Forex Technical Update - By Rcpl Forex

Forex Technical Update

Euro breached the 1.5500 for the first time in 3 weeks as it tested the bids of 1.5485 on the back of increasing unemployment and deteriorating Eurozone consumer confidence. However later regained its losses and closed at 1.5511, the daily and 4-hrly stochastic are in the oversold region showing some buying pressure but upmove will be well contained at 1.5626 (100 & 21 4-hrly EMA & 38.2 % retracement ).(Eur/Usd-1.5537).

Pound:Pound dipped down to a low of 1.9672 on the back of weak housing data but could not deteriorate further as it took the trendline support and later surged up to close stronger at 1.9755. The daily and 4-hrly stochastic are in the neutral region while the hourly is in the overbought region. Its currently facing stiff resistance at 21 4-hrly EMA a break of this level for indicate a further upmove upto 1.9825( 100 daily EMA) which has been holding for the past few trading session. (Gbp/Usd- 1.9784).

Yen: USD/JPY pair surged up by 127 pips to touch an intra day high of 105.87 and closed above the 105 mark at 105.57. A continued sustenance above the 105 (21 weekly EMA &100 daily EMA, trend line support, 50% retracement daily charts) would suggest a bullish bias for the pair and a further upmove upto 107.40 (61.8 % retracement daily charts) could be seen in next few sessions. (Usd/Jpy- 105.29).

Rupee: The rupee fell slightly against the dollar as corporates bought dollars. The domestic currency opened at 42.74-75 and touched an intra-day low of 42.91-92. It closed the day at 42.78-79, against the previous close at 42.74 In the forward premia market, the six-month closed at 2.57 percent and the 12-month ended at 1.88 percent.(Usd/Inr- 42.59)

Swiss Franc: Swiss Franc: USD/CHF pair surged by 157 pips to a high of 1.0523 before closing at 1.0492 levels. The daily stochastic is in the overbought region while 4-Hourly stochastic is showing a fall. Critical resistance comes in at 1.0530 levels (61.8% Retracement of the fall from 1.1106 & 0.9638, 100 Daily EMA). Look for opportunities to short at those levels.(Usd/Chf-1.0472).

Australian Dollar: AUD/USD pair traded within 101 pips as it fell from the days high of 0.9636 to form a reversal bar before finally closing at 0.9553. The 4-Hourly stochastic are extremely oversold while the daily indicates room for further fall. Critical support comes in around 0.9512 levels (21 Daily EMA, 38.2% retracement of the latest rise). Look for opportunities to initiate cautious longs at those levels. (Aud/Usd - 0.9567).

Gold: Gold fell by $30 from the days high of $903 before finally closing at $877. The 4-hourly & daily stochastic are in the oversold region while the hourly is close to the oversold region. Gold should retrace to $894 levels (38.2% retracement of the latest fall in 4-Hourly charts).(Gold - $877.55)

Dollar index: Dollar index is currently at 73.07, 0.45 points higher than previous levels of 72.62. Stochastic is currently at 48.84% and showing further upmove. Medium term target 75.00.

RCPL FOREX
www.rcplforex.com

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.

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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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