April 17, 2009 [FOREX REPORT]
G7 FOREX REPORT
All trades are subject to a clear signal given as per the G7 system at
Weekly Trend direction: Bearish
Weekly trend reversal level: 1.3600
Key G7 resistance levels: 1.3210, 1.3250, 1.3280
Counter-trend opportunities: Try tiny longs at 1.3100
Strategy: Whilst below the weekly trend reversal level, sell rallies to resistance levels
after an entry signal.
Today's trade suggestion:
We have dropped to key support at 1.3100, and it will be interesting to see how the
market deals with this level. Our bearish strategy remains intact (apart from a countertrend
chance to buy the euro at 1.3100) and we look to sell into resistance levels above on
the chart. The key level to watch today is the 50% Fibonacci retracement level near the
200EMA at 1.3250. First target for short trades is 1.3100, and then (perhaps) 1.3000 nex
week. It seems there is little consensus as to which way the dollar should be trading this
year, so continue to expect large, and mainly random, moves in either direction, with
opportunities to trade both ways.
Summary:
No change: Sell rallies to the resistance levels above only after a clear G7 entry
signal. Target 1.3100 and then 1.3000.

02 Nov

Weekly Trend direction: Bearish

Weekly trend reversal level: 1.5070

Key G7 resistance levels: 1.4830/80, 1.4920, 1.4980

Counter-trend opportunities:

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today's trade suggestion:
The euro weekly direction has finally reversed to short, after a bearish engulfing weekly candle and a double top at the 1.5060 level. It seems as if we may have broken down through the “rising wedge” formation, which is
always an unstable pattern. Trading has now become a little tricky, as always when a major top is attempting to form, and we may see several sharp swings between 1.4700 and 1.4980 this week. If we are to maintain the
bearish direction, we must remain below 1.4980 – allow for a final test of this 78.6% Fibonacci level before a further move lower. Additional resistance lies at 1.4830/80 and 1.4920. Watch and wait for a clear reversal pattern (possibly quite dramatic) before selling the euro for a move back towards 1.4700 and then 1.4600 on a break lower.

Summary:
Sell rallies to resistance levels after a clear reversal – stops above the reversal pattern – target 1.4700 and then 1.4600.

04 Nov
Weekly Trend direction: Bearish

Weekly trend reversal level: 1.5070

Key G7 resistance levels: 1.4720/70, 1.4810, 1.4850

Counter-trend opportunities:

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today's trade suggestion:
The euro weekly direction has finally reversed to short, after a bearish engulfing weekly candle and a double top at the 1.5060 level. It seems as if we may have broken down through the “rising wedge” formation, which is
always an unstable pattern. Trading has now become a little tricky, as always when a major top is attempting to form, and we may see several sharp swings between 1.4700 and 1.4980 this week. If we are to maintain the bearish direction, we must remain below 1.4980 – allow for a final test of this 78.6% Fibonacci level before a further move lower. Additional resistance lies at 1.4830/80 and 1.4920. Watch and wait for a clear reversal pattern (possibly quite dramatic) before selling the euro for a move back towards 1.4700 and then 1.4600 on a break lower.

Update: We did indeed drop to just above 1.4600 followed by a sharp bounce. The direction remains bearish, and resistance now lies overhead at 1.4720/70 and 1.4810/50 If you managed a good profit from the drop yesterday, you may choose to stay out for the rest of this week. Otherwise, sell into resistance levels above, targeting yesterday’s low at 1.4625, and then 1.4500.

Summary:
Sell rallies to resistance levels after a clear reversal – stops above the reversal pattern – target 1.46250 and
then 1.4500.

EUR/USD:

Update: The weekly direction has reversed to long, and I advise staying out until next week.


GBP/USD:
Weekly Trend direction: Bullish

Weekly trend reversal level: 1.6240

Key G7 support levels: 1.6620, 1.6550, 1.6480

Counter-trend opportunities:

Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal

Today's trade suggestion:
A fantastic bounce from the floor last week means that the pound remains bullish for the 5th week in a row, and we are currently testing the crucial 1.6720 weekly resistance level and 78.6% Fibonacci (see the numerous
touches over the past few months.) Traders could look for signs of reversal here, with the possibility of a countertrend short trade, or simply be patient and wait for dips to the support levels well below – starting at 1.6550. Target for shorts would be 1.6550 and target for longs back to the 1.6720 resistance level. A close above 1.6720 almost certainly means a move back to the August high around 1.7000 for another bash at moving higher.

Update: We have had a sharp move higher and remain in the long direction. Continue to buy dips, with supports at the levels above.

Summary:
Buy dips to supports after a clear reversal has formed. Target 1.6720.

16th Nov
Weekly Trend direction: Bullish
Weekly trend reversal level: 1.4820
Key G7 support levels: 1.4900, 1.4820
Counter-trend opportunities:

Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.

Today's trade suggestion:
Tricky conditions as the euro grapples with the idea that we may have a medium term top in place at the key 1.5060. Still, last week’s direction was (just) bullish, although not very convincing at all. Bear in mind that at major turning points there is often a titanic battle between both sides (bulls and bears) and this leads to messy conditions which may last for several weeks. All that having been said, we’ll go with the long direction whilst above the weekly reversal level at 1.4820. This leaves just two real support levels – 1.4820 and Friday’s bullish engulfing candle reversal level at circa 1.4900. Look to buy dips to these levels, keeping in mind that’s things could get messy. I suggest trading lightly if you must trade, or waiting for a change in direction one way or the other (a new dramatic rally above 1.5060 or a drop below 1.4820). Target for rallies is the Fibonacci extension level at 1.5120, and then 1.5400

Summary:
Buy dips to support levels if you must. Target 1.5120 and then 1.5400.

23rd Nov

Weekly Trend direction: Bearish

Weekly trend reversal level: 1.5050

Key G7 resistance levels: 1.4950/60, 1.5000, 1.5050

Counter-trend opportunities:

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today's trade suggestion:
Another day – another dollar for range traders as the euro has been stuck in the 1.4800-1.5000 range since the beginning of the month. This really could break out either way (as it eventually will) but there are signs that the 1.5000/5050 barrier is going to be tough to break. Notice on the hourly chart that we have the makings of a “descending triangle” with lower highs each time the rally to near the range top takes place. We are currently
butting up against the downward top of the triangle as I write, and I’ll be watching and waiting for signs of reversal on the hourly chart. Target for short trades is the range bottom around 1.4800 and, on a successful break
lower, 1.4650.

Summary:
Sell rallies to 1.4950/60 or at higher resistance levels, target 1.4800 and then 1.4650.

25th Nov

Weekly Trend direction: Bearish

Weekly trend reversal level: 1.5050

Key G7 resistance levels: 1.5000, 1.5050

Counter-trend opportunities:

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today's trade suggestion:
Another day – another dollar for range traders as the euro has been stuck in the 1.4800-1.5000 range since the beginning of the month. This really could break out either way (as it eventually will) but there are signs that the 1.5000/5050 barrier is going to be tough to break. Notice on the hourly chart that we have the makings of a “descending triangle” with lower highs each time the rally to near the range top takes place. We are currently
butting up against the downward top of the triangle as I write, and I’ll be watching and waiting for signs of reversal on the hourly chart. Target for short trades is the range bottom around 1.4800 and, on a successful break
lower, 1.4650.

Update: Danger signs as the euro is making “higher lows” and has broken the tentative downward hourly trend line. However, I’ll adopt a purely objective stance based on the G7 model, and remain with the bearish direction whilst below 1.5050. This means there is remaining resistance at 1.5000 and 1.5050, where I’ll continue to watch for signals to sell.

Summary:
Sell rallies to 1.5000 or 1.5050 after a clear G7 entry signal, target 1.4800 and then 1.4650

01 Dec (My apologies this should have gone up yesterday...)

Weekly Trend direction: Bullish

Weekly trend reversal level: 1.4800

Key G7 support levels: 1.5000/4980, 1.4920, 1.4820

Counter-trend opportunities:

Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.

Today's trade suggestion:
Interesting week as the JPY strengthened sharply against the euro and the dollar, whilst the euro broke to new recent highs vs. the dollar. This has turned the euro weekly direction bullish and we have a new weekly reversal level at 1.4800. The markets are messy to say the least, but that’s what is to be expected as we near year end. Caution is required and assumptions to be avoided like the plague! Whilst above 1.4800, we’ll look to buy the euro into dips, with first support levels at 1.5000/4980 (the major one – having been the previous range top for several months) Below that we have 1.4920 and 1.4820. Watch and wait for a clear reversal pattern to form
before buying and make sure you have firm stops in place! Target for longs is the weekly 78.6% Fibonacci level at 1.5240 and then (if this fails to withstand) 1.6000, the all-time high.

Summary:
Buy dips to 1.5000/4980 or 1.4920 after a clear G7 entry signal, target 1.5240 and then 1.6000.

07th Dec
Weekly Trend direction: Bearish
Weekly trend reversal level: 1.5145
Key G7 resistance levels: 1.4950, 1.4980, 1.5000, 1.5020
Counter-trend opportunities:

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today's trade suggestion:
Well, the jobs report sure got things going, this time – South, for the euro. We have performed a beautiful “bearish engulfing candle” with a “spike high” on the weekly chart, and this means that we’ll be looking to sell
euros this week. Resistance levels are neatly defined above the current price, so it won’t be hard to pick the spot to enter. Watch and wait for a clear G7 reversal pattern before entering, remembering that these thin markets can lead to large retracements. Don’t enter too soon and don’t make assumptions. Key resistance lies either side of the 1.5000 area, with 1.4942 being the first, at the 38% Fibonacci zone. Whilst it’s hard not to be ceptical of last week’s reversal, year-end markets often present ideal technical trading opportunities and this week could provide an excellent opportunity to profit from the euro!

Summary:
Sell rallies to 1.5020/30, 1.4950/4980 after a clear G7 entry signal, target 1.4650.

Weekly Trend direction: Bearish
Weekly trend reversal level: 1.5145
Key G7 resistance levels: 1.4800, 1.4850, 1.4900, 1.4950
Counter-trend opportunities:

Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today's trade suggestion:
7 December:
Well, the jobs report sure got things going, this time – South, for the euro. We have performed a beautiful “bearish engulfing candle” with a “spike high” on the weekly chart, and this means that we’ll be looking to sell euros this week. Resistance levels are neatly defined above the current price, so it won’t be hard to pick the spot to enter. Watch and wait for a clear G7 reversal pattern before entering, remembering that these thin markets can lead to large retracements. Don’t enter too soon and don’t make assumptions. Key resistance lies either side of the 1.5000 area, with 1.4942 being the first, at the 38% Fibonacci zone. Whilst it’s hard not to be sceptical of last week’s reversal, year-end markets often present ideal technical trading opportunities and this week could provide an excellent opportunity to profit from the euro!

Update 10 December: Excellent opportunity it was, and the euro is still moving steadily (but not dramatically) downwards. Key resistance levels, starting at 1.4800, will provide areas to sell into during the rest of this week. Target for the shorts is 1.4620 and then 1.4500.

Summary:
Sell rallies to resistance levels (especially 1.4800/50 after a clear G7 entry signal, target 1.4620.
________________________________________

14th Dec

Weekly Trend direction: Bearish
Weekly trend reversal level: 1.4905
Key G7 resistance levels: 1.4780/4800, 1.4860, 1.4930
Counter-trend opportunities: 1.4500/1.4480
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.

Today's trade suggestion:
The euro continued to drop last week, mainly due to a late dollar rally on Friday. Some have called this an “unrelenting” dollar rally, but I could hardly agree with that – this correction is a normal part of the process and we
could well see further dollar weakness before year end. However, we’ll go with the flow for now, and look to sell euros whilst below the weekly reversal level (now at 1.4905) resistance levels lie overhead at 1.4780/1.4800 (key)
and then slightly higher at 1.4860. Watch and wait for a clear G7 reversal signal before selling, stops above the reversal candles, and target around 1.4680 and then maybe 1.4600. Counter trend longs could be tried at
1.4500/4480 after a reversal pattern.

Summary:
Sell rallies to resistance levels

Happy Holidays,
Thank you for your support these last few months. We are off on a break now until the 15th January 2010. Until then keep well and stay safe.
Cheers,

James & Chris.

PS. If you missed these here are some webinar links from yesterday with the OU guys…

Presentation Webinar


Q & A Webinar