Currency Daily Update

>> Forex Technical Analysis | Written by Rcpl Forex | Sep 14 07 08:06 GMT |

GBP USD

DAILY CHART (14-09-2007)

COMMENTS: (GBP USD - 2.0184) Cable extended its rally to the extent of 2.0343 before plummeting to the levels of 2.0160. The daily stochastic was extremely overbought over the last few trading sessions and correction was imminent. Cable is holding above the support cluster of 2.0155 formed by the 50% Fibonacci and 55 days EMA in the daily chart. Breaking of 2.0155 support cluster may push pound to the next support zone of 2.0090. However, the overall outlook remains bullish for Cable.

STRATEGY: We have entered long around 2.0165 levels with a target of 70-80 pips intra-day and stops below 2.0040.

Technical Summary:

Resistance 2: 2.0450
Resistance 1: 2.0363
Support 1: 2.0155
Support 2: 2.0090

EUR USD

DAILY CHART (14-09-2007)

COMMENTS: (EUR USD - 1.3878) Euro's bull run accelerated to the extent of 1.3927 levels in yesterday's session. Euro is holding firmly above the 1.3840 levels (resistance turned support). The overall outlook remains bullish for Euro. However, as the daily stochastic is in the overbought territory, correction to the levels of 1.3835 is expected before we witness another rally.

STRATEGY: Look for opportunities to go long around 1.3830-40 with a target of 50 pips and stop below 1.3760.

Technical Summary:

Resistance 2 1.4000
Resistance 1: 1.3927
Support 1: 1.3840
Support 2: 1.3780

AUS USD

DAILY CHART (14-09-2007)

COMMENTS: (AUS USD - 0.8387) AUS USD is trading above its major support zone formed by the 55 Days and 100 Days EMA around 0.8340 levels. The outlook is clearly bullish for Aussie. Staying above the support zone can take Aussie to the levels of 0.8450. Although the daily charts have moved to the overbought region, it has flattened and is further signaling a bull run for Aussie.

STRATEGY: Look for opportunities to initiate longs around 0.8360 with a target of about 60-70 pips and stop below 0.8230.

Technical Summary:

Resistance 2: 0.8660
Resistance 1: 0.8500
Support 1: 0.8340
Support 2: 0.8220

USD JPY

DAILY CHART (14-09-2007)

COMMENTS: (USD JPY- 115.07) USD JPY is moving in a downward price channel. The upside is limited by the trendline resistance around 115.50 levels. As long as yen is trading below these levels, the outlook is clearly bullish for Yen.

STRATEGY: Look for opportunities to short around 115.50 levels with a target of about 70-80 pips and stop above 116.95.

Technical Summary:

Resistance 2: 116.97
Resistance 1: 115.60
Support 1: 114.00
Support 2: 112.55

USD CHF

DAILY CHART (14-09-2007)

COMMENTS: (USD CHF - 1.1882) CHF gained ground to the extent of 1.1800 after the decision of SNB interest rate hike to the extent of 25 bps was released in the early US session. Although, CHF closed a little weak around 1.1860 levels, the overall outlook remains bullish as CHF is holding below 1.1935 (38.2% Fibonacci). Breaking of 1.1800 on the downside can make CHF challenge the lows of 1.1740 and further.

STRATEGY: Look for opportunities to short around 1.1895 with a target of 50-60 pips and stops above 1.1975.

Technical Summary:

Resistance 2: 1.2016
Resistance 1: 1.1935
Support 1: 1.1800
Support 2: 1.1734

DISCLAIMER

These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsible for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

Posted by izone.net

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Disclaimer: Content in the Forex Forecast and Analysis section is for informational purposes only. Contributors submitted Forex Forecast, Forex Commentary, Forex Analysis, and Forex Articles and articles on other markets are based upon information gathered from various sources believed to be reliable, complete, and accurate. However, no guarantee can be made as to the validity of the believed sources. All statements and expressions in the Forex Forecast and Analysis section are opinions, and not meant as investment advice or solicitation. Forex Markets can be volatile and opinions may change without notice.

FOREX : Foreign Exchange Market

FOREX is a word play on the term Foreign Exchange Market. It is a market for buying and selling of currencies from all over the world. Certainly, such transactions are bound to be voluminous. It is just an estimate that there are about transactions of $1.5 trillion USD on a daily basis in the FOREX. Now just compare this with the paltry $300 billion USD a day transactions for the US Treasury Bond and the $100 billion a day transactions for the US Stock Exchange.

The FOREX came into existence in 1971 when the fixed currency exchanges were abolished. Currencies no longer had fixed values after that; on the contrary, their rates (mostly taken in comparison with the USD) were fluctuating, and changed on a daily basis. Throughout the seventies and the eighties the FOREX grew steadily, showing more advancement in the later years. The market has stupendously grown from $70 billion USD a day to the staggering amount that it transacts today on a daily basis.

There are actually about five thousand trading institutions in the FOREX. These include international banks, central government banks such as the US Federal Reserve, and commercial companies and brokers for all types of foreign currency exchange. The best thing that shows the unbiased nature of the FOREX market is that it has no fixed headquarters anywhere – it operates primarily from all major cities like New York, Tokyo, London, Hong Kong, Singapore, Paris, Frankfurt, etc. One can even use the telephone or the internet to make the transactions. The major businesses at the FOREX are the buying and selling of products in other countries. Several transactions are also conducted from the currency brokers or traders who stand to make small profits with the daily fluctuations in the market.

Most of the FOREX business is centered on big banks and financial institutions, but it doesn’t mean that the FOREX is inaccessible to small investors. The recent changes in the financial regulations have effectuated this accessibility. Earlier, a minimum transaction size was required to conduct business with the FOREX. But the current rules have made it possible to break large inter-bank units into smaller bits. Each bit is worth as less as $100,000. This makes it possible to each individual investor through loans that are extended for trading, known as leverage. The ratio to control the lots is 100:1. This means, every $1000 USD will allow one to control $100,000 on the FOREX.

The benefits of trading with the FOREX are mentioned below:-

(1) Liquidity of Investments – As the FOREX is a huge market, the funds have a very high degree of liquidity. This is because of the presence of the international banks who provide their bids and carry out a large number of transactions on a daily basis. Therefore, there is always a buyer or seller for any type of currency.

(2) Highest Degree of Accessibility – The FOREX is open 24 hours a day for 5 days a week. Every Monday morning the exchange opens at Australian Standard Time and closes on Friday afternoon at New York time. Greater accessibility is provided because the transactions can be conducted from the person’s home or office.

(3) Open Market – At the FOREX, there are no secrets. All the fluctuations that occur in the market are made accessible to everyone at the same time. There is no insider trading in the FOREX.

(4) No Commission – There is no hassle of paying commission to the brokers in the FOREX. Here the brokers earn by setting up a difference between the buying price and the selling price of a currency, which is known as a spread.

It must be understood by now that for the FOREX to work effectively, the currencies must always be traded in pairs. For instance, the Japanese yen must be traded against the euro. When one kind of currency is sold, there should be another to be bought in its stead.

The profit happens because there is always mobility between the different currencies. Even if there is a miniscule change in the exchange rate, then it could mean substantial changes in the profits due to the large amount of money involved in the transactions. People are thronging to the FOREX and not any other institution due to the trust that they have in it. To add to the advantage, the market is absolutely well-advanced and uses sophisticated software for dealing out its transactions.

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