Price Page Indicator & Market Psychology
| 10 May 2011
The signals derived from the Price Page Indicator that has again proven its reliability from where the basis of the trade positions had taken shape even before the remarks from the ECB holding rates unchanged came about. An animated short- version (for a change) of this analysis is linked.
The so called rumor & report from Greece's intentions of pulling out from the Euro currency really had no bearing except that it was highlighted by some of the analyst to justify the market's movement. There are apparently more real factors that contributed to the dramatic drop that was not expected as it accelerated its downward momentum during the closing of last week's movement. And currently at 1.4351, resting just above a support after a 1st attempt of penetrating it. The 1.4080- 1.4155 trading range levels would serve as the main support on the technical outlook. A normal recovery is always expected, but such recovery is till within a major upward trend which has not been violated in the longer term period.
The Price Page main key indicators in monitoring the overall prices of the major pairs is the vital importance of the strategy. Especially, at that time, the leading key currency like the Euro versus the US dollar has been the prominent pair dictating the market. As the rate decision and ECB were in the limelight which major institutions were watching real well. As it has been a fact, that they were the primary movers of the market based on the previous Commitment of Traders Report. However, when the majority of the currency pairs have reached their target levels one after the other then the pivotal price point of a price reversal would occur. And as to which of the pairs would best serve this purpose is what all traders would have to determine.
Knowing when prices have reached their target levels should always be pre-determined which would also include price extensions comparative to their correlations with other pairs including the US dollar Index. In short, the direction of the USD pre-determines the other currency pairs based on the distribtuion & percentage share of each currency pair that composes the USDX. Due diligence is required if you decide to use other USD indicators which are seen amongst other analyst & traders that we have seen and read. The original USDX from the NYBOT and traded on the Intercontinental Exchange is the more reliable US dollar indicator that we have used for over several decades and has not failed us yet.
We still maintain our current position to on both cross rates; GBPJPY & EURJPY to gain momentum on its downward direction for the week. Although, some conflicting signals would occur within the major trend. The near term movements would react with more volatility and wide price fluctuations as major institutions would simply eliminate small speculative investors from the market. A convincing follow-through price momentum towards the upcoming Consumer Price Index (CPI) and the University of Michigan's Confidence figure would more likely be mixed but would also have a friendlier net effect for the USDX in the long run. Then this would reaffirm and gain more interest for US Dollar bulls.
The news of S&P's downgrade for Greece & Portugal's contagion effects looming in the air has taken the highlights on the news. Not to mention the debt and trade deficits of what the US is facing is a battle cry for every trader's choices as to what the direction of the market would be in the coming trading days. After a Euphoria market, chaos and confusion on market directions takes place. This is where market psychology takes into account the market behavior from past experience in trading these volatile market.
On the Technical Standpoint, the lower opening prices for the US Dollar Index have shown that the market prices would have to gain momentum for another shot of a rally towards the end of the week, which may build up by anxious bullish market players before the Friday's report. The initial target for the USDX would be to try to penetrate the 75.05-20 levels on its first attempt and retrieve lower to gain significant grounds for a rally and have to close above these levels as we move forward the rest of the trading weeks. However, others would disagree as the opposite is expected and that such recovery would only be short-lived as they have expected. True enough, if volumes and momentum woun't be increasing towards the Friday's report. Suprises are now expected with price behavior and previous targets have been met.
