ForexPros Daily Analysis April 05, 2011
Free webinar on ForexPros - FX Market Outlook for Q2 2011
Expert: Ilian Yotov
Start: Sun, Apr 10, 2011, 10:00 ET
End: Sun, Apr 10, 2011, 11:00 ET
FX Market Outlook for Q2 2011
- Review of the trends for the currency majors in Q1 2011
- Should we expect a reversal of the USD fortunes in Q2 2011?
- Will the carry trade remain strong in Q2?
- Is the worst behind for the EUR?
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The daily EUR/USD has been trending steadily higher and within the context of this mark up trend, a Rising Wedge has formed. Wedges (Rising or Falling) are trending patterns that - to be efedtively traded - should form in a down or up trend. The Rising Wedge formation in this situation has the psychology of a healthy and established uptrend behind it.
I have included two charts of this formation. One is from my MT4 platform while the other was generated from my Autochartist platform.
The MT4 chart shows that there are three highs that are currently causing a stall in the uptrend. The first high dates back to Nov.'10 at 1.4282, the two recent highs (creating a double top) are at 1.4250 and 1.4268 so the November high is still intact as a ceiling.
The support of the Rising Wedge is at 1.4077 which means that even if the 1.4100 major psychological level is broken there is a three-month uptrend line offering support in the form of the lower trendline for the Rising Wedge.
Volatility is the name of the game this week and without getting too far into a discussion of fundamentals and the pending ECB rate hike as well as Rate Statement which is highly anticipated to perhaps shed light on future hikes...there is another tools I use, which I have included in the images (below). These tools are the Expected Price Range and Price Movement Range by Hour of Day, both also calculated and provided by Autochartist. These tools are very unique and I will incorporate them with more frequency in my updates here at Forex Pros. There is no other tools that provides this type of price movement projection and it is a tremendously helpful tool that assists with risk management as well as profit target identification.
Consider that there are multiple support and resistance levels that we could find on a chart, the question is which are potentially in play over the course of an hour or a day?
Look at the two graphs and you can see the rhythm of price action (Price Movement Range) and the projected volatility (Expected Price Range) in the EUR/USD.
Remember that on the daily, in my past Forex Pros analysis, I have discussed swing buys on the daily based upon a zone between 20 period SMA and the 34 period EMA high. This strategy mimics how a Rising Wedge set up would trigger since the area between the two uptrend lines is the buy zone on a correction lower. The Rising Wedge has the added entry strategy of a breakout buy if prices rally through the upper trendline.
Forex Trading Analysis written by Raghee Horner for ForexPros. For more information about forex news visit ForexPros.
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