Technicals Lead The Way Today

Today was much more of a technical day since there weren’t any major fundamental reports out. All the majors looked poised for a reversal and today, they finally followed what the technicals have been showing. Don’t get me wrong, some fundamentals did play a part. GBP Industrial and Manufacturing production numbers were negative as was the German Factory Orders. On the dollar side, a report showed that US companies added more jobs for the month of June. This could be indicative of the upcoming NFP report on Friday which could suggest that the labor market is still kicking.

My EUR/USD trade worked out almost perfectly but didn’t quite hit my intended target. I had a target of 3250 but the market only got down to a low of 3253. I exited my trade at 3270 and I suggest that you do the same if you were in that trade. With the upcoming ECB and BOE interest rate statements tomorrow, it could be a crazy day. The BOE is expected to keep rates the same while the ECB is expected to increase rates. Remember, we’re looking for what these officials have to say about future monetary policy. If Trichet uses his magic word, "vigilance", look for the Euro to gain some ground tomorrow.

Coming Up:

BOE Interest Rate Statement
7:00 am ET; 12:00 GMT
Previous= 5.00%; Forecast= 5.00%

ECB Interest Rate Statement
7:45 am ET; 12:45 GMT
Previous= 3.25%; Forecast= 3.50%

Chart Analysis:

EUR/USD

After 2 days of spinning top candles, I finally saw the EUR/USD reversal. The daily chart still shows signs for more downward movement but with the ECB interest rate statement tomorrow, I’m not entirely confident the Euro will continue to drop.

GBP/USD

Like magic, the Cable dropped to 9650 like I said it would and got very close to hitting 9600. Since daily stochastics is starting to head down it looks like the pair could make another run to 9600 since that is where the 50 SMA is on the 4hr chart. However, with the BOE interest rate statement tomorrow, anything can happen.

USD/CHF

Using my magic crystal ball I predict that the Swissy will hit 2000. Stochastics on the 4hr chart is heading up and the daily stochastics is still oversold. The 50 SMA is lining up right with 2000 so this should make a good short term resistance point.

USD/JPY

Ok I’ve cooled down since yesterday and I’ve decided to be friends with the Yen again. Big Pippin don’t like it when someone takes his money but it’s all good now. Big Pippin has learned to control his emotions thanks to Dr. Pipslow. The Yen is on its way to 115.50 and I think it will get there. Currently it’s right around 115.35 and stochastics on both the 4hr and daily chart are heading up. The 50 SMA is also headed towards 115.50 which makes that a good short term target and resistance level.

Conclusion:

Ok we’ve got 2 interest rate statements coming out tomorrow so be prepared. Read statements from all the head honcho officials and try to see if they give any indication as to what they might with their monetary policy in 2007. Alright cool cats…til’ tomorrow! One.

  • Maatej

    Great analysis. Thanx. But unfortunately, the yen dipped before hitting 115,50. Maybe today it will come to this mark. I stil hold the position.

    Maatej

  • Maatej

    Great analysis. Thanx. But unfortunately, the yen dipped before hitting 115,50. Maybe today it will come to this mark. I stil hold the position.

    Maatej

  • bigpippin

    You might want to consider exiting if the Yen doesn’t hit 115.50 by the time the NFP comes out tomorrow. Trading has just been dead the past 2 days.

  • bigpippin

    You might want to consider exiting if the Yen doesn’t hit 115.50 by the time the NFP comes out tomorrow. Trading has just been dead the past 2 days.