Friday February 25, 2005 - 17:03:27 GMT
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THOSE WHO SEE IT UP AGAINST THOSE WHO SEE IT DOWN
There is good money supporting the EUR and the GBP these days, but the USD accumulation isn’t stopping and despite this week’s sell-off attempt, the greenback still holds a mildly positive outlook on a weekly basis charts.
Watch my trading wizards for this week for long-term trading tips.
If you remember, last week’s report was more or less to indicate the possibility that we could be about to see bullish USD formations in some of the major currency pairs. Definitely there is people in the market who wants to prove this theory wrong.
The current market moves (USD bearish overall) have resumed the bearish sentiment for the greenback, but the weekly closing basis scenario is from from done yet for USD bulls. Taking into account that the US economy keeps a mildly healthy tone (nice GDP number released on Friday, february 25th), it won’t surprise anyone if the moves in the foreign exchange markets are USD positve in coming months.
Well, there’ll be one group of people who will be surprised : the USD bears. They resumed their USD bearish efforts when it came close to a test-and-break of the key long-term downtrend lines some weeks ago, but failed to do so and therefore those USD bears interpretated that as the signal to put money in other majors for another leg of dollar depreciation.
I’m not that sure they will make it this time. It is true, though, they pushed hard to break some key weekly level,. specially one key for me : 1.16 on the Usd/Chf. They did not succeed, and they now should monitor their positions carefully if 1.1975 is broken back up, there could be a massive USD buying there (there’s fresh money awaiting for the USD comeback to join the train).
USD bulls, though, have to be patient. A trend reversal carries a lot of “waiting-and-waiting” time for the clear reversal signals to get confirmed and for the new trend to start and gradually put things where they should be. Therefore, around key support levels, accumulation is preferred than staying out, keeping an eye to that Usd/Chf level which should serve as support and if clearly broken would definitely negative the bullish view for the moment (something that is not accepted for some of the market participants who believe the USD is going to rise in coming months).
Also important, even more than the Usd/Chf levels, is the following of the Gbp/Usd and Usd/Cad moves. Why? Well, GBP just broke downtrend line in his own particular weekly chart and despite having indicators signaling short, it wants to move higher. A break above 1.9250-1.93 on a weekly closing basis will also be very painful for any USD bullish momentum. In the other hand, the USD managed to close above 1.24 against the CAD, providing some relief in its own momentum. These 2 currency pairs look the leaders for the next USD move.
Next week we have the key US NFP data, a truly market shaker. We will see definite trends starting (or not) from the moves its release will generate.
This week’s closing levels (at the time of this writing) : EUR/USD 1.3195 (+130), USD/CHF 1.1685 (-135), GBPUSD 1.9145 (+200), EUR/GBP 0.6890 (-5), USD/JPY 105.25 (-35), USD/CAD 1.2405 (+110), AUD/USD 0.7845 (-30), NZD/USD 0.7195 (-45), EUR/CHF 1.5420 (-35), EUR/JPY 138.80 (+55), GBP/CHF 2.2375 (-30), GBP/JPY 201.40 (+90). CAD the main loser for this week.
Weekly Closing Basis Trading Ideas : Weekly Closing Basis Trading Ideas : short NZD/USD @ 0.72, stop above 0.7375, target 0.66 (long-term trade obviously).
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