Hi Again people, another week in March has passed and we have seen some volatile action last week. Either the ranges have become really small and/or the whipsaws have become really wide with the actual price movements being rather narrow.
I did mention that this will be exactly what will happen with the market behaviour at the beginning of this year if you would recall. In a stage of market uncertainty and dubious policy making, there is much to be convinced and lack of confidence within the market shows in the charts.
If you are a conventional investor, buying stocks/commodities/bonds/unit trusts purely waiting for an appreciation in price value before an exit, this year might be a long haul for you. In the Forex market however, we quite literally don’t care if the market is to go up or down and we purely speculate on price action. As long as there is price action, there is a chance that we make profits. More volatility = more action = more potential trades = more potential profits.
Again, this is just my opinion. If it makes sense, don’t just sit on it. Take action and see what you can do? If it doesn’t make sense, well just stuff it aside for the moment but keep it at the back of your head so that you might get some reference points down the year.
What happened last week?
Ok, back to our weekly stuff, let us look at what has happened so far last week. As usual, we will compare the relative movement of all currencies against the USD. Here is how they performed last week;
1) Eur – -ve 1.77%
Outlook ; Bearish – Still no signs of trouble ending for Greece, PIIGS and Eurozone overall. No signs for optimism as yet.
2) Gbp – -ve 1.09%
Outlook ; Bearish : No positive signs here as well. We will look to Tuesday’s UK Budget announcement where chancellor Darling will announce plans for 2010 and beyond, with possible QE and assets purchasing options.
3) Jpy – +ve 0.23%
4) Chf – -ve 0.36%
5) Cad – +ve 0.06%
6) Aud – -ve 0.27%
7) Nzd – +ve 0.75%
8 ) Gold – +ve 0.39%
As you can tell from the overview, we have had a muted week in terms of actual price action apart from heavy selling of the Eur(no surprises there) and the Gbp(no surprises there as well).
Notice again that we have had little or no correction in the com-dollars and gold but they haven’t quite taken off as we had expected almost 2 weeks ago. We had a fake call with oil spiking but that move too soon subsided and Oil is well below the required 82.50 level and is hovering around the 80.50 mark as of now.
What is the USD Index showing us about USD?
On the USD front, we had some reversal candles and congestion patterns at the MA 50 level, but it has crept back up to be on positive strength. Though it hasn’t quite broken its highs of Feb 19th at 81.34, we are seeing neither strength nor weakness, in general.
USD Index - Not showing any signs of weakness as yet.
We therefore don’t quite have any reasons to believe that the current trend we have will not continue into this week as well.
Fundamental News Events (All timings are with respect to SGT – GMT + 8 hrs)
Mon 11:3o pm – More speeches coming out of both Eurozone and UK
Tue 5:30 pm – UK CPI
10:00 pm – US Home Sales
Wed 5:45 am – NZ Current Account
5:00 pm – German IFO Biz Climate
8:30 pm – UK Budget
10:00 pm – US New Home Sales
Thu 5:45 am – NZ GDP
5:30 pm – UK Retail Sales
8:30 pm – US Unemployment Claims
As always, this is my outlook and is to be used as a guideline only. I will take trades against my outlook if i see conviction in the price action. I can also be trend following long term and counter trend short term. It all depends on what happens at that point in time. So be objective and trade what you see, not what you believe.
