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Good day forex trading koalas!
It is the weekend and now is the moment to spend some time with your loved ones. It is also important that we take some time to review the week’s performance and to improve on our trading. The market will always be there for us and it is crucial that we grow from strength to strength.
In the previous review, we saw the EUR/USD moved little despite the good retail sales of the Euro Zone. This suggests that nowadays, the market may be more interested in punishing the weaker economy and hence this must be considered. Later when the US started releasing weak data such as the US ISM Non Manufacturing PMI, the US dollar suffered as investors were getting worried about the US economy. The housing tax credit had ended and the employment market continues to remain shaky. We were seeing concerns with regards to the Euro Zone too as investors remained worried that the stress test of the European banks may highlight more risk without having a good fall back plan.
Looking at the EUR/USD chart above for the past 5 days ( Source : Yahoo ) , we can see major bullish sentiments. I apologize for the lack of the usual chart as it is down for the moment.
This week i will like to share more about the current “dance” of the EUR/USD. Why is the price rocking back and forth?
Firstly we must understand the situation. The 2008 crisis brought much devaluation across major markets. Businesses and consumers were affected thus bringing problems such as unemployment and housing crisis.These problems do not have a quick fix and hence the only way is the slow road to recovery.
Savvy investors know this even if they appear to be so optimistic. Watch out for any adverse events and see how fast risk aversion appears. Unfortunately many of the “retail traders”, ordinary people like you and me do not release this and try to pick tops and bottoms. This results in their accounts getting wiped out, aka MARGIN CALL.
The trick of the game now appears to be one of shunning away from the worse off economy. This is evidently highlighted this week as mounting US weak data caused the urge of the Euro while months ago, the Euro was being dumped due to the budget deficit crisis.
The weakness of the US Dollar is not new to readers of TheGeekKnows.com as i often highlighted the big deficit and fragile employment market of the US. These are like cancer tumors that will threaten the recovery of the US economy.
Towards the end of the week, we saw the US Prelim UoM Consumer Sentiment fell to the lowest level in a year. This is very bad for sentiments and it is reflected in the S&P 500 dip to 1060+. This will probably bring attention to more investors and lead to questions about the continuity of the US recovery.
From a technical point of view, the resistance line of 1.3000 may be strong. Should it be broken, we may see more upside pressure if the US continues to be printing weak data. Do remember that support and resistance lines are never a single pip.
Take note of the scheduled data releases for the week. This crucial to your trading. You can find the list of the various economic releases in the Economic Calender below.
If you are on Facebook, i urge you to join TheGeekKnows.com page. Discussions on forex concepts, ideas and trades can be found there. It is a helpful community page for forex that i created and it has over 500 participants now
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