Forex Correlations, Technical Analysis

Posted by on Mar 25, 2013

By David Ruscelli


 

This post in italian

 

Forex Correlations, Technical Analysis

We often talk about correlations, it is very important to always keep in mind the various relationships between currencies, indexes and commodities, and how they relate to fundamental analysis. Talking about fundamental analysis, let us begin with the economic calendar for the week of March 25th through 29th.

On Monday it will be interesting to listen to Bernanke’s declarations, the president of FED. Bernanke, Chairman of the Board of Governors of the Federal Reserve System, has been the subject of discussions lately, we recently mentioned his possible resignation.

economic calendar

 

FOREX TECHNICAL ANALYSIS

It is not possible to predict the market’s direction, this is what you should hear from any market analyst deserving of its title, the market is random most of the time and only in specific situations, following specific patterns, like for instance price action signals along with trend, within a large number of trades we can have a greater number of successes versus failures. This is thanks to money management and negative sequences, important aspects which any trader should know. I like to remind everyone that I also use an non-directional trading method, which does not assume the need to predict in which direction a specific quote for a financial instrument will move within its market. It is a very simple mathematical method, at anyone’s reach.  

 

EUR/USD

On the Forex pair also called Fiber, we are seeing through technical analysis that there is a retracement going on, hence a movement contrary to the main trend. 1,3000 is already a good resistance level, and if we should see the appearance of a very obvious signal of price action we could enter a SELL. Or it could keep reversing to 1,3150, there is enough room to allow it, after that, as highlighted in the picture, we enter in the area affected by the bearish, long standing trend line, hence the interruption of the long movement becomes a stronger possibility, and for the main bearish movement to resume.  Obviously we need to act gently with this forex pair, because the Cyprus phenomena and the news we are expecting to hear from the US (including Bernanke tomorrow) could trigger a sudden volatility even short.

Our weekly Chart follows

EUR/USD W1

 euro dollar weekly

 

XAU/USD GOLD

This is the CFD, the Contract Difference of the precious metal that we all know, quoted in Dollars, this instrument usually moves for 2 reasons, the first being the Dollar experiencing strong changes in value, but in particular when there is risk aversion, for instance when we see the stock market collapse this metal is usually bought because it is seen as the best alternative to secure investment capital. Lately there has been some uncertainty regarding this instrument, because many speculators and ETF managers have been changing direction.  Since our purpose here is to do technical analysis, our analysis shows as follow: to sell on price action signal in case there isn’t a break (preferably fakey) of the resistance shown at 1630 dollars per oz. of gold, possible lateral path, like in the May- August 2012 time frame, with several bounces between  1630 and 1540. Should it break 1630, we will research opportunities to buy gold up to 1670 at first, then 1720, 1760 and 1800.

 

cfd gold trading

 

Many sincere wishes for a great and profitable trading week!

 

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