Sunday, February 20, 2011

Pre-Release FX Market Analysis February Week 4

This week we will be looking forward to a pound for a much more dollars. Let discuss the play.

A fine example has been shown last week. EUR were bullish on Friday last week by the hawkish statement from ECB member Bini-Smaghi and this sentiment will be brought up to this week trade. Below are the quoted statements. 

“Today’s comments from ECB member Bini-Smaghi further confirm that some members of the central bank are thinking along the same line as investors. Bini-Smaghi said point blank that the “ECB may raise rates as press pressures mount” He said the central bank has repeatedly communicated its alertness and can take pre-emptive action if needed.”

We are well learned that the correlation between currency pair cannot be put aside. A simple example which trader A sell USD Buy GBP and once GBP are too high, Trader A Sell GBP and looking for low yield currencies. Fund being transfer all the time depend on which will benefit traders the most. So in this case, USD is being in least favour to the traders because of its unstable statement and flips flopping momentum.  The currencies that will be most benefit from this is GBP & EUR with their strong fundamental support.

So here we look at the strong and trendy currency which at this moment were EUR, GBP & AUD. This both 3 have quite stable correlation statistically and part of the element that we want to see is that they are now come up with bullish technical probability. Technically these 3 major currencies have a very high probability on pawning USD next week. 

The best trade for this week would be on Wednesday where the MPC Meeting Minute will be held. Forecasted where 3 of the members voting for a GBP interest rate hike. It’s best advice to trade on sentiment on this very day.   

*** REMEMBER... Every strong thrust neither bullish nor bearish always had been powered by a good retracement. Market move in wave, just make sure next week we ride the bull from the ground.  Buy Low & Sell High. ***
Let’s put a simple summary on last week commentary and find conclusion toward next week trade. Fill this up for this week trade on GBP/USD; Rumour, Probability, Data, Pattern & put a Conclusion toward the trade on either to go short or long. Well, this will be an easy homework for you all.

By the way, for those who already has an account (FXCM) with ASIA ALLIANCE CAPITAL will get our full FX Market Analysis on those 4 elements plus complete drawing on chart technical probability.

I have written about the market elements. Click here to read.

P/S: The trade that I’ve been waiting for is on the month of March, 1st week. The title will be ‘Will this be the last Bullish for GBP?’ I’ll quote Jesse Livermore book on how he plays the games.   

The currency pairs that I will look closely on this week are GBP/USD, GBP/JPY & AUD/USD. These pair have high technical probability & strong fundamental support but carrying less risk. But if there is any opportunity on other pairs, surely I will update the post.

Thank you. 

Kind Regards,
Ahmad Shahmi Ahmad Nordin

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