USD/JPY Forecast December 28, 2011, Technical Analysis

USD/JPY fell again on Tuesday as the market sold off the Dollar in an otherwise quiet session. The volumes are still light during this time of year as many traders will not be at their desks until after the New Year. The pair has been supported by the Bank of Japan over the last several months, and the selling of it can only be done with shorter term goals in mind. Having said that, the 80 mark above is where the real resistance is. Currently, it appears the markets simply cannot close above the 78.50 level in order to gain any real momentum to the upside.

The situation in the world economy does produce some demand for the US dollar, but the Yen has almost certainly not lost its “safe haven” status either. With this in mind, this is really an argument between two favored currencies at the moment. However, this standoff will not go on forever, and it should be noted that Prime Minster Noda was recently quoted as saying the Yen might actually be reflected the Japanese economy, a signal that intervention isn’t coming anytime soon. Either way, the pair will be very precarious to trade if you have anything more than a 3 day time horizon.

The pair needs to close over the 80 mark to show true strength to the upside. This would be a massive breakout, and the pair should continue to lift from that area. There simply has to be an amazing amount of short sellers in that area, and if they are forced to cover their positions, the rally would be fierce indeed.

The recent action is showing a bit of a triangle, suggesting that a run to that level could be coming soon. For now, it is simply suggested and not implied. The triangle has yet to break, and if it does break to the upside, it would be bullish, but one would have to be very concerned about the above mentioned 80 level as massive resistance. It is there where the fate of this pair will be decided. As far as selling, a break below the bottom line of this triangle would d have us shorting for about 100 pips or so.

USD/JPY Forecast December 28, 2011, Technical Analysis
USD/JPY Forecast December 28, 2011, Technical Analysis

GBP/USD Forecast December 28, 2011, Technical Analysis

GBP/USD rose on Tuesday as traders sold off the Dollar overall. The move may have been somewhat exaggerated in low volume though. Also, the 1.57 level held again, and this suggests that we are simply going to continue to consolidate in the 1.55 to 1.57 range for the time being. This makes sense as the markets are usually quiet in this part of the year with the lack of interest. The pair is towards the top of the range, so selling isn’t a bad idea for the short term.

GBP/USD Forecast December 28, 2011, Technical Analysis
GBP/USD Forecast December 28, 2011, Technical Analysis

EUR/GBP Forecast December 28, 2011, Technical Analysis

EUR/GBP rose for the start of the Tuesday session, but quickly retraced that move and more. The resulting candle is a shooting star in an already bearish market. The move shows just how little faith there is in the bullish moves of this pair, and that the downside should continue to be the way to go going forward. On a break of the Tuesday lows, we would be willing to sell yet again. Buying isn’t going to be done by us as the trend is clearly favoring the Pound at this point.

EUR/GBP Forecast December 28, 2011, Technical Analysis
EUR/GBP Forecast December 28, 2011, Technical Analysis

USD/CHF Forecast December 28, 2011, Technical Analysis

USD/CHF fell on Tuesday as the “risk off” trade came into play, at least as much as it can in an extremely low volume trading environment. The lack of liquidity simply made trading most pairs almost impossible for the session, and the breaking of support or resistance areas was probably always going to be too much to ask. The 0.93 level was the site of a breakout recently, and it shows signs of still being supportive. We like buying these dips as long as we can stay above 0.93 or so.

USD/CHF Forecast December 28, 2011, Technical Analysis
USD/CHF Forecast December 28, 2011, Technical Analysis

EUR/CHF Forecast December 28, 2011, Technical Analysis

The EUR/CHF fell slightly on Tuesday as the market continues to move sideways. The floor at 1.20 hasn’t even been seriously tested, and the upside potential of the Euro in general is very suspect at best. The market will more than likely continue to grind sideways for the foreseeable future as this pair simply has no real catalyst to move in either direction. The EU will have to get the financial crisis under control before this pair can break above 1.25, and the 1.20 level will undoubtedly bring out the Swiss National Bank if we get to that level or below. With that in mind, we are scalping this pair for a handful of pips at a time.

EUR/CHF Forecast December 28, 2011, Technical Analysis
EUR/CHF Forecast December 28, 2011, Technical Analysis

AUD/USD Forecast December 28, 2011, Technical Analysis

AUD/USD absolutely sat still during the session on Tuesday as the markets had a very quiet day. The next few sessions could be very quiet, and as a result some pairs simply won’t move. The Aussie is sensitive to bad economic news obviously, so there is always the possibility of a shock to the system, but more than likely this pair will continue to trade in the recent consolidation area between 1.02 and 0.99 going forward.

AUD/USD Forecast December 28, 2011, Technical Analysis
AUD/USD Forecast December 28, 2011, Technical Analysis

USD/CAD Forecast December 28, 2011, Technical Analysis

USD/CAD fell slightly on the session for Tuesday as the oil markets caught a bid. The Canadian dollar will often catch a bid in concert with oil, which is precisely what happened for the session. However, the volume was light and the move very small. The area it currently trades in is in the center of massive support which will keep a cap on declines. The market has support all the way down to the 0.99 level, and as a result we are not shorting it. Having said that, we see no real supportive candles currently and are not buying this market either. We suspect sideways will be the move for the next several sessions.

USD/CAD Forecast December 28, 2011, Technical Analysis
USD/CAD Forecast December 28, 2011, Technical Analysis

NZD/USD Forecast December 28, 2011, Technical Analysis

NZD/USD fell during the Tuesday session as the Kiwi was shunned overall. However, the volume was light and the fall was more than likely somewhat exaggerated by it. The pair does look a little bit toppy at the 77.50 level, so a fall from here wouldn’t be out of the question. The 0.75 level below should continue to be supportive going forward, so any selling is for small gains only. Buying isn’t an option for us until we break above the cluster at 0.78 or so.

NZD/USD Forecast December 28, 2011, Technical Analysis
NZD/USD Forecast December 28, 2011, Technical Analysis

Oil Forecast December 28, 2011, Technical Analysis

Light Sweet Crude

Fueled by comments coming out of Tehran that the Iranians would close down the Strait of Hormuz if the EU chose to put an embargo on Iranian oil imports, the oil markets reacted in a bullish manner as fears of a supply disruption came into being on Tuesday. The $100 mark was easily overcome again, and the top of the downward channel that we have been discussing has been pierced.

However, two things should be thought of during this move: The volume is almost non-existent this time of year, making the moves a bit exaggerated, and the close of the daily candle was below that top line for the channel. Considering this to be a breakout is probably being a little over anxious at this time.

Having said that, we are still tracking the potential downward channel and also the potential flag in this market that were brought up last week. A serious move to the upside would have us buying and holding onto a core position in this market, while a down move of any kind would have us selling the market for the very short-term.

Oil Forecast December 28, 2011, Technical Analysis
Oil Forecast December 28, 2011, Technical Analysis

Brent

Brent markets aren’t quite as clear about their intentions. The move on Tuesday only sent the market back into the epicenter of consolidation from the previous zone, and this isn’t enough to get us bullish of Brent at the moment. There could be a move upwards coming, but it will have much more to contend with than the CL contract will. With this in mind, we aren’t particularly interested in the Brent markets currently as the sheer amounts of noise will more than likely weight upon the market in either scenario.

The oil markets will be influenced by Dollar strength or weakness going forward, as well as this drama unfolding in the Middle East. However, if you look at demand for oil, it is actually fairly weak in a lot of the emerging markets. Also, one would have to think that the Iranians are willing to risk a real war with the United States and Saudi Arabia if they closed the sea lane down. The likelihood of that is quite slim at best. Because of this, we think ultimately this Iranian noise will turn out to be nothing.

Natural Gas Forecast December 28, 2011, Technical Analysis

Natural gas markets sat fairly still during the session on Tuesday as the volume remained light from the holidays. The markets are currently trying to form some kind of base from which to rally it appears, and the $3 mark will almost certainly be supportive. However, with the sheer supply and demand question being so heavily skewed to the oversupply answer, the market simply cannot be bought. In fact, we are hoping for a nice bounce up to either $3.25 or $3.50 from which to sell. We would sell on a daily close below $3 as well, but not as enthusiastically as the previous scenario.

Natural Gas Forecast December 28, 2011, Technical Analysis
Natural Gas Forecast December 28, 2011, Technical Analysis

Gold Forecast December 28, 2011, Technical Analysis

Gold markets continued to slump on Tuesday as the economic situation pushes people towards the Dollar in general. The stock markets did rise slightly for the session, but the optimism was tempered by the fact that the volume was very light. The Dollar strength is starting to weigh heavily on this market, and the end of the year meant that a lot of traders wanted to book end of year profits to help with their statement sheets.

The world economy is certainly slowing in many areas, and this suggests that the gold markets could see a hit for a little while. However, the market isn’t one to sell for anything more than a scalp or short-term trade. The uptrend has been far too strong over the last ten years, and this pullback has simply been a blip on the chart if you look at the totality of the rally. None the less, this market does have investors running.

Most analysts believe that gold will get a bid in 2012 as the European Union will almost undoubtedly print more Euros, and the Federal Reserve is very likely to think about Quantitative Easing 3 if the problems in Europe have too great of an effect on the US economy. These moves would almost certainly have people running back into the gold trade, and the move up from there could actually accelerate as the market runs from both the Dollar and the Euro at the same time.

Technically speaking, the $1,500 level should be massive support if we fall that far. The $1,500 to $1,600 area is one big massive support area, hence us not being overly enthusiastic to sell this market. In fact, we are presently flat in it as selling has been such a good way to lose money since the turn of the century. The market will be a screaming buy in the future, but we simply don’t see the price action telling us that we could be there yet. Stay tuned to our videos as these signs do appear, and in this market that could means months of profits.

Gold Forecast December 28, 2011, Technical Analysis
Gold Forecast December 28, 2011, Technical Analysis

 

Gold Forecast Dec. 28, 2011, Fundamental Analysis

Gold Forecast Dec. 28, 2011, Fundamental Analysis
Gold Forecast Dec. 28, 2011, Fundamental Analysis
Gold prices declined after dollar dropped and a governmental report showed an improvement in consumer confidence in December, while trading volumes are becoming thinner over the week before the New Year’s holiday, noting markets are closed today including UK and Australia, yet data out today showed that the US economy improved recently.

Keeping in mind, sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

Accordingly, we should expect more fluctuations for gold, but if current pessimism persist, we expect gold prices to extend the rallies, however, the level of uncertainty is very high, so investors are ought to remain cautious.

Crude Oil Forecast Dec. 28, 2011, Fundamental Analysis

Crude Oil Forecast Dec. 28, 2011, Fundamental Analysis
Crude Oil Forecast Dec. 28, 2011, Fundamental Analysis
Crude oil prices skipped the $100 level Tuesday amid concerns of oil disruptions after Iran threatened to stop the Strait of Hormuz oil lane to west should Iran face more sanction over its nuclear potentials.

Keeping in mind, sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The outlook for crude oil prices remains generally to the downside, as persistent fears from the EU debt crisis and signs global growth is slowing are likely to keep crude oil prices under pressure.

Traders will also continue to monitor the developments from the 17-bloc euro nation and the European leaders’ latest moves to contain the debt crisis, where we expect volatility to persist during the sessions this week.

Natural Gas Forecast Dec. 28, 2011, Fundamental Analysis

Natural Gas Forecast Dec. 28, 2011, Fundamental Analysis
Natural Gas Forecast Dec. 28, 2011, Fundamental Analysis
Natural gas prices rose as meteorologists predict colder weather than before, boosting demand on natural gas recently.

Traders will continue to focus on weather developments, where weather forecasts suggest temperatures will be likely lower than average over the coming period, and that could temper gains or losses of natural gas.

USD/CAD Forecast Dec. 28, 2011, Fundamental Analysis

USD/CAD Forecast Dec. 28, 2011, Fundamental Analysis
USD/CAD Forecast Dec. 28, 2011, Fundamental Analysis
The USD/CAD pair steadied below the opening level, since trading volumes are becoming thinner over the week before the New Year’s holiday, noting markets are closed today including UK and Australia, yet the US data that was out today showed that the US economy improved recently.

Sentiments will start to shape as investors remain cautious ahead of the New Year’s holiday but traders will be mostly concerned about the latest development from the 17-bloc euro area.

The USD/CAD pair could still rise if pessimism continues to dominate markets, but we still expect volatility to hold the steer for now, as uncertainty remains the main theme in markets, and that could also lead to deep fluctuations for the USD/CAD pair.

Wednesday December 28:

No economic data will be released from Canada so eyes will still focus on Europe and the crisi that could impact trading now and then.

EUR/CHF Forecast Dec. 28, 2011, Fundamental Analysis

EUR/CHF Forecast Dec. 28, 2011, Fundamental Analysis
EUR/CHF Forecast Dec. 28, 2011, Fundamental Analysis
The EUR/CHF was marginally flat on Tuesday with the holiday mode still evident across major markets and many still out for the holidays. The thin trading volumes kept the pair stable ahead of the Italian bond sale that is the highlight for Europe this week.

Investors are still cautious over the European outlook and the week for Europe will be centered on the Italian bond auction. On Wednesday investors will turn their attention to the Italian bond sale as the nation prepares to sell 9 billion euros of 179-day bills and up to 2.5 billion euros of zero 2013 bonds.

We still expect choppy trading on Wednesday with the low trading volumes yet violent moves might be seen if the auction was a surprise to the market as the low volume will be the reason for sharp movements.

Switzerland will lease the KOF Swiss Leading Indicators for December at 10:30 GMT and expected to fall to 0.20 from 0.35. As for the euro area the eyes will be on Italy that will be preparing to auction new bonds at 10:00 GMT.

EUR/USD Forecast Dec. 28, 2011, Fundamental Analysis

EUR/USD Forecast Dec. 28, 2011, Fundamental Analysis
EUR/USD Forecast Dec. 28, 2011, Fundamental Analysis
The EUR/USD was dominated by tight trading ranges on Tuesday as thin trading volumes and the lack of major fundamentals deprived the market of any support.

Investors are still cautious over the European outlook and the week for Europe will be centered on the Italian bond auction. On Wednesday investors will turn their attention to the Italian bond sale as the nation prepares to sell 9 billion euros of 179-day bills and up to 2.5 billion euros of zero 2013 bonds.

We still expect choppy trading on Wednesday with the low trading volumes yet violent moves might be seen if the auction was a surprise to the market as the low volume will be the reason for sharp movements.

No major news scheduled and the market movement will be thin on low volume and focused on the sentiment. The eyes will be on Italy that will be preparing to auction new bonds at 10:00 GMT.

GBP/USD Forecast Dec. 28, 2011, Fundamental Analysis

GBP/USD Forecast Dec. 28, 2011, Fundamental Analysis
GBP/USD Forecast Dec. 28, 2011, Fundamental Analysis
On Tuesday trading, the markets witnessed thin trading amid the year-end holidays. The pound showed a slight rise against the green currency ahead of the release of U.S. housing and confidence data. 

Meanwhile, eyes will track the latest data from the U.S. to see the progress of the economy as last week’s data provided hopes the U.S. economy will lead the recovery path in 2012 without the need of further stimuli from the Fed.

Later in the day, the U.S. will release S&P/caseShiller for the month of Oct., due at 14:00 GMT, which is predicted to record -0.20% from the prior -0.50%, followed by consumer confidence, available at 15:00 GMT, where analysts forecast a soar to 58.5 in Dec. from 56.0 a month earlier.  

In the U.K, the markets are closed due to the Boxing Day holiday. Still, the outlook remains clouded with uncertainty as King said last week debt crisis will threat the real economy recovery while the latest announcement by officials referred that the outlook for the British economy will largely depend on the latest developments in the euro zone.

With mounting expectations the BoE will add to stimulus as early as in 2012, the pound remains under pressure from expected oversupply. Thus, in 2012, the situation in the U.S. seems to be much better than the U.K. along with the refuge merit of the dollar which suggest further decline for the pound versus the greenback. 

On Wednesday, both economies lack fundamentals and therefore the pair is predicted to follow the general sentiment in the market.

USD/CHF Forecast Dec. 28, 2011, Fundamental Analysis

USD/CHF Forecast Dec. 28, 2011, Fundamental Analysis
USD/CHF Forecast Dec. 28, 2011, Fundamental Analysis
On Tuesday trading, the markets witnessed thin trading amid the year-end holidays. Yet, the franc showed a drop against the green currency after the release of Swiss UBS consumption.

Data from the Swiss economy showed a drop in UBS consumption indicator for the first time in three months to 0.81 in Nov. from the revised 0.91, reflecting the uncertain prospect for the retail sector.

Last week, there have been talks last week about further measures to curb the franc’s advance as a panel from the government and the central bank discussed measures such as capital controls and negative interest rates and even restrictions, including a possible ban, on foreigners buying Swiss real estate to halt the franc’s rally which negatively affected prices and exporters.

Therefore, the franc may be under some pressure on growing speculations policy makers will intervene again to push down the franc.

Meanwhile, eyes will track the latest data from the U.S. to see the progress of the economy as last week’s data provided hopes the U.S. economy will lead the recovery path in 2012 without the need of further stimuli from the Fed.

Later in the day, the U.S. will release S&P/caseShiller for the month of Oct., due at 14:00 GMT, which is predicted to record -0.20% from the prior -0.50%, followed by consumer confidence, available at 15:00 GMT, where analysts forecast a soar to 58.5 in Dec. from 56.0 a month earlier.

On Wednesday, KoF Swiss leading indicator which is estimated to retreat to 0.20 in Dec. from the preceding 0.35 will be available at 10:30 GMT, while the U.S. lacks fundamentals.

NZD/USD Forecast Dec. 28, 2011, Fundamental Analysis

NZD/USD Forecast Dec. 28, 2011, Fundamental Analysis
NZD/USD Forecast Dec. 28, 2011, Fundamental Analysis
The NZD/USD pair traded in a narrow range early Tuesday, as the low volume and the absence of fundamentals from the New Zealand with the markets still closed reduced demand for the Kiwi.

The cheerful data could increase demand for higher-yielding currencies due to risk appetite, but the lower volume in the FX market on the other hand will limit the effect on the currencies.

On Wednesday, both economics will not release any major fundamentals, where the pair’s movement will depend on the market sentiment.