Daily Forex Technicals |  Written by TheLFB-Forex.com |  Jan 22 09 03:43 GMT | 

The euro caught a bid on the U.S. equity market rally late in the trading day on Wednesday and the pair shot up 200 pips from the low seen. The pair, seen here on the four hour chart still has not been able to break above the neutral 50 line on the RSI, which denotes that it has entered buy territory. The pair ran into fairly strong resistance in the 1.3030 which ironically acted as a strong support level late last week. If this resistance level were to go the pair would have the 50 day SMA at 1.3230 and slight resistance may again be seen at 1.3540

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved.

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Daily Forex Technicals |  Written by DailyFX |  Jan 22 09 01:36 GMT | 

Why Would AUDCAD Hold a Range?

Levels to Watch:

Range Top: 0.8500 (Pivot, Fib)

Range Bottom: 0.8125 (Trend, Pivot, Fib)

Volatility is extremely high in the currency market and many currencies have either seen significant breaks or are on the cusp of noteworthy moves. For AUDCAD, there is certainly exposure to general risk sentiment as the combination of the high Australian benchmark lending rate and signs that the BoC is heading towards zero have imparted the pair with a clear carry influence. However, each economy is considered a leader in their respective regions.

With little serious momentum developing behind price swings, congestion is relatively stable for AUDCAD price action. Support is read around 0.8100/25 where a general bullish bias finds a clean trendline to follow. This is further backed by a 38.2% fib retracement and notable pivot that happen to all fall within the same area.

Suggested Strategy

Long: Half-sized entry orders will be set at 0.8175, aggressive considering the rising trend.

Stop: An initial stop at 0.8055 should cover a tail that develops from a horizontal range low. To secure profit, move the stop on the second lot to breakeven when the first target hits.

Target: The first objective equals risk (120) at 0.8295. The second target will be 0.8415

Trading Tip - Volatility is extraordinarily high for the FX market and a few key currencies have pushed for significant technical breakouts over the past 48 hours. This means range traders are a dangerous proposition; and those setups that are pursued should find a solid foundation in fundamentals, technicals and a strategy. Our AUDCAD looks to answer at least two of these contingencies. From price action, we can see that this pair is firmly set within a trading band that is wide enough to accommodate volatility with significant technical barriers. Since we are looking to keep with the medium-term bias, our only concern is for a long entry on the range. This finds both a general and concise rising trend, the 38.2 percent retracement of the October 8th to January 5th bull wave and strength as a former resistance on price action around 0.8125. To curb our exposure to potential breakouts, we have reduced position size and widened stops. The real risk to this position is fundamentals. There is significant scheduled event risk on deck, but the real concern is risk trends. Though it is dampened somewhat, this pair still has significant exposure to the ebbs and flows in risk aversion that drive the yen and dollar pairs. With this in mind, we will look to cut open orders by Thursday’s close or if spot hits 0.8420 before we are entered.

Event Risk Australia And Canada

Australia - While the Australian economy is still considered one of the strongest in the far East, its clout is nonetheless fading among disillusioned traders. This is largely a condition of speculation rather than data (the fundamentals have shown the Australian economy has been suffering for a while) which is more difficult to gauge as a market driver as such general perceptions do not have starting and ending points as they shift. Nonetheless, we will see this sentiment hang over the Aussie dollar and leverage the currency’s correlation to general risk trends. As for scheduled event risk, most of the major data crosses after the weekend. This Thursday’s import inflation gauge and next week’s producer counterpart is merely a guide to CPI. If inflation plunges towards zero, the RBA can extend its cuts.

Canada - Uncertainty hangs over the Canadian dollar’s future. Can the nation’s economy and financial markets indeed weather the global crisis better than the United States; or is this wishful think that will consistently be discounted through loonie depreciation? These concerns will be partially answered by through developments in business activity going forward - an unpredictable market dynamic. However, there will also be scheduled event risk that could have an immediate impact on volatility as well as a lasting influence on the fundamental outlook for the economy. On deck for the end of the week, we have two key market movers: retail sales and the consumer price index series. Through the most recent growth figures, Canada seems to have actually seen a boost in growth through the second half of 2008, but this is unlikely to last through fourth quarter data. With November’s retail sales report, we will receive an updated read on consumer spending, a vital component of overall growth going forward. CPI will look to confirm the BoC’s forecasts for inflation to turn negative for two quarters of 2009: but as a confirmation, its impact on the currency will be relatively limited.

DailyFX

Daily Forex Technicals |  Written by DailyFX |  Jan 22 09 01:31 GMT | 

EURJPY back to 122 over next several weeks

CHFJPY back to 82 over next several weeks

AUDJPY 62.28 defines trend

NZDJPY 50.58 defines trend

EURJPY

I wrote last week that ‘the decline from just above 131 may be the next bear leg within the drop from 170. The advance from the low is in 3 waves, confirming that the larger trend is down.’ The decline from 131.08 has traced out 5 waves as the EURJPY has made a new multi year low (dropping below the October low of 113.59). A multi-week low is most likely in place and expectations are for a return to former resistance at 122. Short term Fibonacci support is in the 114-115 zone.

GBPJPY

The GBPJPY continues to make all-time lows. Additional downside is likely over the coming weeks but an important bottom appears close at hand. The decline from 216 is clearly impulsive and the drop from 148.69 is most likely wave 5 of that decline. A close look at the structure of the drop from there reveals that wave 5 is probably unfolding as an ending diagonal (5 waves but each wave is a ‘3′). Expect a rally from current levels, potentially to 129.82, before the decline resumes

CHFJPY

Like the EURJPY, the CHFJPY drop from its late 2008 high is in 5 waves. A break below 74.66 is expected but not before a corrective rally. The pair could reach former resistance at 82.09. Short term support is at 77.

CADJPY

Staying below 73.80 in the CADJPY keeps the near term trend down. The short term target is 64.70; which is the 100% extension of both the 87.55-70.58 decline and the 80.49 70.58 decline. I am looking for equality between these waves because structure suggests that an ending diagonal is underway from 87.55. The confidence in this outlook is low given the patterns that suggest larger rallies in other Yen pairs.

AUDJPY

Since the October 2008 low, the AUDJPY has been in a contracting range (although the range does not appear to be a triangle). There are a number of possibilities with regards to the potential count. Structurally, the trend is bearish as long a price is below 62.28. A rally through there brings to the forefront the count above; which is a flat from the October low in which wave C would be underway now and end above 70.58. Until 62.28 is broken, getting bullish is dangerous.

NZDJPY

The NZDJPY dropped to a multi year low today (again). Staying below 50.58 keeps the trend down and there is potential resistance at 48.69. A bearish target, provided by Fibonacci extensions, is at 42.25 and 37.80 (100% and 161.8% extensions of 56.39-47.10 / 50.58. The all-time low, made in October 2000, is at 41.94

DailyFX

Daily Forex Fundamentals |  Written by DailyFX |  Jan 22 09 11:59 GMT | 

U.K. January CBI manufacturing orders index fell more sharply than expected, dropping to -48 from -35, far below our survey median estimate for a drop to -39. Meanwhile, export orders fell to -39 from -33. Output expectations fell only marginally from December but still hit its lowest reading since September 1980. The quarterly survey was also released today, showing order expectations for the next three months dropping sharply to its lowest reading since July 1991, while expectations for domestic prices fell sharply as well. Though notoriously volatile, CBI data highlights the very difficult situation within the manufacturing sector, underpinning concerns for a prolonged recession. So far the Sterling depreciation has shown little support for exports, as global demand is deteriorating rapidly.

DailyFX

Daily Forex Fundamentals |  Written by TheLFB-Forex.com |  Jan 22 09 11:37 GMT | 

UK CBI Industrial Trends Orders Actual -48, Expected -39, Previous -35

Release Explanation: The release tries to gauge manager’s expectations from the manufacturing industry by comparing actual sales with sales from last year.

Trade Desk Thoughts: The UK CBI report shows the manufacturing sector remains gloomy about future expectations. The release number came in at -48, the lowest read in the last 28 years.

Demand plummeted during the last three months, with 56 per cent of companies reporting a fall in the volume of new orders compared with the previous quarter, and just 14 per cent reporting a rise, giving a balance of -43. This balance is the lowest in more than 17 years, since July 1991.

The rate with which demand fell in the last quarter is particularly striking compared with previous quarters. In October, the balance for volume of new orders was -30, and in July it was -3.

Forex Technical Reaction: The pound fell 200 pips since the Asian session started. The pound hit a 23-year old low against the dollar on Wednesday, and an all-time record low against the yen.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com