Follow-Up Market Analysis 09.27
| 29 September 2011
Listed below are significant issues that best describes the Forex market on our perspective Update:
* Based from our USDX 09.19 market view, the US dollar index met its initial R1/R2 at the 78.08 / 78.85. A wider price swing is expected in both directions as it makes its way back higher with increasing volatility ahead of the end of the month position adjustments. Update Link: Trend following EURGBP Cross 9.30
However, we do eventually expect a ladder-like upswing for the US dollar moving forward to complete its second leg higher to the 81.10 or better in the months ahead towards or just after the closing of the year 2011, in spite of the mix reports for the US economy. On the Technical formation, the higher bottom of the USDX is well defined as the 2nd leg of the price direction is bid between bullish and bearish market players. The opening and closing prices should be well looked at and pay close attention as it would provide the daily price swing and direction of the US dollar. This also signifies the inverse configuration of the USDX vs. the EURUSD when placed side by side or overlayed with one another.
* The precious metal's corrective and dramatic move lower down to the 1532.59 liquidation levels with increased volumes have met renewed exchange / arbitrary position adjustments from Euro denominated Gold positions to flight to quality US dollar denominated assets. This also prompted US Stocks to change in both directions in spite of some mix reports also coming from the Euro zone. Although, a price and trend reversal had been previously called the USD1510/50 range is an established support for the time being.
* Euro zone's relentless efforts of perking the deteriorating EURUSD would have a lifeline of relief efforts European leaders in supporting the Debt crisis as the Euro's short stemmed recovery may prove to be just a mid-week effort to support it. A further extension would have prompted an all important price level of 1.3180 which was a striking distance from its previous low of 1.3361 extension that met some short-covering from efforts made by Germany's Angela Merkel.
On a technical perspective though, the 1.3350 support price seems to be holding a fresh incentives from that effort brought about some slightly bullish players in the market. As the chart formation shows a parallel channel support at the said price levels. And a daily buying divergence occurred at these levels while it was moving lower. Do not discount the probability of a return to the lower prices for the next few days prior to the end of the month. Otherwise, any move higher would only be a corrective mode as the continuing pattern of bearishness still prevails in the market sentiments towards the oopening of the new month this October..
*Meanwhile, the AUDUSD and the GBPUSD chart formations have their similarities with prices recovering from their recent lows at .09621 extensions were made while the GBPUSD did the same at the 1.5326 ; as the market sentiments weighed heavier for the major pairs. The weekly GBPUSD chart formation is an intra bar where it shows the corrective mode of the GBPUSD within a bear trend. Do expect that a mid-term outlook for price movement may be seen but the overall positioning to trade short the European majors is well in place. This goes well with the Aussie Dollar as it has made a price and trend revesal from its previous high as indicated in the monthly chart formation as mentioned in our blogspot report.
The technical price adjustments were made possible to make room for a continuation of its established trend. We do remain bearish and short for the Aussie dollar in particular. Although, the 1st target objective has been attained. Arbitrary hedging would be applied as a precaution to protect the earlier gains to maximize the market’s profit potential and established trend line / bearish Channel.
*USDJPY daily wedge higher may still point for a daily corrective movement while the overall weekly formation have resulted to some profit taking/ liquidation yet the 76.00 may still prove to be a key pivotal price level; as a lot of traders and analyst are too keen that the Bank of Japan has failed to follow suit with the SNB. Knowing how Japanese traders and bank strategist move; they would not give the major players the luxury of being able to read and speculate when their next move would be made. The tandem value movement of the USD and Yen’s appreciation would continue for now while fresh news from Euro zone would try to help and regain confidence in the European markets to avoid further contagion and deteriorating Euro value.
