Daily Technical Strategist

Today's Focus: EURUSD & GBPUSD

EURUSD: Halts Downside Decline, Begins A Corrective Bounce
GBPUSD: Risk Still Remains Lower Towards The 1.9362/35 Zone

EURUSD

Having tumbled off the 1.5817 high to as low as 1.5364 low Thursday, EUR rose sharply higher off that intra day low to close the session at 1.5603.The pair looks to have begun a corrective recovery following the said decline and should now move towards the 1.5817 high, its May 27'08 high initially ahead of the 1.5895/I 5912 area, its Mar 31'08 high/April 10'08 high and then its YTD high at 1.6018.The daily stochastics has turned higher supporting the current upside view. On the hand, the pair is expected to weaken on completing the mentioned recovery putting the 1.5510 level, its April 03'08 low as the first support followed by its May 08'08 low at 1.5283 or even lower towards its .50 Ret (1.4309-1.6018 high) at 1.5164.On the whole, EUR's short term outlook continues to point lower while holding below the 1.5817 level.

Support	Comments
1.5510	April 03'08 low
1.5360/41	.382 Fib Ret/Mar 24'08 low/May 02'08
1.5283	May 08'08 low
1.5164	.50 Ret (1.4309-1.6018 high)
Resistance	Comment
1.5593	May 06'08 high
1.5710	April 18'08 low
1.5895/1.5912	Mar 31'08 high/2008 Peak
1.6018	YTD High

GBPUSD

Despite GBP's backing off its intra day low at 1.9460 Thursday, its broader bias remains to the downside opening up risk towards the 1.9360/35 area, its 2008 lows with a break below there taking it lower towards the 1.9180 level, representing its Mar'07 low. Daily studies remain supportive of this view.However, if a followthrough on its yesterday close is seen then a push towards the 1.9598 level, its April 15'08 ahead of the 1.9674/53 level, its April 25'08 low/Aug 17'07 high could ensue with a loss of there opening the door for more upside gains targeting the 1.9727/19 zone, its Mar 05'08/April 01'08 lows and next the 1.9850 level, its May 23'08 high and the 1.9963/ 2.0026 levels, its Feb 27'08/April 21 & 28'08 highs. All in all, while a higher close yesterday may suggest a temporary halt in its recent decline,as long as it continues to trade below the 1.9850,its medium term bearishness will continue to dominate.

Support	Comments
1.9360/35	2008 lows.
1.9180	Mar'07 Low
1.9045	1.272 Fib Ext
Resistance	Comments
1.9598	April 15'08 low
1.9674/53	April 25'08 low/Aug 17'07 high
1.9727/19	Mar 05'08/April 01'08 lows
1.9963/2026	Feb 27'08/April 21 & 28'08 highs

Mohammed Isah
Market Analyst
www.fxtechstrategy.com

This report is prepared solely for information and data purposes. Opinions, estimates and projections contained herein are the author's own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which the author incur any responsibility. The does not accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not construed as an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report

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.

FOREX-DD : Forex Daily Analysis