Forex Go!

Just when you begin to think that there couldn’t be a more archaic, irrelevant group of financial companies like the ratings agencies, you get slapped back to reality and realize that they do still carry some weight. These are the same companies, after all, that gave the highest ratings to garbage, toxic mortgage-backed debt and were partially responsible for the financial collapse of 2008.Today we will get a special report from our government (another largely irrelevant body but that’s a topic for another day) where they will essentially attempt to place blame for the financial crisis. Predictably, there will be THREE versions of the report, one representing each political party’s view and another which will likely be dismissed by both parties but will actually be closest to the truth. I guess that’s what $9.5 million buys these days in Washington DC.

So where was I? Yes the ratings agencies. Overnight, S&P downgraded Japanese debt one notch citing the nation’s debt burden and the belief that the government lacks a coherent strategy to deal with it. This mark

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News and Events
 
The euro was steady near a two month high (1.3725) against the dollar after the Fed showed reluctance to scale back its easing policy and voted unanimously to hold interest rates steady, repeating that they would stay low for an extended period. While eur/sud retreated prior to the release due to market expectations of a more hawkish stance by the Fed, it quickly recovered as nothing new was announced.  The most important point of its announcement is that although the economy is recovering, it is still not reflected in the labour market. While the Fed’s emphasis is on efforts to cure unemployment, the European Central Bank indicated growing concerns on inflation thus helping the euro gain across the board.
 

Technical Analysis

EURUSD 4h chart The euro continues strong and looks ready to test 1.3750-1.3780 resistance with a break opening the way to 1.4000. Support is at 1.3650 and 1.3575

• Dollar Tests a Fresh Two-Month Low after the FOMC Decision, Looking Ahead to GDP
  
• British Pound Traders Too Optimistic on Rate Implications of BoE Minutes
  
• Euro Economic Activity and Inflation Merely a Distraction to Financial Concerns
  
• New Zealand Dollar Rallies Despite RBNZ’s Near-Term Dovishness
  
• Australian Dollar Eases after Prime Minister Announces a One-Time ‘Flood Levy’
  
• Japanese Yen Untroubled by Ballooning Debt Forecasts, What about Growth Updates?

Dollar Tests a Fresh Two-Month Low after the FOMC Decision, Looking Ahead to GDP

The dollar can’t seem to catch a break. The benchmark currency slid for a fourth consecutive day on a trade-weighted basis Wednesday in the wake of a surprising dovish adjustment to the Federal Reserve’s policy statement and strong housing report. And, thou Read more…

The vast majority of people who trade forex tend to focus predominantly on the dollar pairs. These include the GBP/USD, EUR/USD, USD/JPY and USD/CHF pairs. However there are a few other good pairs to trade that dont involve the dollar at all such as the EUR/GBP, GBP/JPY and AUD/NZD pairs. However today I want to talk about another pair – the CHF/JPY, ie the Swiss Franc against the Japanese Yen.

I dont actually trade this currency pair myself, but Adam Hewison, the co-creator of Marketclub, has just created a short video discussing how he has traded this pair in the last year using his proprietary trading signals.

Whats interesting is that this pair traded in a broadly sideways trading pattern last year, but despite this his trading signals still managed to generate 5 winning trades out of 7 and a total profit of 862 pips. He did all this just by following his weekly trading signals and used no other technical indicators at all.

If you would like to check out this free video for yourself, you can do so by clicking here.

Forex Commentary:

The euro hit a two-month high above $1.36 on Friday and its break of important technical levels suggested more gains to come now that anxiety about a euro zone debt crisis has started to wane.

The euro has outperformed the dollar in eight of the last 10 sessions, and Friday’s breach of $1.3570 took it above the 50 percent retracement of its November-to-January slide. It was last up 1 percent at $1.3615

Currency speculators turned long on the euro for the first time in two months in the latest week while they doubled bets against the U.S. dollar, data from the Commodity Futures Trading Commission showed on Friday.

The value of the dollar’s net short position rose to $15.06 billion in the week ended Jan. 18, from a net short position of $7.38 billion the previous week, according to Reuters and CFTC calculations.

Trading Setups / Chart in Focus:

EURUSD

On Friday the EURUSD broke higher and closed above key technical resistance levels. We

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This morning we received three different retail sales reports from the UK, Canada, and New Zealand, each telling a different story about economic progress.  Retail sales are a good barometer of consumer expectations and confidence, and can sometimes forecast inflation fears.  The logic is that if you think prices are going up, you may want to buy today rather than chance paying more in the future.

In New Zealand, retail sales increased 1.5% vs. an expectation of 1.1%, though most of that was led by cars and energy as the core rate actually fell for the second straight month.  So traders need to be careful as this actually shows weakness and not strength, as consumers are more focused on debt reduction.

In the UK, retails sales declined .8% vs. an

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Pair has opened current candle below 20 SMA, while momentum indicator crossed upside down the 100 level, giving a selling signal that would get a stronger confirmation if price manages to extend the fall below 200 EMA around 1.3240 past Monday low. Last week bullish momentum, mostly triggered by short covering, could reverse once below that level, with the price heading towards the 1.3180 price zone first, followed then by 1.3120. On the longer view, pair has set a double roof around 1.3410, although neck comes at the 1.2880 low set earlier this month.

To the upside, pair needs now to confirm a recovery above 1.3335, to erase the bearish tone and attempt to reach 1.3360/80 price zone.

Congress returned to the people’s business today and the rhetoric appears a dialed down version of debates prior to the tragedy in Tucson.  The new Republican House has made the repeal of Obamacare their first priority.

There is other business on the table and the clock is ticking on some important legislation.  One of the most immediate measures to be resolved is the increase in the debt limit needed to keep the government running.  On Meet the Press this weekend, Senator Charles Schumer of New York said, “If we didn’t renew the debt ceiling, we might permanently threaten confidence of the credit markets in the dollar, which could create a recession worse than the one we have now or even a depression.” 

Republicans know the debt ceiling must be raised, but as they did with the extension of the Bush Tax Cuts and with the extension of unemployment insurance benefits, their support is conditional.  Republican Senator Tom Coburn stressed the importance of the elevated debt ceiling as long as certain spending cuts were implemented.

Treasury Timothy Geithner has said that the government may hit the current ceiling as early as March 31^st.  This extension was raised last year during the lame duck session, but was tabled allowing the Republican House to set the pace.  Since 2002, every Congress has passed the ceiling increase.

But, this Congress is different.  Actually, there are three constituencies to appease in this debate.  The Democrats, Republicans and the Tea Party Republicans all have different opinions on how to proceed.  Traditional Republicans and Democrats would normally arrive at a compromise, but the Tea Party is the wild card in this equation. 

These newly elected officials will certainly try to flex their newfound muscle.  While the U.S. people want to redu

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The euro tanked last week in forex trading, but most of those losses are being overcome this week. EUR/USD is gaining in currency trading on the FX market right. A great deal of that improvement is due to efforts by the European Union to help countries with sovereign debt issues.

Announcements of plans to keep euro zone countries suffering from sovereign debt problems have been made, and that is helping forex traders breathe a sigh of relief. Additionally, the fact that U.S. jobless claims are on the rise again is helping the euro in forex trading. Also not helping the U.S. dollar: A warning by Moody’s of a possible credit rating cut.

For now, it appears that a euro recovery is on the way. However, another sovereign debt crisis in Europe could once again send EUR/USD plunging. Sterling and Aussie are also gaining against the U.S. dollar.

APC Group Inc. (APC), an energy unit of the much favored Belle Corporation (BEL), is indeed poised for a huge upswing in the days to come. APC’s price action, in my opinion, is a technical work of art or a masterpiece to say the least. As you can see from its daily chart, APC’s first notable move was when it broke out from an inverted head and shoulders pattern (highlighted in light blue). After the move, it reached a high of PHP 0.66 before tapering off, developing a cup and handle formation in the process. It then escaped the said cup and handle on September 1, 2010 when it rose by 16% from PHP 0.50 to close at PHP 0.58. It continued to swing higher until it marked a high of PHP 0.89 on October 11, 2010. Since then, APC has cooled off as it trades within a falling wedge. Who would know that this wedge could in fact be a handle of a bigger cup and handle formation?

A falling wedge, as some of you might know, is in fact bullish since it represents only a temporary retracement in prices. Asi Read more…