Monday, June 20, 2011

Daily Market Analysis - June 20, 2011

20/06/2011 NSDQ-SEP10
Last week, fears that Greece could become bankrupt grew, which, in its turn, created pressure in the financial markets and led to a drop in exchange rates. The NASDAQ also continued to move down and is, at the moment, at its lowest ever point at around 2180 dollars. These low price levels seem to be very attractive for a buy position, especially against the background of the harmonic reverse pattern – BEARISH BUTTERFLY – and the small positive deviation in the MACD indicator.

Finding a solution for an aid package for Greece will, in all probability, lead to a sharp rise in prices in all the markets. Because of this, we can wait for the solution that should be decided upon this coming week. On the other hand, we could already enter a buy position when the price is low and relatively close to the safety level and our escape point at 2128 dollars. The short term target price can be found around the resistance level of 2350 dollars.

20/06/2011 USDCAD
The United States dollar – Canadian dollar pair continues to struggle with the stubborn resistance level of 0.9830 and still hasn't beaten it. So long as the pair fails to close above this level, then the chances are good for a change in direction and the start of a move downwards. Of course, the negative sentiments in the markets cause a strengthening of the United States dollar and place pressure on the pair upwards. A change in sentiments will release the pair which can be expected to dive towards support levels and short term targets at around 0.9670.

If the pair closes today, or for that matter, any other day during the week, above the test level of 0.9830, we should immediately leave a position as, in such an event, the pair will try to move in the direction of its 200 day moving average line at around 0.9900 and perhaps even higher to the equivalence psychological level of 1.0000 Canadian dollars to the United States dollar.

20/06/2011 GBPUSD
The United Kingdom pound is still plummeting against the United States dollar but the technical picture for the pair is beginning to show signs for a potential change of direction. The strong support level of 1.6100 that halted the previous wave of price drops did it again at the end of last week when the closing bar for Friday created the bullish reverse pattern – KEY REVERSAL that hints at a trend reversal.

However, as the momentum is still negative, instead of entering a position now, we can wait until the "storm blows over" and place an order for an entry into the market only if there is breakthrough at the daily level set last Friday at around 1.6200. A breakthrough at this level will confirm the move to positive sentiments with a potential for price rises to levels of 1.6500 in the short term and 1.6715 in the medium term.

20/06/2011 GBPJPY
The wave of drops across the markets brought the United Kingdom pound – Japanese yen pair all the way to its lowest and critical support levels in the region of 129.30. This level constitutes the last level, beneath which we will need to redefine the main trend direction for the pound – yen pair. The assessment is that so long as the pair is traded above the critical level of 129.30, it is worth a buy position with views towards price rises to the high levels of 130.70 and 134.00.
The fact that the pair is traded so close to the support and safety level of 129.30 makes a buy position on the pair especially attractive due to its high Chance/Risk ratio. It is important to stress that a closure beneath the level of 129.20 will be used as a trigger for a quick exit from a position with minimal damage. This, of course, despite the chance to catch a new wave of price increases with a potential for a very big profit.