Forex Technical Analysis for October 25, 2011

EUR/USD Technical Analysis for October 25, 2011

EUR/USDrose again on Monday, but saw a sharp pullback from the 1.3950 area in the later hours of trading. It should be noted that the 1.30 level had served as resistance over the last few days, and it appears that the market is willing to fall back under that level. With the EU summit on Wednesday supposedly being the “final” answer to the crisis, the market may be getting ahead of itself at these levels, and judging by the recent track record of European leaders, a disappointment isn’t a real stretch of the imagination. However, with all of the risks to both directions, we feel that trading this pair is going to be very difficult to do until after the results of the summit are known.

USD/JPY Technical Analysis for October 25, 2011

The USD/JPY pair fell again on Monday, as the Dollar got hit against all major currencies. However, the Bank of Japan has been very vocal over the last 24 hours about “speculative” moves in the Yen, and that they are watching the markets closely. The pair is approaching the lows, so one has to think that the Bank of Japan could get involved soon. We cannot sell this pair at the moment because of this. The buying of this pair could be done – but we would stress that position sizes should be small at best.

GBP/USD Technical Analysis for October 25, 2011

The GBP/USD pair rose on Monday, and even retested the 1.60 level. The area held as resistance during the late hours of the session, and the recent consolidation in August at this level shows that we may have hit a very tough spot for the bulls. If we could close above the 1.60 level on the daily chart, this would be massively bullish, and even more so if we close above 1.61 as well. The pair looks set for a pullback from this formidable level, so we are watching the hourly and 4 hour timeframes for sell signals. The 1.60 area is also the 61.8% retrace of the latest plunge to the downside. Needless to say, this area is important.

USD/CHF Technical Analysis for October 25, 2011

USD/CHF rose, and then sold off on Monday to form a shooting star on Monday. The market is being manipulated by the Swiss National Bank, which has been actively working against the Franc. Because of this, we cannot sell this pair as the Dollar is a “safe haven” currency as well, and with all of the headline risks out there, we could see a flight to safety. This would push this pair up, and we would want to buy it. The 0.88 level continues to hold prices up, but we think the closer we get to 0.85 – the closer we get to the Swiss National Bank and should see it get involved. We are waiting for supportive candles between 0.88 and 0.85 to buy from.

EUR/CHF Technical Analysis for October 25, 2011

EUR/CHF had a slightly bullish day for Monday, but fell towards the end of the trading session as traders started to pare back bets in the Euro. The Euro fell in the last hours of US trading all around, and this pair was no different. Remember, the Swiss National Bank is threatening to defend the floor in this pair at 1.20, so its downside will be limited. Because of this, we want to buy, but only after Europe gets the debt crisis under control. The meeting on Wednesday could have that signal for us – however, we don’t dare do anything in this pair until after that.

AUD/USD Technical Analysis for October 25, 2011

The AUD/USDslammed into the 1.05 level on Monday, and pulled back slightly. The area proved to be massively resistive, but the candle is closing towards the very top of the range, which is always a bullish sign. The 1.05 area level is considered massively important, not only because of the technical resistance, but also because of the fact that it is a “large round number”. The pullback was late in the session, so it is hard to put a lot of weight on it. However, looking towards the shorter time frames might be the way to go in order to see if we are going to fall again. The trend is decidedly up over the last couple of weeks though, so shorting is tough. A daily close above the 1.05 level has us buying.

USD/CAD Technical Analysis for October 25, 2011

USD/CAD fell on Monday as traders sold the Dollar around the world. The oil markets also managed to break above the $90 mark, and this was massive resistance. The demand for oil could and should push the value of the Canadian dollar up, which of course pushes this pair down. However, the parity level has held for the session, and the level is massive support. Until we close below that on a daily candle, it is going to be very difficult to short this pair. Signs of support and a move upwards from current levels could send this pair go up to 1.03 in short order. In the meantime, we need to see what markets due for the Tuesday and perhaps Wednesday session, and then place our trade accordingly.

NZD/USD Technical Analysis for October 25, 2011

NZD/USD rose on Monday as traders bought back into the “risk on” trade. The Kiwi is a commodity currency, so the move makes sense to us. The 0.8000 level has given way, but it appears that the 0.81 level might be the top of that resistance area. The resulting candle looks somewhat like a shooting star, but is a bit too thick to actually considered one. The set up is fairly simple: buying this pair on a break of the Monday highs is considered a decent long opportunity, while the breaking back down below 0.8000 would have us bearish.

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