Quiet Day For the Majors..Possible Breakout Soon?

EUR/USD

Well the Euro didn’t drop like I thought it would today, but I’m still feeling bearish and am going to hold onto my position. Today’s movement gives me even more reason to feel bearish and I think we could see a 100 pip drop or so in the pair real soon. If you look at the daily chart you’ll notice that today’s candle has formed a doji. These are usually good signs that a pair is about to reverse, especially on higher time frame charts. Secondly, today’s candle range fell within the range of yesterday’s candle. This is a sign that the pair may break out soon. To top it off, daily stochastics are now trending down in overbought territory. If you are already short, I would hold it and look for the pair to fall to around 5100. If you aren’t in a position yet, look to get in on a break of today’s low at around 5270 and set your target for 5100. Hopefully this will pan out, but we’ll have to wait and see.

GBP/USD

Well for the same reasons I had for the Euro, I am also feeling bearish on the Cable. Today was another quiet day for the pair so I’m thinking we’ll see a breakout real soon. On the daily chart, you’ll notice that we have somewhat of a doji as today’s movement showed indecision. The pair moved up and down but at the end of it all, it ended up right back near its open. Not to mention that today’s candle range also fell within yesterday’s range- What you have is a potentially big move coming up…especially with a big moving pair like the Cable. Daily stochastics are trending down in overbought territory and we still have that double top. All of these things lead me to believe that we’ll see the pair fall down. I’m not sure where, but I think we’re in for a 100+ drop sometime soon.

USD/CHF

Well the Swissy spiked up to my 1.0400 prediction today but dropped back down from there. Right now 4hr stochastics are trending down while daily stochastics have crossed up in oversold territory. So you can see I’m getting mixed signals on the pair at the moment. I’m going to wait and see what happens next before making another move. My gut feeling is telling me that we’ll see the pair rise, especially since I feel so bearish about the Euro. (FYI- The Euro has a strong negative correlation with the Swissy. So if the Euro goes down, then its most likely the Swissy goes up.)

USD/JPY

The Dollar is back below 103.00 and I think we’ll see the pair drop a little more before we see it rise back up. Both 4hr and daily stochastics are trending down, but daily stochastics are in oversold territory so I don’t think we’ll see too much more bearish movement. Currently the pair is trading around 102.90 and I think we’ll see it drop back down to its previous low at around 102.60.

 

I’m not really big into fundamentals but I feel that they are important to discuss. In this section I will be posting fundamental tidbits that I find interesting from various sources. If you find an article that you think would benefit everyone, please email me (Big Pippin) with your username, the article, and a link to where members can read the entire article.

Now onto the Fundamentals:
  • Warren Buffett says we’re essentially in a recession:

  • Dollar Falls to Record Low Against Euro
    • The U.S. currency has slid 4 percent against the euro in the past three weeks as the housing slump deepened and consumer confidence tumbled, leading traders to abandon bets the dollar and the economy would rebound as the Fed cut rates.
  • Bernanke Signaling Rate Cut?

    • The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks," Bernanke said, hewing closely to assurances he offered earlier this month.
    • ncoming barometers continue to "suggest sluggish economic activity in the near term," Bernanke told lawmakers. At the same time, he added, the Fed must keep a close eye on inflation given the recent run-up in energy and other prices paid by consumers and businesses.
      For now though, the No. 1 battle is shoring up the economy.

  • New Home Sales Slip Near A 13 Year Low
    • New home sales slipped to a nearly 13-year low in January, according to a key government report on the battered housing market.
    • The reading was below the consensus forecast of 600,000, according to economists surveyed by Briefing.com, and was the lowest reading since the 559,000 rate reported in February 1995.
  • Euro Interest Rates about to Rise?

    • And don’t look now, but Eurozone inflation is rising… Of course I told you it would, given oil prices, and that the European Central Bank (ECB) would have to drag its feet to cut interest rates… (I also tried to say that on CNBC, right?) Anyway, inflation for the 13-nations that make up the euro, rose 3.1% in November… Whoa Nellie! That’s way too high, given the ECB’s ceiling of 2%!
    • The one thing to think about here is that should the ECB decide to raise rates, and the Fed decides to keep cutting rates (recall the discussion about the possibility of 50 BPS this month from the Fed) The euro would be enjoying a positive rate differential… You think the euro was popular as an offset currency to the dollar before? Wait till that happens (if it does of course!)
News events to watch for tomorrow :

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