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The Majors and their Trends for this week
Japan, UK and Euro Zone rate decisions are all out this week, and with the impact of the NFP carnage to be absorbed, and the downgrading of MBIA on Friday, this week has set up beautifully. Ahead of the BoJ rate decision on Tuesday we are looking at both sides of the Yen. The Euro looks to be ready to test 1.6000, the Pound maybe ready to break lower ahead of what many feel is a rate cut coming from the BOE, the Aussie has just completed a picture perfect pull-back to the 4 Hour trend-line. Late breaking news on Friday was that MBIA, the bond insurer, has lost its Triple A credit rating, and as such may impact equity market sentiment. That may give the US$ a bounce day as the move from equities to bonds takes place. If the equity markets ignore the news then the US$ may lose ground as Trade Desks take on Risk [B]Aussie[/B] A Pennant formation on the Daily chart has been broken to the Long side, and taken out the 20 SMA. The 4 Hour chart has just signaled a Long break of the trend-line, and the 60 minute chart is angling towards 2 o’clock going Long. All of this followed a good pull-back in price that now looks as though Technically could have formed a base. Long looks to be the direction. [B]Cad[/B] The Cad proved once again that there is neither the will nor the way to break the Daily chart channel that has the pair locked in at 1.0350 and 0.9650. We are just bouncing along going nowhere fast. The next leg of this reversal from the recent test of 1.0350 is to break lower through the 50 and 100 day SMA areas at 1.000. If that happens then we may well see a test of support at 0.9650 over the coming week. This has been a frustrating pair to watch, and has become volatile in its daily movement, there is a Battle Royal going on right now to gain control of valuations. There is still no convincing trend either way. [B]Euro[/B] The Euro has not been able to break and hold the Pivot Point Resistance 1 area for nine sessions now, and for a pair that is in such a strong Long mode that is an unusual situation. It goes to show that for as many Euro buyers out there, there are sellers who are looking to keep the valuations down. Ahead of the ECB Rate decision on Thursday the pair may go through the Buy The Rumor cycle as traders ask; in reality is there any way at all that the ECB can lower interest rates? If not the currency may well move to the 1.6000 area against both the US Dollar and a US economy that looks certain to get another cut in rates this month. The trend is Long and the pair just gave a beautiful ‘pull-back and buy’ signal on the 4 Hour chart. The one real downside is that the pair is sitting at the 70% overbought area on the Daily RSI, and as such will need to quickly move higher to be able to hold these areas. [B]Pound[/B] The Cable looks to be setting up to break lower in a technical move that would mirror the fundamentals that are calling for the Bank of England to lower interest rates at the MPC meeting on Thursday. We have seen recently that the biggest moves from the Forex News releases have been before the numbers are out, sometimes weeks before, and this looks to be the same on the Pound. The ‘Sell The Rumor’ of a rate cut will likely play out ahead of Thursday, with most traders looking for the UK to follow the US recession a little easier than most other regions. This could be a perfect storm to trade the pair lower. [B]Swissy[/B] The Swissy is still in Short mode, and after the poor NFP read out of the US on Friday it is likely to stay that way. The pair moves in correlation with the US 10 year Treasury Yield, and as such is recently looking for the the Short moves to draw in more volume than the Long bounces. With the Fed unlikely to be able to stop cutting rates in the near-term the Short Swissy trade is holding favor. The Daily chart RSI indicator is back at the 30% oversold area, all it will need is a session of selling to get it back under and confirm that market sentiment is to hold Short Swissy positions. [B]Yeppy[/B] The Eur/Jpy Pair last week broke a major area of upside Resistance in the 100 day SMA at 159.50, and then ran straight into the 200 day SMA as resistance at 161.20. The Fundamentals need to follow through now for the technical Long trend to hold, and ahead of the Bank of Japan’s rate decision on Tuesday it is all about where equity markets will trade. The pair is in Long mode, and now looking to consolidate the moves. If global equity markets move higher the break-out through the 200 SMA could hold. If not, the Support area looks to be quite a way off if the 100 SMA breaks as Support; it could be a move to 157.00. Yours sincerely TheLFB Trade Team Promotional Material; The above makes up a small part of the daily Trade Plans that are posted to our Members area each day. The plans also include Entry, Target and Stop numbers, both Long and Short, as well as a technical and fundamental review that will guide the direction to trade, and explain why. The Trade Plan numbers are monitored and reviewed three times a day, and an explanation of how, why and where things are moving is included. Membership includes Trade Alerts, on average two a day, and live daily Web Seminars where Members can interact with the trade team, and review our charts. If it is something that you are interested in exploring please feel free to contact us. [url]http://www.thelfb.com/services[/url] Smiles and advice are free.
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