Tuesday 02.10.2009

EURUSD

The Euro pulled back into support zone of 1.2800/10 after testing resistance at 1.3070/90 on yesterday. Daily sentiment remains neutral although the Euro got a chance to start developing a bullish structure on yesterday but a close above the 1.3070/90 resistance is needed. Interim resistance is emerging at 1.2920 followed by 1.3070/90 and the key upside barrier at 1.3320/30. On the lower side, support starts at 1.2800/10 backed by 1.2705 and 1.2550. Intra-day studies are slightly bearish but a recovery seem to be underway. Above 1.2920/50 will confirm the recovery. Current quote is 1.2885 @07:20 GMT

Support levels: 1.2800/10, 1.2705, 1.2650 and 1.2550.
Resistance levels: 1.2920/50, 1.3000, 1.3070/90, 1.3150 and 1.3320/30.
Market sentiment: long-term : bearish, mid-term : bearish, short-term : neutral

Yesterday recommended trade: stand aside

AUDUSD

Resistance on the .6800 handle could not be cleared out on yesterday although the Aussie Dollar has climbed to .6848. Support into the .6650/60 region seem stable for now and a resume of the uptrend is possible. Resistance starts into the .6770 zone followed by .6850. Daily sentiment is bullish while hourly studies are neutral at the time of this writing. Intra-day momentum is expected to turn bullish on a potential break of .6770. Current quote is .6714 @07:20 GMT

Support levels: .6650/60, .6560, .6475, .6415 and .6350/60.
Resistance levels: .6770, 6800 and .6840/50.
Market sentiment: long-term : bearish, mid-term : bearish , short-term : bullish

Yesterday recommended trade: small long at .6700, initial stop at .6660, objective at .6800. Adjust stop to breakeven on +30 pips (at .6730) if reached : +100 pips

EURCHF

Support is formed on the 1.5050 mark and while it holds, the upside is expected to remain under focus. Key resistance is seen at 1.5190 and a potential break may open 1.5270 for test within the upcoming sessions. Key resistance is formed at 1.5270 by the 50% retracement of the 1.5880-1.4655 move. Both daily and hourly studies are bullish. Current quote is 1.5120 @07:20 GMT

Support levels: 1.5050, 1.4950, 1.4880 and 1.4800/15.
Resistance levels: 1.5170/90, 1.5270 and 1.5410.
Market sentiment: long-term : bearish, mid-term : bearish, short-term : bullish

Yesterday recommended trade: stand aside

In order to succeed in forex market, one can follow certain strategies like technical analysis, fundamental and economic analysis, combination of these two, different currency pair relationships etc.

Other more advanced techniques are SAR, CCI, Stochastics, MACD, Liner Regression, Bollinger Bands etc.

One should not be scared of the terminology involved. One should follow a strategy which one can understand and follow well.

The two most important strategies of technical and fundamental analysis are also used in stock markets. It may be advisable to use both of them while some people may use either one.

Fundamental analysis covers economic and financial factors like GDP, inflation, employment figures, devaluation, trade statistics, capital movements etc. In technical analysis one takes help of charts, graphs, bars, trends etc.

Whatever the strategy one adopts, one should learn to be a disciplined trader. For this, one should consider the following:
• Always use stop losses of some kind
• Don’t use all of your balances, but keep some separately available for special situations.
• Start with small lot sizes
• Always have a win / loss limit
• Adjust margin according to market conditions
• Always get new training and education

Some people also use intra day strategy. With this, one can use multiple time frames for analysis like one minute, 15 minutes. 30 minutes and 60 minutes frames.

One noteworthy element of forex trading is risk management. This consists of stop losses and trailing stops. One needs to learn how to establish stops, fix initial stops and experiment with trading plans at the margin. One has also to learn trailing, breakeven and time stops.

Risk management seems to have become easier with more flexibility in forex trading rules. There is full transparency now in this, better ability to put bids and offers within narrow spreads and less cost per ticket. Some forex trading platforms automatically close all positions if an account declines 60%. This provides some added safety.

FX trading like commodity trading is always conducted on “margin”. The general ratio is 50:1 and can go up to 100:1 in some cases. This means that against every margin of $1000, one can hold a position of up to $50,000. In currency trading what one can lose at the most is just the amount of margin while as the potential for profits is substantial.