Forex Analysis

After the rejection of the bailout plan the markets are crazier than before. Stay aside until the dust settles.

Financial markets are waiting for the negotiations on shaping of the $700bln bailout plan. Rep Barney Frank, in BBG, says rescue bill will likely be passed by Monday, and in less than a week a bill will be signed. Until the effect of the plan is clear the markets will remain choppy and volatile. Stay aside or trade with tight stops. Support is 1.4600 and 1.4550. Resistance is 1.4750 and 1.4865.

More than 12% rise in gold prices help the EUR/USD to rebound and gain 3 big figures. Market liquidity is thin and everyone with money can choose the direction and magnitude of the move. Probably the upward correction will continue. In these market conditions the best strategy is to stay aside. If you decide to trade you should use stops and take less risk. Support is @ 1.4280 and 1.4070. Resistance is @ 1.4440, 1.4480 and 1.4570.

Yesterday FED left the rates unchanged but warned that it is watching the markets and will act if necessary. FED rescued AIG by authorising NY Fed to lend up to $85bln as secured loans. We’ll see in the next few days if this is enough to calm the markets. Order books are very thin and the liquitity is extremely low. Be very careful and always use stops to protect your positions. EUR/USD is trying to continue its correction upwards but for now it is very difficult. Even better than expected ZEW couldn’t help. Support is @ 1.4070 and 1.3970. Resistance is @ 1.4220 and 1.4320.

Yesterday the things were pretty messy in the forex market. Lehman filed for Chapter 11 protection, AIG is seeking money and Washington Mutual is the next financial institution in trouble. Dow closed 504.48 pts down, which caused sell off in EUR/JPY and put EUR under pressure. EUR/USD hit 1.4322 around the NYSE close but then Fresh waves of US hedge funds/models, big Europeans, UK clearers sales in EUR, GBP, AUD, NZD - possibly as funds unwind expectations that Fed will have an emergency rate cut tonight- pressured the pair to 1.4200. Volatile moves from the last few days made the charts to look very ugly. The major levels are far away from the current price but culd be reached faster than usual. Today important data releases and events could affect the forex market - UK CPI (8:30 GMT), ZEW Index (9:00 GMT), US CPI (12:30 GMT), FOMC Rate decision (18:15 GMT). Support is @ 1.4180, 1.4085 and 1.3970. Resistance is @ 1.4320 and 1.4480.

A lot of US banking news combined with very thin liquidity (Japan, HK, China and S, Korea are off) resulted in a volatile Asin session. EUR/USD gapped up on the open and rallied to 1.4480. Lehman Brothers announced it is filing for Chapter 11 Bankruptcy. Lehman says none of broker - dealer subsidiaries or other subsidiaries of parent will be included in Chapter 11 filing and all will continue to operate. This was found a tad positive by the market and EUR retreated from the highs now trading around 1.3380/90. As we wrote earlier a correction in EUR/USD is underway. Next area of resistance is 1.4490/505, then 1.4570 and 1.4810. Support is @ 1.4290 and 1.4230. Oil is below $100 and this could weigh on the Euro.

Probably the long awaited correction in EUR/USD has begun. On the daily candlesticks charts were formed a hammer reversal pattern, followed by e white candle with large body confirming the beginning of the retracement. The question is if this is just a correction of the new downtrend or a continuation of the previous uptrend? No one knows the answer, except the guys with big money who manipulate the market. Probable targets of the correction are 1.4386/430 and 1.4570. If the market goes above 1.4910/50 the former uptrend is intact again. Support is @ 1.4130, 1.4040 and 1.3880/50.

EUR/USD posted new low yesterday but the a short squeeze in EUR/JPY caused a rally in the major pair above 1.4000. The forex market is still wondering if the USD strenght should continue or a correction should follow. Economic data from US are not positive but the rest of the world may be in much worse state. If EUR/USD could break above 1.4040/50 we may see the beginnign of the long awaited corection. Next upside targets are 1.4180 and 1.4385. Support is @ 1.3970, 1.3880/50.

New low for the downmove in EUR/USD. The market is extremely oversold but the bears rule and no bottom is visible. The nearest support is @ 1.3850 and it is previous high on weekly charts. A correction is due but if oil breaks below $100 it may be almost impossible. Trade carefully and always place stops in both direction. Resistance is @ 1.4045 and 1.4180.

EUR/USD still looks heavy. The pair is weighed by the lower oil prices and the EUR/JPY sales. The market is extremely oversold and due for correction but it seems impossible at this stage. Probably the big guys will target the option barriers and stops around 1.40 and then will allow any retracement to develop. OPEC wilnot cut the oil production and a break below $100 is posiible. This will put pressure on the Euro. Support is @ 1.4090, 1.4045 and 1.4000. resistance is @  1.4225, 1.4315 and  1.4430.