Forex Market Outlook | Forex Market Recap for USD/JPY, Gold and Dollar Index

0 Comments Published October 20th, 2009 in 4xGenie

Forex Trade Alert.

Gold Rise As Dough Cascade

Gold, USD/JPY, Dough Index

Gold

Spot gold shows signs of an accelerating up-trend, after three trendlines of increasing slope. Retracement respected support at $1040 and breakout above $1070 would indicate an advance to $1100. Reversal below $1040 is unlikely, but would test $1000. In the long term, the break above $1000 offers a target of $1300; failure of support at $985 is unlikely, but would warn of a primary trend reversal.

The only bearish sign is a divergence on Momentum Indicator (14-day), warning that the Market Vectors Gold Miners Index [GDX] has encountered selling pressure. Breakout above $50 would confirm the rise in spot gold, while reversal below $43 would signal a secondary correction (and bearish sign for gold). Divergences between gold miners and physical gold often forewarn of changes in the spot price.

Dough Fall Continues

US Dough Index

The US Dough Index is consolidating in a narrow band below resistance at 76. In the small term, expect a test of 74.50. Reversal above 77.50 is most unlikely, but would indicate that the down-trend has finished. The greenback is replacing the yen as the favorite weak currency used for carry trades. Hedge funds effectively borrow dollars then sell them to invest in a high-docile currency like the Australian Dough, pocketing the interest rate spread — and reinforcing the dough’s downward spiral.

Japanese Yen

The dough respected small-term resistance at 90.00 and is likely to test the 2008 low of 87.00. Breakout above the declining trendline (and 90.00), but, would warn of a revive to test the upper channel border. In the long term, breakout below 87.00 would offer a target of 80.00.

MONTHLY PIVOT ALERT: Support level of 90.44 was broken today. When the monthly pivot point is broken – we can look for a possible drop to the monthly S1 ( support level 1).

TRENDLINE ALERT: Support level of 90.34 was broken today. Look for a possible drop to the next support level.

Next Day Trading Ranges for Tuesday Oct 20, 2009

The [R3] or the most extreme high trading range is 91.14.

The [R2] or the extreme high trading range is 90.96.

The [R1] or the high trading range is 90.64.

The [P] or pivot point is 90.46.

The [S1] or the low trading range is 90.14.

The [S2] or the extreme low trading range is 89.96.

The [S3] or the most extreme low trading range is 89.64.