Forexpros Daily Analysis - 30/04/08

[ForexAnalysis]

Daily Forex Analysis

 

Today’s USD Trading

USD ends mixed

GBP falls through support

 

Today’s Economic Reports

Consumer Confidence out at 62.3

 

Looking Ahead

All times EASTERN (-5 GMT)

 

8:15am USD ADP Nonfarm Employment Change -60K 8K

8:30am USD Advance GDP q/q 0.2% 0.6%

10:45am USD Chicago PMI 47.5 48.2

2:15pm USD FOMC Statement

2:15pm USD Federal Funds Rate 2.00% 2.25%

 

USD mixed, GBP and EURO fall through support

Actually a very unexpected day for the GBP and the EURO as the USD ends a mixed session sharply higher against the Europeans and mixed against everyone else. BOE Blanchflower was making dovish remarks this afternoon and the GBP extended losses from the London fix to make lows under the 1.9700 handle later in the day; the lack of volume from the Far East today likely contributed to the run on the stops as bids were simply not there. A new weekly low and a press for bids under the 1,9680 area left a low print at 1.9665; good enough to wreck a few balance sheets. EURO pressed into stops as well as the potential for correction continues; low prints at 1.5539 in early US trade were untouched for the end of the day and EURO rallied on dip buying but not enough to discourage the bears. Low prints under the 1.5520 area expected tomorrow after the FOMC meeting I think. Other pairs remained fairly range-bound; no real action either way with the exception of USD/JPY.

Many forex traders get so absorbed in trying to find the “best” entry point that they completely lose focus on the really important things.The most significant thing to always remember is that price action needs to be exploited from the point of view that you need to buy low and sell high in order to profit.It doesn’t matter if you are shorting the market or going long—you ALWAYS must have a buy execution lower than your sell. Anything else is a loss. Therefore, you must always be selling strength; whether or not you are covering a long or going short. Same for the other way around. It doesn’t matter if you are covering a short or going long; you must buy weakness. In the final analysis, your trading results are determined by your willingness to buy when everyone else is selling…and buy when everyone else is selling. Don’t look for the perfect place to enter. Rather look for a buy zone after a break and vice-versa.

Actually a very unexpected day for the GBP and the EURO as the USD ends a mixed session sharply higher against the Europeans and mixed against everyone else. BOE Blanchflower was making dovish remarks this afternoon and the GBP extended losses from the London fix to make lows under the 1.9700 handle later in the day; the lack of volume from the Far East today likely contributed to the run on the stops as bids were simply not there. A new weekly low and a press for bids under the 1,9680 area left a low print at 1.9665; good enough to wreck a few balance sheets. EURO pressed into stops as well as the potential for correction continues; low prints at 1.5539 in early US trade were untouched for the end of the day and EURO rallied on dip buying but not enough to discourage the bears. Low prints under the 1.5520 area expected tomorrow after the FOMC meeting I think. Other pairs remained fairly range-bound; no real action either way with the exception of USD/JPY. The rate found stops under the 103.50 area for a low print at the 103.21 number before rallying hard to re-gain the 104.00 handle; sympathy buys along with equities as well as cross-spreading likely lifted the pair. Looking ahead to US data tomorrow you can expect a volatile day in my view. First up is ADP private payrolls which have added a lot of two-way action. Next is GDP and last is FOMC—all things considered tomorrow is the day to set the tone for the rest of the week. Look for the Greenback to be quiet overnight.

 

GBP/USD Daily

 

Resistance 3: 1.9820

Resistance 2: 1.9750

Resistance 1: 1.9720/30

Latest New York: 1.9683

Support 1: 1.9650/60

Support 2: 1.9600

Support 3: 1.9550

 

Other Things to Watch/Open Trades/News

 

Currently flat—stopped out of short yesterday.

 

Rate has strong buy signal but top is at

resistance; possible “late” conflicting signal.

 

Rate under 1.9720 area important, major stops likely under the 1.9600 handle; likely to be challenged soon but given conditions a bounce is coming first.

Closing under the 1.9600 the next 24

hours likely set the stage for a return to 2008 lows near-term.

Upside is limited in my view but ranges can be wide as evidenced by the past few

days of trade. Sell rallies if not short; buying dips dangerous in my view.

Drop to under the MA’s very important in my view. Long selling wick makes sell

side attractive for further losses. Need down bars with higher volume to confirm

Overnight data unfriendly with more to come, Some pressure from EURO also.

 

Data due Wednesday All times EASTERN (-5 GMT)

 

Tentative GBP Nationwide House Prices m/m -0.5% -0.6%

 

EURO/USD Daily

 

Resistance 3: 1.5680

Resistance 2: 1.5650/60

Resistance 1: 1.5600/10

Latest New York: 1.5565

Support 1: 1.5630/40

Support 2: 1.5600/10

Support 3: 1.5480

 

Other Things to Watch/Open Trades/News

 

4-22-08 SHORT EURO/USD 1.6000 Stops @ 1.6100

4-24-08 SHORT EURO/USD 1.5650 Stops @ 1.5750

 

Look to add to shorts again soon.

 

Comments

Market has failed at 1.6000 area resistance with confidence now, be patient on the

potential break. Overhead resistance is heavy above the 1.5750 area; traders say

offers extend into the 1.5800/30 area with stops above. Two-way trade at resistance to start on Monday suggests a deeper pullback is in the works. Strong long-liquidation break is still coming; look for a test of the lows again within 24 hours. Watch for two-way volatility. Be ready to add quickly if a rally happens.

 

Data due Wednesday All times EASTERN (-5 GMT) Forecast Last

 

3:55am EUR German Unemployment Rate 7.8% 7.8%

5:00am EUR CPI Flash Estimate y/y 3.4% 3.5%

5:00am EUR Consumer Confidence -13 -12

 

USD/JPY Daily

 

Resistance 3: 105.00

Resistance 2: 104.80

Resistance 1: 104.20/30

Latest New York: 104.00

Support 1: 103.50/60

Support 2: 103.20/30

Support 3: 103.00

 

Other Things to Watch/Open Trades/News

 

Still Flat but aggressive traders can sell on a test

of the 105.00 area;

 

Looking at the sell side early this week.

 

USD/CHF

 

Resistance 3: 1.0450

Resistance 2: 1.0420

Resistance 1: 1.0380

Latest New York: 1.0373

Support 1: 1.0320/30

Support 2: 1.0300

Support 3: 1.0270/80

 

Other Things to Watch/Open Trades/News

 

SHORT USD/CHF 1.0380 Stops @ 1.0480

 

Aggressive traders can sell 103.70/80 area and

hold over the weekend (Higher risk so trade accordingly)

 

Comments

Rate clears stops above near-term resistance. Rate now at very top of range; look for

a sell-off from here but news is needed. Pullback was bought after the fix on Friday

and the rate is firm now for a test of the 104.30/40 area again.

Test of the lower range now expected if rate can fail again at resistance.

Expect a bounce from 1.0250 now so be nimble though as a break below there likely

to draw aggressive selling. Rate has set up to attract dip buying so we need to see if

that is a head-fake. Need a failure at 1.0420 near-term to go short in my view.

No follow-through is to be respected; look for offers to show up higher than the1.0400

handle now that the bounce followed through higher.

 

Data due Wednesday All times EASTERN (-5 GMT)

 

5:30am CHF Leading Index m/m 1.46 1.54

 

USD/CAD

 

Resistance 3: 1.0220

Resistance 2: 1.0180

Resistance 1: 1.0130

Latest New York: 1.0109

Support 1: 1.0100

Support 2: 1.0080

Support 3: 1.0050

 

Other Things to Watch/Open Trades/News

 

SHORT USD/CAD 1.0130 Stops @ 1.0230

 

Failure to close above the 101.80 area suggests

the rate has a failed rally (top of range).

 

ON THE LOWS TO END NEW YORK

 

Analysis by: Forexpros.com written by Jason Alan Jankovsky

 

Disclaimer:

Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.