January 9, 2012 Forex Signals

In a meeting held in Brussels overnight German Chancellor Angela Merkel and French President Nicholas Sarkozy signalled that Euro-area Leaders may complete their new budget rulebook a month early by the 30^th of January. Whilst discussions did stem from previous EU Summit talks of increased fiscal unity, the latest meeting has again done little to provide any substantial direction for investors. In currency movements overnight the EURO did recover well from the jitters seen earlier in the week, trading as high as 1.2784 against its US Counterpart, opening this morning around 80 basis points stronger at a rate of 1.2762.

In Europe, in what is shaping up as an eventful week for the EURO-Zone an interest rate decision is expected out of the ECB on Thursday where new President Mario Draghi has signalled a willingness to become even more expansionary towards Monetary Policy moving forward. In news flows out of the US, Consumer Credit for the month of November surged to its highest level in almost a decade, showing households are optimistic to take on increased debt levels. With US Fundamentals continuing their recent strength, the Dow Jones rallied 0.3 percent overnight ahead of the earning season due to commence this evening. Meanwhile this morning the US Dollar opens relatively flat against the Japanese Yen at a rate 76.850

Now, on to our open positions and new trades. Lets take a look at the specifics:

Open Orders

New Orders

All Pending type orders are only good for the day. Set the pending order to expire within 24 hours.

Use the Lot Size Calculator to determine lot size. In general, never risk more than 2-3% on a single trade, but that also depends on your own personal trading strategy and risk management.

EURUSD:  A nice push up resulted in a Piercing Line pattern, which generally indicates a potential move up. We need to see this confirm before we trade however. It could simply be a consolidation and we are seeing potential indications of a continued move down. If the price continues up and closes above yesterday’s close, then it is possible we will see a new push to the upside.

GBPUSD:  As we mentioned yesterday, it does appear the price has bounced off support and is moving back upward. This also created a Piercing Line pattern similar to the EURUSD. While we would like to enter a long trade today, we are concerned the pair may make a move back down towards support, or below. We are going to limit our risk to just 1% of our account balance maximum.

USDJPY: Still bouncing around primary support with no real indications of a potential medium to longer term trend.  No trade today.

USDCAD:  We see a narrowing triangle trend where the trading swings appear to be getting smaller and smaller. While we see very short term indications of downward movement, the price is currently right about the apex of the triangle. In addition it is right about at current moving averages. We are concerned that there is less potential downward movement, and along with an equal amount of potential upward movement makes this trade too risky for today.

AUDUSD:  We see a general upward channel being created in the Aussie. The price looks to be coming off a nice hammer pattern, near the lower end of the channel. But, it is also once again near primary resistance. The question is will the price continue through resistance into the channel, or will the resistance hold and the price then breaks the channel. Unfortuantely, we don’t have enough information to make this choice, combined with potential fundamental news reports altering the trading sentiment over the next day or two means taking a trade on this pair today may be too risky. If we had caught the hammer earlier, it would have been a good trade with potential. As it is now, we believe the price will continue up, but are concerned with the primary resistance point. No trade today.

USDCHF:  A strong Bearish Engulfing Signal may indicate a good push down over the following day or two. We would like to see confirmation of this potential fall before trading it. Unfortunately the price is also near support and we may see it bounce back up into an upward move. Holding off for today.

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