Follow up on market outlook

EURUSD

The EURUSD has been in a range these past few days  of trading and developed a triangle chart pattern on the 1 hour chart. The pair had been in an up trend previous to the pattern's development. Yesterday the EURUSD fell by approximately 40 pips, completing the support line of the chart pattern. Today's trading in the market saw a strong break of the pattern's resistance and previous high created when the pattern first formed.

The uniform pattern as well as the strong break, speaks to the strong probability that the break is legitimate. The Hurst Exponent now projects a 56.22% probability that the trend will continue to the upside.

The pattern measures approximately 160 pips, however resistance lies at approximately 150 pips away at the 1.27166 level.

USDCHF

Today's trading on the Swiss Franc saw a break of the support line created at the 0.95510 level. The pair was in a previous down trend prior to range which occurred over the past few days of trading in the market. Forex traders now observe the pair's movement as the down trend continues to support areas of 0.94681 and 0.94190 in the short term and 0.92707 for long term trading in the market.

USDCAD

The USDCAD has yet to break its support line however there is strong movement to the down side as trading continues today. A break of the support level created at the 0.98467 level would mean a continuation of the down trend which took place prior to the pair's range. Development of the move will be observed during the last day of trading in the market today.

Technical Analysis Outlook

GBPUSD

The GBPUSD has retested the support line created by the short term trend line. The pair now trades at around the 1.5865 level as their seems to be a slow move to the upside. Continuation of the trend would place profit targets around the 1.62 region as the pair traded to a high of 1.62826 on the 30th of April 2012 before a strong sell off which took place which saw a test of the 1.52791 region.

USDCHF

The USDCHF ranges around the support area of 0.95510. A clear break of support would mean a continuation of the trend and opportunities to short the pair would yield some profits. A break to the downside would see the pair trading to support areas of 0.94681 and 0.94190 in the short term, and 0.92707 for the long term.

USDCAD

The USDCAD ranges around the support area of 0.98467. This area in price held firmly as the pair tested the area for the third time this year. The area was previously tested in March and May of this year. A clear break would confirm the down trend which appears to be developing and would place profit targets around the 0.94 region. This support area was created during July of last year as the pair rallied to a high of 1.06506 after a double bottom pattern was formed on the daily chart.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

EURUSD upward move?

EURUSD 4HR - MetaTrader Platform

The EURUSD has been trading in a range for the past couple of days after the pair traded to the upside last week to approximately 200 pips.

The pair seems to have met upon resistance as it ranged outside the ichimoku cloud on the daily chart.

Failure to achieve a strong break of the ichimoku cloud on the daily chart has signaled that market players remain cautious during their trading over the past 48 hours. Trading the pair to the upside would come from further confirmations in price movement over the next few hours.

EURUSD Pennant - 4hr

The pair has shown some upside potential for a continuation of the trend which had started last week as a triangle (chart pattern) is developing on the four hour chart. Prices shows some persistence in the upward move as there is a continuous test of the resistance of the pattern.

The triangle measures approximately 150 pips and a clear break of the pattern to the upside would project prices moving by approximately that amount.

Should a break occur, there is a 54.95% probability that the up trend would continue based on the reading from the Hurst Exponent.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

USDCHF rests on support

USDCHF 4HR Chart - MetaTrader4 Platform

The USDCHF has reached a support level of 0.95510 on the four hour chart from its down trending move which started during last week's opening days of trading.

This bearish move was confirmed by the angle and separation of the 20 and 50 period exponential moving averages. The Ichimoku Kinko Hyo also started to trend down and began plotting future resistance area for the pair, evident by the thickness of the cloud.

USDCHF 1HR Ascending Triangle - MT4 Platform

A look at the 1 hour chart and we can see what appears to be an ascending triangle chart pattern being formed. There was a break of the support line (red line), however the pair failed to break below the 0.95510 support area. This area has proved to be a critical area of support, with a clear break signifying a continuation of the down trend for the next few days of trading.



Confirmations to hold short positions from the pair will come from a break in the support area of 0.95510 on the 4 hour chart. Should this area be broken, further support will lie at 0.94681, 0.94190 and the 0.92707 region.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

Introduction to MetaTrader

The MetaTrader software was developed by MetaQuotes Corporation and is one of the most popular trading software among many forex traders. The software can be downloaded directly from your forex broker's website. Forex brokers such as FXDD and FXCM are among the many forex brokers in the market to offer MetaTrader as their forex trading platform.

MetaTrader has a clean interface, allowing ease of accessability to navigate the trading platform. Accessing the various charts and trading tools offered in the platform can be done without struggle or confusion.

The MetaTrader come equip with a range of default indicators to apply in your trading strategy. The platform also allows you to download or create your own custom indicators and install them directly in the platform for your ease of access whenever it is needed.

The MetaTrader platform is easy to use. Adding a chart is done by a simple click of the file tab where the first option displayed is "New Chart". You may add as many charts to the trading platform as you wish. You can also modify the chart and indicator colors to best suite your preference.

MetaTrader also offers the option for your own Expert Advisor. The Expert Advisor feature allows you to test your current strategy with data spanning over several years. A tool which may provide useful to assist in developing a proper trading strategy as well as your confidence to trade.

Fee free to go online and sign up at any fx broker that offers MetaTrader for your free trading account and begin your trading experience. Forex demo accounts are normally available for a three month period after which your account expires and you will have to download another demo account free of cost, should you wish to continue demo trading. Otherwise, you may opt to go live with your fx broker and deposit as low as US$100 to start your trading experience.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

USDCAD's bearish movement to 0.98898 to extend further

The USDCAD downward movement extended to 0.98898 at the close of the week's trading on Friday August 17, 2012.

The pair's break through the ichimoku cloud and support level of 1.00995 on the daily chart signified the bearish move. The 20 and 50 period exponential moving averages confirm that the pair is now in a down trend position.

An analysis of the Hurst Exponent reveals a 52.52% probability of persistence i.e. the time series is trending and there is a 52.52% change of the trend continuing.

The pair bounced off a support region around the 0.98467 level on the last day of trading. This rebound could signify a pull-back to the moving averages for a continued move down.

A break of the support level around the 0.98467 region could mean a further extension of the pair to as far as 0.94390, a 410 pip move.

Opportunities to short the pair on smaller time frames once support is broken could yield some profits riding the trend to the projected target. Confirmation to keep trades open would be sought from further increases in the Hurst Exponent, indicating persistence from the move.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions.. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

AUDUSD bounces off support

AUDUSD 4HR Chart - Metatrader platform

The previous dip in the AUDUSD has shown now shown indications of a rise in price as the pair failed to break below support of 1.04115.

The pair had bounced off this level on the 1 hour chart, only to find resistance at the 1.05178 level on August 21, 2012. A retest of the support level had occurred earlier today where the pair again bounced to and achieved a clear break and close to the upside of the previous resistance level.

The pair now forms what appears to be a double bottom on the 1 hour chart. A clear move to the upside of the neckline would project a 106 pip move to retest the previous high created before the pair began its descent from the 1.0611 area of resistance.

Double Bottom chart pattern - Metatrader platform

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

USDJPY Reversal

USDJPY - Metatrader platform

Long positions on the USDJPY would have been stopped out today as the pair plummeted shortly after the release of the Federal Reserve minutes (pure fundamental).

On a more technical side, the pair has been in up trend since the start of last week.

Traders that opened position on the pair from the start of the up trend would have realized some profits before the reversal.

The pair had closed the previous week's trading on an area of resistance on the daily chart inside the ichimoku cloud. This would have caused conservative traders looking for an entry on the trend to remain cautious, as a clear break and close of the candle stick outside the cloud would have been confirmation that the pair would continue in its upward direction. On the other hand, aggressive traders that entered on a pull back to the moving averages would have been stopped out of the trade.

The best step to take at this time is to watch the pair's development over the next few days for potential opportunities to trade.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

USDJPY on resistance

With the recent move upward of the USDJPY, the pair closed trading last week on a resistance area on the daily chart inside the ichimoku cloud.

The days trading for August 20, 2012 saw the USDJPY pulling back to the 20 period exponential moving average on the 4 hour chart.

 The Hurst Exponent has indicated a 54% probability for persistence in the upward move.

Confirmations to go long or to keep long positions open would come from a clear break and close from the daily candle through the ichimoku cloud in the upward direction. For higher risk traders, a pull back to the moving averages on the 4 hour time frame would pose a meaningful entry point.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions.. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

The foreign currency market

Foreign exchange trading or forex trading, is a transaction in which one party purchases a quantity of one currency by paying in another currency.

The foreign exchange market is a global decentralized financial market for the exchange for international currencies. The market consists of a range of buyers and sellers executing transactions around the clock, with the exception of weekends. The market provides an opportunity for traders to trade at anytime of the day or night. The value for a wide range of currencies are determined in the forex market by valuing one country's currency against another.

The need for international trade and investment have been seen as the primary reason for the existence of the foreign exchange market. The market also provides a means for speculation, which adds liquidity to the market.

Today, the forex market is a multi-trillion dollar market.

Who trades in the forex market and what are the main currencies traded?

The forex market is traded primarily by:

1. Commercial banks, central banks and other financial institutions
2. Government
3. Currency speculators and brokers
4. Institutional Investors
5. Corporations
6. Travelers and tourists

The most traded currencies in the market are as follows:

1. United States Dollar "Dollar" (USD)
2. Euro (EUR)
3. Japanese Yen (JPY)
4. Pound Sterling (GBP)
5. Australian Dollar (AUD)
6. Swiss Franc (CHF)
7. Canadian Dollar (CAD)
8. Hong Kong Dollar (HKD)
9. Swedish Krona (SEK)
10. New Zealand Dollar (NZD)

The most traded currencies in the world are called the Majors and they constitute the larges share of the currency market. The four pairs traded by most forex traders are the EUR/USD; GBP/USD; USD/CHF and USD/JPY.

A currency pair, similar to the ones described above, is the quotation of a currency unit against the unit of another currency, with the currency being used as reference referred to as the counter currency and the currency quoted in relation is called the base currency.

What is foreign currency trading?

As it relates to individual retail investors and traders, foreign currency trading occurs when the rate for a particular currency pair is speculated. Trades that think that the GBP/USD might go up, will buy, "go long"  and make a profit by selling the pair at a higher rate than it was bought. Similarly, if a trader believes that the GBP/USD will fall, he would sell the pair then buy it back at a lower price, making a profit in the process. This is called "shorting the market". All trading which takes place by individual investors and retailers  must be conducted through a broker. The broker charges a small fee to execute each transaction called the "spread" i.e. the difference between the bid and ask price of a particular currency pair quoted by your broker.

Dip in the AUDUSD

The AUDUSD has been in an up trend since its rebound off the 0.95773 support level on the daily chart on the 1st of June 2012. 

AUDUSD Daily Chart

The trend which began from this strong rebound, saw a move of over 900 pips to a high of 1.06144 on the 10th of August 2012.

The pair has however shown a break of support level of 1.04410 on the 4 hour time frame at the end of the weeks trading on August 17, 2012 to close trading at 1.04208.

The Hurst Exponent also fell from a high of 60.17% to 54.99% at the end of the week's trading. The Hurst Exponent is a numerical estimate of predictability of a time series and is useful in technical analysis as it provides a means of clarifying time series in terms of predictability.

An outlook of the pair on the weekly chart would observe that the pair has been in a range between support and resistance levels of  0.95773 and 1.10754 respectively, approximately 1,494 pips. Trending between these levels could be sought on the lower time frames.

This dip in the AUDUSD could have occurred due to market concerns on fundamental analysis. Closer observation is needed for the pair during its time of uncertainty for the opening week's trading.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions.. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice. 

Bulls Market for the USDJPY

The USDJPY has found a bullish momentum at the end of the week's trading after breaking out of a consolidation which started late July 2012.

The pair broke resistance of 78.687 on Tuesday August 14, 2012 on the 4 hour time frame, signified by a strong bullish close above that level. Since July 24, 2012, the pair has been consolidating between resistance and support levels of 78.687 and the 78.151 region with a test of the 77.904 level throughout that period.

Upon breaking resistance level of 78.687, the pair retested the level and continued its move in the upward direction.

Strong signals from the 20 and 50 period exponential moving average confirms the upward move, as the 20 and 50 are now in a trending position. The ichimoku cloud has also begun its ascent, as it projects future support for the pair on its upward move.

The pair now rests on major resistance levels on the daily chart and a break of this level will project further resistance at the 80.315 level. The USDJPY reached this high on the 22nd of June of this year, after which a sell of of the pair took place.

Disclaimer: Foreign exchange trading carries a high level of risk that might not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objective, experience level and risk tolerance. You could loose some or all of your initial investment; do not invest money that you cannot afford to loose. Educate yourself on the risks associated with foreign exchange trading and seek advice from an independent financial or tax adviser if you have any questions.. Any opinions, research, data or other information contained within this site are provided as general market commentary and do not constitute investment advice.