Hi, I warned during the week that I was becoming concerned that some of the pullbacks looked like they could turn into full blown reversals. The markets were particularly volatile towards the end of the last week and it appears that sentiment is shifting away from the Gbp is terrible, to the thought that the $ may be worse! It is still not clear to me whether the Gbp/$ is experiencing a severe pullback or whether it is in fact about to turn back upwards. This is actually great news for forex traders because it is a lot easier to make a profit when we have lots of movement. However my best advice at the moment is to wait until the dust settles before diving back into the current extremes.
The week ahead has a heck of a lot of news lined up including a couple of Bernanke speeches on Monday and more later in the week. There is also major Gbp news out wednesday morning London time, that could be the deciding factor as to whether the current moves are temporary reversals or permanent changes of trend direction. Because of all of this I am looking more to fundamental analysis to give me clues for price action this week. The news is obviously a big part of that but the other thing to bear in mind is that the price of oil has broken through its upper resistance area and hit $79 a barrel on friday.
Canada is a major oil supplier to the USA and is oil and mineral rich and therefore in the medium term I expect to see the cad continue to rise against the $, ie the price of the $/cad pair to fall. Similarly the price of the Aud is strongly correlated with the price of gold. Gold has made new highs recently as well. Therefore it is reasonable to presume that the Aud currency will continue to rise against the $. The problem for us has been that the prices of these pairs has been breaking new highs and lows in recent months so it is difficult to find an entry. However both are showing signs of potential pull-backs and it is these that I hope to exploit this week.
Erol will continue to send us a couple of his video analysis updates during the week. He is a more fundamental trader than me with a great deal of experience and also trades the dow and other USA commodities, make sure to check out his videos as well. regards, marc
To see the video in full screen click over the “You tube” logo, bottom right. Please post a comment/rating on you tube, thanks, marc
Leave a Reply