Currency, Oil, Silver Analysis and Charts

Euro vs Dollar - Daily Candle Chart 4th June 2009

Euro vs Dollar - Daily Candle Chart EUR/USD 4th June 2009

Yesterday’s candle on the euro vs dollar daily chart, has provided plenty of food for thought, and an interesting candle which closed the day on a wide spread down bar, with a small wick to top and bottom,and reversing the gains seen in the euro in the last few days. The question of course is whether this is simply a short term reversal whilst the market takes a breather after the long rally last month, or is perhaps more significant, suggesting a reversal in the fortunes of the euro? The reason for the fall yesterday was largely as a result of dollar strength returning to the currency, following a fall in equities prompted by weak fundamental news, and as a result many analysts and market commentators suggesting that the V shaped rally in equities has now peaked. Whilst this could be true, and we are possibly witnessing the start of a downturn in equities and a resurgence of the US dollar, one bad day on the markets does not represent a turning point, and the same applies when analyzing the daily candle chart for longer term signals.

The down candle of yesterday, has certainly provided a bearish engulfing signal, which we cannot ignore, and time will tell whether this signal is confirmed in due course, or simply ignored as the market moves higher. However, one element of yesterday is particularly revealing, and this is the low of the day, which failed to penetrate the 9 day moving average, which in fact acted as a support level, suggesting that this my simply be a short term reversal, rather than a longer term top. However, as always, we cannot trade on one signal, and therefore need to wait for today’s price action to see whether the candle is indeed confirmed, or simply ignored, and I would therefore suggest that you wait before entering any news trades, particularly as we have the NFP figures around the corner tomorrow.

You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker and all the other fundamental news for the EUR/USD pair are covered here.

Pounds To Dollars - GBP/USD Candle Charts 4th June 2009

Pounds To Dollars Daily Chart - 4th June 2009

Yesterday’s wide spread down bar on the pounds to dollars daily chart, brought the recent rally for the UK pound to a shuddering halt, closing the day almost 300 pips lower and reinforcing the view held by many traders and currency analysts, that the pound was over bought and due for a correction. This ” correction” came from the fall in equities which in turn helped the US dollar to stage a recovery following its recent demise in the currency markets, but from a technical perspective we now need to decide whether yesterday’s bearish engulfing signal is simply the short term correction of an overbought market, or a longer term reversal of the recent bull rally that has seen the UK pound recover from the lows of 1.35 back in early 2009. To answer this question we need to analyse both the daily and ( prematurely) the weekly chart which may provide some clues.

First, the price action from yesterday has continued into this morning’s trading session ( which has seem the Bank of England maintain interest rates at 0.5% for the time being, and largely as expected by the markets ) with a further fall, despite trying to stage a recovery earlier in the trading session. The important point from yesterday’s candle is that it failed to reach the 9 day moving average, and closed some way above, which provides a positive signal that this could be a temporary reversal as the market takes a breather before moving higher. However, the counter argument to this is if we take a look at the weekly chart, which although it still has a day to run, if the price action continues into tomorrow, then we could be left with a extremely strong sell signal, with a deep and clear shooting star atop a series of wide spread up candles. Should the week close at or around the current price point of 1.62 then this looks ominous for the pound bulls, and could provide some excellent long term trend trading opportunities on the short side of the market for the dollars to pounds pair. Given that we have the above signal which now needs to be confirmed or ignored, and coupled with the fact that we have the NFP data due for release tomorrow, my suggestion is to wait until the end of the week before opening any new positions or closing out existing ones.

GBP/USD - Weekly Candle Chart For Dollars To Pounds 4th June 2009^

USD to CAD - US Dollar Canadian Dollar 4th June 2009

USD vs CAD - Daily Candle Chart 4th June 2009

As I have been suggesting for some time, and indeed as mentioned in yesterday’s market commentary, the short squeeze duly arrived closing the trading session with a wide spread up bar, which closed marginally above the 9 day moving average and almost 300 pips up on the day - no doubt frightening many short sellers who rushed to cover their positions! The reason for the bounce was twofold - first, after such a steep fall it was inevitable that at some point we would see profit takers entering the market and currency traders in general seeing an opportunity to cash in, and secondly the move was triggered by a return of US dollar strength following a general weakening in equity markets on the back of fundamental news in the US, with the 1.08 price level provide the springboard for the move higher. The question of course is whether this is a temporary short term reversal, or a signal that the bearish trend has run its course, and in order to provide an answer we need to analyse the daily usd to cad chart in a little more detail.

First, it is clear that the 1.08 price point has provided the base, and this will now prove critical if we are to see the move re-established in due course. Secondly, whilst the close of the day finished the session marginally above the 9 day moving average, this is far from convincing, and indeed could be considered as providing a barrier to any further move higher on the day, suggesting in turn that this could simply be a temporary reversal after a long and steep fall. Finally the candle provides a bullish engulfing signal which we need to take notice off, and to pay attention!  My own view is that we need to see this signal confirmed before we can begin to make any trading decisions, and the interest rate decision due from the Bank of Canada shortly, may well provide the answer for today’s price action, with a break back and hold above the 1.13 region and  both the 9 day and the 14 day average suggesting that we could see a longer term rally upwards. Alternatively the candle and signal may simply be ignored, but as always we now need to wait for today’s session to close for any further clues, before entering any new positions or closing existing ones and taking our profits off the table!!

As outlined above the main item of fundamental news on the economic calendar for today is the BOC rate decision and statement, and all the US news is covered for you on the euro to dollar site. You can keep up to date with all the latest fundamental news on the economic calendar, latest currency news and live currency charts by simply following the links.  I have also included details on an excellent ECN broker.

Yen to Dollar - Currency Trading The USD/JPY 4th June 2009

Yen vs USD - Daily Chart For Exchange Rates USD/JPY 4th June 2009

The yen to dollar currency pair continue to be one to avoid, as the messy and erratic trading pattern of the last few weeks continues unabated, with a repeated whipsaw of prices in the $94 to $98 price region, which ( in my view) is impossible to trade. As I have said several times before, with the BOJ waiting in the wings, the daily price hovering below the head and shoulders neck line, and with the three moving averages converging, now is NOT the time to be trading this currency pair, and you must therefore wait for a clear trading signal.

All the fundamental news on the economic calendar for the US dollar is covered for you on the EUR/USD site, and with no significant news in Japan, either today or tomorrow, it seems we will have to wait until next week at the earliest before we are likely to see any clear direction for the dollar yen.

Following spot gold, silver prices declined sharply as the US dollar managed to recoup some of its recent losses in a day when many commodities found themselves under pressure as the recent equity market bear rally looks to be coming to an end.  Indeed many financial experts expect the downturn to continue and any recovery will not be V shaped and the recent bounce will simply peter out.   As always the fall in spot silver was dramatic with silver prices falling 56 cents to close at $15.38 on the day and as a result producing a wide spread down bar, with wicks to top and bottom.

From a technical perspective, yesterdays bearish engulfing candle has provided an early warning signal, that the current bull rally for silver prices may be running out of steam, a view which is reinforced on the gold chart, however as always with any signal we need to wait for this to be confirmed, and not make trading decisions based on one candle!! Whilst this could indeed be the start of a short term reversal, the fact that the low of the day failed to penetrate the 9 day moving average is a positive sign, and could suggest that this will provide the support for a bounce higher once again in due course. This is often the case in a strong trend ( whether up or down ) where the low (or high) of the day bounces off the moving average, which then provides the necessary support for the trend to re-establish itself once again, and indeed we can see this at work on the daily silver chart over the last few weeks, where small reversals on the day, have been supported by the moving average ( 9 day or 14 day)  which has then provided the springboard for a continuation of the move. Whilst I am not suggesting that we can conclude this from one candle, I am suggesting that we need to wait and see, as this may be the case here. If the bearish signal is to be confirmed, then we need to wait for a sustained break and hold below both the 9 day and 14 day moving averages, coupled with a hold below the most recent support region at $14.45. Only time will tell whether this is a false signal, or an early warning of a change in the trend, and we must therefore wait for today’s trading session in silver to unfold. My suggestion, given the above, and also that we have the NFP data tomorrow, is to take a wait and see approach to trading silver for today, as the unemployment figures could have a strong influence on the equity markets tomorrow which in turn will affect commodity prices across the board.

Support:    $15.230 (yesterday’s low)                                   Resistance: $16.210 (high of 08/08/09)

Support:    $15.130 (low of 29/05/09)                                   Resistance: $16.003 (high of 02/06/09)

Support:    $14.620 (low of 28/05/09)                                   Resistance: $15.760 (high of 29/05/09)

Whilst the early falls in crude oil prices were undoubtedly triggered by a strong rebound in the US dollar, thereby confirming the strong link between the energy complex and the currency markets, the decline in daily oil prices in the latter part of the oil trading session was accelerated by a combination of the EIA figures, which showed a surprise build of 2.9mb in stocks against market expectations of a slight draw, and a weakening in the equity markets.  Indeed financial experts are beginning to question the sustainability of the recent  market rally with many expecting the current downturn to continue unabated.  Interestingly, this week has also seen His Highness Sheikh Mansour bin Zayed al-Nahyan calling the top of the market by selling all 1.3bn of his Barclays shares, a decision which followed the Qatar Investment Authority, which trimmed its stake from 6.4pc to 5.8pc in April. Moving forward it is the currency markets which will continue to be the main drivers for crude oil prices.

From a technical perspective daily oil prices experienced a further failure at the $69 per barrel, eventually losing $2.22 (3%) to close the day at $65.92. The move was significant but somewhat expected given that markets do undergo occasional consolidation in reaction to the type of strong rallies that crude has experienced lately. Nevertheless the 9 day moving average proved to be a good support level and it remains to be seen if the fall is set to continue, or after a much needed breather crude is now ready to aim higher. Technically the upwards trend remains intact, and with a deep wick to the bottom of the candle, coupled with the bounce from the 9 day moving average, this candle suggests that this is only a temporary pullback, and not a longer term reversal to the trend. Technically this is a different picture for that of both gold and silver, where the daily candle has provided a bearish engulfing signal, but again in both cases ( as with the oil chart), the 9 day moving average has provided solid support to the low of the day, suggesting that this reversal is only temporary, and that the bullish trend in oil prices should be re-established in due course.

The short term trend is sideways, and the medium and long term trends are bullish.

WTI:

Support:    $64.96 (yesterday’s low)                              Resistance: $70.53 (high of 30/10/08)

Support:    $64.74 (low of 29/05/09)                              Resistance: $69.21 (high of 29/10/08)

Support:    $62.77 (low of 28/05/09)                              Resistance: $68.96 (yesterday’s high)

OIL (BRENT):

Support:    $64.91 (yesterday’s low)                              Resistance: $70.15 (high of 16/10/08)

Support:    $63.96 (low of 29/05/09)                             Resistance: $68.87 (high of 22/10/08)

Support:    $61.78 (low of 28/05/09)                              Resistance: $68.65 (yesterday’s high)

DOE Stock Figures (change in millions of barrels)

Crude +2.9 (-1.6)      Distillates +1.7 (+1.2)    Gasoline -0.2 (+0.1)

Anna's Websites Below:



http://www.euro-vs-dollar.com
http://www.euro-to-dollar.com
http://www.usd-to-cad.com
http://www.yen-to-dollar.com
http://www.prices-oil.org
http://www.spot-gold-price.org
http://www.pounds-to-dollars.com
http://www.spot-silver.com
http://www.cot-report.com
http://www.currency-trading-forex.com
http://euros-to-pounds.com