FX Volatility on EURGBP Cross Rate - LIVE

Written by megatrade101 | 01 September 2010

Youtube URL:http://www.youtube.com/watch?v=rkZx9-NxHkY

With the recent UK PMI disappointing nine-month low prompted the GBPUSD to continue to move lower currently at the 1.5370 from a low at the 1.5330 which led other traders and investors to shift currency pairs to the EURUSD and back to the AUDUSD as an arbitrary hedge strategy against the weaker USD.

Whereas the USD index is now at the 82.77 bp levels and a probable continuation lower would be made. With the EURO leading the majors as an alternate currency flight to quality whenever the USD heads lower with some alternative trades with the appreciating Gold prices now back nearing it s all time high USD 1265.05. The correlations of the currency market with the financial futures and the precious metals are vital for any trade. so we do advise to have proper due diligence whenever one trades in the FX market.

As the EURGBP cross rates has reacted higher whenever a contradictory movement is made between the two major pairs as it made in the recent hourly high at 0.8323 at the start of the 1st trading day of the new month. With accelerated volumes and strength of the Euro vs the USD and the Pound will continue to the 0.8350-60 level of resistance on a day to day basis. However, continued strength will prevail whenever the Euro accelerates and the continuing USDX still heads lower. Also with some intraday corrections everytime it touches a resistance price which it did on the highs. Looking at the 0.8450-8520 levels as initial target on the next wave up. Hedging strategy to protect EURGBP position would simply be taking a long GBPUSD on pivotal point of acceleration. So one offsets the other or just settle the positions simultaneously is another alternative of keeping it simple.

A combination of the Fibonacci and Elliot Wave theory is applied for setting the target levels in both directions. On breakout, the Donchian Theory is applied for channel breaks whether they be support or resistances. A minimum of at least 8 technical tools plus the fundamentals would be advisable for analysis.

Meanwhile, the USDCAD corrective move has been limited to the 1.0553-80 levels while maintaining its higher movement in a slower pace. Do expect that this will also continue while making these slight corrective moves before it resumes its trend higher. We still remain bullish with intraday corrections but should only be within the vicinity of the above stated lows with extensions on the lower band of 1.0495-5-0500 support. Pls. remember, that certain strategies used in these markets are a bit complicated for new traders and does not guarantee that the same results would work for others. Choosing which of the majors should be traded takes a little more time and research.

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