Sunday, July 3, 2011

Forex Daily Technical Analysis - July 4, 2011


Wall Street gained more than 5% last week and completed an amazing rally since it reached the bottom on the week before. Sunbird's chief analyst kept talking about the strong support that the S&P had at 1250 and the high possibility for aggressive short squeeze that eventually occurred. If you look at the volumes, you will see that they were average and below average. That indicates that there is still plenty of money that might be pushed into the markets, so the rally might not be over yet.

All indices are obviously overbought and a correction is likely to occur, buy do not count on sharp declines unless bad news will flood the markets again. The S&P easily broke through the resistance at 1320 and it is now close to another strong resistance at 1340. A successful break-up here might take the stock markets to the annual highs.

The panic of the Greek crisis was lower due to the bailout plan and the government Greek actions, but the world is likely to face this problem again in the future, with more ill countries involved.

Monday is America's Independence Day and therefore US banks and markets will be closed and cause low volume on the beginning of the week.

Important news to be published this week: AUD, GBP, EUR interest rate; continuing claims USD & AUD;Real-estate Data GBP, USD & CAD

EUR/USD

The EUR chart looks exactly as the S&P's. The rising of the US markets is pushing up the European currency which is also in overbought. Stochastic levels are high but it does not mean that the EUR cannot continue rising, and it depends on the US stock markets. The current resistance is at 1.4550 and technical correction might get to 1.435-1.44.


Trichet is probably going to raise the bid rate from 1.25% to 1.50% on Thursday. However, the recent rally in the Euro emphasizes that estimation and traders might try to take profits then, so do not look for extreme strike, unless new buyers will join the game.

USD/JPY

The Yen is still traded above the trend line but struggling to break through 81.0. The shadow that extends from Friday's candlestick emphasizes the strength of the sellers at this resistance and a successful break-up might get them nervous and cause a sharp short positions covering. On the other hand, a break-down of the support at 80.0 might set a new bearish momentum.


Silver (XAG/USD)

The silver moves in an accurate channel and seems to have a red future.  As sunbird's chief analyst estimated, the silver failed to break through 34$, and the sellers took actions at the moment the silver was halted. The current support is at 33.3 and a break down might slide to the 200 SMA at 32.3$. A possible target for the current declines might be the break-up area from January this year, at 31.20.



writted by SunbirdFX

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