FX Daily Signals, Analysis and News - 18 January 2008

I published an article just a few hours ago about the Fibonacci numbers and way that you can use them in your trades. I suggest you to read it carefully because I use the Fibonacci levels in my trades a lot and it is important for you to know how I draw them on my charts.

Fundamentals:

Today we have Mich Sentiment-Prel at 10:00am.

Tip of the day:

I noticed that the news release we had yesterday (Fed’s Beige Book at 2:00pm) changed the direction of the market but after a few hours all the currency pairs returned to the previous direction they had. Hope you have not lost any money.

In these cases, you’d better to wait. If you know that a news is on the way, you’d better to close your positions or move your stop loss to a proper position and wait. If you don’t have any position, try not trade before the news. Wait until the news becomes released and the market calms down and then make your analysis and take your positions.

Ok! Let’s check the currency pairs:

1. Euro against US Dollar (EUR-USD):

You should have gone short and kept your position if you followed my 16th Jan report. It is still Bearish and the 1.4682 support is broken but the 17th candlestick is right above the 23.60% Fibonacci level. The Jan 16th candlestick couldn’t go lower than this level and also the 17th candlestick. They also have relatively long lower shadows which means Bulls are trying to take the control. The 17th candlestick shape is close to a Doji.

It means we have to be careful because it is possible that the price goes up. If you are already short and you have some profit in your hands, I suggest you to close your trade and take your profit. Then you can take the proper position after the price passes through this stage. It is possible that it breaks the 23.60% level and go down. The today candlestick will let us know.

The 4hrs candlesticks are forming a pennant and are stuck above the 50% level. So the 4hrs chart also confirms the indecision of the market. The last two candlesticks are Bearish and strong and couldn’t break the Bollinger middle band to go up. So I think it is highly possible that the price keeps on going down.

If the next candlestick breaks the 50% level and a reasonable portion of its body becomes formed under this level, then the level is broken and you can go short. We have to wait for four hours.

2. US Dollar against Swiss Franc (USD-CHF)

USD-CHF is in the same situation but on the opposite direction. It couldn’t break the 1.0885 support and went up but the 17the candlestick tells me there is a resistance that doesn’t let the price go up. It is the same resistance we have since 31 Dec 2007 (the thick red arrow). I don’t see any Fibonacci level on the way of the price but there is a strong resistance.

So we have to wait for this one too. If you went long yesterday and you have some profit, be careful not to lose it because it possible that it goes down.

The 4hrs gives more information. There are nine candlesticks under the 23.60% level trying to go up. The Bulls are trying so hard and it is possible that they win and take the control. If any of the next candlesticks have most of their bodies formed above the 23.60% level, then the level is broken and you can go long or you can keep the long position you already have.

3. British Pound against US Dollar (GBP-USD)

The 38.20% level cold not be broken and the price went up. I hope you went long when you realized that the price is going up. Now it is trying to break the Bollinger middle band. It was not successful in the past three days.

The same story is happened at least three time on 29 Nov, 12 Dec and 31 Dec. In any of them the Bollinger middle band was just tested and then the price went down. So it is possible that it happens once again. Be careful not to lose your profit if you have a long position.

Wow! The 4hrs shows a very strong Bearish signal. I think it will go down at least for today.

4. US Dollar against Japanese Yen (USD-JPY)

It is still strongly Bearish.

The Bollinger middle band looks so strong and could not be broken in the past several hours. Bears are still so strong:

5. British Pound against Japanese Yen (GBP-JPY)

It goes up and down to test the broken support (thin red line):

In 4hrs it tried so hard to break the 23.60% Fibonacci level but failed and made a small double top. Then it went down, broke the Bollinger middle band and now is testing it as a resistance (the last candlestick) but has not been successful so far (18 Jan, 0:00 GMT):

In the one hour chart you can see it has formed something like a head and shoulders pattern. The second shoulder top is at the same level as the head (which should not be like that in head and shoulders pattern) which means the Bulls are strong. If it breaks the support (the lower thick purple line) it will go much lower. The 23.60% Fibonacci level is also a strong resistance. So wait for the support in the one hour chart. If it broke, go short, if not go long.

6. Euro against Japanese Yen (EUR-JPY)

The daily is strongly Bearish:

The 4hrs had formed a triangle but broke it and went down. It should keep on going down.

7. US Dollar against Canadian Dollar (USD-CAD)

Bulls succeeded to break the 61.80% level and the daily is strongly Bullish.

4hrs says that it is forming another pennant. So the price will not go higher for few hours. Have an eye on it. If it broke the thick purple line, it will higher. Otherwise it will go down.

8. Australian Dollar against US Dollar (AUS-USD)

The daily is strongly Bearish but the price is right around the 38.20% level. This level also worked as a support on 7th Jan and the price went up. The difference is that at that time the Bollinger Middle Band also worked as a support that couldn’t be broken but this time the Bollinger Middle Band is already broken. So I think the price will keep on going down. Let’s see.

Everything in 4hrs chart says that it will go down except the 61.80% level. It has formed a very beautiful head and shoulders. It broke a strong support (the thick blue line) and so Bears are so strong. It should go down. If you are already short, keep your position but if the current candlestick becomes formed Bullish, you will have to collect your profit by now and wait.

9. New Zealand Dollar against US Dollar (NZD-USD)

The daily chart is right above the support line of the channel. Have an eye on it. If it broke the support, go short, if not, wait for confirmation and go long. If the NZD-USD acts like the AUS-USD, it should break the support. I also checked the one hour. The one hour shows that it wants to make a pennant. So it is possible that the price goes up and down in the same area for a while.

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