Technical Analysis

Technical analysis can be defined as the study of past price behavior in an effort to determine patterns and trends that are believed to be predictable of the future. At the core of this school of thought is the assumption that human behavior is repetitive in nature. We all recognize that, although human behavior patterns may have recurrent tendencies, they do not normally express themselves in the same exact, mechanical manner each time. Even with this qualification in mind, technical analysis is capable of providing us with the ability to make price forecasts characterized with an improved probability of outcome. It can help us achieve the "edge" required in our pursuit of long-term consistent success. A wide array of technical approaches is available. Some are better suited to particular personalities and styles of trading than others. This article will focus on just a few that I have found to be consistently helpful in interpreting intraday market behavior and making short-term price...

  The EUR/USD pair had a slightly bullish day today again, but the charts are starting to look a little tired at this level. It cannot be ignored that the last two days have formed shooting stars, and could be pointing south. The market has support below at 1.45 and 1.46 as well. Because of this, shorting isn’t recommended, but rather waiting for the pullback is. Buying at those levels might be the move to make.

EUR/USD Today saw the EUR/USD plunge violently due to Mr. Trichet’s statement being very dovish in nature. There was a previous trend line that price had retested the underneath of yesterday, and as such provided a technical reason for a sell off anyway. The day’s candle is bearish, closing at the bottom of the range and sets us up for a run to 1.35-1.34 before it sees any major support. With Non-Farm Payroll being later today, Asian and European currency markets will probably be quiet as the Forex waits for the results out of America. EUR/AUD Continuing the look at the Euro, it really got punished by the Australian dollar, as the day saw the price close at the very bottom of a huge bearish candle. Yesterday saw the markets closing at the 1.3650 area, which was a previous support area. Breaking through that rather violently today shows that this pair has significant downside risk, and is probably going to find its first bit...

Currencies EUR/USD: ECB expected to leave interest rates unchanged at 1.00% The euro traded around 1.3810 when Asia opened last night initially trading slightly lower before pulling back up this morning. The single currency is just shy of a 12-werek high hit Wednesday at 1.3862. The meeting of the European Central Bank at 12:45 GMT later today kept the market quiet. Interest rates are expected to remain unchanged with the focus on Trichet’s speech at 13:30 GMT. There is a hawkish expectation among traders with Trichet expected to highlight inflation and bond buying. Watch out for the Euro climbing higher on the back of the ECB President’s comments and target long-term resistance at 1.3950. Disappointment and the EUR/USD could test support at 1.3755. GBP/USD: Services PMI at 09:30 GMT, Sterling at 3-month high Cable traded at 1.6188 at the Asian open and climbed higher going into the European open. A relatively quiet Asian session meant there were no major moves higher above 1.6220 until this...

UK data has increased the market’s confidence that the BOE will hike rates and this has UK interest rates broadly higher, with the short-sterling futures strip yields rising 6-9 basis points and the 2-year gilt yield rising 7 basis points. The differential between the US short term yield and UK short term yields have reached a 12 month high. Short term yields in the US remain low. The FOMC has made it clear to the market that they plan on keeping short term borrowing rates targeted to zero for an extended period. The increasing yield differential is driving the price of the Pound relative to the US dollar higher. A break above 1.6250, will likely lead to a new bull trend. It seems that the BOE and ECB are likely on a shorter calendar for tightening rates than the FOMC. On Wednesday, the equity markets in the US were mixed despite better than expected employment data from ADP, helped offset profit taking....

TOKYO, Feb 2 (IFR) - EUR/JPY looks to be very well bid following the break above 1.3800 in EUR/USD. USD/JPY heaviness does look to be a drag but the cross could trade higher on a decisive break above 112.70, currently resistance on the hourly chart. A trade through this level suggests a retest of the 113-handle and a possible retest of the 114.02 high seen on January 27. Offers are eyed ahead of 112.70 and 113.00 but trader stops lurk above both of these levels. Larger stops are seen above 114.10. Asia saw a high of 112.70 yesterday and the high so far this morning has been 112.64. Support in the cross is seen from around the 112.48 low seen so far this morning. More is seen ahead of 112.00 and then at 111.80-90, 111.88 the retracement low seen in London overnight. Technically, EUR/JPY is looking good after a rejection of moves into its Ichimoku cloud. Two attempts down on Friday...

Asian markets today continued their optimistic spark and resumed the gains as investors unwind some of their jitters and further believe in the ongoing global growth. The market today was buoyed by good earnings and the positive manufacturing figures from the US yesterday which uplifted expectations for stability and continued recovery. The MSCI Asia Pacific Index added 1.2% to 139.14 as of 13:33 PM in Tokyo. Surely the risk appetite is improving and especially as the positive outlook for global growth accompanied unwinding fears over the protests in Egypt as the situation is stable despite continued objection from the people over the government’s course of action and after Mubarak announced yesterday he will step down in September and insure a smooth transition, though still the public seemingly are not content with this decision and still demand his immediate resignation. Still, the market conditions are improving and we can see the Japanese yen correcting some of the gains yesterday and weakened versus the dollar...

Political contagion hit the Egyptian market as riots and fight continued to spread across the capital. The Egypt equity markets have collapsed and are closed after erasing approximately 12 billion dollars within the last 2 trading days of the week. For the fourth consecutive day of street protests, as police used tear gas, bullets and batons against demonstrators at scattered points across Egypt's capital. Oil prices surged, as investors became anxious that flows of oil would be curtailed. The Euro and riskier currencies started to liquidate at the end of the week, as investors moved into the dollar and the Yen. The currency markets were volatile during the week and the surprise news that S&P had cut Japan's sovereign debt helped generate choppy markets. The day after S&P cut Japan's credit rating, Moody's indicated that the US AAA rating faces a small but growing risk. While no action is contemplated now buy Moody's, it suggesting that the risks are rising of...

After opening lower, last week, the EURO to DOLLAR recovered rather nicely and climbed higher. However it did cross and important 1.344 line and eventually closed at 1.338. Going forward today and this week, 1.344 is the important resistance line to watch. Going above 1.357 support line was only minor, and is now a minor line of resistance. Going higher, 1.37 served as support and is now another minor line of resistance. Going to 1.378 was the peak before falling in November. This is now the important resistance level. Looking down; minor and immediate support is around 1.3325. We find even stronger support at 1.3080. Also look at 1.2970 at the bottom which occurred last in November. This will be another important support line.

The euro briefly spiked higher against the dollar on Tuesday, after Japan said it planned to buy debt to be issued by the European Financial Stability Facility later in the month. EUR/USD hit 1.2989 during late Asian trade, the pair’s highest since last Friday; the pair subsequently consolidated at 1.2942, slipping 0.07%. The pair was likely to find support at 1.2872, Monday’s low and resistance at 1.3169, last Thursday’s high. Earlier in the day, Japanese Finance Minister Yoshihiko Noda said his country planned to buy about a fifth of the bonds the European rescue fund plans to sell later in the month to finance its bailout scheme for Ireland. However the euro retreated after Noda said Japan would like to make the purchase with euro cash holdings already in its foreign currency reserves. The single currency remained under pressure as markets focused on whether Portugal would be able to raise funds in the debt market on Wednesday or be forced to turn to the European...