Forex Investment and Currency Trading

EURUSD: Rallied through the 55 dma which is now at 1.3005 though did not close above there. However this does not change the overall setup which suggests that a rally through 1.3095 would be a major bullish development that could open the way for 1.3335 in the ST and possibly a rally up to the 200 dma at 1.3917.

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DXY Index – Is that the end of a 5 wave bull market?

DXY Index: It appears as though the 5 wave bull market is indeed over as expected. Last week’s poor close has meant that an evening star pattern has been posted at the trend high and further losses have followed this morning.
The DXY index is expected to fall down to the 55 dma at 85.66 and then the support area around 83.10 over the coming days. Over the long term the index should test the 200 week moving average at 78.95. Again the price action is similar to that [...]

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Everybody thinks EURUSD is firmly caught in a range and they could be right. However in this market consensus is a dangerous thing
The chart below suggests that people could very quickly get “caught on the back foot” if we can see one more move higher on EURUSD
This looks like a potential replay of December 2008

EURUSD drops from 1.3081 to 1.2549 (532 points) over 8 trading days from 25 November ’08
EURUSD drops from 1.2992 to 1.2457 (535 points) over 8 trading days from 23 Feb ‘09
Posts a key day off the lows on 04 December and just misses doing the same [...]

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The recent move up in USDJPY has been characterised by a state of denial as everybody believed it should be faded as a “risk trade”
As a consequence, as equities kept falling, everybody waited for USDJPY to follow
Belief was that the most recent fall in Equities was on the back of us moving into the “Economic” dynamic rather than the financial dynamic
What it means is that Japan was a hedge against financial distress (Less leveraged,stronger banks etc) but not economic distress
As economic distress Globally came to the forefront and in Japan in particular (Horrible GDP numbers, collapsing exports etc) the JPY [...]

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