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Key Support & Resistance (S/R) Levels:

As the Greenback continues to rally heading into the end of the year we thought it would be a good time to review a couple key S/R levels.  Traders generate S/R based on a number of factors.  One key factor is based on the tenor of the chart the trader is using.  A trader using a tick or minute chart will be less concerned about S/R generated from a 4 hour chart that is 100+ pips from the current handle.  However, that same trader will want to know where the longer term S/R levels sit. If price moves towards those points he can integrate them into his trading strategies thereby profiting and or avoiding losses.

GBP/USD:

The Cable is currently sitting below its 100 day MA which generates an already negative bias.  A candle body below 1.6198 would generate the next Short entry point  Near term profit taking would be the 200 day MA.  If the 200 day MA is breached we would target the low of this range bound period near 1.5683 which also represents the Fibonacci  38.2% Retrace level.  The 38.2% Retrace level was generated from the Sterlings turn around in January of this year.

AUD/USD:

The Aussie has shown great resilience and for good reason.  The RBA had taken a hawkish stance on rates as it was amongst the first to raise rates.  The Australian economy is in relatively good shape.  Additionally, the AUD is a commodity currency and it has ridden the commodity rally. Currently the AUD is sitting just below the 50 day MA.  A candle body appearing below .8944 equal to the Fibonacci 76.4% Retrace level, which also coincides with recent support levels would trigger a near term Short entry.  We would increase the Short position with a close below the 100 day MA, currently holding at .8834.  A long signal would be generated with a close well above near term resistance at .9325.

With the EUR taking a sharp nose dive yesterday it prompts us to look at recent relative price levels on the G-7.  The EUR/USD is the most commonly traded pair in the world.  The price of the EUR has broad implications on the relative value of other G-7 currencies.  Although the below data can be shown graphically it is easier to view price differentials in a table.  If the EUR is a leading indicator of relative  value then the CAD, AUD, and GBP may be in for a minor drop.

Historical

Date                EUR               CAD               AUD               NZD                JPY                 GBP

2009-10-02      1.4576             1.0797 0.8652 0.7160             89.8050           1.5946

2009-10-01      1.4545             1.0839             0.8697             0.7149             89.6050           1.5955

2009-09-30      1.4640             1.0695             0.8828             0.7232             89.7050           1.5982

2009-09-29      1.4587             1.0846             0.8703             0.7143             90.0885           1.5961

Current

Date                EUR               CAD               AUD               NZD                JPY                 GBP

2009-12-15      1.4533             1.0611 0.9067 0.7224             89.6355           1.6272

Analysis by http://www.ufx.com

Global Equity Markets were mixed on Tuesday as Dubai continues to sort out its debt repayment obligations.  In the U.S Producer Prices climbed 1.8% which was more than double expectations.  This caused stocks to retreat as it may engage the U.S Fed to raise rates out of necessity instead of a planned withdrawal from its current quantitative easing policies.  The DJIA slid 49.05 points to close at 10,452. Ahead of the rate decision today traders have consolidated positions as markets may move drastically depending on what language the Fed uses.

There are a number of other economic data releases on the docket for today.  Oil traders will be watching Crude Oil Inventory figures.  CPI data as well as Housing Starts and Building Permits will also be on the wire today.  In the U.K Jobless Claims will print although no major changes are expected.  GDP in Australia has already printed slightly below expectations.

The Greenback continued to advance against its G-10 counterparts with the AUD giving up 1.15% for the day.  The DXY closed above the 100 day MA to 76.961 helping to legitimizing the recent rally.  Gold and Oil were essentially unchanged finishing the U.S session at 1.125.20 and 70.69 respectively.

Upcoming Forex Events for December 16, 2009

EUR    CPI (YoY)       Forecast   8.00%  Previous  7.80%

USD    Core CPI (MoM)        Forecast  0.20%  Previous  0.20%

USD    CPI (MoM)     Forecast    0.40%  Previous  0.30%

USD    Interest Rate Decision            Forecast  0.25%  Previous  0.25%

Research by http://www.ufx.com

NZD/USD:

The New Zealand Dollar is starting to falter and like most of its G-10 counterparts it is holding at pivotal levels against the Greenback.  One slip either way may send the currency tumbling or ready to resume its advance on the Dollar.  We have mentioned the Kiwi in the past as we feel it may yield the biggest percentage loss when the Dollar does finally rally.

In the graph below we see the formation of a downward sloping Triangle beginning to emerge.  The Kiwi has been riding the 50 day SMA as support on its path to .7600.  You can observe that NZD peaked in late October but after 3 attempts it has failed to break the October high.

Short term support has been holding near .7100 represented by the bottom leg of the triangle.  As the hypotenuse converges on near term support the more likely it is that a breakout will occur in the direction of the slope.  We have also diagrammed a pattern we use often to identify trend and that is a step pattern whereby there are lower high’s and lower lows (or vice versa as the case maybe).  Typically we like to see more obvious lower lows than what the Kiwi has shown us thus far.

The NZD is currently sitting below its 50 day MA, which we mentioned prior, represented support for the NZD’s move over the last 9 months.  During the Dollar’s rally last week the Kiwi was able to bounce off of the 100 day MA but was not able to bounce back above the 50 SMA.  As price action moves into the wedge of the triangle it may force price below the 100 SMA.

For good measure we added a Fibonacci Retrace starting back in March when the Kiwi dipped below      .50 running through its most recent high in October when the NZD struck .7635.  This data range produces the 23.6% Fibo Retrace at a handle of .6988.  To trigger a strong short signal the Kiwi would need to take out the 100 day MA, near term support (the base leg of the triangle), and the Fibo 23.6% level, as we then target a .6500 handle.  In order to resume a Long NZD position at this point the NZD would need to break north of the hypotenuse, the 50 day MA, and near term resistance at .7525.

Analysis by http://www.ufx.com

World Equity Markets gained some ground Monday amid assurances from Abu Dhabi that they would provide $10 billion in immediate financial aid to ensure Dubai World meets its $4.1 billion debt obligation due yesterday.  The DJIA closed a shade above 10,500 after picking up 29.55 points.

The Greenback gave up a little ground yesterday as the DXY was down marginally to 75.352.  Gold advanced slightly to 1,126.70 as the dollar showed some weakness. Oil was unchanged as it continued to hold below $70 a barrel.

In the U.K CPI data is set to print today.  The Euro-zone’s Current Sentiment/Survey will publish today.  In the U.S a number of economic releases are slated for today; Crude Oil Inventories, Gasoline Inventories, Total Net TIC Flows, Empire Manufacturing Index, and lastly PPI figures will print.  In light of the Dollar’s recent rally expect that traders will be watching these numbers very carefully ahead of tomorrow’s FOMC rate decision.

Upcoming Forex Events for December 15, 2009

EUR    German ZEW Economic Sentiment   Forecast  50.20  Previous  51.10

CAD   Leading Indicators (MoM)     Forecast    0.60%  Previous  0.70%

USD    TIC Net Long-Term Transactions       Forecast    43.00B  Previous  40.70B

AUD   GDP (QoQ)      Forecast  0.40%  Previous  0.60%

Research by http://www.ufx.com

Binary options traders need to know positive and the negative character traits that will lead them to success in binary options trade. Some negative character traits include ignorance about the trade, over-confidence, being guided by emotions such as greed and hope, and being dishonest, among others.

An important positive character trait that a binary options trader should have is belief in self. This does not mean being over confident, it means trusting your instincts in the binary options trade. Your instincts should be supported by fundamental and technical analysis of the underlying asset you want to invest in and of the market. If an investor is confident, he/she will attract buyers and sellers and he/she will not be taken for granted by the brokers. Investors should have goals and they should not deviate from these goals under any circumstances. Having a strategy is a good way making sure you accomplish your goals.

Patience is an important positive character trait in binary options trade. You should be patient when you begin investing in binary options since you are unlikely to make profits in the first few months. You should take the time to get valuable contacts, experience and skills and you should never give up just because of losses – binary options trade is a game of chance.

Always ask for help from others when you need it. Even if you are doing day trading, you should consult with a broker, especially when you are a novice binary options trader and when you are dealing with large sums of money. Brokers have years of experience and they have theoretical knowledge. Successful binary options traders are those who ask for help from those who have been in binary options trade successfully for a long time. This is important in that they get to learn from their successes and failures. You should not shy away from making use of technology in the trade. Use of technology brings convenience since you do not need to move around and it makes it possible for you to make accurate predictions since you can study trends and you can use different analytical tools.

Another important character trait in binary options trade is being adaptable. Binary options trade is a betting game and no two trades are the same. Although binary options traders should have strategies, these strategies should allow for adaptability depending on the specific circumstances.

It is important to know your strengths and weaknesses when doing binary options trade. This way, you will be able to take full advantage of the trade using your strengths and you will be able to work on your weaknesses. If you know you are weak in something, you will be able to take a course or to consult.

Another character trait that binary options traders should have for success in binary options trade is keeping records. A binary options trader should have a journal where he/she records all trades. This way, the trader will have a reference point when making future decisions and the trader will know how well or badly he/she is doing. Other positive character traits crucial for success in digital options trade are honesty and good inter-personal skills.

EUR/USD:

The EUR is perilously close to falling into a tailspin.  We have been stating for some time that a candle appearing below the 50 day Moving Average (MA) would generate a strong signal for a Short entry.  As you can see in the Graph below that signal occurred last week, with the 50 day MA currently holding at 1.4880 while the EUR is trading at 1.46.

The EUR is now on the cusp of an even larger fall. It closed last Friday’s session at the 100 day MA an even more significant breach than the 50 day MA.  Perhaps even more troublesome for the EUR is that it is just a hairsbreadth above 61.8% Fibonacci level at a handle of 1.4621.

A close below the 61.8% Fibo level coupled with a close below the 100 day MA as they converge may equal real trouble for the EUR.  The EUR has not been south of the 100 day MA since April 2009 which coincidently occurred when the 100 day MA and Fibo 23.6% level converged.  The EUR proceeded to advance 14.6% from that point.  We therefore target the 50% Fibo level with a handle of 1.4184 as the next support level should the EUR breach the 61.8% Fibo level.

USD/CHF:

The CHF is another currency holding at a very pivotal level.  With Friday’s session closing just below the 100 day MA the CHF is trying to hold its ground against the Greenback.  The Swiss Franc has been one of the benefactors of Gold’s jump in value.  However, as the Dollar has rallied and Gold prices have begun to fall so has the CHF.

The Franc closed above its 50 day MA for the first time since August, representing only the 3^rd such close since April of 2009. This coincided with it’s last close above the 100 day MA.  The Franc has another issue to contend with and that is the 23.6% Fibonacci Retrace level created from the CHF low of 1.20 back in March of 2009.

If the CHF closes above the 100 day MA and the 23.6% Fibonacci level at a handle of 1.0402 is breached then we would expect the CHF to test support at the 38.2% Fibo level or 1.0701.

Analysis by http://www.ufx.com

Global Equity Markets closed higher as the prospect for a bona fide recovery now seems assured.  The Markets were able to shake off credit fears and focus on continued positive economic data coming out of the U.S.  On Wall Street the DJIA closed up 65.67 points to 10,471.50 on better than expected Advanced Retail Sales figures.

The Greenback continued it rally as it advanced on positive economic data, breaking the 9 month long “positive equities to poor dollar” correlation, for a second time in 1 week.  The DXY touched 76.725 before retreating slightly to close at 76.573.  Another positive session for the Greenback and it may take out the 100 day MA.

In the commodity space both Gold and Oil were down.  Gold lost 15.60 to close Friday’s session at 1,115.40 while Oil closed just below $70 a barrel for the first time since September 29^th.  Gold has lost nearly 9.5% since its high on December 3^rd and is just a few dollars away from closing below its 50 day Moving Average.

In the Euro-zone for Monday, Employment figures will be published on Tuesday.  U.S.  PPI numbers will print as well as the Empire Manufacturing data.  In Australia, GDP numbers will hit the wire on Wednesday, as will Housing Starts and Building Permits in the U.S.  However, investors will be tuned in on Wednesday to the FOMC rate decision.  Although no change in rate is expected, traders are hoping for the accompanying statement to shed light on future rate hikes  and economic policy as continued positive economic data continues to print.

Upcoming Forex Events for December 14, 2009-12-14

CHF    PPI (MoM)      Forecast    0.20%  Previous  -0.40%

EUR    Industrial Production (MoM) Forecast    -0.50%  Previous  0.30%

CAD   Capacity Utilization Rate       Forecast    67.80%  Previous  67.40%

AUD    RBA Meeting Minutes

Research by http://www.ufx.com

USD/CHF:

The Swiss Franc has a positive correlation to Gold.  Thus, as Gold appreciates so does the CHF and vice versa.  When the Gold rush of 2009 began the CHF participated in the precious metal’s appreciation.  However, the correlation broke down as Gold broke its all time high.  In the below Chart the CHF hesitated as it broached Dollar parity while Gold enjoyed near new daily highs.  We would have expected the CHF to enjoy new highs, in line with Gold, once breaking parity with the Greenback but that did not transpire.

The CHF like most of the G-10 is currently holding at very volatile handles.  During the Dollar’s initial rally the Franc closed just above the 50 day MA and has since surpassed it.  Currently the CHF has breached S1 at 1.0278.  In the Chart below we have drawn a Fibonacci Retrace from the CHF low on April 20^th, then trading at 1.17. We used the CHF high on November 26^th, with a handle at .9918 to complete the Fibonacci range.

The Fibonacci Retrace puts the 23.6% retrace level at 1.0350.  The 100 day MA is also converging on the same level.  If the Swiss Franc takes out the FIBO 23.6% level and closes below the 100 day MA this would trigger an additional short CHF entry.  A close below the 50 day MA at 1.0163 would generate a long CHF entry.

There are a number of moving parts to watch when trading this pair.  Gold has been hit hard during this Dollar rally and most analysts felt a retrace was imminent given the metal’s stellar rise.  However, most analysts also forecast Gold to retain most if it’s appreciation given the high level of demand.  This view may shield the Franc from massive depreciation.  However, if the CHF takes out the 100 day MA prior to Gold firming then we would expect to see significant price action.

Analysis by http://www.ufx.com

It was a mixed day on Wall Street following a continued selloff in the Asian and London sessions.  The DJIA closed the day at 10,337.05 up 51.08 points.  It saw modest gains as analysts upgraded their ratings on 3M and Sprint Nextel.

The Greenback gave up some gains from its 3 day rally as the DXY closed down slightly to 76.038, but still above the 50 day MA.  The big winner on the day was the Kiwi, as it advanced 1.81%.  The RBZ held rates at 2.5% but improved their forecasts to include a possible rate hike in mid 2010.  Additionally, Governor Bollard added the Bank’s expectation now looks for a significant rise in GDP.

Commodities continued their slump as Oil closed the session down 1.75 to 70.87.  Corn, Wheat, and Soybeans sold off as the dollar held firm most of the day.  Gold finished the day essentially unchanged to close at 1,128.60

Thursday will see a lot of price action as Unemployment figures is Australia print.  Consensus expectations are looking for a modest rise to 5.9%.  Obviously a print above or below will advance or plummet the AUD as the market looks for direction in this Dollar rally.  The SNB will make its Interest Rate decision, although widely expected to keep rates on hold.  Traders will focus their attention to accompanying language from the Central Bank.  In the U.K the BOE will announce their interest rate decision and although they are expected to keep rates on hold at .5% it will be the Central Banks accompanying statements that have the chance to stir the market.  Lastly, in the U.S, Trade Balance figures will print as will Jobless Claims.  Traders will be watching carefully to see where Jobless Claims print as they seek to confirm last week’s NFP numbers.  A significantly higher print may put an end to the Greenbacks rally while a better than expected print will affirm the Dollars new levels.

Upcoming Forex Events December 10, 2009

CHF     Interest Rate Decision           Forecast    0.25%  Previous  0.25%

GBP     Interest Rate Decision           Forecast  0.50%  Previous  0.50%

CAD   Trade Balance                         Forecast    -0.50B  Previous  -0.90B

USD    Trade Balance                         Forecast  -36.50B  Previous  -36.50B

Research by http://www.ufx.com

GBP/USD:

The Greenback continues to rally and we are approaching pivotal handles across the G-10.  The GBP has been range bound since the end of May, so much so, that it is the worst performing currency against the Dollar amongst the G-10 since May 25^th. Currently the 100 day MA is sitting above the 50 day MA which is indicative of a falling price environment.

The Pound is currently trading at 1.6276 and the 50 SMA is sitting at 1.6404.  A close below the 50 SMA generates a strong Short entry signal.  In addition, using the Fibonacci Retrace from the Cable’s low on March 11^th at 1.3657 to the Cable’s high at 1.7043 on August 5^th brings to the forefront some important levels.

The 23.6% Retrace level sits at 1.6244 just 30 pips from the current mark.  The close today likely below the 50 SMA coupled with a breach of the 23.6% level may send the GBP free falling to the next Fibo level of 38.2% or 1.5749.

There are a number of trading indicators that are used for ranging markets versus trending markets.  The MACD is a common and important tool for traders as it more easily identifies momentum and changes thereto.  In the Chart below the red vertical line highlights the crossover of the Average versus the MACD, representing a shift in momentum.

Another indicative technical pattern we use are lower lows, lower highs and vice versa.  As you see on the chart above we have been trending down within the range.  More importantly we have reached a succession of lower high and lower lows.  The more the pattern repeats itself the greater the confirmation of the move and the more likely it is to continue.

The combination of MA’s, Fibonacci’s, MACD, and technical patterns identifies potential entry points, momentum, and profit targets.

Analysis by http://www.ufx.com