Trend for 26th of May 2011

Let’s come back to silver today. I indicated yesterday (and you can check it on your charts) that silver bullish triangle was finally broken and the security started going up. Today it advanced even more before collapsing during early European session. And where do you expect it to find support. I guess you know now: at previous resistance. 36.40 was resistance that was broken and silver rallied from there. It has not reached the resistance yet. It looks a little bearish now, due to the fast fall that it experienced today, but the fact that it met very strong buying at former resistance (now support) indicates that we have a lot of bulls who are willing to buy silver. I am one of them. Let us see if the support holds. 

Gbp/jpy was also in a bullish triangle that was broken yesterday too. Contrary to silver, gbp/jpy did not manage to advance upwards that well. It tells me that bulls are pretty weak at this point. However, the bullish pattern suggests that there are a lot bulls below. The pair (in the same manner as silver) came back to test previous resistance (now support) at 133.00 and is not going anywhere at the time of writing. News from US is coming in a few minutes, so I guess it might give direction for both gbp/jpy and silver. 

Eur/usd made a short term reversal and shows some technical bullishness now. You can see 123 technical reversal pattern on 4 hour chart in the pair. It also sits on former resistance, which is now support (in the same way as we saw it with silver and gbp/jpy). We do not have too much data tomorrow, so the piece of news that is coming now can set a tone for the pair as well as many other securities. Be ready to follow the market wherever it goes. 

Read my previous post:

Bullish triangles come true

Disclaimer

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.

Trend for 7th of May 2011

Eur/usd finished the week on a very bearish tone. It is approaching pretty serious level 1.4285. This was previous resistance. Now, according to classical technical analysis rules, the level should act as support. As fundamental factors are the driving force in all financial markets we cannot just believe that the price will stop at 1.4285 level and eur/usd will start going up again. 

I will be watching this level very closely for any signs of reversal. If that does not happen Euro will be in serious trouble. I am convinced that dollar is a very flawed currency, but Euro zone is experiencing very serious problems and I don’t think that it is going to solve them any time soon. In fact, I think that quite a few European countries can go bankrupt in a matter of a year or two. In my opinion, some of them are already bankrupt, they just don’t admit that. 

If an economy is not able to sustain itself and government is forced to go to IMF for a loan, the country is in serious trouble and if it will not use the money to deal with the causes of the problem, but will simply use for social payouts or paying salaries in a public sector, money will be wasted pretty soon and the country will have to borrow again to compensate its’ inability to solve economic problems. 

So, watch what happens next week when markets open. I can also repeat myself that I trust in the strength of silver and other commodities as well as commodity currencies: Australian dollar, Canadian dollar and New Zealand dollar. These, together with some Scandinavian currencies should be among the strongest when chaos in global economy starts. And I think that stocks and bonds will be the securities to avoid investing to. 

Read my previous post:

Oil, silver and other commodities