The pound sterling was surprisingly resilient during Wednesday’s bought of risk aversion and now that the tables have turned, we have seen a remarkable run-up in the pair. Since bottoming 10 hours ago, it has shot up to 151.50 from 148.50 – a 300 pip move. About two-thirds of that came in the past two hours after the U.S. GDP report showed growth at 3.5% compared to the 3.2% expected. There is also talk of Middle Eastern buying.

The GBP crosses have all traced out more bullish technical patterns than the rest of the market, which is consolidating. On the hourly chart, we see that GBP/JPY has cracked resistance from the double top on Monday and Tuesday.

GBY/JPY hourly oct 28

We would caution that an overshoots happen and we would want to see an hourly close above 151.20 before we would be jumping in. If it does, there is no resistance all the way up to 153. On a failure, look for a quick pullback to 150 or 150.20.

Also be aware that the hourly Bollinger is far into overbought territory so bulls looking to get in will eventually get a chance.

Much of the volatility in GBP relates to uncertainly about what the Bank of England will do when policymakers meet next week. A Reuters poll of 62 economists shows 19 do not look for an further quantitative easing, 22 for an additional 25 billion pounds and 21 for an additional 50 billion pounds. The more easy money, the worse it will be for the sterling.

The Bank of England decision is Thursday, Nov. 5 at 5 a.m.

USD/CAD Hourly oct 28

USD/CAD has gained more than 200 pips in the last day. The pair got a surge of momentum as it burst into the Aug-Oct range of 1.06-1.11 but stalled at the downtrend resistance (green line) that began at 1.30. After breaking that resistance, it retested it several times before surging 125 pips overnight. The pair is now benefitting from the support of the downtrend (resistance becomes support).

The pair has had a nice run since falling to a 14-month low of 1.0260 but with all major resistance until 1.11 broken, the pair could continue to run. The hourly Bollinger Bands (show) are stretched but could continue to widen before we see a period of consolidation.

A failed attempt to break 138.50 established a long-term triple-top on EUR/JPY charts and has led to a substantial 300 pip pullback. This chart has been a easy one to trade for technical traders and given the historical volatility of the pair around tops, this move may still have some way to go.

Looking at the hourly chart, a pattern of sharp drops and retracements is evident. After the initial drop, there is a nearly perfect 38.2% Fibonacci retracement. The second leg down was followed by a nearly 50% bounce and third leg by only a 22% rebound. In the most-recent leg, we have already seen a 38.2% retracement.

If that correction can exceed 50% (135.61) then the hourly downtrend may be in jeopardy. In that case, look for some stronger consolidation around 136.22 – 136.33 as another cue to sell. If then downtrend continues, look to support at 134.87.

USD/CAD

What a pair this is to trade with!!! As we all know this pair is directly affected by the commodities. We can clearly see how it is making all the same moves and following the same trends as the gold, silver, oil and AUD. Tomorrow we will  see what the interest rate will be in Canada. The results alone can shape the future of this pair over the trading week, so it is well worth it to keep an eye out for this announcement and the subsequent movement for this pair.

Resistances-1.0370 – 1.0433-1.0485

Supports-1.0305 – 1.0266-1.0205

EUR/USD

Last week we witnessed the EUR continue to gain on the USD. On Friday we also saw the market do a bit of a correction favoring the US by 100 pips respectively.

Today starts a new trading week and the market correction done on Friday has already been erased and we are seeing the trend we have been discussing continue.  Make sure to update your support and resistance lines before entering this position

Resistances- 1.4950– 1.4967-1.5000

Supports- 1.4900-1.4875-1.4817

Fundamentals:  We have a few announcements today which will affect the market.Coming from United States we have the “Fed Chairman Bernanke Speaks”. (15:00 GMT)

What a market we are experiencing today!!!  It spells money!!!

As we can see from the trading day yesterday the oil continued its movement in the direction of an uptrend reaching the price of $75.38 a barrel. This was a 10 month high for oil after the amazing summer of 2008 when oil reached $140 a barrel.  This direction continues to support the weakening of the USD, while supporting the CAD and AUD, the commodity driven currencies.

When will this trend stop??

Maybe a few traders have an idea when this will end, however when we look at technical analysis we continue to clearly see the trend.  The announcements we mentioned above coming from the US have already been published and both were positive for the USD. Will we see a market correction or will the trend continue? Question left unanswered will be answered by the traders during the end of the London session and into the US session. Make sure to always examine your support and resistance lines before entering your trades.

Let’s take a closer look at a few pairs:

USD/CAD

I’m not going to talk about the oil, but we can talk about this pair and how it is affected by the oil.  We can find that yesterday this pair made more moves supporting the price of oil, leading to a stronger CAD. Here are the Support and resistance lines for this pair today.

GBP/USD

Employment data in the UK today showed that the country lost 20.8K jobs, less than the 24.5K expected, helping the cable gain a bit against the buck. The gain put it above the 1.6000 level temporarily, though it has come off a little since then going back to the range it was trading in during the last few trading days.

Fundamentals:  We have a few announcements today that will affect the market.

Coming from US we have the “Core CPI M/M”.  The previous announcement was 0.1% and the forecast for today is 0.1%. Released at (12:30 GMT).

One more announcement coming from the US  “Unemployment Claims” which will be released at  12:30 GMT, the previous announcement was 521K and the forecast for today is 524K.

OK traders!! It is time to get some important and good education in order to become a better and more knowledgeable trader.  However to become a better trader one must know the 3 major trading sessions that control the forex market. Those 3 sessions being Tokyo, London and New York.

We all know, this market is a 24 hour a day market revolving around those 3 sessions.  As a trader it is vital to decide which session I want to trade in and follow the trend that is presented in the specific session one enters.  If you look at the chart I have enclosed you will clearly see the London session to carry more pip movement than any other session. As a trader I can find this information prudent for my success.

One more thing I want to share with you guys is this, its money time!!

Over the last few weeks many of the traders I talk to are opening positions selling the USD.  In this case many of these traders are simply following the trend and making money while doing simply that. Follow the trend and know the session you are entering to join those successful traders.

USD/CAD

Over the last few weeks and days we have continued to watch the CAD strengthen against the USD. This is happening due to 2 real reasons. The first is the overall weakness of the USD. The second is the fact that the CAD is a commodity driven currency and with the price of oil continuing to increase the CAD continues to follow that same trend. Make sure to continue searching for support and resistance lines and make sure you know those before entering the position here.

Have a great day of trading…

Today, I would like to continue to address the unprecedented weakening of the USD and the effect it has on major currencies. One of the most exciting things happening in the market over the last few weeks, days and hours are simply the record breaking increase of the Gold and silver. More so we are seeing the commodity related currencies also increase in value to a point of which few have gone and recovered from.The CAD and AUD are both approaching all time highs and continue on a strong uptrend against the USD. Is the USD done??

No, allow me to explain, many analysts across the world agree the recession is over however many believe the road to complete recovery is going to slow and painful, especially in the area of job growth. Fundamental analysis continues to show us higher unemployment rates from the US, the weakness of consumer spending continues to decline or remain flat. However with so much of the world wealth tied into the USD, it is hard to imagine a complete crash, for us traders right now the trend is clear!! We are seeing a weak USD and stronger everything else. In this market we say, “The trend is your friend”

Let’s talk on one of the most popular pair in the world

EUR/USD

The EUR has been moving in a clear uptrend. Today it reached and broke the resistance level of 1.4812. The expectation by many analysts in this market and the next resistance line for the EUR is at the 1.5000 line. Today we have seen the gold piggy back ride on the increase of the EUR with the gold reaching the level of $1065 an oz today!! The trend for this pair is clear, the fundamental and technical analysis is there to support our findings. Continue to look for the entry opportunity for this exciting and volatile pair now!!!

Here are the S&R line for Today:

Support: 1.4850-1.4780-1.4740

Resistance: 1.4890-1.4960-1.5010

Yes, Barack Obama winning the Nobel Peace Prize was the highlight of the weekend, but let’s be honest the Dollar isn’t on the same position as Mr. Obama in terms of popularity. Lets look over the last few weeks and we will find something even more interesting then the Nobel peace prize in terms of a trend.

It keeps on being positive for us as forex traders, the trends are clearly there.  Over the last few months we will see a very clear trend on most of the currencies traded in the Forex market, especially the majors. We can also see the same trend applying to the commodities.

What continues to push the commodities in the market forward appears to be the weaker dollar. So know the Nobel peace prize doesn’t look so relevant for the dollar and we will need to wait and see what will be the upcoming announcement for the US economy this week and the effect they have on the USD. So lets break it down and see how it will affect the Forex market.

This week, I am sure we will get some more movement and excitement from the market!!  However we are starting the week with Monday which happens to have 2 of the 3 largest markets closed because of a holiday. The US, CAD and JPY are all closed because of the holiday. When the biggest session is closed the market is expected to be quite and not a lot movement is expected.

Fundamentals:  We have a few announcements today that will affect the market.

Coming from New Zealand we have the “Retail Sales M/M”.  The previous announcement was -0.5%and the forecast for today is 0.6%. Released at (21:45 GMT).

One more “Core Retail Sales M/M” which will be released at  21:45 GMT, the previous announcement was -0.5% and the forecast for today is 0.5%.we have a Bank Holiday in Japan, US, and Canada so will not expected to see a strong activity from there.

AUD/USD

The AUD is refusing to stop its uptrend!! in order to understand the change this pair has made an increase of more than 41% in the last 7 month. We can now see very clearly how this pair continues to move in an uptrend. Moreover we continue to receive good results from Australia that continue to support this uptrend while the US results continue to be mixed.

In a country where agriculture and mining products constitute 60% of exports, it is crucial for us to understand the dramatic impact that commodities have on the currency market and specifically on the Aussie dollar (see this week’s blogs entry talking about the gold). Besides, Australia’s geographic position allows it to maintain trade relations with emerging markets in South-East Asia where trade is done in Aussie dollar not USD, thus continuing to support its uptrend.

In other word, we have more people buying the AUD and selling the USD.

Keep looking at the charts and look for the fundamental announcement coming from Australia and the US that can directly affect this pair

In the case of this pair we will not put any indictors on the chart but rather we will put 2 lines on that chart and view how simple and easy this uptrend is to analyze and see. We will continue to observe this pair closely heading into the fourth and final quarter of the year.

Fundamentals:  We have a few announcements today that will affect the market.

Coming from United Kingdom we have the “PPI Input M/M”. The previous announcement was 2.2% and the forecast for today is -0.9%. (08:30 GMT). A few more announcements are also coming. One is from Canada and it’s the “Employment Change” which will be released at 11:00 GMT. The previous announcement was 27.1K and the forecast for today is 4.9K. We also have the “Unemployment Rate” coming from Canada, the previous announcement was 8.7% and the forecast for today is 8.8% (11:00 GMT). From the US we will have the “Trade Balance” previous announcement was -32.0B and the forecast for today is -32.8B (12:30 GMT). Also don’t miss the “BOC Business Outlook Survey” AT (13:00 GMT).

Big Fundamental day today!!!!

We have a lot of announcement coming out today effecting many currencies, so let us take some time to review those and the currencies they effect. We often talk about how fundamental announcements affect the market and how they help us determine the certain direction of some currencies. Today starting with Australia we have the unemployment rate release kicking off the Asian pacific session. Later that day as Europe wakes up we have many announcements that are expected to have an impact on the market. The GBP has 3 important announcements coming out today as well. Official bank rate which is the interest rate from the national bank is expected to be released at 12:00 GMT. Affecting the Euro we have the minimum bid rate and the ECB news conference where every word spoken will be analyzed 100 different ways. Also from Canada we have the housing starts then to end the trading day we have the unemployment claims coming from the US those being released at 13:30 GMT.

All these announcements tell us one thing,  appears to be a volatile market day which should make it for an interesting trading day. We should have some interesting nuggets from today to talk about on Friday.

XAU/USD

Gold prices reached an all time record high yesterday. Gold trading is currently on the rise and continues in that direction with an increase of about 5% to the price of $1037 an ounce. The previous record price of gold was recorded in March 2008, when gold reached the price of $1032 an ounce.

Gold is becoming more attractive to buyers as the USD continues to drop. The price increase of the gold can be seen when looking at the CAD/USD, AUD/USD and NZD/USD. Those pairs are what some call commodity effecting pairs and they continue to indicate the weakening of the USD.

This is an exciting time for us as traders as we are witnessing record high for the gold and the unprecedented weakening of the USD.  We talked about the G7 meeting that happened over the weekend yesterday and I will continue to wait and see the outcome of that joint statement since the market is continuing with the technical trend and ignoring some of the fundamental news coming out as of late.

By the way yesterday we talked about the USD/CAD below you will see the results of the pair over the trading day. Needless to say the fundamental news had some affect on this pair.

Fundamentals:  We have a few announcements today that will affect the market.

Coming from Europe we have the “Final GDP”.  The previous announcement was -0.1% and the forecast for today is -0.1%. Released at 9:00 GMT.

Two  more announcement coming are also expected. One from the EU being the “German Factory Orders m/m” which will be released at 10:00 GMT, the previous announcement was 3.5% and the forecast for today is 1.3%. Also coming from US we have the “Crude Oil Inventories”. The previous announcement was 2.0M; the expectation is at 2.8M this will be released at 14:30 GMT.

Alright, so before we start today let’s see how our review yesterday and what happened with the AUS/USD. As you remember yesterday we talked about the amazing trend this pair has and how over the last few month we saw the great uptrend this pair offered us ( I will show you how much money you could have made yesterday with this pair).

Now let us talk more about the G7 (meeting of the finance ministers from a group of seven industrialized nations), as Forex traders we receive some very interesting news from those ministers and world leaders. All leaders made a bold statement expressing support for a strong dollar. The joint statement after their meeting in Istanbul was identical to an earlier statement of April “We come back and strengthen the common interest of our strong In recent months we began to see signs of global economic recovery, continuous improvement in conditions in the capital markets. However, there is no room for complacency, since the growth forecast is still not stable labor market conditions have not improved. To recovery will be based, we leave the support mechanisms in economics “, the ministerial statement said.  The ministers are seeking to strengthen the global market by indicating what they would like to see however we are still seeing a weaker buck today and the big question is, when will they intervene and make it a stronger dollar?

Fundamentals:  We have a few announcements today which will affect the market. Coming from United Kingdom we have the “Manufacturing Production M/M”. The previous announcement was 0.9% and the forecast for today is 0.4%. (08:30  GMT). Two more announcements coming in from Canada “Building Permits M/M” which will be released at 12:30 GMT. The previous announcement was -11.4% and the forecast for today is 4.5%. We have the “Ivey PMI”. The previous announcement was 55.7 and the forecast for today is 56.6. (14:00 GMT)

USD/CAD

The USD has lost it power over the last 3 days after it appeared like the USD was getting stronger.  We know that over the last few weeks we are seeing more sales of the USD and more buyers of the CAD and those actions are increasing the value of the Loonie. As we all know over the last 3 quarters the USD has been dropping against the majors against the EUR alone it is down 15% Y/Y already. Today we will wait and see what the result from Canada will bring today. Those results can give a strong indicator as to the direction of the CAD. I will Put Support and resistance lines so we can get a much better feel to where this pair goes. In a technical point of view we used a moving average of 30 days on a weekly and daily chart and with both it appears to be a down trend.

AUD/USD

It‘s not the first time that we are talking about this great pair.  The thing about this pair that makes it so exciting is that every few weeks, days or hours this pair is breaking the previous record and moving in a uptrend. Take a look over the daily chart and you will clearly see the trend this currency is moving in. Over the last year we have seen that this pair has moved in the 2600 pips range and in a clear uptrend. Now the big question I hear everyone asking is when and will this pair will really break the record and prove this uptrend to be real and reach the highest point of 0.9400?

In order to get the feeling of the movement you will need to take a look at a few different parameters, one is the fundamental news that will come from the US and Australia that will directly affect the move and trend of this currency.  Next thing to do is keep looking over the chart and to technically analyze the trend of this pair over non fundamental days where only sentiment will effects its movement.  The combination of both will help you make the right decision when trading. Over the last few weeks the market has moved nicely for this pair, let’s go ahead and translate today’s movements to money in our pockets!

Fundamentals:  We have a few announcements today which will affect the market.

Coming from United Kingdom we have the “Services Purchasing Managers’ Index”. The previous announcement was 54.1 and the forecast for today is 54.6. (08:30 GMT).

Two more announcements are also coming in. One from the US “ISM Non-Manufacturing PMI” which will be released at 14:00 GMT, the previous announcement was 48.4 and the forecast for today is 50.  Also coming from New Zealand we have the “Business Confidence”. The previous announcement was -25. (21:00 GMT), no forecast on this one available.

Let’s talk about how we use fundamental analysis for trading purposes and how it affects the market on a daily basis. Political, economical and social events and announcements are considered to be a part of the fundamental analysis. They play an important part in the strength or weakness of any said currency.

For example, in today’s economy with a recession still looming and many countries still suffering from the recession, we see a weakness in the USD. That weakness is due to a bad economy with no new job creation and Interest rates holding still while inflation rises. We see the USD value as a currency dropping against many of the other major currencies. However as the economy gets better, interest rates get higher to control inflation and as a result, the value of USD will begin to increase.

Basically this is what fundamental analysis is. As we continue writing this blog we will continue to reference this entry as a point of what we believe fundamental analysis to be.

Fundamentals:  We have a few announcements today which will affect the market.

Coming from United Kingdom we have the “Manufacturing PMI”. The previous announcement was 49.7 and the forecast for today is 50.3. (08:30  GMT).

Three  more announcement coming in from US “Unemployment Claims” which will be released at  12:30 GMT. The previous announcement was 530K and the forecast for today is 532K. we have the “ISM Manufacturing PMI”. The previous announcement was 52.9 and the forecast for today is 53.9. (14:00  GMT).At the same time we will have the “Pending Home Sales m/m” previous announcement was 3.2% and the forecast for today is 0.9%. Don’t miss the “Fed Chairman Bernanke Testifies” AT (13:00 GMT).