Intraday Market Outlook for Day Traders

EUR/USD
The pair is still consolidating its higher levels in the European morning, currently trading quietly back a little at 1.2890. We do not expect much trading activity today but see a selling tone coming up, leading to market levels around 1.2820.

GBP/USD
A sudden sell off in the present European morning brought cable to levels 100 pips lower to now 1.5385. We reckon with a consolidation phase now, with not much more downside risk, and see a trading band between 1.5360 and 1.5420.

USD/CHF
Acting only a little stronger against the Swiss franc, the dollar is currently priced at 1.0147. We do not expect much action in this market today and cannot see any specific direction for now.

USD/JPY
Again the dollar was weaker against the yen at the start of the week in Asian trading today and is now about to find a support near 84.00 in the European morning hours. Currently at 84.20, we anticipate some recovery for today, but not above 84.45.

USD/CAD. Ranging from 1.00 to 1.10

USD/CAD (1.0550) is up overnight and appears to have taken up residence in a broad 1.00 to 1.10 range.

Technicals:

• Trend: Daily lower; weekly lower.

• Overbought/Oversold (stochastics): Daily overbought; weekly neutral.

• Support/Resistance Levels: Resistance lies at 1.0673 (Aug31 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0108 (Aug5 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

• The risk reversal (3m, 25delta) rose overnight along with spot. It looks as if it might be bottoming in the bottom half of the six-month range, which would be consistent with a bottoming in spot.

• Implied Vol (3m) rose overnight and is continuing the uptrend in place throughout Aug.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).

AUD/USD. Consolidating Wednesday’s rally

AUD/USD (0.9100) is down modestly overnight, consolidating Wednesday’s rally. Something of a wedge formation forming as spot has traded higher lows since May but lower highs since April.

Technicals:

• Trend: Daily higher; Weekly higher.

• Overbought/Oversold (stochastics): Daily neutral; Weekly neutral.

• Support/Resistance: Technical support lies at 0.8771 (Aug25 low), 0.8634 (Jul19 low), 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.9117 (Sep 1&2 high), 0.9222 (Aug6 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

• The risk reversal (3m, 25delta) rose overnight despite the correction in spot. The reversal lies in the middle of the six-month range, providing little information as to future price action.

• Implied Vol (3m) rose overnight, and it continues to consolidate in the lower 1/3 of its six-month range.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and the DXY (negative.)

USD/JPY. Sitting on 84

USD/JPY (84.46) is down overnight and consolidating just above the low of August.

Technicals:

• Trend: Daily higher; Weekly lower.

• Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.

• Support/Resistance Levels: Support lies at 83.60 (Aug24 low) and 79.75 (Apr 1995 low). Resistance lies at 88.12 (Jul28), 89.16 (Jul12 high), 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

• The risk reversal (3m, 25delta) ticked lower overnight. The skew is still in favor of USD/JPY downside, but is consolidating in neutral territory relative to its range the past six months, thus providing little guidance as to the direction of spot.

• Implied vol (3m): fell overnight but is trending higher from deep in the lower half of its 6-month range.

Cross-asset valuation: The correlations of USD/JPY with the US 10yr yield (positive) the US-JGB 10yr spread (positive) and the S&P500 (positive) are significant.

USD/CHF. Consolidating

USD/CHF (1.0147) is up slightly overnight on positive general market sentiment.

Technicals:

• Trend: daily lower; weekly lower.

• Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.

• Support/Resistance levels: Resistance lies at 1.0641 (Jul27 high), 1.0676 (Jul12 high) and 1.1742 (Apr’09 high), while support lies at 1.0065 (Sep1 low) and 0.9918 (Dec low).

Positioning:

• The risk reversal (3m, 25delta) bounced overnight with the rise in spot. The skew is extreme, suggesting potential for a rally in spot.

• Implied Vol (3mo) slipped overnight from a high since Jun. Vol remains in the middle of its six-month range.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative) and the USD index (positive).

Forecast on Spot Gold (Spot Gold, NZDUSD, USDSGD)

Spot Gold

SPOT GOLD closed @ 12355 which was BELOW the open and was within prior day's trading range. The High was PRECISELY at Precise Trader's Res Zone 1 and the Low was PRECISELY at Precise Trader's Sup Tgt 1. The Hourly Oscillators are Bearish and the Price is Within the MA, so the Bulls have to be Sidelined. Hourly Trend is Turning Down while 12495 holds and Daily Trend is Limited Up while 12105 holds, so expect the price to Turn Down Soon, so the Bulls may stay Sidelined and the Bears get ready to pull the Trigger. The Daily Trend breached the Prior Day's High but the Bears gained towards the Close which signifies the high may have been seen. The Hourly Trend has been in a Range Trading with a Downside Bias,12410-445 are the Critical levels to watch to maintain the Bearish Outlook .On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session with a potential to Turn Down Soon. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 12335 12205 12105 BEARS: 12415 12475 12525

Today's Strategies: Trade @ the Bears Levels Only.

NZDUSD

NZDUSD closed @ 7030 which was ABOVE the open and was within prior day's trading range. The High was 5 pips from Precise Trader's Res Zone 5 (U Turn Zone) and the Low was 5 pips from Precise Trader's Sup Zone 1. The Hourly Oscillators are Bullish but Weak and the Price is Within the MA, so CAUTIOUS approach is needed for the Bulls. Hourly Trend is Sideways while 6970 holds and Daily Trend is also Sideways while 7195 holds, so expect the price to be Choppy until Breakout. The Daily Trend breached the Prior Day's High marginally but the Bulls gave up partially towards the Close which signifies a Choppy Session with some Weakness in the First half of the Day. The Hourly Trend has been in a Range Trading with no Clear Direction, 6990-70 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Horizontal Channel and expect a Choppy Session until the break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 7020 6980 6930 BEARS: 7075 7125 7185

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

USDSGD

USDSGD closed @ 13555 which was BELOW the open and breached the previous day's low. The High was 15 pips from Precise Trader's Res Zone 1 and the Low was PRECISELY at Precise Trader's Sup Zone 1. The Hourly Oscillators are MIXED and the Price is Within the MA, so CAUTIOUS approach is needed. Hourly Trend is Sideways while 13625 holds and Daily Trend is Limited Down while 13725 holds, so expect the price to be Choppy until Breakout. The Daily Trend was within the Prior Day's Range but the Bears gained towards the Close which signifies Choppy Session a Head. The Hourly Trend has been in a Range Trading , 13610-25 are the Critical levels to watch to maintain the Bearish Outlook . On the 5 min is along the Horizontal Channel and expect a Choppy Session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 13525 13460 13400 BEARS: 13585 13640 13705

Index Recommended Levels

Dow Jones :
Resistance(daily close) : 9382.12, 9744.26, 10 091.30, 10 935.23, 11 164.57, 344.92 and 11 520.30. Then 11 749.22, 11 970.00, 12 152.82, 12 600.24, 12 982.20, 13 162.50 and 13 320.00. Break of the latter will lead to 13 567.60, 13 668.74 and 13 792.53 (published on October 21, 2008).
Support (daily close): 9630.33 and 9358.35(main), 9090.00, 8912.62 (published on November 10, 2009).

Today’s support: - 10246.54(main), where a delay and correction may happen. Break of the latter will give 10214.70, where correction also can be. Then follows 10172.18. Be there a strong impulse, we shall see 10148.50. Continuation will bring 10110.75.
Today’s resistance: - 10360.25, 10400.63 and 10451.40(main), where a delay and correction may happen. Break would bring 10533.11, where a correction may happen. Then follows 10586.22, where a delay and correction could also be. Be there a strong impulse, we’d see 10631.20. Continuation would bring 10707.38 .

S&P500

Support: - 1074.38( main). Break will give 1070.75 where correction could be. Then follows 1063.13, where correction could also be. Be there a strong impulse, we would see 1058.68. Continuation will lead to 1050.85.
Resistance: - 1091.27, 1102.50, 1115.62 and 1128.23(main), where a correction may happen. Break would result in 1138.08, where correction may also be. Then 1147.46. Be there a strong impulse, we would see 1153.12. Continuation will lead to 1157.47.

NASDAQ

Support : - 2160.00(main). Break will give 2150.90, where correction could be. Then 2144.56, where correction could also be. Be there a strong impulse, we would see 2137.44. Continuation will lead to 2128.32.
Resistance : - 2205.15 and 2216.30(main), where the correction could be. Break will bring 2228.53, where the correction may also happen. Then 2240.80. Be there a strong impulse, we would see 2252.40. Continuation will lead to 2261.27.

GOLD

Support: - 1203.72, 1192.50, 1187.41 and 1180.22(main). Break of the latter will give 1167.30, where a correction is possible. Then 1158.80, where a correction is also possible. Be there a strong impulse, we would see 1152.12. Continuation will bring 1144.46.
Resistance: - 1220.35(main), where a correction may happen. Break would bring 1226.24, where a correction may also happen. Then follows 1232.20. Be there a strong impulse, we’d see 1237.46. Continuation would bring 1241.58.

SILVER

Support: - 17.73(main).where correction is possible. Break of the latter would give 17.55, where correction may happen. Then goes 17.30, where correction can also be. If a strong impulse, we would see 17.19. Continuation would give 17.08.
Resistance : - 18.18, 18.44, 18.63 and 18.71(main), where correction is possible. Break will lead 18.81, where again may be a correction. Then follows 18.97. If a strong impulse, we would have 19.16. Continuation would give 19.35.

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Currencies Trading Strategy

EUR/USD. Rally Intact

EUR/USD (1.3263) is down slightly overnight, but after showing signs of stalling last week, the uptrend appears intact after Friday’s strong rally.

Technicals:

• Trend: Daily lower; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.

• Support / Resistance Levels: Support for EUR/USD lies at 1.30 (psychological), 1.2733 (Jul 21 low), 1.2152 (Jun 29 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.3334 (Aug 6 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

• The CFTC net long, non-commercial position rose to -13.6K last week, consistent with the ongoing rally in spot. The position is at the top of its six-month average, suggesting a potential top in price action.

• The risk reversal (3m, 25delta) rose overnight along with spot. The reversal is still heavily skewed for EUR downside, but it has rallied sharply towards the top of its six-month range – suggesting the rally is increasingly at risk of stalling or failing.

• Implied Vol (3m) rose overnight, but it remains in the bottom-third of its six-month range.

Cross-asset valuation: The significant correlations that EUR/USD has exhibited during the past 60 days are the US10yr yield (positive) and the SPX (positive).

GBP/USD. Stalling at 1.60 - still

Cable (1.5956) is up overnight, but it remains stalled at 1.60, where it has been stuck since early last week.

Technicals:

• Trend: Daily lower; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly overbought.

• Support/Resistance Levels: Resistance lies at 1.5999 (Aug9 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.50 (psychological), 1.4949 (Jun12 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).

Positioning:

• The CFTC net long, non-commercial position rose to -8.4K last week, consistent with the rise in spot. The net position is trending higher and lies near the top of the 6-month range, suggesting a potential top in price action.

• The risk reversal (3m, 25delta) rose overnight along with spot, and it remains near the high since Feb. While it remains skewed for GBP losses, it is also in the upper end of its six-month range, which suggests an overbought condition.

• Implied Vol (3mo) rose overnight but remains near the low since Sep 2008.

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative) and EUR/USD (positive).

USD/CHF. Channeling a downtrend

USD/CHF (1.0399) is up overnight but continues to trade a modestly downtrending channel formation in place since early-Jul.

Technicals:

• Trend: daily lower; weekly lower.

• Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.

• Support/Resistance levels: Resistance lies at 1.0641 (Jul27 high), 1.0676 (Jul12 high) and 1.1742 (Apr’09 high), while support lies at 1.0332 (Aug6 low) and 1.0131 (Jan low).

Positioning:

• The CFTC net long, non-commercial position rose to 15.1K, a new high since 2009. Such an extreme position suggests a potential bottom in USD/CHF.

• The risk reversal (3m, 25delta) fell overnight despite the rise in spot. This market segment has abandoned its bullish USD/CHF call, but the skew is extreme, suggesting potential for a rally in spot.

• Implied Vol (3mo) is up overnight, above multi-year lows.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative) and the USD index (positive).

USD/CAD. Rebound is testing downtrend

USD/CAD (1.0288) is up overnight, holding near the highs of Friday’s sharp, post employment rally. Price action is now testing the downtrend in place since early-Jul.

Technicals:

• Trend: Daily lower; weekly lower.

• Overbought/Oversold (stochastics): Daily oversold; weekly neutral.

• Support/Resistance Levels: Resistance lies at 1.0307 (Aug 9 high), 1.0584 (Jul16 high), 1.0677 (Jul5,6 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0108 (Aug5 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

• The CFTC net long, non-commercial position rose to 33.3K last week. The move is from the bottom half of the six month range, and could suggest that spot will rebound from here.

• The risk reversal (3m, 25delta) rose overnight along with spot. It is trending lower deep into the bottom half of the six-month range, consistent with the move lower in spot but also warning of a potential reversal.

• Implied Vol (3m) rose slightly overnight and looks to be testing the downtrend in place since May.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).

USD/JPY. Pinned near lows

USD/JPY (85.57) is up overnight, rebounding slightly from the new low since Nov’09 established Fri. However, the downtrend continues. Further weakness is likely to provoke a policy response from Japanese officials, but the case for a rally is also weak.

Technicals:

• Trend: Daily lower; Weekly lower.

• Overbought/Oversold (stochastics): Daily oversold; Weekly oversold.

• Support/Resistance Levels: Support lies at 85.02 (Aug6 low) and 84.83 (Nov27 low). Resistance lies at 88.12 (Jul28), 89.16 (Jul12 high), 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

• The risk reversal (3m, 25delta) remained relatively steady overnight. The skew is still in favor of USD/JPY downside, but lies in neutral territory relative to its range the past six months.

• Implied vol (3m): rose overnight but remains deep into the lower half of its 6-month range.

Cross-asset valuation: The correlations of USD/JPY with the US 10yr yield (positive) and the S&P500 (positive) are significant.

AUD/USD. Uptrend continues

AUD/USD (0.9188) inched higher overnight. It remains within the uptrend in place since early-Jun.

Technicals:

• Trend: Daily higher; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.

• Support/Resistance: Technical support lies at 0.8634 (Jul19 low), 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.9222 (Aug6 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

• The CFTC net long, non-commercial position rose to 49.1K. It is trending up and lies in the middle of the six-month range, suggesting no impediment to further strength.

• The risk reversal (3m, 25delta) rose overnight. It continues to trend higher in the middle of its 6-month range.

• Implied Vol (3m) fell overnight and continues to trend lower below the middle of its range for 2010.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and the DXY (negative.)

NZD/USD. Wedging against July high

NZD/USD (0.7299) is down overnight. It continues to trade higher lows, but the daily highs remain stalled below 0.74.

Technicals:

• Trend: Daily higher; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly overbought.

• Support/Resistance: Resistance lies at 0.7397 (Jul27 high), 0.7442 (Jan14 high), 0.75247 (Nov high), and 0.7635 (Oct21 high). Support lies at 0.72 (psychological), 0.7030 (Jul19 low), 0.6795 (Jul1 low) and 0.6561 (May25 low).

Positioning:

• The CFTC net long, non-commercial position rose to 15.0K last week. It is now in the upper reaches of its six-month range, suggesting an elevated chance that the rally since Jun is over.

• The risk reversal (3m, 25delta) slipped overnight, but it is trending higher above the middle of its six-month range.

• Implied Vol (3m) fell overnight. It is stabilizing in the bottom third of its six-month range.

Cross-asset valuations: The strongest correlates for NZD/USD during the past two months have been AUD/USD (positive), stocks (S&P500, positive), the DXY (negative) and commodities (CRB index, positive).

Intraday Market Outlook for Day Traders

EUR/USD
In low volatility this European morning, the pair is moving directionless, currently at 1.3165. We do not expect any significant change for today in the market's behavior and project a sideways trend with a slight selling tone, between levels of 1.3190 and 1.3155.

GBP/USD
Some selling has put cable down to 1.5857 right now in early European trading. While we see no aspect for much further downside risk (1.5825 at the most), we expect the upside to be limited as well, at 1.5875.

USD/CHF
A quiet summer market has put the dollar to sleep in the European morning, priced at this moment at 1.0486 against the Swiss franc. We expect this level to be defended more or less today, in a bandwidth between 1.0490 and 1.0455.

USD/JPY
After a short upswing against the yen in late Asian trading, the dollar is currently trading slightly downwards again, at 86.05 now in the European morning. We expect more of the downmove to come today, to levels around 85.75.

Intraday Market Outlook for Day Traders

EUR/USD
In a quiet summer market this European morning, the pair just broke below important support at 1.3000 to the current 1.2995. We expect a move today to the 1.2950 next support and then see a sideways trend between 1.2950 and 1.3000.

GBP/USD
The pound broke below the 1.5600 handle against the dollar and is trading currently at 1.5581. We do not expect any significant upmove today but instead range trading between 1.5540 and 1.5600.

USD/CHF
Consolidating at higher levels from yesterday's trading in the early European market, the dollar against the Swiss franc is priced right now at 1.0432. There is not much more downside risk today in our view, rather a continuation upwards to the 1.0455 resistance.

USD/JPY
In an intact downtrend against the yen, the dollar is currently trading at 86.30. We expect that downtrend to fade out today and reckon with recovery moves up 86.65.

Forex Analysis

Currencies: CAD and JPY outperformed overnight, while the EUR underperformed the pack. JPY strength and EUR weakness both emanated from ongoing concerns about the European bank stress tests due this week. CAD strengthened in both Asian and European trading.

EUR/USD. Failing at 1.30

EUR/USD (1.2801) is down overnight, again mostly in European trading, and spot didn’t even both to test 1.30 after runs at the level in the three prior sessions. The EUR is being weighed by concerns about the coming bank stress tests.

Technicals:

• Trend: Daily lower; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly oversold.

• Support / Resistance Levels: Support for EUR/USD lies at 1.25 (psychological), 1.2152 (Jun 29 low), 1.1877 (Jun7 low), 1.1827 (Mar’06 low), and 1.1640 (Nov’05 low). Resistance lies at 1.3029 (Jul20 high), 1.3094 (May10 high), 1.3692 (Apr12 high), 1.3818 (Mar17 high), 1.4026 (Feb3 high), 1.4194 (Jan25 high), 1.4579 (Jan13 high) and 1.4626 (Nov low).

Positioning:

• The CFTC, EUR, non-commercial, net position (-28K) moderated sharply, in keeping with the EUR/USD rally through last Tuesday.

• The risk reversal (3m, 25delta) ticked lower with spot. The reversal is still heavily skewed for EUR downside, but it lies in the middle of its six month range – suggesting two way price action.

• Implied Vol (3m) rose overnight. It remains in the middle-third of its six-month range – plenty of two-way risk here.

Cross-asset valuation: The significant correlations that EUR/USD has during the past 60 days are the 10yr yield spread (positive), the US10yr yield (positive) and the SPX (positive).

GBP/USD. Upchannel intact

Cable (1.5267) is up overnight, continuing within the uptrending channel since May. GBP was supported by the BoE minutes, which evidenced concern regarding inflation in 2011.

Technicals:

• Trend: Daily lower; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.

• Support/Resistance Levels: Resistance lies at 1.5472 (Jul15 high), 1.5524 (Apr15 high), 1.5816 (Feb17 high), 1.6284 (Jan22 high), 1.6458 (Jan19 high), 1.6479 (61.8% retracement of Nov to Dec decline), 1.6722 (Dec 3 high), 1.6878 (Nov16 high) and 1.7043 (Aug high). Support lies at 1.50 (psychological), 1.4949 (Jun12 low), 1.4239 (May19 low) and 1.3503 (Jan’09 low).

Positioning:

• The CFTC, GBP, non-commercial, net-position moderated to -35K, and it has consolidated the past three weeks, consistent with the consolidation of spot just above 1.50 up through Tuesday.

• The risk reversal (3m, 25delta) rose overnight and remains near the highs since Feb. While it remains skewed for GBP losses, it is also in the upper end of its six-month range, which suggests an overbought condition.

• Implied Vol (3mo) ticked higher overnight but remains near the low since Jan.

Cross-asset valuation: The significant correlates over the past two months for GBP/USD have been the DXY (negative), EUR/USD (positive), and S&P500 (positive).

USD/CHF. Holding 1.05

USD/CHF (1.0510) is down slightly overnight and has traded both sides of 1.05 each of the past five sessions.

Technicals:

• Trend: daily higher; weekly lower.

• Overbought/Oversold (stochastics): Daily oversold; Weekly neutral.

• Support/Resistance levels: Resistance lies at 1.05 (psychological), 1.0676 (Jul12 high) and 1.1742 (Apr’09 high), while support lies at 1.05 (psychological), 1.0400 (Jul16 low) and 1.0131 (Jan low).

Positioning:

• The CFTC non-commercial net position jumped into positive territory (+13K) for the first time since Jan. This is significantly positive for CHF relative to the past six months and could suggest a potential turn higher in USD/CHF, especially with spot stalled around 1.04 support.

• The risk reversal (3m, 25delta) rose overnight despite the slip in spot. It remains near its low since Oct’09. This market segment has abandoned its bullish USD/CHF call, but the skew is very close to a six-month low, suggesting potential for a rally in spot.

• Implied Vol (3mo) is up slightly overnight and is showing some signs of rallying from multi-year lows.

Cross-asset valuation: USD/CHF has correlated mostly strongly during the past 60 days with EUR/USD (negative) and the USD index (positive).

USD/CAD. Correcting from 1.06 down below 1.04

USD/CAD (1.0372) is down significantly overnight with downward momentum continuing after yesterday’s sharp losses that developed after the BoC rate decision.

Technicals:

• Trend: Daily higher; weekly lower.

• Overbought/Oversold (stochastics): Daily neutral; weekly neutral.

• Support/Resistance Levels: Resistance lies at 1.0584 (Jul16 high), 1.0677 (Jul5,6 high), 1.0680 (Jun high), 1.0853 (May25 high) and 1.1725 (Jul’09 high). Support lies at 1.0277 (Jul13 low), 1.02 (psychological), 1.0139 (Jun21 low), 1.0110 (May13 low), 0.9931 (Apr21 low), 0.9825 (May’08 low), 0.9712 (Feb’08 low), 0.9058 (Nov’07 low).

Positioning:

• The CFTC, non-commercial, net position rose moderately to 22K, keeping the uptrending channel for this times series since early-2009 intact.

• The risk reversal (3m, 25delta) fell overnight along with the decline in spot. It remains roughly in the middle of its six-month range, providing little direction for the trend in spot.

• Implied Vol (3m) is down slightly, and it lies just below the middle of it’s range so far in 2010.

Cross-asset valuation: In terms of other assets correlating with USD/CAD, watch the SPX (negative), CRB (negative), crude oil (negative), and the 2yr spread (negative).

USD/JPY. Consolidating lows since Dec

USD/JPY (86.99) is down overnight. The market remains wary of BoJ intervention after testing to a low since Dec last week.

Technicals:

• Trend: Daily lower; Weekly lower.

• Overbought/Oversold (stochastics): Daily oversold; Weekly neutral.

• Support/Resistance Levels: Support lies at 86.27 (Jul16 low) and 84.83 (Nov27 low). Resistance lies at 89.16 (Jul12 high), 92.89 (Jun4 high) and 94.99 (May4,5 high).

Positioning:

• The CFTC, non-commercial net position rose to 47K, among the most bullish JPY readings and suggesting limited downside for USD/JPY.

• The risk reversal (3m, 25delta) rose overnight despite the rally in spot. The skew is still in favor of USD/JPY downside, but lies in neutral territory relative to its range the past six months.

• Implied vol (3m): fell overnight and remains deep into the lower half of its 6-month range.

Cross-asset valuation: The correlations of USD/JPY with the US 10yr yield (positive), the US-JP 10yr (positive) spread, the S&P500 (positive), CRB (positive) and crude oil (positive) are significant.

AUD/USD. Consolidating near Jul high

AUD/USD (0.8841) rose overnight, and it is holding in near the high established in Jul.

Technicals:

• Trend: Daily lower; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.

• Support/Resistance: Technical support lies at 0.8634 (Jul19 low), 0.8316 (Jul1 low), 0.8067 (May25 low) and 0.7704 (Jul’09 low). Resistance for AUD/USD exists at 0.8871 (Jul14 high), 0.9389 (2010 high), 0.9406 (2009 high), and 0.9850 (2008 high).

Positioning:

• The CFTC, non-commercial net position rose to 23K, consistent with the rally in spot up through last Tuesday.

• The risk reversal (3m, 25delta) rose overnight along with spot, and it is trending higher in the middle of its 6-month range.

• Implied Vol (3m) is down overnight, just below the middle of its range for 2010.

Cross-asset valuations: AUD/USD has correlated most strongly with equities (S&P500, positive), commodities (CRB, positive) and USD/JPY (positive.)

NZD/USD. Rebound after two-day collapse from high since May

NZD/USD (0.7177) is up overnight, continuing to rebound from the sharp losses Friday and Monday, but facing resistance at 0.7200.

Technicals:

• Trend: Daily lower; Weekly higher.

• Overbought/Oversold (stochastics): Daily overbought; Weekly neutral.

• Support/Resistance: Resistance lies at 0.7200 (psychological), 0.7303 (Jul15 high), 0.7326 (Apr30 high), 0.7442 (Jan14 high), 0.75247 (Nov high), and 0.7635 (Oct21 high). Support lies at 0.7030 (Jul19 low), 0.6795 (Jul1 low) and 0.6561 (May25 low).

Positioning:

• The CFTC non-commercial, net position rose to 5K, still a very low reading and still supportive in a contrarian sense of additional Kiwi strength.

• The risk reversal (3m, 25delta) rose overnight, and lies just above the middle of its six-month range.

• Implied Vol (3m) fell overnight and looks to be consolidating in the middle of the 2010 range.

Cross-asset valuations: The strongest correlates for NZD/USD during the past two months have been AUD/USD (positive), stocks (S&P500, positive) and commodities (CRB index, positive).

GBPUSD: The 1.4768 Level To Provide Support On Pullbacks

GBPUSD: The 1.4768 Level To Provide Support On Pullbacks.

GBPUSD: While the pair may be hesitating after halting its nearer term rally on Thursday, we expect its Jun 02’10 high at 1.4768 to provide support on pullbacks. This should turn the pair back up and push it towards the 1.5000/52 levels. That zone is crucial to the continuation of its recovery as a break will open the door for further gains towards the 1.5308 level, its May’10 high. However, we expect that zone to provide a strong resistance on initial test and turn it lower if tested. The daily studies are bullish and pointing higher suggesting further up move. On the contrary, a decisive clearance of the 1.4569 and the 1.4344 levels must occur for its present strength to halt and open risk towards the 1.4257/26 levels. Below there will reverse its corrective recovery and create scope for the resumption of its broader weakness from the 1.7041 level towards its March’2009 low at 1.4112 and then its big psycho level at 1.4000.All in all, with its nearer term recovery remaining intact, a decisive break above the 1.4935 level will open the door for more strength.

Forecast on Spot Gold (Spot Gold, NZDUSD, USDSGD)

Spot Gold

SPOT GOLD closed @ 12360 which was BELOW the open and was within prior day's trading range. The High was 1 Dollars from Precise Trader's Hrly Level and the Low was 0.5 Dollars from Precise Trader's Sup Zone 5 (U Turn Zone). The Hourly Oscillators are Bearish and the Price is Within the MA, so the Bulls have to be Sidelined. Hourly Trend is Limited Down while 12475 holds and Daily Trend is Sideways Up while 12152 holds, so expect the price to have a Minimum Downside and the Bears have to be Cautious. The Daily Trend was within the Prior Day's Range but the Bears gained marginally towards the Close . The Hourly Trend has been in a Range Trading with a Limited Downside Bias , 12415-485 are the Critical levels to watch to maintain the Bearish Outlook . On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 12265 12185 12105 BEARS: 12415 12485 12565

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

NZDUSD

NZDUSD closed @ 7135 which was ABOVE the open and breached the previous day's high. The High was 10 pips from Precise Trader's Res Zone 1 and the Low was 5 pips from Precise Trader's Sup Zone 1. The Hourly Oscillators are Bullish but Weak and the Price is Above the MA, so CAUTIOUS approach is needed for the Bulls. Hourly Trend is Limited Up while 7065 holds and Daily Trend is also Limited Up while 6970 holds, so expect the price to have a Minimum Upside and the Bulls have to be Cautious. The Daily Trend was within the Prior two Day's Range but the Bulls gained aggressively towards the Close . The Hourly Trend has been in a Range Trading with a Limited Upside Bias, 7095-65 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 7090 7025 6955 BEARS: 7165 7230 7285

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

USDSGD

USDSGD closed @ 13875 which was ABOVE the open and breached the previous day's high. The High was 25 pips from Precise Trader's Hrly Level and the Low was 20 pips from Precise Trader's Sup Zone 1. The Hourly Oscillators are Bullish but Weak and the Price is Within the MA, so CAUTIOUS approach is needed for the Bulls. Hourly Trend is Limited Up while 13795 holds and Daily Trend is Sideways while 14030 holds, so expect the price to have a Minimum Upside and the Bulls have to be Cautious. The Daily Trend breached the Prior Day's High but the Bulls gave up most of their gains towards the Close . The Hourly Trend has been in a Range Trading with a Limited Downside, 13820-13795 are the Critical levels to watch to maintain the Bullish Outlook . On the 5 min is along the Horizontal Channel and the Patterns are suggesting a Choppy Session until there is a Clear Break. The Opening Price Principles are Mixed , so Cautious approach is needed until the price breaks out of Zone 1 levels.

BULLS: 13840 13795 13735 BEARS: 13915 13975 14035

Today's Strategies: Trade @ the Bulls & Bears Levels Only.

Trading British Pound with UK Trade Balance

Each month the Office of National Statistics (ONS) reports the UK trade balance. This is a very important economic indicator in London. Essentially the UK trade balance measures the difference between the value of exports and imports in the UK, and is shown in billions of Pounds.

This economic figure compares the UK trade activity with the rest of the world, and evaluates it in three categories: Goods only, Services only, and Goods and Services.

United Kingdom – Main Exports	United Kingdom – Main Export Partners
Manufactured Goods	US – 13.9%
Fuels	Germany - 10.9%
Chemicals	France – 10.4%
Foods	Ireland

United Kingdom – Main Imports	United Kingdom – Main Import Partners
Manufactured Goods	Germany – 13.9%
Machinery	US – 8.9%
Fuels	France – 6.9%
Food Stuffs	Netherlands – 6.6%

How to trade this economic indicator:

Due to the fact that this indicator is a direct input to the balance of payments, it is heavily used when speculating upon the price movement of the Sterling. Over the past ten years, the UK has realized a deficit on average. To trade off of this figure, Forex traders should focus on the monthly percentage change in the deficit. If the deficit were to grow, or widen, traders could expect a slide in the price of the Pound. On the other hand, a shrinking deficit would likely lead to a rally in the Pound.