Wednesday, May 25, 2011
Trend for 25th of May 2011
Let me come back to what I wrote yesterday. I discussed gbp/jpy pair and also silver commodity. Both securities formed bullish triangles that are very clearly seen on 4 hour charts. Data from Great Britain (Gross Domestic Product) caused British pound pairs to rally and it took silver upwards together with them. Gbp/jpy may look a little bit tired now as it has already rallied 130 pips (inspired by the news) and is somewhat overbought on 1 hour chart (RSI hit 70 level). However, this does not mean that the pair will reverse.
Silver is more overbought as it is overbought not only on 1 hour chart, but also on 4 hour chart (RSI went over 73). However, we should remember that the pair stayed in a pretty tight range for about two weeks and any bigger moves make spikes in RSI indicator when price starts moving one direction or another. If movement smoothes just a little RSI usually comes back to normal levels. So, I am not worried about silver being overbought for I hold to the position that it will continue its uptrend sooner rather than later. Of course, this break that we saw today might prove to be false, but I am not changing my bullish position towards the commodity.
I do not see any serious economic news coming today, so I guess the pairs might rest for a while and then continue their short term trends that they started today. Tomorrow might be a more interesting and volatile day as ECB President Jean-Claude Trichet is going to speak on European Economy at 9:20 GMT. This might cause our old friend eur/usd to move pretty well. You should not forget that the pair is in a downtrend and as I mentioned about possibility of shorting it at 1.4140 level, so it reversed there after forming a 123 pattern on 1 hour chart and went down during Asian session. Check my two previous posts on that. You may also consult a eur/usd chart for more clarity.
Read my previous post:
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