Forex Technical Update - By Rcpl Forex

Forex Technical Update

Euro: Euro surged by 235 pips to touch 1.5600 mark (50% Retracement of the latest fall in daily) as Trichet indicated that ECB may be hawkish enough to hike in July. The 4-Hourly stochastic is overbought while the daily shows strong upmove. The pair is currently taking strong resistance of (21 daily EMA & 100 & 200 4-Hourly EMA and 50% retracement of the latest fall) and a firm break of this resistance will lead Euro to 1.5645 levels (61.80 retracement of the latest fall). (Eur/Usd-1.5582).

Pound: Pound traded in a range of 134 pips as it surged from the intraday low of 1.9461 to touch a high of 1.9595 in the U.S. session (took resistance of the 21 4-Hourly EMA, 100 Hourly EMA and 50% Retracement of latest fall). The 4-Hourly stochastic is overbought while the daily shows buying pressure. A firm break of the above mentioned resistance will lead Pound to 1.9670 levels (21 Daily EMA) but, if the resistance holds the bias would be bearish. (Gbp/Usd- 1.9569).

Yen: USD/JPY pair surged from the day's low of 105.19 as it stayed above the 100 Daily EMA throughout the session to trade in a range of 123 pips. The daily and 4-Hourly stochastic show some room for upmove, which along with strong Asian equity markets should lead the USD/JPY pair beyond yesterdays high of 106.42. Usd/Jpy- 106.16).

Rupee: The rupee continued to weaken yesterday to end the day at 42.90 against the dollar, 12 paise below its previous close as. Today rupee was at 42.825/875 per dollar, stronger than thursday's close of 42.90/91 helped by firm Asian stocks and on expectations of foreign inflows. RBI would possibly intervene to prevent rupee to go past the 43 mark. (Usd/Inr- 42.80)

Swiss Franc: USD/CHF pair scaled up to high of 1.0520 in the early trading session but witnessed a free fall in the US session on the back of hawkish statements given by the Mr. Trichet. The daily stochastic shows fall while the hourly and 4-hrly shows some buying pressure. The pair is currently facing stiff resistance at 1.0395 (21 & 55 daily and 100 & 55 4-hrly EMA) a break of this level would indicate a further upmove till 1.0438 (50% retracement hourly charts) which should hold. (Usd/Chf-1.0394).

Australian Dollar: Aussie tested the bids of 0.9511 in the yesterday's session but later regained to touch a high of 0.9592. The daily stochastic shows strong buying pressure while the 4-hrly shows a fall hence a further upmove beyond 0.9631(trend line resistance) seems to be unlikely. On the downside 0.9613 ( 21 daily EMA & 38.2 % retracement) should hold. A firm break of this level would lead to a further fall upto 0.9450 (100 daily EMA). (Aud/Usd - 0.9601).

Gold: Gold had a volatile trading day as it traded in a range of $14 as it surged up to a high $878. Strong resistance comes in at $892 (100 & 21 daily EMA and 38.2% retracement daily charts) which should cap an upmove if any. Gold is currently trading at critical levels of $ 877( 61.8% retracement of the rise from $780 to $1032) a further deterioration from this support would indicate a bearish bias and a fall till the next immediate support of $850 (200 daily EMA) can be expected in the next few trading sessions. (Gold - $878.00)

Dollar index: Dollar index is currently at 73.12, 0.55 points lower than previous levels of 73.67. Stochastic is currently at 71.13% and have taken sharp turn upwards indicating a 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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