Market Analysis - SRO 5.19
| 19 May 2011
The uncertainty of the market participants could be best described by viewing across the board how the price behavior is currently taking place in the market. Without considering the other fundamental factors surrounding the market, one would view it as a waiting game for breakout prices to occur.
Although, the overall sentiments derived from the previous market movements of recent days compared to the previous weeks, have certainly been subdued. The continuing analysis has been a bit more challenging, since the market prices would never really show its actual intent ( next directional price movement). Even with the combined technical tools available, the uncertainty will always be present in the market place. However, a well informed investors' decision or analysis can only lead to a calculated speculative action best described weighing the risk/reward ratio in a given period of time.
The probability of an increase market volatility would occur depending on the interest and intense activity made by the majority of institutional players rather than the main street investors is no comparison to say the least. With that said, from the most recent Commitment of Traders-COT report, the overall shift of interest and volumes have been identified from the key price reversal established from the US Dollars higher directional move as to this writing. Currently measured by the US Dollar Index at 75.30 basis point; it now has more room to re-adjust lower and re-test its lower band before a real trend reversal could occur. And in addition, a second wave of volume and open interest increase can only justify this key turn or pivotal price point for the USD to be more convincing. The underlaying support previously registered at the 72.80 basis point would be vulnerable for a re-test since the price and position adjustments hasbeen made from last week's USD recovery movement.
Trading Range: 1.4938 H, 1.4047L, 1.4489 Mid-Range Price ( MRP)
Fibonacci 50% @1.4489; 1.4360 - 21 DMA initial Obj. & Minor Resistance
Current support: 1.4180-1.4210
Momentum Leveling off at 1.6100 in line with Filter(Kumo)& within the Cloud
Corrective move Bearish sentiment signals in place.
RSI at 38.0% weakness
The correlation of market prices and behavior with the two major currency pair of the Euro & Pound is reflected more than the other currency pairs for now. The continued EURUSD recovery within its major trend higher has also been reestablished after the major-corrective action on both pairs. Meaning, the Euro's downward momentum made from its previous high of 1.4938 to it lower price level at 1.4045; currently at the 1.4216 as of this writing. And this occured in line with its counterpart with the GBPUSD high at the 1.6745 to as low as the 1.6105 levels. And currently at the 1.6165 corrective move. Comparatively, now that its cross rate counterpart of the EURGBP had made the same major correction from 0.9040 high down to the 0.8670 support price level is currently back on track within the same upward trending market. Although, expect a wider trading range, price fluctuation on both directions with smaller/slower increments on a daily basis before any range-breakout would occur for the week. A lower slight pullback can occur not to exceed lower than the 0.8750-70 levels. On the Upside careful watch on the 0.8880 penetration can build a more convincing follow-through swing when it generates enough volumes and momentum for the next upward swing. Arriving to this conclusion has been a bit more challenging since there were so many factors involved in coming up with the rationality as to why.
A re-test of the EURGBP back towards its intended target is an attempt to the 0.8905- 0.8995 or better in the higher range. Determining the time-frame with this analysis is still in the process. As the timing with other factors invovled would partially depend on the daily volumes and open interest in the financial futures market including the US Dollar Index. These are the three major pairs that we are currently monitoring & considering for the next high probability market movements.
And these are all counter-trend with everyone's ideal USD expectations towards the end of the QE2 by the Federal Reserve in June. However, its only May and a lot more other issues would come before this happens.
