The currency markets experienced moderate, but not significant movements last week. Some currency pairs and crosses even traded in defined ranges, however this week could lead to some breakouts, either in new directions or in existing ones. The month of August 2012 itself witnessed some important reversals in the markets.
Now letís see the recent developments in the markets:
EURUSD: This pair went up by more than 100 pips last week, and it is still poised to continue doing so. Last Friday, the price closed at 1.2573, still having much room to go up. The resistance level at 0.1.2650 is the next easy target for buyers, though this does not rule out a possible pullback in the markets (something that is expected to be temporary).
USDCHF: The outlook on this pair is exactly the opposite of what happened on the EURUSD. The price, which was closed at 0.9547 on Friday, was generally bearish last week (though not so much). The pair is expected to continue its slow but steady downward movement this week.
GBPUSD: This pair still remains bullish - as it has been in the month of August. Up till now, bulls still hold their ground against bears. The price, which closed at 1.5866 last Friday, still threatens to go up. In fact, the resistance level at 1.5900 could easily be breached.
EURJPY: The EURJPY cross traded in an equilibrium zone throughout last week, as there was no noteworthy move in either direction. It is possible for this kind of scenario to continue this week. But at last, there will be a breakout, either above the resistance level at 99.00 or below the support level at 98.00.
USDJPY: The USDJPY traded slightly to the downside last week, and it was expected that it would continue dosing so. The price (which was closed at 78.38 last on Friday) could reach the support level at 78.00 this week; the nearest resistance level being at 78.50.
NB: A note on resistance and support levels. In order to avoid repetition during market analyses, we would like to let our readers understand the resistance and support zones drawn automatically on the charts included in our analyses. A chart is enlarged by clicking on it. Please see those blue lines on the charts. All lines above the price show resistance zones while all lines below the price show support zones. They show potential turning points in the market prices Ė with relevant prices highlighted. When a resistance zone is broken upwards (say 1.5900 on GBPUSD), it becomes a support zone. If it is broken downwards, it becomes a resistance zone. You may click on a chart to enlarge it so that you can see these lines yourself. For example, there may be resistance zones of 80.50, 90.00, and 90.50 on the USDJPY, while there may be support zones of 1.2000, 1.1950 and 1.1900 on the EURUSD.
Yesterday (September 3) featured the continuations of the currency markets conditions that started last week, and it seems there is no end in sight to this. Today, the markets are expected to go in the directions that have started this week - at least for a considerable amount of time. It is logical to simply go with the flow of the markets.
Now letís see the recent developments in the markets:
EURUSD: Despite what is happening right now, the bias on this pair remains bullish. The price is currently above the SMA 21 as the Stochastic itself is heading upwards. As long as the price stays above the SMA, the bullish propensity is valid.
USDCHF: Here too, the USDCHF pair is in a downtrend: it is under the SMA 21 as the Stochastic is heading downwards. Only a break in the price above the SMA could render this scenario invalid. The nearest resistance is 0.9550.
GBPUSD: This pair is winding its way upwards - although with considerable difficulties. The bulls could experience some challenges as the price nears the resistance level at 1.5900. The Williamsí % Range is in the overbought region, i.e. above -20. No wonder the price is experiencing some difficulties right now.
EURJPY: This market has been flat so far, although it is consolidating to the upside. The Williamsí % Range is hovering around the overbought territory as the resistance lines at 99.00 poses a threat to further bullish pressure. The nearest support line is 98.50.
USDJPY: The price on this instrument is currently weak, since it is clearly in a downward bias. The EMA 11 has crossed the EMA 56 to the downside as the price attempts to find some bottom. If the resistance zone at 78.50 proves effective, especially in the near-term, it would cause further bearish move.
There were mixed results in the markets yesterday - with not many directional moves on certain popular pairs and crosses. There is a kind of equilibrium territory found by bulls and bears. This kind of scenario cannot continue indefinitely as serious breakouts are bound to occur soon.
EURUSD: The EURUSD pair was slightly corrected lower yesterday - albeit in a context of a near-term uptrend. The price is now around the resistance level at 1.2550, which should do some job in checking further downward moves.
USDCHF: On this pair, the bearish hegemony still holds, as the price hovers around the level at 0.9950. This is a precarious situation, and the bears still have some strength in them. The level at 0.9550 is yet not a lofty aim (it is an easy target).
GBPUSD: The cable was still able to maintain its northbound tendency; though in a rangebound mode. The great resistance level at 1.5900 was further tested a few times on Tuesday. If this level is breached, the price might rise further, going up.
EURJPY: The EURJPY cross has so far traded sideways between the resistance line at 99.00 and the support line at 98.50. This support lines has done a great job resisting further southward threat. There is a long signal here.
USDJPY: On Tuesday, there were several futile attempts by the bulls to push the price higher, for price failed to reach the supply zone at 78.50. I still expect the price to go south, as the recalcitrant USD might be weakened further.
Against the threats of pullbacks and corrections, the currency markets have managed to maintain its current stance. The scenarios mentioned at the beginning of this week are still valid, and they will be driven by economic figures to be released today.
EURUSD: The massive pullback that happened on Wednesday was checked by a consequent resumption in the price rally. The price is currently trading above the support level at 1.2600, and it is expected to go up.
USDCHF: This pair shows almost the opposite of what happened to its EURUSD counterpart. It is expected that the price would break the support level at 0.9550 before the bearish ride can resume.
GBPUSD: Early on Wednesday, there was a significant rally on the Cable before a minor retracement that we currently observe. The level around 1.5900 now serves as a determinant factor. If the price manages to stay above it, buyers would continue to win.
EURJPY: This cross rose significantly yesterday, and later consolidates higher. The next easy target could be the level at 99.00. The price could continue going up if this level is breached.
USDJPY: This pair still reflects the ongoing tussle between bears and bulls. Only a break above the level at 78.50 would render the current bearish possibility invalid.
True to what has been analyzed, most currency instruments were expected to continue in the direction of the new overall trend, except in a few circumstances. After some protracted consolidations, those pairs and crosses have broken out in the expected directions.
EURUSD: This has been a bullish week for this pair. It has continued to move up above the EMA 21 as the Stochastic heads towards the overbought level. The resistance level at 1.2705 has already been tested and price could continue higher if it closes above that level.
USDCHF: Contrary to what would be normally expected as a negative correlation movement, this market has continued to be rangebound, rather than give a clear direction. One will do well to stay out of it for now.
GBPUSD: In spite of bearish corrections and pulls, the Cable has continued to go up. It has moved up by over 100 pips this week. The price is also above the EMA 21 as the Williamsí % Range is around the overbought level.
EURJPY: Based on what has been said, the bullish breakout that has started in the present context of an uptrend is expected to continue. Albeit there could be some correction to the downside before the upward journey is resumed.
USDJPY: It was said that the previous downward journey would be invalid if the current indicators settings changed. This is exactly what has happened. The EMA 11 has crossed the EMA 56 to the upside as those demand zones have held out. This is the beginning of a new long-term bullish outlook.
Last week, the events on the markets were not favorable to the Greenback. The Greenback was weakened against most other currencies while they gained strength against it.
EURUSD: The EURUSD ended up rising by over 250 pips last week. The price is now above the level at 1.2800 and is expected to continue.
USDCHF: After some decisive battle between bulls and bears, this pair fell by over 110 pips last week. The price is expected to reach the level at 0.9350 this week.
GBPUSD: The Cable rose by over 160 pips last week, closing at 1.6008. A price level at 1.6100 is expected to be reached this week.
EURJPY: The EURJPY went up by over 180 pips last week, as it closed at 100.28. This week, if the present outlook continues to be valid, the price may reach the level at 101.00
USDJPY: Based on the market fundamentals, this pair, which traded in some tight range, rose and fell last week. It touched the resistance level at 79.00, fell by almost 100 pips and nearly reached the support level at 78.00. In correlation with other JPY pairs, the USDJPY is expected to rise this week.
Today, the currency markets are hovering around major supply and demand zones, as buyers and sellers continue their normal activities. Most pairs and crosses have tended to continue in the directions they saw earlier this week
EURUSD: This pair has been experiencing some difficulty in trending more upwards. The price is still above the EMA 21 as the Stochastic is trying to head upwards: which means that the price can break out to the upside.
USDCHF: As the USDCHF range-trades, it also finds it not easy to plunge further downwards. The price is below the EMA 21 as the Stochastic is also trying to head up. The price would possibly continue to go lower.
GBPUSD: This market has continued to showcase its northward bias as the price remains far above the EMA 21. The Williamsí % Range is in the overbought region; which may cause some pullback before the price continues its northward journey.
EURJPY: Since the EMA 11 still stays above the EMA 56, it is possible for the price to continue going up. In spite of the present pullback in the price, the Williamsí % Range in the oversold territory may allow bulls to enter at a cheaper price.
USDJPY: This pair has continued its weakness as the price has broken down, testing the support level at 78.00. The EMA 11 is below the EMA 56, showing a downward bias. The next target in the price may be 77.50.
Yesterday saw determined continuations in the current market biases. These biases are expected to continue further today, as buying and selling pressures hold out in their respective directions. This still holds true, though prices do not travel in straight lines.
EURUSD: This is a bull market. The price is still far above the EMA 21, though the Stochastic is now in the overbought territory. The next price target would be 1.2950.
USDCHF: When the EURUSD goes up, it will be difficult for USDCHF to do the same; hence the current downtrend. The support level at 0.9350 has been tested, and the price could breach it if the current market bias continues further.
GBPUSD: This is also an uptrend. The Cable has continued its slow and steady journey to the upside. The resistance level at 1.6000 has already been breached, while the price targets the resistance at 1.6150.
EURJPY: Looking at the chart that accompanies this analysis on the EURJPY, we would see that everything points northwards. The resistance level at 100.50 has been disrespected as the price sticks its neck further.
USDJPY: Unlike most other JPY pairs, the USDJPY has continued to show vivid lack of strength. The support level at 77.50 is struggling to halt further downward trend. If it holds its ground, the price would rise.
The present currency markets biases are still valid, though some instruments are showing signs of retracement. When the markets break out of the current equilibrium zones, pairs and crosses are expected to continue in their directions.
EURUSD: The price is presently above the support level at 1.2900. The next resistance level is 1.2950, and if this is broken, the price would target 1.3000.
USDCHF: In this market, further bearish move was rejected at the accumulation territory situated at 0.9350. The price is trying to rally temporarily to the resistance level at 0.9400, but this could be what it is called - temporary.
GBPUSD: The price on this market has already been caught in an equilibrium zone as the Cable tests the support level at 1.6100. If the support level proves valid, the price would test the resistance level at 1.6150.
EURJPY: The resistance level at 100.50 has been futilely tested by the price, as the Williamsí % Range is heading down from the oversold region. The psychological support level at 100.00 would allow the bulls to enter long at that level.
USDJPY: This is a bear market: the price is now threatening to go below 77.50. If this bearish propensity continues, the next target would be a demand zone at 77.00.
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