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Market Update: Where Next for Major Currencies Against the Dollar?

A $1 Trillion bailout for the Euro zone in which they try to stabilise the Euro and the Euro zone nations such as Greece as the global recovery is at immense risk.

We have a coalition government for the U.K. in which they must handle the record government deficit which has hit around £163.4 billion.

Whilst the U.S. full year deficit this year is projected at $1.5 trillion!

One thing is clear;

Well fundamentally all are under economic stress in which detrimental consequences could occur in years ahead.

The question is where are major currencies heading next technically from a price action perspective?

Euro vs. Dollar

Below is a chart of the Euro in which each bar represents a month's action:

Euro versus Dollar Monthly Chart
Larger Image

Everything technically seems nice and simple. If you were to look at a daily chart you would see that the market stalled at the red flat line in which it remained a problem for the Euro. Furthermore the double green lines show how the Euro has bounced from around the 125 mark and that is the region that provides support in which if snapped could result in further declines.

The following chart is also a Monthly chart of the Euro but shows the technical battle in more detail:

Euro Monthly Chart
Larger Image

The chart seems so different in which firstly you can see the support area shown again by the two intersecting green support lines in which the 125 mark can be seen again. However the relevant old resistance and new support areas are further highlighted by the orange circles in which the Euro has an area that it must hold and can easily bounce in elasticised fashion.

We have two scenarios though; the 'expectation' is that the Euro will fold this area and head towards the blue line support area at 115, 1000 odd points lower! As we know expectation doesn't always play out especially when such expectations are coupled with a record short position attached to the Euro and when the currency remains in extreme oversold conditions coupled with a $1 trillion dollar back up.

We of course only follow our system signals at tradingmarketsignals.com which removes the guessing out of trading in which price prints facts not expectations.

Nevertheless the scenario from the technical charts above is simple, if the current orange circle snaps then ANOTHER 1000 point drop can be occur but with conditions as they are and volatility set to increase further big bounces can occur from current prices leaving many wrong footed as they get stuck in a rut in expecting the 11500 mark although it has some technical justification attached. Further out this 115 number can come but a washout short rally needs to occur first.

GBP vs. Dollar

GBP versus Dollar
Larger Image

The chart above shows the Sterling in which this is a long term chart with each bar representing one quarter of data. Again whilst many are left searching for lower targets it is possible that the low at 14475 on Friday may be in place in which a move to 15375 can easily occur with the 150 mark being the line in the sand. The green area is major support in which a window of 1000 points opens up but whilst many look for 135 we may have just halted at 145. Systematic issues with the currency along with politic disarray may well prompt a fierce decline in which we may get 1:1 with the dollar. Although this is unlikely at this stage it still needs to be given technical representation on the long term chart. Once again a short covering rally can easily occur in which like the Euro the next few days to week's worth of price action will be crucial.

Once again we follow systems not views and at tradingmarketsignals.com our TMS strategy gained 15377 points in 2009 on five major markets we follow. We continue to power ahead in 2010 as members were told to look at lows forming for the Euro and GBP.USD last Thursday and Friday in which it would represent levels to go long as quick limit objectives were met.

All safe haven audience is welcomed to a private member subscription offer where the annual membership is offered at virtually the cost of our monthly membership. Unfortunately this silly price is only available to 100 new members only and was offered in line with the flash crash last week. You can visit the following link for details: http://tradingmarketsignals.com/#/special-client-100-members/4540799314

 

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