FX Technical Analysis

EURUSD

Comment: Difficult as we trade in a small range roughly in the middle of the range since March. Expect more of the same today. Rallies will probably be capped by the very large Ichimoku 'cloud'. Intermediate highs and lows will be hard to spot.

Strategy: Possibly attempt tiny shorts at 1.5555/1.5590; stop above 1.5655. Short term target 1.5485, maybe 1.5400.

Direction of Trade: →

Chart Levels:

Support	Resistance
1.5512	1.5559
1.5485	1.5590/1.5605*
1.5461*	1.5640
1.5400*	1.5680/1.5700
1.5340	1.5800

GBPUSD

Comment: Having an awful lot of trouble with a very thin Ichimoku 'cloud'. Prices will hopefully try and form a small interim base today allowing for an upside squeeze later this week.

Strategy: Possibly attempt small longs at 1.9625; stop well below 1.9600. Short term target 1.9750, then 1.9900

Direction of Trade: →

Chart Levels:

Support	Resistance
1.9615	1.9680
1.9597*	1.9760
1.9550	1.9828
1.9500	1.9850
1.9450**	1.9900

USDJPY

Comment: Little to add after a third upside test saw prices inch to a new recent high at 105.88. We are still looking for signs of topping this morning and then a very slow drift back down to 104.50 late today/tomorrow.

Strategy: Attempt shorts at 105.50; stop above 105.95. Short term target 104.50, then 103.50.

Direction of Trade: →↘

Chart Levels:

Support	Resistance
104.11	104.50
104.00	104.71
103.89	105.35
103.50	105.50
103.00	105.88*

EUR/JPY

Comment: Dropping, here and in a wide range of Yen crosses. If not today then later this week we favour a drop below the top of the Ichimoku 'cloud' and a cautious drop to the lower edge of this very fat 'cloud' at 158.35. Below here would complete a large 'double top'.

Strategy: Sell at 162.10, adding to 162.65; stop above 163.50. Short term target 161.50, then 159.00.

Direction of Trade: ↘

Chart Levels:

Support	Resistance
161.82	162.00
161.60/161.40*	162.46
161.00	162.65
160.60*	163.00
159.00	163.50*

Mizuho Corporate Bank

Disclaimer

The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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