Weekly Outlook – 22nd-26th Feb

Great Tuesday again people! Lovely to be back writing to you again.

I love to start off with a broader perspective of trading and then back to our weekly outlook which we normally cover. I did a short post last weekend about a simple trick that you can use to generate extra pips for you every end of the week. This is neither a technical nor a fundamental event based trade setup. It is purely about how market forces work and how overall sentiments can be used to our advantage.If you haven’t read it yet, read the post here.

I had lots of our readers write back to us and ask how to further apply this and what are the finer nitty gritty details and so on. There were others who were absolutely thrilled saying that they have never heard this kind of stuff anywhere. They have read the books and been to courses but this they felt was totally out of those context. Honestly, this is something i have picked up from years of exposure to folks who are professional traders in banks and fund houses. This stems from years of experience and we can take this into a whole new level of applying it within daily cycles also, not just in weekly cycles as what we described in the post earlier.

Well, let me know if you have any questions too and let us get back to our weekly outlook;

Once again, here is a review of how the various currencies performed against the USD

1) Eur – -ve 0.03%
Notice overall range of over 300 pips but actual price change of only abt 20 pips

2) Gbp – -ve 1.26%

3) Jpy – -ve 1.63%

4) Chf  – -ve 0.11%

5) Cad – +ve 1.16%

6) Aud – +ve 1.26%

7) Nzd – +ve 0.49%

8 ) Gold – +2.46%
Largest gains over the last 6 weeks.

For the 2nd week running, we are seeing both the com-dollars and Gold rise in value against the USD. However, it is important to note that the strength of this trend has dropped. It could possibly have been a correction before USD strength continues or it could be a reversal pattern which could indicate a new trend(my bias)

Again on the USD Index front, we are seeing stalling strength denoted by the RSI though the actual price hasn’t dropped yet.

2 weeks of continued drop in strength of USDx

I strongly feel, as mentioned many times before, that major USD affecting sentiments can be born in March. This can be detrimental to USD(my bias) or it can set the year long bullish note for the USD as some experts predict.

Oil too is testing the $80 mark, having set new highs since Jan 13, which will be a sign of increasing costs, causing inflation. This indicator will cause USD to drop and the com-dollars to rally with significant strength. This is the perfect setup we are waiting for, though it hasn’t quite happened yet.

On the fundamentals front this week, we are having some high impact news from the US Economy;

1) Tue Feb 23 – 11pm SGT – Consumer Confidence

2) Wed Feb 24 – 11pm SGT – New Home Sales

3) Thu Feb 25 – 930pm SGT – Unemployment Claims

4) Fri Feb 26 – 930pm – 11Pm SGT – Prelim GDP, Existing Home Sales

With these, we have some news indicators from UK which might affect GBP strength but not affect overall bearings in my opinion. There are also speeches from Fed Chairman Bernanke and BOE Governor King. Again, there isn’t much to speculate on this and i would urge you to stay out of it. The theme for this week will be news out of the US market.

Happy trading,
Seeni

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