Last Updated on Monday, 29 June 2009 10:23
Written by Derek Frey
Monday, June 29th, 2009
Forex Markets This Week
We have a shortened holiday week in most forex markets this week. Volume will fall all week and therefore risks will increase since they are inversely correlated. We continue to use pullbacks in the Dollar as buying opportunities, which continues to work. We are entering into what is sometimes called the summer doldrums and just like the doldrums on the oceans it implies somewhat directionless “wind” and an overall “drifty” environment. Hurst exponent values across most markets are gravitating toward 0.5 which implies more “random” type of movements. So be extra cautious in the weeks ahead.
EUR/USD:
Sells taken in the 1.40’s to 1.41’s should be solid entry points as discussed last week. Look for breaks towards the 1.38 level to take profits or at least lock in gains. We could see a much deeper correction but for now we will just look very near term.
GBP/USD:
This pair has not followed through to the downside yet but has seen a number of nice breaks. We are still looking at shorts above 1.65 this week and looking to cover them in the low 1.60’s. Again during this holiday week be extra cautious, especially in the ladder half of the week.
USD/CHF:
This pair remains a buy close to the 1.08 level. This pair could see a move back into the low teens before this rally stalls. Same comments as the last few weeks and they still stand. They have paid off nicely last week and we see similar movements in the weeks ahead.
USD/JPY:
This pair is now trying to rally a bit after hitting our downside targets. Would rather be a seller of whatever rallies come for the medium term.
AUD/USD:
The support levels from last week have held and we are now seeing another retest of the upper end of the range. We are again sellers near the .8100 level with stops above the recent highs.
USD/CAD:
This pair continues to be dominated by the price of oil. We continue to see oil pulling back over the summer and are therefore having a hard time seeing this pair stage a major breakdown in the near term. So we are looking for harmonic dips to buy into this week.
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