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Thursday, July 14, 2011

Market trend analysis for 14th of July 2011

Japanese Yen at crossroads


Hi, everyone. Let’s do market trend analysis for today. There were a few pieces of macroeconomic news released today, but they did not have major impact on the price action of currencies and other securities. You must have noticed that commodities such as silver and oil stopped falling and are trying to go up. Japanese Yen pairs are on crossroads. I think Yen will weaken soon. My assumptions are based on technical price action of various currency pairs. 

Silver will continue its’ upward trend soon


Let us start from silver. It looks like the commodity finally found its’ bottom and is ready to make new highs. It now sits at the end of the upper part of its current range. The security has been trapped in it from the 12th of May and I suppose two months of a range are enough for silver, provided instability in world financial system and a lot of printing of money that is going on in the whole world. There are a lot of regulations going on in financial markets too. I think this is going to impact prices of silver a lot. Futures is becoming difficult to trade for governments are more and more interfering with financial markets. One never knows what they can decide to do in the future. Their decisions are usually pretty dumb. 

200 sma stopped fall in silver prices


If you look at daily chart in silver, you will see that bottom was established when the price hit 200 sma. I have already talked about importance of using this technical indicator in your trades. Be sure to put it on your charts and check the position of the indicator on various time frames. Let us watch now what happens at the resistance. Silver might stop there (39.50) for a while and even reverse, but do not forget that the path of least resistance is still upwards, not downwards. The same can be said about oil. If you have an investor type mentality, you should have bought both oil and silver when they fell to their most recent lows. I do not think bulls’ era in commodity markets is over. 

Yen can fall soon


By looking at price action in Yen pairs I make a conclusion that Yen is going to fall in the nearest future. The way prices behaved in Yen pairs in the last three days resemble the way they behaved on the days 16-18th of March, when after a strong up trend, Yen suddenly collapsed and started going down. There is one thing which I usually see on these reversal days and that is: prices fall very sharp on the last day of a downtrend, then on the same day they reverse and the following days the reversal continues. 

This can be clearly seen looking at gbp/jpy price action. The security fell sharply on the 12th of this month, then the same day reversed upwards and has been going up in waves for the last two days. Other Yen pairs reflect the same situation.
Hope the market trend analysis was useful.

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Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.