Major Correction within a Major Trend
| 18 April 2011
Corrective movements are prevailing the forex market amongst the major currency pairs including the cross rates. As this is part of the statement from our previous analysis, that a major corrective movement should not be discounted within a major trend. A price reversal as we call it, but definitely not a trend reversal. Reinforcing this analysis is our supporting video dated the 16th of April and Market view analysis of the 17th of April 2011. Pls. refer to the : 8 Forex Technical Trading Tools & Analysis thru the week 4.22 with spill overs on 4.27
URL: http://www.youtube.com/watch?v=yHshysgSvg4
The EURUSD corrective moves lower is influenced more on the fundamentals related to the Irish downgrade and on a technical note, is now out of its overbought areas along with the rest of the other currencies across the board. Interest rates hike is still looming in the air for the ECB to continue its intentions raising rates sooner than later. However, the contrary analysis for the daily prices to move lower for the European currencies are now in effect. As it justified the hanging-man candlestick formation on the daily chart the previous day's trading.
Although, we do anticipate it to be short-lived. The 1.4520 levels is just the initial resistance ideal for the correction, alongside with the EURGBP's 0.8770- 0.8660 low to be more stable and a good support price for the cross rate. Risk factor is minimal with a -100 pips tolerance level, but rather a bit substantial for short term main street investor to trade long for a position. This however, can also be considered a scalping opportunity for day traders to take advantage of. While the GBPUSD tries to recover from its corrective moves sooner than we expected. Making a slight recovery from a 1.6227 low just about the tail end of the 21 day EMA which may hold for now. A wider trading range would be good for day traders to speculate on.
Meanwhile, the influence of the EURJPY is weighing in more for a continuation of the upward trend for the EURUSD as it pulls-back. Also in line with the USDJPY currently working at the 82.55 levels alongside with the USDCHF at the 0.8929 levels. The EURJPY looking at its 1st attempt back down to the 116.00-50 area of support levels. As the technical spike candlestick formation weighed heavier. For the moment this is in place and is indeed, a technically motivated market. The same goes with the GBPJPY cross rate .
The corrections on the USD has led to this movement, as some good reports came out from the US slight recovery in spite of the surrounding conditions. On the technical front; the cross or doji weekly bar on the USDX have indicated a corrective move as prices recovered. However, this is short-live as it takes more than a technical bar to reverse the market sentiments. As the trading week is gaining closer to the month closing, do expect some wild fluctuations on both directions but we do remain firm on our bullish outloo & analysis until the 22nd and a spill-over effects towards the 27th of April, 2011
