EUR/USD low volume day

Today is a US bank holiday.

Evidently, volume is low and the EUR/USD is currently in a tight range.



After brushing R1, the pair has eased down but have yet to touch the pivot for the day.

Although the new trendline identified previously has been breached, this may be just due to low volume movement.

If bullish momentum continues, the 1.4362 area may offer some resistance as it was the high of 29 DEC 2008.

Bearish momentum will need to clear today's pivot first at 1.4273.

S&P 500 is closed for the day while oil remains around $67.

Watch out for the Asian markets to open for more clues.

Trade safe.

EUR/USD low volume day

Risk aversion in the forex market

I often hear newcomers in the forum asking " The news was bad for the US! Why did the USD strengthen? I had a margin call "

I feel sad when i see this as after all , money is not easy to come and losing it at forex is not the best way to spend it.

To explain the above, allow me to touch in simple terms one of the theories with regards to the above.




Risk Aversion.

In all markets, sentiments are the reason behind all movement.

You feel good about A, you buy.

You feel bad about B, you sell.


1) Prior to the current crisis, say before 2008, markets were doing good. Properties, equities.

Everyone felt ready to take risk and invested all over the world.

Everyone was risk seeking.

2) When the market began it's spiral downwards in the mid of 2008, everyone paused to look at one's own risk taking and exposure.

"Hmm, the market is collapsing. Are my money in danger? i better shift my funds out when i can and park them in safe assets in the meanwhile"

What are some of the relatively safe assets in the world?

• Gold
• US government treasury bonds
  ( The US government won't go bankrupt right? )

These are in USD and hence currencies are being exchanged for USD.

USD strengthens.

Everyone was risk averse.


This apparently still happens now on a smaller scale when negative developments occurs in the markets.

Let's bring an example in for better understanding.

Find below a chart comparing the MSCI World index of equities in developed countries ( Yellow ) and the US Dollar Index ( Green ) from OCT 07 to today.



I have divided into 3 sections.

Section 1 were the days before the crisis. You can see the World index climbing steadily while the USD weakens steadily. ( Note that the beginning of 2008 has marked problems for the World Index but perhaps folks have not went into risk averse mode )

Section 2 was when the crisis started to unfold. You will notice a sharp drop in the World index while the USD gains in strength. Apparently folks were liquidating their positions all over the world, seeking safe assets.

Section 3 marks the "recovery" phrase. The World index once again climbs and the USD weakens.


I hope this was of help and the next a negative US news is released and the USD strengthens, i hope you are not caught off guard.

Folks, i wish to reiterate that forex trading is not an easy "game". You have to employ proper money management and catch up with developments in the world.

Trade safely please and i hope to see you around.

Risk aversion in the forex market

The Koala System Review - Week of 31 Aug 09

Hi all, i mentioned before that Koala is never meant for a tight ranging market.

These days, we often get such conditions.

My experiments with the M15 has yielded better results.

Therefore folks who prefers more trades than waiting week long for a trade or two, may drop to M15.

Find below a M15 chart for the week.

I have circled possible good entries and boxed the areas where although a winning trade, it is simply too risky due to the speed of the movement.

Do take note that with a shorter timeframe, you need to cater for false signals and smaller sized take profit targets.

For example 20 pips. Trade safe and do leave your comments and feedbacks over at the thread in forex factory.

The Koala System Review - Week of 31 Aug 09

EUR/USD Weekly Review. 5 SEP.

The EUR/USD brushed the 1.4200 mark 3 times during the week.

In each attempt, the EUR/USD bounced back up, failing to go lower.


It is worthwhile to note that the highs made by this pair are getting lower.

An apparent trendline is seen, sloping downwards.

From a technical point of view, if bearish momentum prevails, we can expect support at the daily trendline, followed by the major support at 1.4200.

However if bullish momentum develops, we can expect expect resistance at the top trendline, followed by the major resistance at 1.4400.

As of now, we can be seen to be bounded by 1.4400 and 1.4200.

-

Let us now look at how our usual market clues performed.

Oil has broken through it's support at $70 and is currently diving towards $65.

I tend to attribute a lower oil price to increased USD strength. We have not seen it significantly yet.


The S&P 500 has been amusing me these days.

Despite negative news releases, it fought hard to remain above 1000.

The latest bounce up circled above is one example.

-

In my opinion, we are rather overstretched in the current bullish sentiments.

The recent non farm payroll reports a fewer number of jobs being lost.

Although this is good, the market chose to ignore the fact that unemployment rate in the US is now at a 26 year high at 9.7%.

A correction across all markets may be due and perhaps oil is the first to start.

Trade safe.

EUR/USD Weekly Review. 5 SEP.

EUR/USD slides

As of now, the markets are red.

After pushing through the R1 point today, the EUR/USD eases and heads south to rest right on the pivot now.

Generally, the pair is still making lower highs.

Notice how the small chart above is dominated by red daily candles.

If the notion of lower lows we discussed previously still holds, we may be looking at a bearish day tomorrow.

Having said so, it is the end of the week and the pair has been known to do unexpected stuff at the end of the week.

Oil has been diving since it's rejection at $75.

The discovery of a huge oil field by BP as mentioned should not serve to affect much now as the operations are many years away.

Remember markets seldom go in a straight direction including oil.


S & P 500 has attempted to reach the 1000 mark but has failed again.

Employment is down and the crisis is far from over.

My take is with increasing negative sentiments, the demand for safe asserts such as the US 10 year treasury notes will increase, bringing up demand for the USD.

The yield is currently around 3.30, lower than the days before.

In view of a continuation of all these conditions, the EUR/USD may be dragged further down.

However, 1.42 may be a tough nut to crack and one can expect support at that level.

Once again, tomorrow is the end of the week and we should factor in the possibility of the need to exit bad trades should the need arises.

Trade safe.

EUR/USD slides

EUR/USD needs more reason to climb

As much as i try to be objective and write about both sides of the coin, the rate of negative news streaming out is unavoidable.

With a more than expected job cut in the US in August conducted by a private survey, risk aversion could be triggered.

The daily trendline we talked about so often faced a challenge today and it is safe for now.

Do note that the EUR/USD is making lower lows recently and the highs are not impressive.

Coupled with the recent developments, we may be heading for a bearish trend.

I was slightly bias towards being bull but these days, the negative news are hard to ignore.

Oil clearly broke the $70 resistance.

This will trigger further bearish sentiments.

If it fails to climb back to $70 soon, i will be watching for more breakdowns.

S&P 500 took an extreme beating yesterday and looked posed to continue through today.

Likewise if it fails to climb back above 1000, bearish momentum may prevail.

Presuming negative sentiments continue on, we may indeed be looking at a correction across the various markets.

How this week closes should probably give us a clue.

Trade safe as always.

EUR/USD needs more reason to climb

EUR/USD not any higher

The EUR/USD has been making higher lows for the past few days which is by right a bullish sign.

So much so that a new trendline can be seen.


However, it is interesting to note that the EUR/USD has not be able to make new highs yet.

Tightly bounded between the 1.44 and 1.42 region.

The crude oil and S & P 500 displays similar tight ranging conditions.

One year and on since the major crashes began, it seems as though the market is stopping to evaluate whether has things really change for a better.

One side to look at perhaps will be the summer holidays causing low volume.

The holidays are right about finishing.

Everyone should do their homework diligently these times and pay attention to our usual clues.

In the meanwhile, i will probably be finding lows to enter small positions of long based on the chart.

Trade safe.

EUR/USD not any higher

EUR/USD bounces off R1. Oil falls.

EUR/USD acted unexpectedly as expected today.

It is good to know the markets and London is closed today, bearing low volume.

The EUR/USD touched S1 today and rushed up to meet R1 when the US session started.


Currently hovering around there, which happens to be the top for a few previous days too.

 

Over the next few charts, i will show you that the market today is rather

bearish and hence this will suggest to me that EUR/USD may be headed towards 1.42.

 

Oil on the daily has broken $70.

This is a critical support and if oil remains below, we may open up to further declines.

S&P 500 has fallen too and its currently approaching the 1000 mark.

It is interesting that the EUR/USD did not follow suit.

However as i mentioned previously, sometimes the changes to the EUR/USD do not happen immediately.

Instead i take it as a bearish indicator for the near term.

If we indeed fail to breach 1.44, we may turn around to meet 1.42.

Watch out if more adverse conditions surface.

Trade safe.

EUR/USD bounces off R1. Oil falls.