Forex-TheStrategy.com

Archive for February, 2010

The last time I’ve written about the gold bubble was almost a year ago when the commodity has been trading near its all-time high at $941/ounce. Since then, the gold managed to reach a new historical maximum at $1,226/ounce and retrace to near $1,050/ounce. So, what’s the current situation with it? Is it still a bubble? Is it already bursting? Is gold going to go up even higher? When will the gold bubble burst?

Unfortunately, there are no simple answers to these questions. Ask a gold bull or an average Joe and they will say that the gold is going to go up as the economy is tumbling and the paper money is worthless, while the gold has always been a real measure of value. Ask a dollar bull or a gold pessimist and they will say that the commodity has no future as the economy is going to recover soon, that the inflation is nonexistent and the gold is useless as a commodity. But today I’ll try to look at gold from the technical point of view.

The chart below shows the daily chart of the spot gold from August 2009 until now. It includes the head-and-shoulders pattern that has started forming since October 6 and has ended its formation on January 20, 2010. The ”shoulders” are marked with the letter “S” and the head is marked with letter “H”. The neckline is sloped because this “head-and-shoulders” pattern is bullish. The pattern broke out down on January 21. The gold continued to form a sloped resistance line, which now contains three price spikes. The probable target for this pattern breakout lies at the basement of the first shoulder:

The key level on the chart is the pattern breakout target that is located at $1,023/ounce. That lne can be reached during the next 7 weeks even if the gold is going to continue retracing to the resistance slope from time to time.

From the technical point of view this is a perfect pattern breakout, but what does a retracement to ~$1,023 means for gold in a long-term perspective? Is it a bubble burst? Definitely not. Of course, it may serve as a first step in a serious trend change or even may end in a steep drop to some years’ lows, but the pattern itself doesn’t mean a lot in a long-term perspective. I suggest watching closely for what happens next after the pattern is played out and the new technical data becomes available.
(…)
Read the rest of Gold Bubble — Technical View (16 words)

MetaTrader 4 platform with ECN execution – FXOpen.

Posted on Forex blog.

EUR/GBP formed a symmetrical triangles pattern on the daily chart near the end of this week. Although the pattern isn’t aligned horizontally to count as reliable, the price is currently located near the apex of the triangles and may break out of it soon. Since this is a continuation pattern, expect a bearish trend continuation as the most probable scenario as the pattern resolves. You can click the image below too see the full-scale chart of the currency pair:

(…)
Read the rest of Symmetrical Triangles on EUR/GBP D1 — February 7th 2010 (18 words)

MetaTrader 4 platform with ECN execution – FXOpen.

Posted on Forex blog.

EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: buy.
EUR/JPY trend: sell.
GBP/JPY trend: sell.

(…)
Read the rest of Forex Technical Analysis for 02/08—02/12 Week (14 words)

MetaTrader 4 platform with ECN execution – FXOpen.

Posted on Forex blog.

The greenback is about to finish this trading week with considerable gains versus the euro as unemployment declined in the U.S., being that another evidence of a better economic health in North America than in Europe, which is still suffering, and is likely to continue suffering, from deteriorating public accounts in several nations using the single currency. EUR/USD climbs very slightly now and is at 1.3721.

Unemployment rate fell to 9.7 in January from a previous reading of 10.0 one month before.

Nonfarm payrolls were at -20k in January from a previous revised reading of -150k. Forecasts were more optimistic expecting an increase of 15k jobs, but even if actual data didn’t confirm the analyst’s opinion, a significant improvement could be perceived.

Consumer credit was the last USD report this week and improved significantly from the last reading, but still declined $1.7 billion from a previous revised decline of $21.8 billion. Forecasts were expecting grimmer figures, betting on a decline of $9.2 billion.
(…)
Read the rest of Dollar Continues Strong as Unemployment Falls (13 words)

MetaTrader 4 platform with ECN execution – FXOpen.

Posted on Forex blog.