Foreign exchanging market world outlook on EUR/USD

The exchanging market world in the past week for EUR/USD closed at 1.4312. Loss more than 600 pips with all factors against it.

Some factors that affected the EUR/USD pair:

• Trichet's code words stating that hike won't be seen in June, but more likely in July.
• Greek crisis accelerated.
• Fall in commodities weakened Euro.
• German factory orders dropped by 4% instead of rising
• USD positive NFP results.
• "strong doller policy" in Washington part of bank consideration delay hikes.
• Manufacture in good condition above 60.
• Possible GDP growth.

More factors are going to be release in the coming week to define the direction of movement of the exchanging market. I personally believe that pair will remain bearish from the uprising negative reasons on Euro and the broken uptrend channel.

Some facts on euro worst fear to foreign exchange market

The ongoing depute of the Greek, Ireland, Portugal and Spain debt crisis is still yet to reach its conclusion. While focusing only on setting up enough funds to help Ireland, Portugal and Greek, their worst fear is getting nearer.  With Spain economy standing as the fourth biggest in the euro-zone, if it happens to be unable to retain its economy exposing to sovereign debts would be hard to solve.

The bursting of Spain property boom resulted in great lost to the economy. And here are some facts on the Spain economy. Over 20% of workforce is unemployment, deficit of 11.4% of GDP, total debt equal 240% of GDP, credit downgrade, 1.6 million unsold housing, carbon restriction forcing into green economy causing job lose and higher energy prices.

This uncertainties in the euro-zone will have a great effect to the euro in the foreign exchanging market.

Fibonacci usage

Foreign exchanging market consists of ups and downs in the prices and volumes in order to function as a market trade. There is no such thing as one sided direction move. In order to benefit from this equilibrium effect, we must choose the right moment to enter a trade. For example in a uptrend, why would you buy at a higher price when you can get it at a much lower price when it retrace. Fibonacci method is the most commonly used technique to calculate the possible extension and retracement of the trends in foreign exchanging market.

The Fibonacci important levels in retracement are 0.382, 0.500 and 0.618. For extension the important levels are 0.618, 1.000 and 1.618. (N%)

To calculate in uptrend:

Retracement = High - (High - Low) x N%

Extension = High + (High - Low) x N%

To calculate in downtrend:

Retracement = Low + (High - Low) x N%

Extension = Low - (High - Low) x N%

This method is a effective way of predicting the possible retracement and extension of the trend, but it might not always reach the calculated levels.

Using indicator effectively on the foreign exchanging market

As the market are closed during weekends, there is nothing much to say on the foreign exchanging market. I recently read some interesting tips on using the indicators, so i'll be sharing it on this foreign exchanging market blog.

Indicators are basically mathematical calculation basing of the prices, volume or both nothing more. In foreign exchanging market most indicators give information base on the price chart, so any supposition or signals found from an indicator can also be analysed from the price action analysis. Due to the complexity of the price action analysis in some price period, the indicators comes in handy.

This is the five tips in using indicator effectively in the foreign exchanging market:

1. Avoid using indicators that you cannot calculate by hand: Using indicators without knowing what the indicators calculation are based on is not going to help you analyse correctly. Resulting in failure, due to the lack of knowledge.

2. Know your information needs: Many traders fill there screen with indicators without knowing how to use it. It is important to realize what you want to trade to find the information you need. For example if you are an intra day trader your indicator periods should be about 3-20 periods not 100-200 periods to know more precisely on the recent movements.

3.Do not trade solely on indicators: This is one of the important factor that can determine success or failure in foreign exchanging market. Every decision to enter a trade should be supported by both indicators and meanings. There is no prefect system such as when indicator RSI above 70 buy long position. Try to evaluate the meanings of the indicators through information and news to confirm your analysis. Not entering based on just either one.

4. Be precise about your intension: Failure from indicator usage normally comes from the mistake  in the way indicators are used. Most traders after trading for sometimes would come up with some strategies in using the indicators, but they lack the precision in using it. For example there strategies might work perfectly fine in a smooth uptrend, but not in a high steeping upslope.

5. Do want price action analysis cannot do: Not the other way round. Using indicators to predict what price action can do better is not the way. Indicators should be used to tell beyond the PA with various results depending on how you use it. As indicators are based on pure prices and volumes, it have the advantage of lesser noise. Indicators would be of less use than PA when the direction of trends is clear. And of course it would be best to use both together.

This is just some tips and advice, which i found useful. Following this will not guarantee you success, but i hope it will make you a better trader.

EUR/USD analysis

Today in the foreign exchanging market we going to look at the EUR/USD currency pair. As dollar still struggling low, favoring the euro to retest the 1.5 resistance level in December 2009. 


Despite the ongoing dispute of uncertainties on the Greek debts issues, the Euro continues towards newer high.  With the US loose money policy of near zero interest rate and the expectation of Euro increasing its interest rate, outcast the negative sides pushing it towards newer high. Some resistance is to be expected at 1.49 and a stronger resistance at about 1.5 with current support level of 1.4820.  

For more analysis see the Euro/Dollar forecast

Foreign exchanging market breaking new high

After the long awaited announcement of the FOMC to confirm the movement of the foreign exchanging market, the fed announced that they will continue to use its existing money policy as the economy is still recovering and showing signs of improvements. And will maintain the reinvesting payments from its securities holdings and the purchases of $600 billion of longer-term Treasury securities by June.

This caused extreme movements to the foreign exchanging market. Triggering green lights to the bull market, which benefits from the weak dollar. Results can be seen as currency pair such as the EU/USD and GBP/USD continues to break new high after the long easter holiday.

Foreign Exchanging Market

Foreign exchanging market or foreign exchange market (forex, fx, currency market) is a worldwide OTC financial market for the trading of currencies. 

Currencies are being brought or sold everyday in the foreign exchanging market making it one of the largest market of the world in trading value.

Currency is the medium of exchange used throughout the world. Exchange rate are used to define the rate a currency can be exchange from and to another currency. The price of the foreign exchanging market can be determine by the fixed or floating rate.

In the past world once used the gold standard, which peg or fixed a set exchange rate relating to gold value. Nowadays floating rate is being used globally, where exchange rate are determined by the supply and demand of the market. Regardless of the foreign exchanging market system, the currency can never be completely fixed or float in the market as there are alway interference from different factors in the world economy.

Foreign exchanging market is naturally unstable and can be influence by any factors in the world that effect the human feelings, whether it is the central bank trying to increase interest rate to reduce inflation or the occurring of natural disaster causing uncertainty to investors.