Update:Technical Perspective

Written by JS T Alexander | 24 August 2010

It has been quite a directionless forex market at the opening for the week as the overall price movements for almost all major pairs have been within the previous week's trading range. As the market awaits further details coming from the upcoming reports on the Existing Home Sales and the durable Goods Orders that may show some mix expectations for the next couple of days.

Trending 6 maJORS live-Highlights on USDJPY & USDCAD
Youtube URL:http://www.youtube.com/watch?v=vgMvTA4IepI

Thereafter, the jobless claims, the Michigan Consumer Sentiment Index and the more important speech of the Fed Chairman Ben Bernanke towards the end of the week. So as a matter of analysis, we have to go by with the Technical perspective looking at the market ahead of these reports. However, the reluctance of the market players make trades could still be looked at as in a weary situation after being battered down by the wider market swings that led to an onslaught of stop loss and liquidation for retail investors and traders for the last two weeks.

However, we did took into consideration to state in our market view reports and blogs to simply stay clear of the market as it was very obvious that central banks and major institutions were adjusting positions and hedge funds were simply so busy with their trade conversions that not a lot of analyst making their market calls did even mention what is actually going on in the market place.

With that said, the majority of the trade now would concentrate on the cross rates rather than the USD base vs. foreign currency trades. Although, AUDJPY and the GBPJPY has been on the Yen favor as the USDJPY base currency pair went as low as the 84.70 support price. The strength of the Japanese Yen has been in focus by the Bank of Japan and at this time talking the Yen back down to a more desirable level would be their strategy. but to intervene would be a long shot as they already have tolerated the prices back to its 15 year high. So most carry trades may not be as attractive as this point of time.

One of the best indicators used during these kinds of market condition is to follow where the directional trend of the USDX.the corrective move for the USDX was substantial enough for some traders and analyst to be convinced that the reversal has been made. However,when the prices of the USDJPY and the USDCHF remains at the lower band of the trading range and the USDX at the higher band would simply indicate a spread and a re-alignment has to be made, where the USDX would have to move lower to align with the rest of the major pairs.

Currently at the 82.97 may try to attempt 83.80-84.20 range before dropping back down and continue its original trend lower. But watch for the fundamental reports this week on durable goods orders. Relative to the futures, the behavior of the financial futures is the most common technical tool that determines the markets' future direction based on the volumes and open interest of the futures prices relative to spot market prices. Where a normal and contagion market may pre-determine the next move of the traders. But some other traders and analyst correlate the Dow Jones and S&P more often to get some indication. Well, everyone has their styles and trade analysis.

Why the financial futures? Its because of its direct relationship with the spot market prices. But the momentum and where exactly money shifts to would be determined quite easily. There is a distinct advantage of having the experience of trading directly with both the interbank market and commodity futures through the CME and the CBOT.

The weekly chart of the EURGBP still holds a distinct divergence as it moves lower, while both majors are still in the sidelines as to where they started from. currently at 1.5570 for the GBPUSD and 1.2715 for the EURUSD respectively.Indeed, they maybe tempting prices for long trades however, it depends on how each traders'portfolio would be willing to tolerate any down movements as the extensions lower may still be wider.

As the USDCAD shows its form by continuing to move higher as of this writing at the present levels of 1.0503 and attempting to move to the first objcetive of 1.0600-80 levels.Although, the day to day seems to resist but the leg room to move higher is still intact as it penetrated its first Fibonacci trendline resistance. And ultimately would attempt its 21 month MA at the 1.0710-20 levels. Pls refer to video for more details on the Canadian dollar and the Japanese Yen.