Majors such as the British Pound and Euro ended the week positively having broke out to higher levels closing the last NY session at the top of bullish sentiment. On the higher time frames of the daily and weekly charts there are signs of break outs or bullish continuation which may suggest that we are looking at a correction higher anywhere up to 100 - 150 pips before we start considering tops, reversals and continuation of major bearish trends. Whether it completes this in one hit or over a series of fractals is yet to seen. However this is not the same case for the AUD which tells a different story. Its weakness has even brought strength upon all its cross pairs including the GBPAUD and EURAUD.Free Forex Trading Room Similar to the Pound and Euro which reacted positively to the unchanged interest rate, the AUD also followed suit sparking a positive reaction which propelled the pair to once again attempt the 104 region reaching a high of 104378 before reversing back down to a low of 103796 by the end of the week. Therefore unlike most of the majors which ended the week higher due to positive domestic data released during the week in combination with the weaker US non farm payrolls numbers released on Friday,Profitable Forex Signals the AUD took the opportunity to test the daily pivot and reverse back down below 104 closing lower than 1390 which represents the low just before the Easter break.
This week ahead will once again be filled with a fresh new round of economic data particularly for the Pound and Euro which of course may act as a catalyst for a continuation of short term current trends should the fundamentals support the movement. Although we currently may be sitting at higher levels in price compared to last week, there is a potential top formed on the 4 hour leaving behind an inefficient leg which at some stage will need to be filled.
Currently the Pound and Euro are sitting at key weekly resistance levels while the USDJPY is sitting a daily resistance level on smaller time frames. This to me suggests that we could be looking at a retracement due to positions closing and/or attempts to reverse. However given that the daily and weekly charts do show a force of bullish sentiment I do think that if we do experience some counter price action in the opposite direction it may work in the favour of providing entry upon a retracement to ride the bullish sentiment a little higher to support a continuation. However, we are actually looking bearish major trends on the daily of the Pound and the Euro indicating that we are not in a reverse but more a correction mode.Free Forex Trading Room If so, this means we will be looking for top as well as the fundamentals and market sentiment to support a reversal and continuation of these major trends. The lead will come from the domestic fundamentals and/or events being unable to provide the inspiration to instigate a reversal, hopefully our forex EA picks up on these moves.
Moving on, what really stands out for me right now is the USDJPY which on all higher timeframes continually displays a very steep incline and inefficient leg suggesting this pair is overbought and will be due for a reversal or retracement. Last week we saw the USDJPY consolidate around the 92726 -93594 which also equates to the low and 23% fib levels. The major break out and move towards 97 was inspired by the BOJ meetings last week and anticipation revolving around the outcomes of the two day event.
In regards to the USDJPY, just to recap, Japan sit in a very unique position as an economy that is heavily reliant upon exportation to sustain their economy. Therefore as a nation, they are notorious for taking measures such as intervention and buying foreign bonds in an effort to ensure that their currency does not rise too high and impact their economy negatively. There have been many previous discussions and announcements in particular over Japan's position on deflation especially prior to the recent election and also post once new leadership came into power. Most recently,Free Profitable Forex Signals it has been announced that Prime Minister Abe has placed Japan's target to reach 2% inflation a top priority while being supported by new asset buying programs which forms part of their strategy in meeting this objective.
Looking at the daily charts, it is evident that there is continued renewed interest upon dips to buy this pair given the fundamentals surrounding the Japanese economy. We are in a steep incline that actually has not experienced a major correction as yet. We are looking at inefficient legs on both the daily and the weekly, which would suggest that there will be inspiration to close longs due to profit taking at such high levels. If we move to the monthly chart we can see that within a major downtrend, we are in fact experiencing a decent correction and once again a very inefficient leg that will be need to be filled. At the moment I do not see any indication of the formation of a bottom and a reversal but rather a break out from a consolidation at lower levels. We have surpassed my previous targets for this pair at 9670 and have closed nearly 100 pips higher at 97542 which sits just above the high of the bollinger band on the monthly chart. The move in the USDYEN has also carried all yen crosses to higher levels as well in conjunction with their USD counterparts. However any weakness in the majors this week will most likely to cause a retraction or attempt of a correction across their yen pairs.
We are currently in the middle of moves even though we are in fact sitting at key levels Iíll be in the free forex trading room to discuss if anyone has any questions. I form the view that we are most likely at this stage looking at a continuation should the fundamentals support this however what we will see if indeed it is the plan to continue is either a consolidation at these high levels which we then will be looking for a breakout or a retracement first and perhaps another test before direction is determined as to where we will be going.
Although I do my create my forex signals over the weekend ,Forex signal I have needed to revisit my strategies at the start of the new week due to the flow of events such as Europe and the Cyprus situation, which caused market gaps upon opening and have needed to change my strategy completely. In regards to the strategy, the moves actually have been carried out as expected however we have seen attempts to reverse prior to rejecting and resuming. This is particularly the case with the Pound and Euro.
Therefore having said that, I think it is best for now that we stick with smaller price movements until we have a clearer indication of direction which we should be able to obtain early next week. I have touched upon the AUD above and this is another one to keep on the radar as it now exhibits signs of weakness as it fails to sustain itself above 104378. I think if we open the week in risk appetite mode and the AUD follows suit but still maintains bearish momentum, we could be looking at another attempt between 104100 -104378 as a top before attempting lower 103 and possibly breaking new lows given that we are now post cash rate announcement and it has not sustained optimism. However Europe and its events will play a significant role in driving price. So we will need to wait. I am mindful that there appears to be some selling of the AUD and previously such attempts at these levels has been met with buying demand by foreign investors and asset managers .Live Forex Trading This is how the
AUD has been able to sustain itself for so long between this range with the release of both positive and negative data as well as the cash rate announcements. However a move towards and rejection from 104378 will bring this pair to the 103 range with a possible bottom at 103324 and after that 102670.
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