Market Outlook-28th Jan ‘09 – Important!

Today, i am back to trading and there are some very important things to look out for.

Off the cuff, as we look at the market from the asian session till to just about 3 hours after since UK open, we are seeing risk appetite with both GBP and the EUR. However, looking at the 1h charts, it shows that there is a decline in strength and using the 3 session rule, we might see a reversal with the US session when it opens. For G/U, i did place a short earlier but it was stopped out with some irrational buy orders. I don’t see any fundamentals once again for such appetite, so it could be short lived and we could see strong reversals ahead. Note that since our lows of last week. gbp/usd has since moved about 800 pips upwards. Please don’t be greedy and start buying Gbp/Usd or Eur/Usd for now.

We saw a strong psychological factor or 1.4300-1.4330 being tested earlier and the resistance level did hold. According to the 3 martet session rule, when NY/US opens, G/U should be bearish in my opinion. If so, we can see market retest 1.42 and possibly 1.40 level again by this week. Let’s see.

Important news – We have both FOMC rate decision and RBNZ rate decision happening later today. Both are highly anticipated events but i foresee that they might not be tradeable. I have opened up a 1% price in order on a sell of NZD/USD,  with regards to the RBNZ rate cut which is expected to be about 100 bps. However, i am afraid that the effect might have already priced in as i see very muted moves on the pair so far. We will usually start seeing full effect about 4-8 hours prior to the news, so i am watching this closely.

As for the FOMC, there is nothing much that they can do as there is no more interest rates to be cut! Therefore, this could be a boring session where perhaps, tonality of the future to be rebuild could be re-addressed. This might cause random moves of the market(bias towards bearish USD) and i would rather stay out of this one.It might end possibly end up bullish for USD but a lot of whipsawing could make this difficult to trade.

Happy Trading,
Seeni

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