Buy USD/CHF  SL@ 1.0425, TP1@ 1.0624, TP2@ 1.0790, TP3@ 1.0874
 
The pair has been dropping decisively since the beginning of June, without a serious retracement yet.
At current price levels, the pair is now forming a green candlestick at the most important support levels from March- April on the daily chart (1.0500 area). After a drop like that to a stop at a support, calling the pair “oversold” would not be baseless. Counting on a reverse in the trend now, would allow an extraordinary risk/ reward ratio, with a stop loss relatively close and a huge take profit potential for a retracement.
 
All analysis is based on the daily chart.
 
For Questions comments and further information call us at + 357.220.226.68.
 
Last price: 1.0535

Kiwi Declines Against USD by

NZD/USD:

The Kiwi declined the most against the Greenback last week, compared to the rest of the G-10.  On October 28^th the RBNZ kept rates on hold.  More damaging to the Kiwi were the accompanying statements from the RBNZ in which they remarked that rates would likely remain on hold through Q2 of 2010.

Six days prior to that announcement NZD struck near the prior day’s high versus the dollar at .7606.  Since that day the Kiwi has been in a tail spin.  The Chart below is a daily Candle chart of NZD/USD.

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In the white circled area we have a Candlestick that traders refer to as a Hangman. There is a short candle body with a wick hanging down from it.  When this is seen during price appreciation it may signal a possible reversal.  The candles following the Hangman are lower and that could be confirmation enough to enter a short NZD position.

This pattern appearing out in front of a rate decision may have been traders signaling caution ahead of the announcement.  In the end traders were correct and price has continued to decline.  One last item to always keep an eye on are the daily Moving Averages.  NZD is approaching a close below its 50 day MA.  A close below the 50 day MA should put further pressure on the already battered NZD.

USD/CHF:

We have discussed correlations and their importance.  Aside from straight technicals and fundamentals often what drives a currency might be its correlation to another instrument, product and or commodity.  The Swiss Franc historically has had a very tight correlation to Gold, as one appreciates so does the other and vice versa.

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The Chart below shows the price movement of GOLD and CHF.  During Gold’s most recent depreciation (as depicted between the 2 blue lines), you observe the strong correlative effect one exerts on the other.  What should grab our attention as Gold has resumed its strength is that the Franc has not. As a trader you should wonder if Gold is overbought or the CHF oversold?  Of course keep in mind it is not a perfect correlation of 1, meaning some variation is normal.

US Markets finish the Day Slightly Ahead by GoLearnForex

In Asia, Equity Markets were down while in London and in the U.S markets finished the day slightly ahead.  This is coming on the heels of a horrendous close on Friday in the U.S and CIT’s bankruptcy filing over the weekend.  Equity Futures in Asia are pointing to a slightly higher open for Tuesday while London Futures are modestly lower.

The Dollar was slightly off against the G-10 mirroring the DJIA small advance today of 77 points.  Oil closed today mostly unchanged while Gold soared again to 1,054.  In the U.S the ISM Manufacturing figures printed smartly better than expected coming in at 55.7 versus expectations of 53.  In addition, the Pending Home sales figures surprised to the upside at 6.1% against expectations of 0%.

This is a busy week for economic data releases.  Due out tomorrow will be the RBA Rate decision.  The current rate holds at 3.25% and market consensus is looking a quarter point hike to 3.5%.  In the U.S, Factory Order numbers are set to print.  A positive show will confirm today’s ISM numbers while a below consensus read will cast doubt on the durability of the ISM figures from today.

Upcoming Forex Events for November 3, 2009

GBP Construction PMI  Forecast   47.20   Previous 46.70

USD  Factory Orders (MoM) Forecast  1.00%   Previous  -0.80%

AUD AIG Services Index  Previous   49.30

GBP Nationwide Consumer Confidence  Forecast  72.00   Previous  71.00

Analysis by http://www.golearnforex.net

AUD/USD:

The AUD continues its recent retrace.  Many traders use different time frames for different currency pairs.  The longer the time frame the more valid the pattern you are charting is.  Moving Averages are basic tool that even the most sophisticated trader needs to always be cognizant of.  The markets tend follow the moving averages generated off of the daily charts.

In Chart below I use a moving average from an 8 hour chart.  I strongly encourage traders to be vigilant of at least checking a weekly, daily, 8 and or 4 hour chart and then any time frame less than 4 hours that you may want to look at.

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You can see that the yellow line representing the SMA 50 was breeched and prices continued a steady fall (The Red line is the 100 SMA).  There are also a number of near candle formations that support this price depreciation.

Circled in blue is a near Falling Three Candle pattern.  Typically you have a red candle followed by 3 or so small green candles that are contained by the original red candle.  Following the last green candle is another red candle with price closing below the original red.  The Falling Three pattern is nearly followed by Three Black Crows.  This candle pattern forms when you have the candles each open in the midsection of the proceeding candle but also close lower than the proceeding candle.  This pattern nearly forms between the 2 white lines.

GBP/USD:

This pair has been range bound since May.  When a pair trades in a range, price is confined to a narrow margin of highs and lows.  In the Chart below the 2 red lines represent the range support and resistance lines.

The 2 red boxes indicate when minor breakouts have occurred.  The tops and bottoms of the boxes would be your absolute stops depending on the handle you entered the trade at.  Another point of consideration is the 50 SMA and 100 SMA.  You can see that the SMA’s are also moving sideways.  Price typically pops when it passes above/below a significant SMA.  With SMA moving into a sideways march we are approaching congestion on this pair and that should signal another breakout.  Obviously if the dollar continues to strengthen as it has GBP should be headed south.

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Analysis by http://www.golearnforex.net