Elliott wave: OIL & Usd/Chf

Gold hit the resistance area on Friday that was highlighted in our analysis, and along with a big drop in oil prices, pushed Eur/Usd lower. The euro now starts the week around 1.4700. The market may try to trade lower this week if the price of gold and oil continue their decline, and that may be lead by sentiment initially, but fed by a week of important U.S. based economic data. The moves on the euro automatically equate to new highs on Usd/Chf which bounced from the trend-line support that we have been looking at in recent posts, on Friday. We have an update on the one hour chart swissy chart, and have gone to the weekly oil chart to really get to the bottom of the technical story on oil. After all, who needs headlines when we have daily Elliott Wave analysis on the movers of the market?


OIL

Most currency pairs are highly correlated with Oil and Gold, they have to be in the respect that over 90% of all currency tickets has the Usd on one side of then or the other, as the Usd is the currency that international markets price oil in, traders should be watching commodities closely to find the right way on euro or swissy trends. We have kept this chart simple because that is the way that we like most charts to be; we have four clear waves with wave five to come. The chart is looking for technical support in wave four on Oil, which should slow down the short moves on Eur/Usd and push the Usd/Chf lower. Before that, we may need to see...

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Forex Daily Outlook

EURUSD Outlook
Yesterday the daily CCI gave us a valid warning about an upside correction potential of EURUSD. The pair topped at 1.4907 and closed at 1.4896. I am expecting further upside scenario towards 1.4975. We have a valid bullish channel on hourly and 4h chart. As long as these channels are not violated we still have a potential further bullish scenario. Immediate support is seen at 1.4820 followed by 1.4750. Initial resistance at 1.4925 followed by 1.4975. CCI just cross 100 line down on hourly chart and in overbought area on 4h chart suggesting a downside risks as the pair is traded near the bullish channel resistance line.

EURUSD Daily Supports and Resistances:

• S1= 1.4782
• S2= 1.4668
• S3= 1.4606
• R1= 1.4958
• R2= 1.5020
• R3= 1.5134

GBPUSD Outlook
Yesterday the Sterling recovered against Greenback. The GBPUSD was corrected higher, topped at 1.8793 and closed at 1.8776. Technically this fact open the door for a further upside correction move towards 1.8960 area. Immediate support is seen at 1.8740 followed by 1.8666. Initial resistance at 1.8850. We have a valid bullish channel on hourly and 4h chart. As long as these channels are not violated we still have a potential further bullish correction scenario. CCI just cross 100 line down on hourly chart and in overbought area on 4h chart suggesting a downside risks towards bullish channel support line.

GBPUSD Daily Supports and Resistances:

• S1= 1.8657
• S2= 1.8539
• S3= 1.8471
• R1= 1.8843
• R2= 1.8911
• R3= 1.9029

USDJPY Outlook
Yesterday the Greenback slumped against Japanese Yen. The pair bottomed at 108.13 and closed at 108.47. My model is mixed with downside bias. A consistent move below 108.50 would open the door towards 107.35. Immediate support is seen at 108.11. Initial resistance at 108.90 followed by 109.50. CCI about to cross -100 line up on 4h chart suggesting an upside risks.

USDJPY Daily Supports and Resistances:

• S1= 107.79
• S2= 107.11
• S3= 106.10
• R1= 109.48
• R2= 110.49
• R3= 111.17

USDCHF Outlook
Like all other major currencies, yesterday the Swiss Franc was traded stronger against Greenback. The pair breakout to the downside from ranging area, bottomed at 1.0842 and closed at 1.0864. My model is mixed with downside bias. Immediate support is seen at 1.0828. Initial resistance at 1.0896 followed by 1.0930. CCI about to cross -100 line up on 4h chart suggesting an upside risks.

USDCHF Daily Supports and Resistances:

• S1= 1.0805
• S2= 1.0746
• S3= 1.0651
• R1= 1.0959
• R2= 1.1054
• R3= 1.1113

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CHFJPY Hedge to Cover Longs Through 380-pip Drawdown

The Swiss Franc has been trending higher against the Yen since late November of 2000. With both CHF and JPY traditionally used as funding currencies for carry trades when paired with other currencies, their relationship among themselves has been primarily driven by the slightly higher yield offered by the SNB versus the BOJ. With both monetary authorities now firmly on hold, there is little reason to believe the underlying conditions guiding the pair’s broad direction will change in the near term. That said, CHFJPY does tend to oscillate in wide ranges along its upward trajectory. This can mean substantial swings in P/L for traders holding long-term CHFJPY positions.

Price action has seen the pair confined to a neat upward-sloping corridor since August of last year. Current trading has taken CHFJPY to the upper boundary of this corridor, with the Slow Stochastic oscillator topping out above the key 80 level and appearing to favor a reversal. A bearish Hanging Man candle now appears at resistance, lending further credence to a near-term selloff.


Hedging Strategy

Currency Pair: CHFJPY

Long Term Bias: Bullish
Long Term Position: Holding Long

Short Term Bias: Bearish
Short Term Position: Short below 103.40, Target 99.59, Stop-Loss at 104.31

Traders looking to protect their existing long CHFJPY position or enter long at a favorable price may consider a hedge short CHFJPY below 103.40 with a target at 99.59. Once the profit target is hit, we expect the bullish trend to resume. We will maintain a stop-loss on our hedge position should CHFJPY break out to the upside prior to the limit being hit. We will set the stop-loss near 104.31.





When should I use the hedging feature?

Markets hardly ever trade in the same direction for long. Though there are general trends that may unfold for weeks, months and years; there is almost always considerable fluctuation in price during these periods – sometimes leading to significant retracements. There are a few common strategies that traders use to immunize their risk to counter-trend moves while still holding to the long-term trend. One method of reacting to these changing tides is to actively enter and exit a trade on each swing, which requires constant attention and a superior ability to pick tops and bottoms. The other, more passive, strategy is to hold on for the long-term trend through retracements in the belief that the higher trend will reengage. Taking a temporary hedge positions through the counter-trend moves, on the other hand, requires less accuracy in picking tops and bottoms and at the same time lowers the drawdown while increasing the potential for return.

The hedging feature is currently available on all accounts using FXCM’s No Dealing Desk service.

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ZAR Heads for Biggest Weekly Drop

The South African rand headed for the biggest weekly loss against the U.S. dollar in the last three months as the traders were concerned that the high interest rates will prevent country’s economy to rise at a fast pace.

After the central bank said that the inflation will probably keep above the bank’s target 3-6 percent rate for at least until 2010, the rand reached its lowest value against the dollar since April 17 yesterday. The South African Reserve Bank is expected to increase the official repurchase rate from 11.50 percent to 12.50 percent on its next meeting on June 12.

Major investors believe that, while the rate hikes are probably the only right treatment for the accelerating inflation, the tight monetary conditions may significantly hurt the Africa’s biggest economy growth.

And while the higher interest rate can be a positive factor for the South African currency, the global unwillingness to hold the carry trade positions paired with the instability of the national economy can turn higher rates against the rand as it probably already happens now.

USD/ZAR rate rose this week on the Forex market from 7.6005 to 7.8223 as of 13:13 GMT today with a daily maximum at 7.8821- more 2.8 percent gain, making it a highest weekly growth for this currency pair since the week starting February 3 this year.

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

Winning in trading depends on using the right strategy and controlling all the moves. Trading strategies are discussed in details at ForexGen Academy.

Chile to Buy U.S. Dollars to Weaken Peso

The Central Bank of Chile will be buying the U.S. dollars in 2008 in order to stimulate the economy by the weaker national currency.

This year, starting April 14 Chile’s central bank will be buying $50 million every day on the Forex market to increase the overal country’s currency reserves from current $18 billion to $26 billion.

This step is rather controversial as the weakening of the peso will spur the consumer prices, while the inflation in Chile is already at a highest high level since 1996. CPI was at 8.4% in March (year-to-year) with the central bank’s target value between 2% and 4%.

On the other hand, weaker peso will bust the competitiveness of the exporting companies, increasing the economy output growth. Chile is a very export-orientated country with a large part of copper in the national export. Copper is sold for U.S. dollars and, with a cheaper peso, costs of production will remain low.

Although, the dollar purchasing process probably won’t affect the U.S. dollar rate against the other currencies, as it will be performed rather slowly, without sharp interventions, it may create some additional demand that will keep dollar from the fast falls during the volatile sessions.

ForexGen provides its institutional clients with incomparable professional and individualized trading services. As a professional online trading service, ForexGen provides several facilities for all kinds of traders. Our corporate and managed trading service performance are based on respect and appreciation which is only achieved by offering intelligent high end trading tools for secure investment. ForexGen is the easiest and fastest gateway for the corporate traders to perform successful trading, which provides a unique institutional investor professional facilities and highly qualified individualized services for the international customer. ForexGen provides advanced online trading software with full corporate trading services. A rich choice of managed accounts are also available, please check our Managed Account Section

ForexGen delivers what traders want: instant order execution, lowest spreads, flexible starting capital, fast deposits and withdrawal, a local support in more than 18 countries, and most of all, solid funds security.

Winning in trading depends on using the right strategy and controlling all the moves. Trading strategies are discussed in details at ForexGen Academy.