Forex Technical Analysis for October 26, 2011

EUR/USD Technical Analysis for October 26, 2011

The EUR/USD pair found itself in a range during the Tuesday session, but ultimately ended up being slightly negative. The upcoming summit today in the EU should continue to drive the pairand its future direction. The markets could be disappointed, and if it is – this pair falls rapidly. The 1.39 – 1.40 areas is proving to be resistive, and the trend is still down. With the EU Finance Ministers cancelling the meeting for Wednesday, it leaves only the member states to try and work things out. This leans more towards bearishness in our opinion. If we can break above the 1.40 area on a daily close, we would be forced to buy this pair. Otherwise, it should be sold if we see a sell off.

USD/JPY Technical Analysis for October 26, 2011

USD/JPY fell on Tuesday, but bounced later in the session to form a hammer for the day. The Bank of Japan has been jawboning this pair quite a bit over the last couple of days, and many think an intervention is about to happen. The breaking of the top of the range from Tuesday would be a bullish case, although we think that the overall range will hold, keeping gains below the 78 level. (Unless of course the BoJ does get involved.) If we break lower, it dramatically will increase the odds that the BoJ intervenes, so we won’t sell this pair at this level.

GBP/USD Technical Analysis for October 26, 2011

GBP/USD had a wide range during the Tuesday session, and ended up printing a doji for the day. The candle is right at the 1.60 level, and the 61.8% Fibonacci retrace as well. The area looks like a great spot to run into trouble, and the candle sets up a binary trade: Buying on a break of the top of the candle or selling on a break of the bottom of the candle. With the trend being down overall, we prefer a selling situation and think the reaction of the markets to the European meeting later today will be the driver of this pair going forward.

USD/CHF Technical Analysis for October 26, 2011

The USD/CHF pair has fallen again on Tuesday. The pair continues to drift lower, as traders are starting to test the will of the Swiss National Bank. The SNB is trying to keep the Franc weaker, and as such – we prefer a buying opportunity in this pair. If the market begins to sell off risk assets, you may see the opportunity as the Dollar has become the “safety trade” as the Yen and Franc are both actively being worked against by their central banks. With this in mind, we like buying, and want to see a supportive candle on the daily chart to get long.

EUR/CHF Technical Analysis for October 26, 2011

EUR/CHF fell on Tuesday, showing just how weak the Euro could possibly be under all of the noise in the EUR/USD pair. The fact that the Swiss National Bank is willing to buy this pairjust 200 pips below, and the market still wants to sell shows just how unwanted the Euro was Tuesday. With the EU member meeting today, we should see some kind of decisive direction for the Euro. The market needs for some kind of certainty out of the EU on its debt and banking issues, if it doesn’t get it, this pair could fall. However, the SNB will be there to push back. Because of this, the real play if to buy this pair if the Euro gets a bid in other markets after the meeting, signaling the market liking what it sees out of the meeting.

AUD/USD Technical Analysis for October 26, 2011

AUD/USD fell during the Tuesday session after trying to break through the 1.05 level. The area is significant resistance, and showed it during the session. With the issues in Europe taking the headlines, this pair will certainly be controlled by what happens in Brussels, not Sydney. With this in mind, we like selling this pair if the markets in general get bearish because of the EU meeting today. The markets look like they may be overbought in the “Risk On” trade, and as such, we think the path of least resistance is down. Signs of weakness are to be sold.

USD/CAD Technical Analysis for October 26, 2011

The USD/CAD pair bounced hard from the parity level on Tuesday, an area that we have mentioned several times over the last week or two. The area offered support, and was urged on by the Bank of Canada not only holding rates on Tuesday, but also being very dovish on the future of the Canadian economy due to the global uncertainty in the various markets. With this in mind, it appears that we could see a bounce in this pair. Also, if the EU doesn’t come together with a reasonable solution to the crisis over there, the “risk off” trade could come back into play – forcing this pair higher as well.

NZD/USD Technical Analysis for October 26, 2011

NZD/USD fell on Tuesday after breaking the 0.8000 barrier, and then printed the shooting star on Monday. The signal was confirmed as the markets broke below the low on Monday, which was a sell signal. The fact that we have closed below 0.8000 does not bode well for bulls. If the market can break the lows over the last week or so – this pair goes much lower, perhaps to 0.7500 or so. The breaking of the Monday high is what it would take in order for us to get long of the Kiwi dollar. The “Risk On” trade needs to be in vogue for this pair to rise again. With situations in Europe being so cloudy, it is difficult to get bullish the “Risk On” trade.

 

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