The previous week and expectations for the upcoming week

• kevinmhughes
• September 26th, 2009

This week seemed to bring all the FX traders back to their computers.  The volatility was back in the market and it seemed that some big players were closing out their $GBP profits (or it was just the UK government talking like the US gov’t).  Regardless of what caused the $GBP to fall like the Cowboys to the Giants in their home opener, the excitement in the market, in which created it’s popularity, is back (hopefully)!

The $USD staged a nice and fruitfull fight mid week to regain some strength, but as I said it was nice (more like cute), it didn’t have the flair or the stamina to convince me.  In my opinion, the $USD is going to continue in its downward channel.  The strength in our government is not there, not now…  That alone in itself will cause weakness (as a fundamental look) in the $USD.

The daily chart for the $EURUSD is showing a falling wedge (a bullish indicator – lower highs w/lower lows).  The four hour chart that I have posted here shows a bear flag,  but that flag is not as strong as I would like it to look (weak mini bull flag inside).  The 1.4645 support line (2nd bold white line) looks to be a strong level for the $EURUSD.  It will probably retest that level before bouncing to the resistance.  I would wait for confirmation on that trade because if it falls below that support (confirmed breakout) we could be looking at a 100+ pip fall [I don't believe that will happen, but the market could decide to do it, so wait for the market to tell us what to do].  In my opinion, the $EURUSD is imfamous for having a large bounce/retracement (pending on the direction) after having a false breakout (blue circle – from the down channel).

As everyone knows (people that follow me) I am a technical trader that trades from 1, 5 & 30 min charts.  The reason I used the 4 hour chart for this posting is because my charts aren’t good indicators for the upcoming week (too short of time frame), I’ve found that for my type of analysis, the 4 hour works the best for me.

Look for further $USD weakness.  Also, keep your eyes out on the $JPY, that could be a tell tale sign on where our rates (U.S.) could be heading.

Have a great weekend!

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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