After trading sideways most of Monday, EUR/USD has dropped down out of consolidation after reaching our 4th channel boundary at 1.4179 (light blue). A new ST down-cycle is likely forming, with tentative projections at 1.4036, 1.3999 and 1.3962 (orange). If we correct up higher than resistance at 1.4110, then those targets will change.
One of the big differences between beginners and experts is that the former determines only how to enter trades without giving much consideration on how they plan to exit them. Experts, on the other hand, pay very careful attention to their exit strategies and always know how they intend to exit their trades even before they enter them.
One of the most heart-breaking experiences of Forex trading is to watch a sizeable profit vanish before your eyes. Even worse, is when your stop is knocked out as well and you incur a loss as a result. This situation is the woe of many Forex traders and can be attributed to poor money management.
The Japanese Yen surged broadly in Asian trading today following the news that Chinese authorities ordered the implementation of recently established capital reserve requirements for some Chinese banks, an indication that China is making some effort to control its booming economy and stave off inflation. Not all Chinese banks were required to raise their reserve; the specifically chosen banks all bore the same characteristic excessive lending policies.
EURUSD bulls did bounce off by support level, however while trend line is still valid and not broken, bears are in better place for now. According to the recent bulls movement, lack of strength can initiate another bears downside slide. At the moment, waiting action with selling possibilities are better options to look into.
The Kiwi has had a phenomenal ride against the Greenback for nearly a year. It is the single largest percent gainer amongst the G-7 over that period of time. The Dollar has gained some strength as of late and commodity currencies have been selling off as China acts to curbs excess liquidity in the market. Thus, since January 14, 2010 the NZD has been the biggest loser against the USD, giving up 2.81%
The JPY and USD decreased on Monday while the EUR and other igh-yielding currencies increased, both results of reports that Ben Bernanke was close to being confirmed for a second term as chairman of the Federal Reserve.
As explained in previous articles, if you are patient and simply wait for the initial breakout move to unfold then this course of action may help you avoid fakeouts which have the major characteristic of settling back inside the original consolidation pattern.
With concern over the potential overheating of the Chinese economy and Barack Obama’s plans to reform the banking sector, last week saw all of the major stock markets closing lower. In Europe, the FTSE fell by 2.8%, closing at 5303; the CAC dropped by almost 3.4% closing at 3820.8; the Dax shed 3.1%, ending the week at 5695.3.
Friday capped a terrible week for the equity markets as it sent almost all markets negative for the year. President Obama's plan, to limit the risk that banks can assume sent the Dow Jones Industrial Average plummeting. This announcement combined with China's new hard line stance on quantitative easing helped to send all equity markets lower on Friday. In the U.S, the DJIA closed down 216.90 points to 10,172.98
