gap Seen on the Euro Against the US Dollar

Good day Forex friends! Last October 7, I mentioned in my post (kindly see it here) the the euro has still a lot of room to move up against the US dollar. Zooming closer to its, 4-hour chart, you will see that the EURUSD pair has been trading in a very well defined rising channel. Given the pair’s present trend and the channel’s degree of ascent (45 degrees), I’d say that the euro rise at least in the near term could be easily sustained. Furthermore, another bullish sign propped out of the pair’s charts when it gapped up to open the this week. A bullish gap is an occurrence when the opening price opens much higher than the high of the previous period. Obvious, this is a positive sign as this suggests a rapid demand for the security which in this case is the euro. So as long as the support of the rising channel or the uptrend line holds, the EURUSD or the fiber would most likely conntinue its move north. In case it weakens, the channel’s support and the bottom of the channel could keep it from falling further.

For this week, no material economic data will be reported from the euro zone. Given the lack of economic flow, the EURUSD may just resume its present trend. Then again, it’s also possible for the pair to retrace a bit as investors lock in some of their profits.

A Temporary Rally Seen in the US Dollar

Welcome to another day of Forex trading! In today’s FX feature, I present to you an update on the US dollar index (USDX). A little more than a week ago I already warned the dollar bulls of a likely take over by the bears [Read more...]

More Room to Move Up for the Euro Versus the US Dollar

Hello FX friends! Last September 24, I specifically noted the Euro’s potential to gain in valuation (kindly see that post here). At that time, the EURUSD pair or the fiber had just broken out from a cup and handle formation. So if you took my cue and went long there and then, you would have been up by almost 600 pips already! While you might have missed the first the EUR’s initial move, technically speaking, there’s still a chance to ride this train. For one, Elliot Wave Theory states that the third wave is usually the longest wave of a 5-wave cycle. In some instances, though, the third only equals the length of the first wave. But even if this is the case, notice that the present wave 3 still falls short of wave 1, suggesting that there could be more space for the pair to move higher. Secondly, the pair’s upside target (gauged by projecting the height of the pattern from the point of breakout) has not yet been met.

Earlier today, the European Central Bank (ECB) left its interest rate unchanged at 1.00% for the 17th straight month. During the global financial crisis and the recent credit troubles in the Euro zone, the ECB was forced to lends banks with cheap cash and to support this until the whole bloc recovers. While the economy has been rebounding, it remains to be fragile and pulling the central bank’s lifeline would endanger the economy once again. Despite the ECB’s decision to hold rates, the euro continues to trade strongly against the greenback because of the overall bias against the USD.

Tomorrow, the US’s NFP report will be published. Expect an increase in volatility around the time of the data’s release. In any case, firms in the US are seen to have added 3,000 jobs after they laid about 54,000 during the previous month. An increase in employment, as we know, would be beneficial for the economy and, thus, would spark some risk taking. A jump in optimism then would lead investors to more US dollar selling which in turn props up the valuation of the euro.

Stocks Of American Express Bound To Drop?

Hello friends! The American Express Company also called as AMEX by credit card holders or AXP as listed in the New York Stock Exchange is most known for its charge and credit card products. AMEX is the main competitor of Visa and MasterCard credit cards. Anyway, its stock price is currently at $38.28 as it dropped 2% yesterday going against the 193.00 point gain of the Dow Jones Industrial Average. This could be caused by analysts’ expectation of a poor 3rd quarter earnings report coming out this October 21. In my technical analysis, the decline could further continue if the stocks breakdown from the neckline of what could be a head and shoulders setup. If it does, the price could head all the way lower until it finds some support around $34.26. If it further drops below that marker, the next support could be $31.69. If the breakdown doesn’t take place and the stocks decide to move higher, the significant resistance it could encounter is $43.93. If the stocks passes through above that level, the next resistance could be $45.68.

The US ADP Non-Farm Employment Change data, from 10k previously unexpectedly dropped to -39k when it was released a few moments earlier. This could have a negative impact on the investors/traders’ sentiments towards the US market as well as for American Express in the short term.