Currency Daily Update

By Rcpl Forex

DAILY CHART (04-10-2007)

COMMENTS: (GBP USD - 2.0302) Cable's fall continued to the extent of 2.0280 levels yesterday where it gained support from the 50% Retracement (as seen in the above daily chart). Unable to sustain at higher levels; cable is currently trading around 2.03 levels with the daily & weekly stochastic still overbought. The immediate support for cable is around 2.0260 levels (21 Days EMA & 61.8% Retracement). Breaking of this level on the downside can further push cable to the levels of 2.0200 (200 Days EMA in the 4-hrly Chart).The key focus of the day is the BOE interest rate decision at 16:30 IST today.

STRATEGY: Look for opportunities to short at higher levels around 2.0330 with a target that Cable could retrace upto 2.0250 -260 levels and stop above 2.0450 levels.

Technical Summary:

Resistance 2: 2.0500
Resistance 1: 2.0440
Support 1: 2.0260
Support 2: 2.0200

EUR USD

DAILY CHART (04-10-2007)

COMMENTS: (EUR USD - 1.4097) Euro has broken the important channel trendline support of 1.4115 and is currently trading around 1.4100 levels. The stochastic which was extremely overbought has also corrected. A short term top seems to be placed at 1.4280 levels. The next important support for Euro is around 1.4050-60 levels (21 Days EMA in the daily chart and 100 Days EMA in the 4-hrly chart); alongside the 4-hrly stochastic is also in the oversold region. The key focus is on the ECB Interest rate decision at 17:15 IST today.

STRATEGY: Wait and watch for the interest rate decision. However; if Euro sustains at these levels opportunities to enter long on Euro around 1.4050 levels with a target of 50-60 pips and stop below 1.3950 can be considered.

Technical Summary:

Resistance 2: 1.4280
Resistance 1: 1.4160
Support 1: 1.4060
Support 2: 1.3930

USD JPY

DAILY CHART (04-10-2007)

COMMENTS: (USD JPY- 116.57) Yen, which was consolidating below 116.30 levels ended yesterday as Yen weakened to the extent of 116.75 levels. Yen is currently trading around 116.50 levels (above the 38.2% Retracement of the fall from 124.13 to 111.59 at 116.21). The next resistance is at 117.30 levels (100 days EMA in the daily chart). Sustaining below these levels could again push Yen to the levels of 114.00

STRATEGY: Look for opportunities to initiate shorts around 117.00 levels with a target of $7-8 and stop above $755.

Technical Summary:

Resistance 2: 117.85
Resistance 1: 117.30
Support 1: 116.20
Support 2: 115.60

USD CHF

DAILY CHART (04-10-2007)

COMMENTS: (USD CHF - 1.1743) Swissy's weakness continued to the extent of 1.18 levels yesterday (as projected); a move of almost 120 pips breaking past the resistance of 1.1770 levels. CHF is currently trading around 1.18 levels and the next resistance is faced at 1.1880 levels (50% Retracement and 55 Days EMA). Sustaining below these levels indicates that Swissy is still bullish as the hourly and 4-hrly stochastic is also in the overbought region.

STRATEGY: Look for opportunities to short the pair around 1.1820-1.1830 levels with a target of 50-60 pips and stops above 1.1900.

Technical Summary:

Resistance 2: 1.1950
Resistance 1: 1.1885
Support 1: 1.1735
Support 2: 1.1680

RCPL FOREX

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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