FMFX

Near the end of yesterday’s North American session, I...

Thu, 17 Nov 2011 23:31:11 -0800

Near the end of yesterday’s North American session, I expressed that cable take another stab at the lows before moving higher. However, during the Asian session, the GBPUSD has been pivoting around the key 1.5750 large quarter point level instead of moving lower as expected. The 8hr candle close above that level signals that cable may, in fact, be done with the lows and move higher in today’s session.

Bulls target 1.5820 then 1.5900 before the major psychological level of 1.6000. Bottom line: GBPUSD maintains its bullish bias.

GBPUSD QUICK LOOK POST-BOE: With monetary policy unchanged and...

Thu, 10 Nov 2011 05:35:14 -0800

GBPUSD QUICK LOOK POST-BOE:

With monetary policy unchanged and GBPUSD rallying, these are the Fibs that everyone is watching. However, I just don’t think this is a corrective rally. I’m looking for these Fibs to be broken.

PRE-BOE QUICK LOOK Cable is weak headed into the Bank of England...

Thu, 10 Nov 2011 03:55:00 -0800

PRE-BOE QUICK LOOK

Cable is weak headed into the Bank of England rate announcement. Interesting level where bulls have stepped in before but the market is obviously waiting on the central bank before pushing significantly in either direction. I’ve been biased for more correction into the red Fibs but I’m aware that we could push higher from here. 5 minutes until showtime!

QUICK LOOK GBPUSD giving bulls another opportunity with this...

Wed, 09 Nov 2011 03:07:21 -0800

QUICK LOOK

GBPUSD giving bulls another opportunity with this morning’s descent from 1.61. The Fibs to watch are in black while the green Fibs are larger levels still at play.

The EUR Is Unhinging No it’s not. But it makes for a great...

Wed, 07 Sep 2011 02:10:00 -0700

The EUR Is Unhinging

No it’s not. But it makes for a great headline LOL. To be honest, I have been amazed at the resiliency of the euro. I thought for sure Greece would drive the EURUSD below 1.25 and the EURGBP below 0.80. But that thought is 2 years ago and we find both currency pairs well above those levels. And while the SNB’s peg to the euro brought mass attention to the CHF, I did see one tweet that considered the other side of the trade.

The SNB has affectively propped up the EUR. If the SNB needs to devalue its currency, it will need to buy euros to do so. As such, the EUR has another agency willing to keep the currency intact. With the Chinese, the Swiss, and the Germans all with incentive to keep the single currency in existence and with the ammunition to do it, I don’t expect we will see the day of reckoning that many of us anticipated when reality of Greece reverberated through the markets.

The EURGBP continues to remain bullish as price remains above 0.8750. The major area of resistance remains 0.8880. A return to this level will mark a 5th attempt. And I tell you, the odds of breakout above 0.8880 are very good. But until then, a EURGBP close above 0.8800 gives the pair a bullish bias. A close below 0.8750 changes the picture entirely.

No Francs (The Economist)
Another Reason to Buy Gold: Franc Losing Safety Status (CNBC)
Will the SNB be successful in slowing the franc? (Daily Forex Trading Edge)

Updated chart below:

USD Weakness Is Still Very Real As many know, I really only view...

Sun, 04 Sep 2011 11:34:42 -0700

USD Weakness Is Still Very Real

As many know, I really only view the USD through the lens of the GBPUSD. The USD has weakened versus GBP and regardless of the catalyst of a USD rally, cable continues to put in higher lows since the July 11th low at 1.5770. So while GBPUSD did put in a bearish week last week, the daily chart still remains bullish as the new trading week opens.

The daily chart played out very technically as the August 24/25 lows broke below the 61.8% Fibonacci retracement levels (purple) of the rally from 1.6100 to 1.6618. A break of the 61.8% Fib usually signals a reversal. And that is what unfolded as the ensuing rally fizzled out and resulted in a new low at 1.6140 on Thursday of last week.

There are a lot of bears out there on cable. And as long as price struggles above 1.6500, it is hard for the bears to go away. But the fundamentals continue to point to a LOWER US dollar. Economic data is deteriorating in the US after a decent first half of the year. The Federal Reserve has confirmed the worst is indeed coming back in the form of QE3. As the year ends, I think we will see worsening economic numbers as the consumer spending decreases in response to the slowdown in manufacturing and labor markets we have seen thus far. And while the UK economy doesn’t bode better, the Fed is much more dovish than the BoE. And for that reason, the fundamental picture favors GBP over the USD.

Technically, I raise my eyebrows at the 3 bearish waves that were unable to break below 1.6100 level. This is a serious level of support and we have seen that candles that have closed above 1.61000 have led to sharp rallies back towards 1.6500.

As the week opens, all eyes should be on 1.6250 to the upside and 1.6150 to the downside. These levels will dictate direction into the open especially with US markets closed Monday in observance of the Labor Day holiday. Over the week, however, the larger levels to pay attention to are 1.6100 if prices remain below 1.6250. If prices find support above 1.6250, the key level for further rallies remains 1.6500. Trade what you see!

The Fed’s Plan - Rumors of News (Bruce Krasting)
UK economic outlook darkens (The Financial Times)

EURGBP Starts The Week Toppish After a very bullish close to a...

Tue, 30 Aug 2011 01:10:36 -0700

EURGBP Starts The Week Toppish

After a very bullish close to a very bullish week, EURGBP starts this new trading week looking weak. Attempts at 0.8880 have remained as before. Since Sunday evening, the 8hr chart continues to put in wicks that suggest weakness.

A first target is the more aggressive 38.2% Fibonacci retracement level at 0.8810. A 2nd target is the 38.2% Fibonacci retracement level of the entire rally off the 0.8650 lows at 0.8790.

After this consolidation, watch for continuation to the upside or more weakness. The key level will be 0.8750 to the downside and 0.8850 to the upside.

EURGBP Week End Wrap The EURGBP has rallied for the last 2...

Fri, 26 Aug 2011 13:14:00 -0700

EURGBP Week End Wrap

The EURGBP has rallied for the last 2 trading weeks. But the trend gained considerable strength this week as the bulls targeted the short term resistance level at 0.8880. However, despite the momentum of this trend, I saw too many bears in my Twitter and StockTwits streams this morning. It seems the plan is to step in front of this train as it nears 0.8880 level where price has failed at this level 3 times prior. While seemingly logic, it actually isn’t.

First off, follow the trend, especially a daily chart trend. This rally is a result of another failure at the 0.8650 level, a short term support level on the daily chart. A trend that has rallied over 200 pips shouldn’t be ignored. Plus, the failed low is a higher low - a subtle bullish hint.

Secondly, when a currency pair looks to challenge a level more 2 or more times, it is usually a hint of an eventual breakout of that particular level. My mentor taught me that.

Third, there is NOTHING bearish about this candle. What we need to watch for in the new trading week ahead is if the next candle puts in a wick like the 3 times before it.

Remember that the European Central Bank President speak tomorrow when the markets are closed. With the European sovereign debt crisis in full swing, market participants will listen carefully as to whether or not Trichet chooses to finally acknowledge the crisis with monetary policy. The market will execute judgement on Sunday at the open.

Enjoy the weekend!

GBPUSD UPDATE Before the market open this week, I did hold a...

Tue, 16 Aug 2011 00:36:00 -0700

GBPUSD UPDATE

Before the market open this week, I did hold a bearish bias on the GBPUSD. It would only change if price remained above 1.6250. It did. And the pair rallied to high of 1.6410. However, cable failed to remain above 1.6350. As a result, cable is trading lower at 1.6325 at the time of this writing. The 61.8% Fibonacci retracement level of Monday’s intraday price action at 1.6320 has been respected so far. However, the real level to watch on the news release is 1.6250. A break below and price heads towards the green zone. If price remains above, then it heads towards 1.6350 on its way to 1.6500. Ultimately, I remain a long-term bear until price trades above 1.6500. Trade what you see!

EURGBP New Week Outlook August 14 2011 The EURGBP also saw...

Sun, 14 Aug 2011 12:47:00 -0700

EURGBP New Week Outlook August 14 2011

The EURGBP also saw some wild moves last week as the market had to deal with the fact that now France as entered the European sovereign debt crisis discussion at the same time that Italy has become a serious concern in the market. Technically, however, the pair gave mixed signals as price made lows at 0.8640 rallied over 200 pips to 0.8880 and ended the week at 0.8750.

The lows on Friday at 0.8730 gave a very small signal that EURGBP will head lower by piercing even the 78.6% Fibonacci level. Also, price closed the week below 0.8750 even if by only a few pips (0.8748 on my platform). Rallies to the 0.8880 highs continue to be met by sellers to target the green buy zone below 0.8700. However, the week closed before entering this green zone. Therefore, this pair continues to maintain is bearish bias into the 0.8600’s. Only a break and hold above 0.8880 changes this bias to bullish.

GBPUSD New Week Outlook August 14 2011 Though cable managed...

Sun, 14 Aug 2011 11:18:00 -0700

GBPUSD New Week Outlook August 14 2011

Though cable managed to close the week above the key 1.6250 level, the pair maintains a bearish bias as long as price holds below 1.6500. At the open, price has the bullish momentum to move into the red sell zone that is marked by the 50% and 61.8% Fibonacci retracement levels of last week’s move to the downside.

The main target for bears will be the green buy zone. However, if price manages to break and hold below 1.6100 support then expect price to move to the 1.6000 major psychological level. From there, bears will have to prove themselves with a push towards the 1.5770 lows.

This week sees plenty of key economic data out of the UK that could make or break sterling this week. UK CPI is released Tuesday followed by the Bank of England meeting minutes release on Wednesday. UK retail sales will be contrasted to the US retail sales report of last week. Since both economies are heavily reliant on the consumer, investors will looks to see which economy is stronger relative to one another. There is also a lot of economic news from the US this week but I expect that UK fundamentals will ultimately dictate direction for the GBPUSD currency pair. Trade what you see!

GBPUSD Was Never Bullish Despite the rally this week after...

Thu, 04 Aug 2011 23:19:00 -0700

GBPUSD Was Never Bullish

Despite the rally this week after finding support at 1.6250, cable was unable to take out the all important 1.6500 level. It was only a close above this level that turned the bounce off of the 1.5770 low into a true rally.

Alas, price failed at 1.6440 and we find ourselves back at the 1.6250. Previously, GBPUSD remained bullish as long as we had a 4-hour candle close above 1.6250. However, Thursday’s price action resulted in a candle that closed below the 1.6250 large quarter point. Though price remains above 1.6250 as of this writing, the pair has given a huge signal to further direction heading into US non-farm payrolls.

Trade what you see!

EURGBP Carves A Base The EURGBP has managed to base at 0.8730...

Tue, 02 Aug 2011 00:35:59 -0700

EURGBP Carves A Base

The EURGBP has managed to base at 0.8730 with a spike low at 0.8705. Buyers look ripe to step in at these levels if we do not get an hourly close below 0.8700. A failure targets first 0.8850 with an ultimate target of 0.8900. A break below targets 0.8680 with an ultimate target of 0.8600. News this week will be key with construction PMI out later this morning and Bank of England on deck for Thursday.

GBPUSD Remains Bid Though bears took an early lead in the week,...

Wed, 20 Jul 2011 20:56:00 -0700

GBPUSD Remains Bid

Though bears took an early lead in the week, cable has remained bid thanks to the Bank of England (BoE). The BoE meeting minutes released yesterday morning were not as dovish as the market expected. As such, GBPUSD managed to rally after weakening into the release.

However, the market remains weary to strengthen the currency pair as the pair still fails to make a new high above 1.6200. The market awaits the release of UK retail sales. If better-than-expected expect cable to rally to 1.6250 which is also the 61.8% Fibonacci retracement level of this entire bear trend. I wouldn’t be surprised to get a break of this level to test 1.6300 if retail sales surprises to the upside. However, if retail sales disappoint expect a move back towards 1.6000 with a break opening up a further breakdown to this week’s downside targets.

EURGBP UPDATE Bounces out of 0.8720 as expected on its first...

Mon, 18 Jul 2011 12:21:00 -0700

EURGBP UPDATE

Bounces out of 0.8720 as expected on its first attempt on the level in over a month. So far a high on the day at 0.8780 still repects the channel noted yesterday.

It seems we will get a bullish close on EURGBP above 0.8750 today. 0.8820/50 are key to the upside as we head into the BoE meeting minutes release. Watch for sellers to step in for a bigger move to the downside. A hold below 0.8850 confirms. Trade what you see!

Cable Bears Take Early Lead Traders had to admit that another...

Mon, 18 Jul 2011 11:28:32 -0700

Cable Bears Take Early Lead

Traders had to admit that another weekly close above 1.6000, despite the breakdown to 1.5770 midterm support, was bullish. However the failure at 1.62 hinted that bears were still around. The failure at 1.6150 became an early confirmation that shorts were indeed on the right side of the trade.

Today’s break of 1.6050 was key. Today’s hold above 1.6000 is natural reaction to the major psychological level. So a bounce could happen back towards 1.6100. At this level, we watch if new shorts will show themselves for the bigger move towards 1.5750. 1.5950 is the first level of support to contend with. We’ve seen plenty of action there last week making this the week’s target to the downside. Momentum goes to the one who can break and hold. Bullish above, bearish below. News this week can rock this either way but today’s Monday action has yielded nicely for last week’s bears.

1.5950 is key to the downside going into Tuesday’s Bank of England meeting minutes release. The market is obviously biased bearish on the BoE considering the trend of the last 6 months. With FOMC out of the way, traders are free to put their attention back on the inaction of the BoE. Trade what you see.

Sellers Can Gain Momentum in EURGBP If price can hold below...

Sun, 17 Jul 2011 21:31:08 -0700

Sellers Can Gain Momentum in EURGBP

If price can hold below 0.8720, the first target is 0.8670. The real test for bears will be 0.8600, the 61.8% Fibonacci level of the entire 2011 EURGBP rally. Watch price action going into the week.

EURGBP starts the new trading week developing beautifully to the...

Sun, 17 Jul 2011 20:37:00 -0700

EURGBP starts the new trading week developing beautifully to the downside as the 38.2% Fib holds with lower highs and lower lows.

Weak USD Rallies GBPUSD The USD has weakened significantly as...

Wed, 13 Jul 2011 15:35:00 -0700

Weak USD Rallies GBPUSD

The USD has weakened significantly as the Federal Reserve talks down the USD and the market rumors about QE3 (a third round of quantitative easing in the United States) gather steam. After making a low at 1.5770, GBPUSD has actually been bullish.

Another bounce off of the 1.5750 midterm support level
A close above the 61.8% Fibonacci retracement level at 1.5880 despite breaking below it.
A new high above 1.6150

To confirm the bullishness, a break and hold above the 61.8% Fibonacci retracement level at 1.6185 would be need with price completing the quarter to 1.6250. If this doesn’t develop, we could see corrective action back towards 1.6000, the 61.8% Fibonacci level of today’s rally.

Ultimately, cable looks bullish above 1.6000 despite the bear trend since late April.

Full disclosure

Will GBPUSD Resume Lower? GBPUSD rallied to 1.6115 highs in the...

Thu, 30 Jun 2011 03:36:19 -0700

Will GBPUSD Resume Lower?

GBPUSD rallied to 1.6115 highs in the Asian session only to fall in a vicious sell-off to 1.5980. However, 15980 has become a strong level of support this week, best seen on the hourly (or 5-minute) chart. A bounce off this level targets the top of the consolidation range at 1.6040/50. A break there targets highs again above 1.6100.

If GBPUSD is to continue its bear trend, price will need to break and hold below this 1.5980 level.