Trend continues....

Written by JS T Alexander | 05 January 2012

AS CORRECTION CONCLUDES 1ST PHASE

UPDATE: As of Jan. 05, 2012

The continuation of the rally for the USD can be seen as it is moving higher with a more influential force on the Swiss Franc or USDCHF working at the present price back to 0.9498. Its attempting to reach its initial target at the 0.9550 (R1) with a possible extension nearing the 0.9650 (R2) - 0.9720/50 (R3).

USDCHF DAILY

However, there would be no straight directional moves as volume and volatility would only build up towards the thrid trading week of January. Daily pullbacks are expected with the USDCHF nearing the 1st resistance levels with some price adjustments between the USDJPY as it moves contrary with each other.  As the Japanese Yen moves closer to its intervention levels expect some speculative movements takes place. We would stay clear of the USDJPY and instead work with a cross related trade this coming weeks ahead with the EURGBP cross pair, USDCHF and the Aussie.

We are expecting a continuation of a rally for the USDX that would occur in the Asian session towards the European market for that particular time period, as some major players may soon start building fresh positions for the year. The 1st corrective phase before the actual rally takes place have been completed. We should be able to pay a closer attention as to volume build-up and open interest for financial futures; as this would set the pace for hedgers and institutions to play with the market before the end of the fist month's trading period ends. Keep track of the reports and price behavior as volatility would increase, so does price fluctutaions on both sides would occur.

Additional Reference from our previous month's market view report on the USDX on the 2nd leg higher towards the 81.10basis point levels; please refer to reports dated the 29th of September 2011" Follow-Up Market analysis 09.27 and video presentation dated the 09.19 USDX Forex Trading Market Analysis

 As of January 03, 2012 Currency Leaders

GBP-EUR-AUD-NZD - Not necesarily in this order!

The start of the trading week has taken off with the expected corrective moves anticipated by way of the closing prices and behavioral movements of market since the opening of the US trading sessions. Although, the backdrop of the sentiments still remains bearish for the Euro in general the actual session highs for the European majors has been quite friendly for the bulls anticipating a correction.

EURUSD DAILY

The EURUSD and the GBPUSD has performed well during the mid-week transition towards a full trading activity for the week. Reaching an initial high as of this writing at 1.3067 and 1.5650 respectively for both currency pairs after the USDX made its corrective move lower at the 79.60 basis point. For that matter, with the GBPUSD falling to a low 1.5360; initially breaking a trading range support with a slight closing recovery at the 1.5410. This is the 1st weekly support level which somehow have influenced the initial recovery for the GBPUSD, the EURUSD & the EURGBP cross rate. Thus, signaling a pause and probable recovery is being set-up for a temporary correction just after the past week's holiday schedule. Quoting last week's market view..... In addition, this set-up could be a preparatory strategy for the new trading week ahead in line with the temporary corrective daily moves of the US Dollar index as mentioned in Forex Trend following in 2012  focused on the extensions of the EURUSD heading lower as it continues its trend.

AUDUSD WEEKLY

Considering the market across the board, the Aussie and the Kiwi rallied to the 1.0370 and 0.7903 high respectively. The first trend line resistance levels for the Aussie is at the 1.0450/80 range and would meet some pullbacks on a day to day price movement. While the Kiwi may find legs to continue the rally alongside with the rest of the Asian currencies showing resiliency with the USD and gold movements. The trendline resistance for the NZDUSD above the 0.7790/00 has been penetrated while its maintains its prices just above the 0.7800 levels. However, any first trendline breakout may have a couple of daily pullbacks as it gathers pace to continue if and when the USDX goes back to the corrective price of 78.85 - 79.05basis point. With that said, most analysts are now anticipating the BOJ to again be watching the USDJPY price levels and would anticipate another round of intervention nearing the 75.50. The continued strength of the Japanese Yen has been more of quiet repatriation for Japanese investors versus the anticipated weakness of the Euro for the first quarter of the year in spite of the BOJ to curve the currency pair to strengthen further.

The fundamentals outweighing the current reports on the FOMC minutes and the only major report from the US NFP and unemployment numbers toward the end of the week; are the tensions escalating with Iran's Nuclear power play in the Gulf region and flexing their muscles with the missile testings including their naval exercises against a severe sanctions by the Western countries. This weighed on oil and gold prices more than the European debt crisis which has been a constant factor for the Euro's recovery. Meanwhile stocks have made their initial gains for the start of the week as well.  This apparently coincides with the precious metals recovery back to USD1606.95/oz price levels from an established low at 1522.48 and oil back to the 102.24 price levels.