My Forex Analysis

Tuesday, January 6, 2009

I am certain you all noticed the vast opportunities in the FX markets so far. Take USD/JPY for example.

As you can see a double top (if you don't know what a double top is please drop a comment here) has formed when the graph tackled a solid resistance. I followed it, opened a short position and left it open for a couple of hours (approx):

I think those who paid attention to the moves noticed an attractive market, enriched with constant opportunities. The market will be extremely interesting tonight (CET) and throughout tomorrow's session due to the heavy releases.

Let's analyze them together and see why is tonight session (CET) and tomorrow are so attractive.

Let us first look at GBP

Nationwide HPI m/m:

It is simply the change in the selling price of homes with mortgages backed up by Nationwide. Rising house prices will appeal investors thus giving us a good picture of the housing market in The UK. So far so good, let's refresh ourselves with last November's Data:

The Graphs are available for all from The Nationwide official web site.

To summarize, the price in November fell to -0.4%, the pressure on the housing market may intensify due to poor economic conditions but big rate cuts may cushion the impact. So, we can see the high rate cut in November was supposed to cushion the impact. British mortgage approvals for house purchases fell to their lowest level in November since records began. Mortgage approvals are an important indicator for the housing market as it reflects housing demand. The Mortgage approvals fell to a shocking 27,000 in November as we discovered last Friday, which forced GBP down against a basket of currencies.

Therefore, the Nationwide HPI for December is very important. We are going to see whether the previous rate cut did the trick despite the grim expectations, which are not positive at all and have the strength to crush GBP.

Time of release: 07:00am GMT

Now lets see what is happening so far with The GBP?

One can easily note GBP is on the move, riding with the bulls. This trend may be reversed via the aid of the Nationwide HPI and Services PMI or they will not become an obstacle and ride with the GBP on the bullish trend, depending on the actual figures, worse or better then expected.

The new interest rate that will be released this Thursday may unleash a new reality to The GBP, which will definitely create a window of opportunities for us, the traders.

Now have a look at USD

ISM Non-Manufacturing PMI & Pending Home Sales m/m

If you followed the market today you would have noticed the sudden burst of USD, gaining against a basket of pairs until tackling solid resistance in some pairs, which forced the graph down although I believe those resistance levels may be to the test again.

Both financial indicators are expected to be negative; the new home sales are not expected to blossom and neither does the non-manufacturing PMI. These figures will be released simultaneously and are likely to impact all the major pairs, I will eye out JPY pairs as well such as GBP/JPY and EUR/JPY at time of release.

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