GoLearn Forex Analysis 30/11/2009
Moving Averages Are Not So Average by GoLearn Forex
Moving Averages – they are not so average
EUR/USD and USD/CHF
On Thursday of last week we saw the EUR and CHF finally break near term resistance. The EUR cleanly sliced through 1.50 and took out near term resistance around the 1.5055 handle. The CHF finally broke parity with the Dollar after struggling for weeks.
The very next day the Dollar was saved by the news coming out of Dubai. Risk aversion was on as traders unwound short Dollar positions to cover themselves. We discuss Moving Averages a fair amount especially since the 50 SMA has acted as support for such an extended period of time and for a number of currencies such as the EUR and CHF.
The CHF touched .9918 on Wednesday only to give back its gains on Thursday. In the Chart below notice the CHF low on Friday as fear penetrated the market place. As a sense of calm returned the CHF was again bouncing off the 50 SMA, as support held again.
INSERT CHART CHF
The EUR easily breached resistance last Wednesday when the DXY hit new lows for the year. As you can see on the Chart below it closed just below the Fibonacci Retrace level of 76.4%. The very next day the EUR gave back all its gains as the market was reeling from the news of the day.
As details emerged and fear stirred recent wounds in the market the EUR plummeted again. Notice the level the EUR hit before retracing its losses on Friday. The 50 SMA again held support for the EUR.
INSERT CHART EUR
The moral here: Do not discount these as just “average” lines. Even if you question the indicative validity of a moving average the very fact that institutional traders monitor these levels makes them exceptionally important if for no other reason.
Moving Averages – they are not so average
EUR/USD and USD/CHF
On Thursday of last week we saw the EUR and CHF finally break near term resistance. The EUR cleanly sliced through 1.50 and took out near term resistance around the 1.5055 handle. The CHF finally broke parity with the Dollar after struggling for weeks.
The very next day the Dollar was saved by the news coming out of Dubai. Risk aversion was on as traders unwound short Dollar positions to cover themselves. We discuss Moving Averages a fair amount especially since the 50 SMA has acted as support for such an extended period of time and for a number of currencies such as the EUR and CHF.
The CHF touched .9918 on Wednesday only to give back its gains on Thursday. In the Chart below notice the CHF low on Friday as fear penetrated the market place. As a sense of calm returned the CHF was again bouncing off the 50 SMA, as support held again.
INSERT CHART CHF
The EUR easily breached resistance last Wednesday when the DXY hit new lows for the year. As you can see on the Chart below it closed just below the Fibonacci Retrace level of 76.4%. The very next day the EUR gave back all its gains as the market was reeling from the news of the day.
As details emerged and fear stirred recent wounds in the market the EUR plummeted again. Notice the level the EUR hit before retracing its losses on Friday. The 50 SMA again held support for the EUR.
INSERT CHART EUR
The moral here: Do not discount these as just “average” lines. Even if you question the indicative validity of a moving average the very fact that institutional traders monitor these levels makes them exceptionally important if for no other reason.
Mixed Day for Global Equity Markets After Dubai’s Announcement by GoLearn Forex
It was a mixed day for the Global Equity Markets on Friday following Dubai’s debt default announcement the day before. The markets in Asia continued to sell off while in Europe they apparently felt the exposure was sufficiently contained. In the U.S on Friday after returning from Holiday the day prior, it was the DJIA’s turn to take some risk off the table as it closed lower by 154.48 points to 10,309.92 Opening session futures are pointing positive in premarket hours.
The United Arab Emirates (UAE) Central Bank issued a statement indicating they would offer financing to the local and foreign banks at 50bp over the 3month local benchmark rate. This facility offered by the U.A.E C.B will ensure liquidity and restore some confidence in the market.
On the economic data docket for Monday we have a number items set to print out of the U.K. However, forex traders will be analyzing Black Friday sales numbers as well as the ensuing weekend figures. Currently, net sales figures look to be on par with last year. Additionally for Monday, Euro-zone CPI will hit the wire as will Canadian GDP.
Upcoming Forex Events for November 30, 2009
EUR CPI (YoY) Forecast 0.40% Previous -0.10%
CAD GDP (MoM) Forecast 0.40% Previous -0.10%
USD Chicago PMI Forecast 53.00 Previous 54.20
AUD Interest Rate Decision Forecast 3.75% Previous 3.50%
