Archive for May, 2009
As Foretold, Dollar Continues to Shrink !!
By Marek W. Stupka | May 30, 2009
In a couple of my recent blog posts I have discussed the EUR-bullish outlook for the market (old posts can be found in the Archives of this blog). Those who took my advice to heart are now several hundred pips richer. Good old buck just did it again - shrink, I mean...
Another set of record-breaking price levels for the Euro paired against its major rival, the US dollar. The pair has just reached and significantly crossed the psychological resistance 1.4000. Interested in the fundamentals that triggered the aggressive dollar selling? Want to know what the catalyst was?
US GDP was revised up to -5.7% in Q1 from -6.1%, leaving the past two quarters as the worst in 50 years. The revisions reflect a change in gross private investment to -49.3% from -51.8%, a shift in exports to -28.7% from -30.0%, and a rise in the inventory change to -$91.4B from -$103.7B. Meanwhile, personal consumption was revised down to 1.5% from 2.2% due to a contraction in demand for nondurable goods and slower services growth.
These catalysts forced the greenback to fall to levels above the psychological Resistance 1.4000. Note, however, that many trade position stops are placed at this rather significant price level of the referential EURUSD currency pair. Therefore, do not expect the market to substantially cross above this line easily. Candles and bars might get a little shaky this week..
The bullish technical scenario in the 1W chart proved to work as smoothly as it was foretold in my earlier posts. In the 1W chart above [ click on the picture to get a bigger chart ] we can see that my EUR-bullish forecast was successful - AGAIN !! - and the price has just reached the 76,4% fibble at 1.4180.
Note, however, that at this point the long-term indicators for this pair are heavily overbought. This simple technical setup suggests a shaky movement on the north side of the indicator equilibrium in the days and weeks to come. The outlook is only powered by the fact that in this case the technical perspective agrees with the fundamental picture above.
In other words - I’d be a little more careful trading the pair long this time - the referential currency pair has just hit its long-term Resistance and will need more momentum to really break above it in a substantial way…
And, as usual, be advised that what is being presented to you here is a very simplified technical analysis, and you are under no circumstances advised to understand it as a trade signal or recommendation. To actually deploy a trade, you should have it backed by a full-scope technical examination, that we at Gepard Investments, Inc. like to call the Trading System, following a clearly defined Trading Plan.
Now, in order to master and deploy a working, back-tested GEPARD trading system (either short-, or mid-, or long-term) you need the access codes to enter the community of GEPARD traders. Feel free to send me an email if you have any questions about joining our community and participating in the 1-on-1 Training.
Topics: FOREX Trading Analysis, News From Wall Street | 2 Comments »
Banking Sector - Signs of Revival ??
By Marek W. Stupka | May 9, 2009
Apart from the fact that equity markets have been surprising all investment sceptics lately by posting higher than expected levels, there are some good news coming from the US banking sector as well that add another spark to the “bottoming-out-of-recession-is-already-happening” camp. And, as we all know, US banks is where it all began…
The Obama administration has given assurances US banks will be allowed to raise less than the $74.6bn in equity mandated by stress tests if earnings over the next six months will be higher than regulators’ forecasts. This agreement means some banks may not have to raise as much equity through share issues and asset sales as the market is expecting. It could also increase the incentive for banks to book profits in the next two quarters.
Banks will have about a month from now to announce their capital-raising plans, and 6 full months to put them to work.
This is a great, great news for all players in the banking industry (currently under the so called “Stress Test”), since if their operating profits will be greater than the government’s stress-case forecast for the second and third quarter, they would receive credit for the difference. This, in turn, would reduce their need to raise fresh equity from other sources.
As we are aware of positive news like the above (and not just one or two pieces of them..) blowing fresh breeze into the sails of the Capital Markets and serving as catalysts of market sentiment, we are beginning to see how the so called “risk appetite” of many investors slowly starts to unleash. Therefore, in the light of the above, we at Gepard Investments, Inc. prefer trading along with the euro bulls at the moment. This renewed euro-strength sentiment is also backed by the 1d EURUSD Ichimoku analysis which shows the price distinctly leaving the uncertainty of the Kumo cloud, and moving high into the bull territory.
Topics: News From Wall Street | No Comments »