Forex Market Sentiment

We saw a reversal of Market Sentiment to exuberant irrational enthusiam. Eur/usd and the other major pairs made a huge move against the USD.
Option barriers and stop losses were taken out. Momentum traders jumped on it.
This week we have an FOMC meeting, an ECB meeting with a possible euro interest rate cut, and the Friday's Non Farm Payroll numbers. Each of these will trigger a kneejerk reaction that will test support/resistance levels.
Knowing this, and the fact that the global ecomomic situation is not all doom and gloom for now, has triggered a yearly seasonal pattern of a bull run in equities until Thanksgiving or New Years. This pattern has been fairly consistent over the years, and the Sept gloom and doom scenario drove the market prices down to value levels where they were bought hard. Bears had to bail or short cover. The market swung wildly lately clearing out orders along the way and clearing the path for a big move up. At this point, the bears and the bulls are both buyers until momentum wains. Then we see a sideways movement and a retracement back to test previously broken support.

The daily chart for eur/usd shows a very small bearish colored candle. This denotes the very tight range that this pair traded on the last day of the week. Long positions have mostly held, as the small candle denotes little profit taking occurred. Short covers are still holding. If they dump their positions or take partial profits, the pair will retrace.
You can see the momentum indicators have reversed. We have divergence, when the pair encountered option defensive barriers, residing just under 1.4200.
The Bulls may need to reload in order to break out. Market Sentiment will dictate what this pair will do. Offers to sell will need to absorbed.
Risk on = Buy Dips
Risk off = Sell Rallies

The hourly chart clearly shows the sideways movement I described earlier, as the week came to a close and the pair remained bid around the 1.4120/1.4150 price level.

Very tight range but trading slightly below the yellow 5 sma and the green 22 sma. I drew a fib on the daily candle for Thursday, as evidenced by the red colored fib to the left side of the screen. The 50 fib is represent by the yellow dotted horizontal trendline at 1.4065. Further support is added by the brown 55 sma.

The thicker yellow horizontal trendline represents the approximate pivot, using a simple formula of high+low+close divided by 3 = 1.4109.
The red 38 fib coincides the 1.4109 also. I will look to buy around that price if we see a retacement in the future.

The 4 hour chart for the aud/usd reflects the very strong Risk Appetite market sentiment.
1.0657 to 1.0751 is the very tight range for this pair.

1.0610 shows minor support.
The 61 fib and the green 22 sma provide some support @ 1.0520/30 area.

The eur/cad will be the pair to watch if the market prices in a rate cut for the Euro at this week's ECB meeting.

A good Non Farm payroll number will also strengthen the CAD.

I am looking to get short this pair if I see any euro weakness this coming week. I will look to sell into rallies to test 1.4000.

I am making a small tester position for eur/chf to capture possible Swiss Bank intervention.

I was buying and selling this usd/cad at various times this past week.
The pink 300 sma is providing support @ .9858
The red 200 sma sits at .9799.

The NFP will influence this pair.
A weak number will move her up to test resistance at parity and/or 1.0100.
A strong number will provide Risk Appetite to test support.

She got sold hard at 1.0211 when Market sentiment reversed.

Risk on = sell rallies
Risk off = buy dips.

The gbp/cad found buyers at 1.5883 and sellers at 1.6060 area.
The larger range is 1.5800 to 1.6300.

The weekly chart for eur/jpy shows buyers around 1.0524 and 1.0475.
it shows a high at 1.0812 or so. Price peeked above the blue 14 sma but closed below it. Good size wicks on top and bottom.

Risk Appetite= buy dips
Risk Aversion = sell rallies.

Good stuff! Every time it get to that risk on feeling , I start to look for poss. Risk off senarios by nature....What's your objective of your thread?btw

Market Sentiment Strategy

5 sma close price = yellow color
5 sma open price = orange/red color
5 sma high = white
5 sma low = white

This set up forms a "river"

14 sma = blue
22 sma = green
55 sma =brown
100 sma = aqua
200 sma = red
300 sma = pink
400 sma = purple.

The daily chart for nzd/jpy shows resistance provided by the orange colored 61 fib. (62.54)
Hammer candle following a bullish engulfing candle.
55 sma at 61.77 provides support above the "river".
Upside targets are the purple 400 sma @ 63.12,
Cluster resistance provided by the aqua100 sma and pink 300 sma @ 63.57.
Red 200 sma @ 64.01

Support @ 61.77 (brown 55 sma)and 61.50 (yellow 5 sma close+ orange 50 fib).

Risk Appetite = buy dips
Risk Aversion sell rallies.

Alright ! Nice and clean chart too..My sentiment is there is something fishy here with the hole EFSF last rating from S&P and the buying of USD paper from the Norwegians is very temporary as to were to put your money, if your not going to put it in Gold, Oil or some sort of bond, were ever they may be ( not just US bonds) but , ones with big return Or you could say High risk! history tells us this Risk on is only temporary..

I do think your on to the same quesestion I as myself everytime I enter the market. To what the Market wants to do with not only TA...

Regards.

I will be looking to place a small tester position to exploit any possible Swiss bank intervention near those yellow dotted horizontal trendlines.

Just set it and let it run forever, i guess. hehe

If the eur/chf is pegged at 1.2000, then the odds are this pair will correlate.
A strong NFP will take her up, most likely.

Weak USD usually = strong Gold.


1,700 has provided strong support in Risk Appetite conditions.

Weekly bullish engulfing candle with 1,710 as the simple pivot.

Orange 61 fib is sitting 1,771

1,762 is a previous swing low.