Today's Market Outlook

EURUSD

Continues reversal from 1.5818, 27 May lower top, to nearly fully retrace 1.5285/1.5818 upleg. 1.5461 low was reached initially, with subsequent bounce being capped by 1.5828/26, ahead of sharp sell-off. Loss of 1.5461 and the recent 1.5410 low, has opened way for fresh weakness that reached 1.5365 today. Correction higher is underway, expected to leave a lower top below 1.5582 for fresh attempt towards 1.5285. Only sustained break above 1.5628 to improve the outlook.

Res: 1.5485, 1.5520, 1.5550, 1.5589
Sup: 1.5450, 1.5410, 1.5385, 1.5365

GBPUSD

Recovery off 1.9364, 14 May low, was capped by 1.9848/50 ahead of reversal. 1.9595 was reached on 02 Jun, ahead of rally to 1.9740 on 03 Jun. This marked a lower top for fresh decline and break below 1.9595 has seen new low at 1.9461, posted today. Near 80% of the 1.9364/1.9850 upleg has so far been retraced. Current bounce seeks a lower high before fresh weakness and potential break below 1.9461 to expose 1.9400/1.9364.

Res: 1.9530, 1.9557, 1.9577, 1.9600
Sup: 1.9452, 1.9440, 1.9400, 1.9364

USDJPY

Remains in uptrend from 95.72, 17 Mar yearly low, with 105.87 high being reached on 29 May. Correction to 103.87 low followed, ahead of renewed strength to 105.56. Subsequent pullback left a higher low at 104.54, ahead of fresh thrust. Today’s clearance of 105.56/87 resistance area and psychological 106.00 level, now seeking for test of 106.60, 38% retracement of 124.14/95.72 downleg, possibly 107.00/40 zone. Downside, 105.30/20 offers initial support, while only loss of 104.54 would weaken the structure.

Res: 106.43, 106.60, 107.00, 107.40
Sup: 105.87, 105.56, 105.20, 105.00

USDCHF

Extended decline from 1.0625, 08 May high, to reach 1.0216 on 23 May, ahead of recovery. Gains reached 1.0523/26 on 29/30 May, before reversing to 1.0274. The rebound through 1.0448 lower top led to today's probe of trendline resistance off 1.0625, near 1.0500, ahead of the latest reversal. A fresh higher low is now sought by 1.0360, with potential break below here to allow deeper correction and delay immediate bulls.

Res: 1.0447, 1.0470, 1.0489, 1.0507
Sup: 1.0360, 1.0325, 1.0300, 1.0274

Windsor Brokers Ltd
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The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.

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