Forex Update

USD/CAD: Bullish Waves May Lift Prices To 1.0500

USD/CAD: Bullish Waves May Lift Prices To 1.0500The USD/CAD reversed nicely, higher from the 1.0134 low where the double zig-zag appears complete. The reason is a sharp rise in the last two trading days, which clearly has personality of wave 3 of a new five wave rally.

The next important thing for bullish continuation is a broken trend-line connected from the latest high. We think the pair is headed higher, ideally towards 1.0500 while 1.0240 level must not be breached. Why 1.0240? We know that when the black wave 4 pull-back will occur, prices must not retrace into a territory of a wave 1.

India's forex reserves up $982 million

India-forexMumbai, June 22 : India's foreign exchange (forex) reserves increased by $982.3 million to $290.65 billion for the week ended June 14, according to data released by the Reserve Bank of India.

The reserves had risen by $1.77 billion to $289.67 billion for the week ended June 7.

The foreign currency assets (FCA) - the biggest component of the forex reserves - grew by $962.5 million at $261.08 billion, the weekly statistical supplement of the central bank shows.

The FCA had increased by $1.61 billion at $260.12 billion in the previous week.

Lower Stock Market Pushing USD Higher Against The Majors

Lower Stock Market Pushing USD Higher Against The MajorsThe European stock market is sharply lower today, following yesterday's sell-off on U. S. equities after Ben Bernanke's statement yesterday that if the economy continues to improve, it could start to wind down its $85 billion a month asset-purchasing program towards the end of 2013, and end it in 2014.

Does What The Fed Says Matter To The Overall Trend?

You may read that title incredulously: Is she mad? The Fed is an interpretation game and it won't start until the last hour of the trading day.  How will traders close the Dow?

IF the market REALLY wants the Fed to say "I will taper when the economy is improving", then of course there are the "transparency" questions behind that: What is the definition of improvement and How will the Fed taper?

EUR/USD, USD Index And E-Mini S&P500

EUR/USD, USD Index And E-Mini S&P500The EUR/USD and S&P are higher in this week, but generally speaking markets are slow and sideways ahead of the FOMC later today. We are tracking an ending diagonal in the fifth wave on the EUR/USD, but as long as we have higher highs and higher lows in place , the trend remains up with possible test of 1.3450 in the near future.

OIL Prices Could Reach $100 In A Few Days

Oil moved nicely higher last week, closing above the 97.00 key level, which means that the bullish trend is probably confirmed if the three wave retracement from early May high appears complete.

If we are correct, then a rally from 91.20 should unfold impulsively. With that in mind, we expect further strength on oil as we need five waves up from 91.20. Right now we see prices in the middle of a black wave 3 that may be targeting 99.30/100 area this week, while the market trades above 96.40.

Forex Analysis by Gregor Horvat at ForexPros. com

GBP/USD Could Reverse Into A Deeper Pull-back, towards 1.5480

GBP/USD Could Reverse Into A Deeper Pull-back, towards 1.5480We can count five waves up in wave A) from 1.5000 psychological level on
the cable, which means that temporary high for this pair could be near
if we consider that correction follows after every five waves.

that said, a coming corrective retracement would be red wave B) that is
part of an incomplete second zig-zag in wave II. If we receive lower
levels for wave B), watch for a bounce/support zone at 1.5480/1.5550.

Forex Analysis by Gregor Horvat at ForexPros. com

Chinese banks see smaller forex surplus

Chinese-bankBeijing, June 17 :  Chinese banks bought more foreign currency from clients than they sold in May, although the surplus was less than that of previous months, indicating relieved pressure from capital inflows.

The forex surplus hit $17.2 billion in May, marking the ninth straight month of surplus in bank-to-client forex transactions, the State Administration of Foreign Exchange (SAFE) said.

The surplus was far less than those recorded in the first four months of the year, coming in at roughly half of the $34.3 billion surplus recorded in April, reported Xinhua.

EUR/USD At Temporary Resistance

The USD has been extending its losses since Tuesday, when the U. S. stock market turned sharply lower with the Dow Jones Industrial Average down three days running for the first time this year.  The correlation between the markets remains unchanged.  The USD/JPY and other JPY pairs are tracking the stock market, while the EUR/USD and other USD pairs are moving in opposite direction.  As such, the EUR/USD is at its highs, and is now testing the 1.3380 area.

EUR/USD Bullish But Technical Resistance Is Near; 1.3350/1.3400

The EUR/USD reached new highs and is now trading higher within wave (v), that is part of a black wave 3 of one larger degree. We see room for 1.3350, but traders should be aware of a possible deep wave 4 pull-back in the coming days.

Divergence on the RSI also means that momentum is decreasing, so the top could be near. Wave C) that we are tracking from 1.2800 is still incomplete; we need five waves up from that level so until then, the EUR/USD remains in bullish mode.

S&P Futures At New Low After Draghi Speech

S&P Futures just broke to a new low on Draghi's speech, so it seems this market is headed below 1600 as current decline in wave three or wave c is incomplete. In any case we will be tracking an impulsive, five waves down so more weakness is expected while the market is trading beneath 1621. Coming bounce should be corrective wave four, before downtrend resumes.

S&P Futures Count#1: Wave-B Triangle, Now Wave C Down

S&P Futures Count #2: Wave Three In Progress Of A Larger Bearish Impulsive Decline

USD/CAD: Correction Appears Complete, New Highs In View

The USD/CAD is currently reversing higher again, after only three legs down to 1.0260 area where we see evidencs of a completed corrective pull-back, lableled as A-B-C.  This is called a zig-zag.  Notice that the rally from 1.0260 is sharp, and is now already testing the upper trend-line of a corrective channel.  There is a break here is in view, that could lift the pair up to 1.0500.

What is a zig-zag? This Is a corrective pattern labeled with letters that moves against the larger trend.  It is a 3-wave structure labeled A-B-C, generally moving counter to the larger trend.  It is one of the most common corrective Elliott patterns.

Forex Analysis by Gregor Horvat at ForexPros. com

Oil Is Trapped In A Triangle Higher Prices Seen

Oil is slow, choppy and overlapping since September 2012 , so we think that whole price action represents a triangle pattern in red wave B) that is part of three wave rally in wave (D) from June 2012 low. If we are correct, then we know that we need five sub-waves within a triangle before we may look for a push higher into C) of (D) towards 102/103 mark. Well, current reversal from around 97.00, trend-line resistance region seems to be a wave E pull-back, final leg in a triangle pattern. As such, triangle could be near completion, but based on Fibonacci levels we see room for even deeper pull-back, towards 88.00 area before market may turn bullish again, but it should sometime this year.

AUD/USD Could Continue Lower Within Larger Downtrend

We can see some mixed picture on the markets today. The USD is up against the AUD, JPY and GBP. It is, however, sideways against the EUR, while GOLD is down and S&P Futures unchanged. The main focus today is on the AUD, which is moving lower across the board as the RBA leaves the door firmly open for further rate cuts. From a technical perspective, we see some nice structure that could be good for shorts in the next 24 hours.

We can see a three wave rise from the lows followed by a recent sharp intra-day downward reaction that could be the start of a new bearish cycle. However, we want to see further weakness during the days towards the lower side of a trading channel. In this case, we would focus on wave 2 pull-back or shorts.

AUD/USD Sideways But Still Bearish Within A Larger Trend

The AUD/USD has been slow, choppy and sideways for the last few trading days. This is a very important indication of a corrective contra-trend price action. With that in mind, we think that pair is trapped in a wave 4 that is part of a larger five wave decline in red wave 3). As such, we suspect that the pair will fall beneath 0.9528, probably this week as we are observing the final stages of a triangle.

Forex Analysis by Gregor Horvat at ForexPros. com

USDJPY Testing Important Rising Trend-Line

USDJPY broke higher in the last few weeks and hit 102-103 area as highlighted few weeks back. This break occurred after a triangle in wave 4, and interesting thing is that move after that pattern is usually final within a larger trend, if we consider the Elliott Wave guidelines. As such, we are observing an ending diagonal placed in wave 5) that is showing first signs of completion around 103.70.

The reason is recent impulsive weakness towards the trend-line connected from early April. Break and daily close below it will put pair in bearish mode at least temporary.

USD/CHF: Uptrend Continuation Pattern

USD/CHF reversed sharply lower at the end of the last week from 0.9837 to 0.9590, which can be counted as a five wave decline. However, we must keep in mind that a larger trend is up, so we need to label the wave count that fits best into the current price action. In other words, we need to stay with a trend, so we suspect that those five waves down represents wave C, final leg of a three wave flat correction in wave 4). In fact, we can see that prices reversed sharply from the latest low in impulsive fashion, so ideally wave 4) is complete, and the market is headed higher within wave 5) towards parity while the 0.9590 level holds.

Forex Analysis by Gregor Horvat at ForexPros. com

AUD/USD: Correction Within Downtrend

There is evidence on the AUD/USD of a temporary low in place after five waves down in black wave 3. We know that a correction follows after every five waves, so we think that current sideways price action represents a wave 4 pull-back that should be sub-divided by three legs. As such, we think that the corrective, temporary rally is incomplete and that the pair may test 0.9830/0.9890 resistance area this week before new sell-off occurs.

Traders who want to join the larger trend should wait on completed wave four first and then look for short opportunities.

Forex Analysis by Gregor Horvat at ForexPros. com

Gold Sideways, But Still Bearish

Gold found some support last week and reversed back to the base channel line again. That could react as a resistance in current black wave 4, which is now making more complex wave structure than we first thought.

We can see that price is slow, sideways and choppy. More importantly, recovery from 1337 cannot be counted impulsively. We think that move is corrective, probably wave 4 which is still incomplete. Ideally that is now wave (d) down, that will look for a support somewhere above 1352. From a larger perspective, we think gold will continue lower, but based on 4h count critical level is at 1441 which was wave 1 low.

Forex Analysis by Gregor Horvat at ForexPros. com

India's forex reserves down $1.7 billion

India's forex reserves down $1.7 billionMumbai, May 25 : India's foreign exchange (forex) reserves decreased by $1.72 billion to $291.96 billion for the week ended May 17, according to data released by the Reserve Bank of India.

The reserves had fallen by $616.4 million to $293.69 billion for the week ended May 10. The foreign currency assets (FCA) - the biggest component of the forex reserves - fell by $1.68 billion at $261.47 billion, the weekly statistical supplement of the central bank shows.

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