5/16/2012 2:00PM EDT - The FOMC Minutes was released. As far as stimulus goes:

“Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough”. This is just rhetoric, and actually not as strong as we saw in the previous minutes where stimulus was suggested.

There is also expressed concern in the fallout from further euro area crisis:

“Participants identified several downside risks to the projected pace of economic expansion, including the fiscal and financial strains in the euro area and the possibility of an abrupt fiscal consolidation in the United States.”

Inflation is balanced, and growth projection has not changed from the last time. Therefore, it is maybe slightly less dovish than the previous.

A more dovish tone would have been a catalyst for the market to retreat from the current USD-onslaught. Instead, this release provides no such trigger, and the USD has a chance to advance further in this risk averse environment we have so far in May.

USD Index daily chart 5/16 2:30PM EDT

The USD Index continues to trade higher, (12 out of the last 13 sessions have been bullish). There is still room to rally before we hit the 2012 high just above 82.00. A break above that opens up the 83.40-83.70 area, resistance in August-September of 2010. A corrective drop should be monitored for buying again near 80.75-81.00

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Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

XAG/USD (Silver) Daily Chart 5/16/2012  1:55PM EDT

Silver has been persistently bearish. Commodity prices, gold and silver have all been in a downtrend as the USD surges in the risk aversion environment in May. The moving averages are in bearish orientation, and the RSI is below 30. This means the market is bearish, but maybe in the short-term is a bit stretched to the downside. Can we expect a pullback?

Note in the weekly chart that as the market approaches 26.10, it is trading near the 2011 low, and an established support pivot during this year and almost half of consolidation (triangle?). However, a break below 26.00 should suggest that the market is in a declining channel. The first target for this break should be 23.00, the 200-week SMA.

FOMC Minutes are out as I wrap up this article. the FOMC minutes came out

- inflation is controlled
- “Participants identified several downside risks to the projected pace of economic expansion, including the fiscal and financial strains in the euro area and the possibility of an abrupt fiscal consolidation in the United States.”.
- no mention of stimulus.

Seems like a non-event at the moment. It is less dovish than the last minutes as well as the BoE inflation report, so the market may need to find another reason to hold off USD-strength, meanwhile, risk aversion should continue to boost the greenback and pressure commodities.

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Fan Yang CMT is a trader, analyst, educator and the Chief Technical Strategist FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

by forexcycle.com

EURUSD Analysis.
EURUSD’s downward movement from 1.3283 extends to as low as 1.2722. Further decline could be seen after a minor consolidation, and next target would  be at 1.2650 area. Resistance is at 1.2800, followed by the downward trend line on 4-hour chart, only a clear break above the trend line resistance could signal completion of the downtrend.

USDJPY Analysis.
USDJPY breaks above the upper line of the price channel on 4-hour chart, suggesting that lengthier consolidation of the downtrend from 84.17 (Mar 15 high) is underway. Further rally would likely be seen in a couple of days, and the target would be at 81.00 area.

GBPUSD Analysis.
GBPUSD’s downward movement from 1.6301 extends to as low as 1.5979. Further decline could be expected in a couple of days, and next target would be at 1.5900 area. Initial resistance is at 1.6050, followed by the downward trend line on 4-hour chart, as long as the trend line resistance holds, downtrend will continue.

AUDUSD Analysis.
AUDUSD continues its downward movement from 1.0474, and the fall extends to as low as 0.9920. Further decline could be seen after a minor consolidation, and next target would be at 0.9850 area. Resistance remains at the downtrend line on 4-hour chart, only a clear break above the trend line could signal completion of the downtrend.

USDCAD Analysis.
USDCAD breaks above 1.0062 resistance, and reaches as high as 1.0073. Further rise could be seen, and next target would be at 1.0150 area. Support is at now at the upward trend line on 4-hour chart, as long as the trend line support holds, uptrend will continue.

USDCHF Analysis.
USDCHF continues its upward movement from 0.9043, and the rise extends to as high as 0.9440. Further rise could be seen after a minor consolidation, and next target would be at 0.9500 area. Support is at 0.9350, followed by the upward trend line on 4-hour chart, as long as the trend line support holds, uptrend will continue.

The above analysis was provided by www.forexcycle.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Previous: USD/JPY – Inverted Head and Four Shoulders? (5/15)

USD/JPY4H Chart 5/16/2012 9:52AM EDT

USD/JPY indeed bottomed out in the short-term and broke above a declining channel resistance. The 1H chart shows the bottoming formation.  There is resistance in the 80.50-80.60 area. This is the May high established in the beginning of the month.

Above this pivot, some resistance can be expected near 81.00, and then again at 81.78. If we do extend our corrective rally, which can be confirmed by holding above 80.00 on a throwback, the 81.78 level could be the maximum bullish outlook in the short-term for now.

USD/JPY Daily Chart 5/15/2012 10.29AM EDT

Why limit the outlook to 81.78 for now? Let’s assume that USD/JPY is neither bullish nor bearish but entering another sideways market, with resistance at 84.15 and support at 79.40. In a range bound market, the short-term bullish attempt from support can be just a reversion toward the mean. In this case, 81.78 is 50% retracement, and also a pivot that was support in March and then resistance in April.

There is a chance to rally higher, but the higher it goes, the farther it will be from the middle of our proposed range, and the higher the tendency will be to return toward the middle. As far as reward to risk assessment goes, it is probably better to stay conservative and expect just a reversion to the  middle or “fair price”, a scenario with a higher chance than a push from the middle to range resistance.

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Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Summary: Today’s overnight session was characterized by some tentative risk-on as European equity and bond markets retraced the falls seen earlier in the week. Will it be a correction that gets faded in the NY trading session? The cloud around Greece certainly has left financial markets jittery. In the UK meanwhile, the BOE Inflation Report and comments from BOE King left the prospect that the BOE might re-start its QE program if Europe deteriorates, which weakened the GBP.

Nick Nasad is a macro economist, market analyst, and educator; and one of the main contributors to FXTimes.com – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis,

Previous: EUR/USD Has 1.2625 in Sight…(5/15)

The EUR/USD is trading at a 4-month low and continues to be weighed by the uncertainty in the Greek parliament, which is headed for a re-election on June 17. One ray of light does shine from the diplomatic and cooperative appearance of Hollande and Merkel in the 5/15 meeting in Berlin.

EUR/USD day chart 5/16/2012 7:20AM EDT

The daily chart shows that the market is about to enter a support area which goes down from about 1.2660 down to 1.2625. This was the 2012 low as well as a support for a consolidation period in August of 2010. The RSI shows oversold condition in the daily and 4H chart. In the daily chart, a bullish divergence like the one we saw in January would help signal a slowing of the current drop so buyers won’t have to try to “catch a falling knife”.

Reward to Risk for Buying at Support: A correction to the upside is limited to the 1.30 level, and has resistance near the 1.28 and 1.29 handles. 1.29 seems to be a reasonable target from the 1.2625 area.

A stop may be needed to be placed below 1.26 to avoid clear outs of the 1.2625 low.

If entry can be planned at 1.2630, and a stop is at 1.2570 with a conservative target at 1.28, the trade has a 170:60 or just below  3:1 reward to risk ratio. The 1.29 target presents 270:60, or 4.5:1 R/R.

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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Previous: GBP/USD Approaching Key Support Area Ahead of the BoE Inflation Report (5/15)

The BoE inflation report revealed slowing inflation and a dovish tone as this concern is put to the side with the Eurozone crisis taking center stage.

- inflation still above 2.0% annual target rate, but is easing; y/y rate went from 5.2% in Sept. 2011 to 4.2% in Dec. 2011, and expected to come down further in 2012.
- no prospect of interest rate hike
- Mervyn King expects bumpy recovery
- King does not put away QE saying there’s no diminishing return but it will need some convincing to make it an appropriate option
- Sympathizes with the ECB’s tough task in trying to keep things
- Warns that exposure to European financial system puts the UK in harms way if Greece were to exit for example, so contingency plans are being made.
Sources:
BoE Inflation Report (May)
the Guardian

GBP/USD Daily Chart 5/16/2012 6:55 AM EDT

The GBP/USD was already breaking a key support area ahead of the BoE inflation report and Mervyn King’s press conference. The 1.5990-1.60 area was a rising trendline that goes back to January 2012. A break below now opens up 1.5780-1.58, and below that opens the 1.5650 area.

Technically, the bull run in 2012 has not deteriorated, but has taken the first step.

Fade a pullback? If there is a pullback, it should stay below the 1.6050 pivot. This may be a good level to monitor for selling again after the bearish breakout. With a stop say 1.6080 and a target of 1.59, an entry at 1.6030 for example presents a 130:50, or about 2.5:1 reward to risk trade. 1.59 is a conservative target. The 1.58 target gives a much higher reward to risk.

It should be noted that if a choppier correction comes, the next level to consider fading can be near 1.61 and the 1.6150/60 area.  above that, the market has likely found support  for a range between 1.63 and 1.5890.

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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Traders are on a euro watch this week as political uncertainty is driving financial market tension. Today 5/15, a couple of key events headlines the press. 1) Greek coalition talks break down as President Karolos Papoulias says re-election will be taking place. June 17 is the most likely set date. The uncompromising position of the Syriza party, which is anti-euro and austerity, has been noted to be the reason. 2) Hollande and Merkel seem to be able to put differences aside to agree that renegotiation of bailout terms should be had, and that more material “growth” measures have to be included.

Here’s a video of Merkel and Hollande speaking: http://www.bbc.co.uk/news/world-europe-18081075

Hollande as a socialist pushing a populist view that is anti-austerity, seemed to have put that campaign mode down and be more diplomatic in saying that the German-France relationship is strong. Can this type of talk allay the fear of a euro break-up of some sort that would be a result of the domino effect from a Grexit? If the Syriza party does gain control, or is a major part of a somehow managed coalition, will it also retreat a bit from its campaign rhetoric?

What will the market do with the euro before the June 17 re-election?

There is still room to fall toward 1.2625 before the re-election and before EU leaders come up with some plan that can give some relief to the risk-off mood in the markets.

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EUR/AUD Daily Chart 5/15/2012 2:53PM EDT

The EUR/AUD has been rallying from the low of 1.2130 to about 1.2920 since February 2012. It should be noted that this bull run is basically just below 50% retracement of the downswing from Nov. 2011 to Feb. 2012 from 1.3805 to 1.2130. Also, the 1.2920-1.3015 area represents the support of a range-bound market during 2011 from July to Dec when this support area broke down. It has now acted as resistance.

The market is resistance resistance around 1.2920 forming a bearish divergence with the RSI in the daily chart. This shows at least a deceleration of the uptrend and suggests at least a sideways market if not a reversal. The market is also testing a rising trendline as it breaks below 1.28. A break below this is another sign of topping, and a possible bearish reversal. A break below 1.2750 will probably be needed to clear some short-term support as well as the rising trendline.

EUR/AUD 4H Chart 5/15/2012 3:05PM EDT

In the 4H chart a break below 1.2770 already shows a break from a topping pattern. Clearing 1.2750 would also clear the trendline and the 4H 200SMA. If this top is successful, it will be hard for a pullback to rally back above 1.28. Above 1.2850, we should shelve the bearish outlook. Looking back at the daily chart, a break below opens up the 1.2570 pivot. Below 1.2550, we open up 1.2130.

China’s slowdown will continue to weigh on the AUD, but the Euro is under the spotlight right now, with uncertainty in Greece.

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Fan Yang CMT is a forex trader, analyst, and main contributor for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

by forexcycle.com

USDJPY Analysis.
After touching the upper line of the price channel on 4-hour chart, USDJPY pulls back from 80.18. The fall could possibly be resumption of the downtrend from 84.17 (Mar 15 high), further decline towards 78.00 would likely be seen over the next several days. Resistance remains at the upper line of the channel, only a clear break above the channel resistance could signal completion of the downtrend.

GBPUSD Analysis.
GBPUSD stays below a downward trend line on 4-hour chart, and remains in downtrend from 1.6301. Another fall to 1.6000 could be expected after a minor consolidation. Only a clear break above the trend line could signal completion of the downtrend.

AUDUSD Analysis.
AUDUSD’s downward movement extends to as low as 0.9944. Resistance is at the downward trend line on 4-hour chart, as long as the trend line resistance holds, downtrend could be expected to continue, and next target would be at 0.9850 area.

EURUSD Analysis.
EURUSD stays below a downward trend line on 4-hour chart, and remains in downtrend from 1.3283, and the fall extends to as low as 1.2814. As long as the trend line resistance holds, downtrend could be expected to continue after a minor consolidation and next target would be at 1.2700 area.

USDCAD Analysis.
USDCAD is in consolidation of the uptrend from 0.9799. Range trading between 0.9900 and 1.0062 is expected in a couple of days. Resistance is at 1.0062, a break above this level will indicate that the uptrend has resumed, then next target would be at 1.0100 area.

USDCHF Analysis.
USDCHF’s upward move extends to as high as 0.9372. Support is at the uptrend line on 4-hour chart, as long as the trend line support holds, uptrend could be expected to continue after a minor consolidation, and next target would be at 0.9400 area.

The above analysis was provided by www.forexcycle.com

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Under the spotlight again, Greece is now at the brink of an exit from the European Monetary Union (EMU). Breakdown in coalition talk further puts pressure on the euro. German Finance Minister Wolfgang Schaeuble is calling the vote a “referendum on whether the country stays in the euro” as noted in Bloomberg.com. If the re-election puts an anti-bailout PM in charge ie. Evangelos Venizelos of the socialist Pasok party, we can expect direction of a Greek Exit (Grexit).

Greek bank run fears are surfacing as well. According to President Karolos Papoulias’s website, “Anxious Greeks have withdrawn as much as 700 million euros ($893 million) from the nation’s banks since the inconclusive May 6 election”. Just the prospect of a Grexit can cause a run on the banks because the exit would shut out funding except from the ELA as noted on ZeroHedge.

The hope of many EU bankers and political leaders is that Greece reforms and stays in the EMU. It will be painful, and unpopular, but necessary for the existential safety of the Eurozone. However, at the markets are losing hope, and this can be seen in the currency markets as the Euro slides across the board.

EUR/USD heads below 1.28. The next support is in the 1.2625-1.2670 area.
EUR/GBP continues lower, with 0.79, the 0.77 in sight.
EUR/JPY is falling through some support at 102.50, with the 100 handle in sight, as well as the 2012 low of 97.03.
EUR/AUD has topped off below 1.29, and heading below a rising trendline. A break below 1.2750 forms a top and breaks below this rising trendline, opening  up at least 1.26, with 1.2135 low in sight as well.
EUR/NZD is holding at resistance at about 1.6575. A break below 1.6350 will confirm topping.
EUR/CAD broke below a key support at 1.2870, opening up the bearish outlook toward key support pivots at about 1.2770 and 1.2425.
EUR/CHF unmoved, resting about 1.20.

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Fan Yang CMT is a forex trader, analyst, educator and main contributor for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Previous: USD/JPY Pushes Above 80.00; Forms an Inverted Head and Shoulders (5/13)

USD/JPY4H Chart 5/15/2012 10.29AM EDT

USD/JPY’s inverted head and shoulders attempt to start the 5/14 trading week did not work out. However the subsequent drop basically respected the shoulder level near 79.70. Into the 5/15 US trading session, the USD/JPY is pushing above 80.00 again. The inverted head and shoulders pattern is still valid, but this time with 2 shoulders on each side.

Looking at the 1H chart, the 80.55 resistance area is in sight again. Above that, the 81-81.20 area should be monitored for selling again.

I still think there is downside risk toward 78.30-78.50 area, but if 80.00 and then 80.50 levels hold as support, we can see a significant corrective rally and the market might be sideways instead of bearish. A more significant corrective rally can send the market toward 82.00, and if the market is sideways to bullish, instead of sideways to bearish, the 84.00 high is in sight as well. But first we have to establish support at 80.00 to building from a bottoming pattern.

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Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Summary: Today’s overnight session was characterized by some tentative risk-on as a result of better than expected Germany 1Q GDP reading, which showed the economy expanding 0.5%, helping the wider Euro-zone skirt a technical recession by posting flat growth in the 1Q. That helped the EUR to stabilize but as NY trading started and with Greece talks on forming a coalition government falter, we had more bearish action and a move in favor of safety.

Nick Nasad is a macro economist, market analyst, and educator; and one of the main contributors to FXTimes.com – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis,

Previous: GBP/USD Staying Resilient in a Risk Averse Environment (5/14)

GBP/USD 1H Chart 5/15/2012 9:37AM EDT

The fell over the 5/15 Asian-European session, and continued to slide in early US session.The 1H chart shows the pair tagging the lower bollinger band which is 3 standard deviations from the 200 simple moving average here. The ability to do that and stay below the 200SMA is a reflection of a bearish mode. Similarly, the RSI holding below 60, and tagging 30 is a sign of a bearish market.

In the very short-term though, tagging the lower BB and having the RSI reading fall below 30 are signs of oversold market (in intraday sense).

GBP/USD Daily Chart 5/15/2012 9:45AM EDT

The daily chart shows that as we near 1.60, there is more than just oversold conditions in the 1H chart. There is a key support area down to the 1.5988 pivot. Note the rising support trendline. Also note the RSI nearing 40. A bullish market should keep the RSI above 40 after being able to tag 70.

For now, a bullish outlook from the 1.5988-1.60 area has a target at 1.6150-60, then 1.6250-1.6280 (coincident with a declining trendline).

Tomorrow’s Bank of England Quarterly Inflation Report can shake things up a little for the Sterling. BoE governor Mervyn King will hold a press conference. If the report and conference gives the market confidence that QE will be off the table in the UK despite the recession data from Q1, the GBP can continue to be resilient.

Otherwise, if the market continues to experience risk aversion, and the GBP losses its luster, a break below 1.5980 can open up 1.5780 and the 1.5650 support areas.

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan and management strategies for the GBP/USD, and other currency pairs.

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Previous: EUR/USD Edges Below 1.29 as Eurozone Bankers Brace for Greek Exit (5/14)

EUR/USD 1H chart 5/15/2012 7:48AM EDT

After a 2-week tumble from about 1.3280 to 1.2810, the EUR/USD started to stall against this trend in the 5/15 European session. The Euro Area avoided a recession in Q1 on the back of positive German GDP data. In my opinion, the data is not that great at all, but risk sentiment have been stretched and this data did not stoke a panic.

The pullback might not have much juice unless EU finance officials coming out of the Brussels meeting give the markets confidence and hope that Greece will stay in the Eurozone and countries like France won’t renege on their austerity measures “forced” upon French citizens as a condition of the bailouts received.

Looking at the 1H chart with fibonacci retracement levels map based on the swing from last week’s high to this week’s low so far, we see that we are not even 38.2% retracement. There could be some further unwinding especially if risk appetite stays in the US session. There are April CPI and retail sales data from the US at 8:30AM EDT.

If there is further retracement, renewed selling might come in around the 1.29 handle, which was last week’s low and brief support. 1.2893 is 50% retracement and 1.2913 is 61.8% retracement. Also note that the RSI is below 60. If the market can hold below these retracement levels and pivots, we should see a slide to 1.28, with 1.2625-1.2670 support area in sight. Above 1.2950, we are possibility in a more significant unwinding that can bring us back to 1.30, 1.31 before stronger selling interest.

In the 4H chart below we see that the 61.8% retracement of its 2-week slide is at 1.31.

EUR/USD 4H chart 5/15/2012 8:01AM EDT

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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

A slew of GDP data coming out of the Eurozone was released during the 5/15 European trading session.

2012 Q1 GDP estimates
France: 0.0%, forecast 0.0%, previous 0.1% (revised from 0.2%) – Flat as expected.
Germany: 0.5%, forecast 0.1%, previous -0.2% – Avoided recession
Italy: -0.8%, forecast -0.6%, previous -0.7% – In recession
Euro Area: 0.0%, forecast -0.2%, previous -0.3%

The euro area as a whole barely avoided a recession after Q1 mainly saved by the positive German GDP data.

May sentiment data from the ZEW reflect tension:
Euro Area ZEW Economic Sentiment: -2.4, forecast 11.7, previous 13.1
German ZEW Economic Sentiment: 10.8, forecast 19.1, previous 23.4

Economic sentiment is sliding due to the uncertainty in the Greek election as well as new leadership in France and how all this plays out regarding these bailed-out countries dealing with unpopular austerity measures.

The Euro therefore remains pressured, but since breaking below 1.29, the EUR/USD has recovered slightly over the European session, staying above 1.28 and and reaching 1.2865 ahead of the 5/15 US trading session.

CPI and Retail Sales data for April is just around the corner at 8:30AM EDT.

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Previous: Gold Dropping Sharply Toward Range Support Zone; 1560 in Sight (5/8)

XAU/USD (Gold)

As risk aversion boosts the USD, XAU/USD or gold has been sliding sharply from a central pivot of 1666.50 to the current 1555 area. As the market falls sharply, we should remember that gold has been trading in a range roughly between 1802 resistance and 1522 support. To the left of the daily chart, we would have seen a support pivot of 1531.72 established in September 2011.

The RSI reading in the daily chart is dipping below 30. Last time the RSI was down here in December, we saw a bullish divergence (lower price low matched with higher RSI low) leading to a rally. The rally ended up developing a bearish divergence (higher price high matched with lower RSI high) before falling. Divergences are clues signs of a slowing trend. When the market is range-bound, it is an even more reliable signal for reversal.

As gold slides sharply, counter-trend players and bulls might want to wait for such a signal instead of “catching a knife“.

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Fan Yang CMT is a forex trader, analyst, educator and main contributor for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Previous: WTI Crude Oil Trying to Find Support at 95.60 with Double Bottom (5/8)

WTI Crude Oil 1H 5/14/2012

WTI Crude Oil failed to bottom out last week after consolidation, trying to hold the market above the 95.50 handle. Risk aversion continues to pressure commodities, and WTI pushed below 95.50 to start the 5/14 trading session. After we conclude this session in the US, WTI has made a low near 93.50, and retraced to about 94.00.

The RSI reading in the 1H chart shows persistent bearish momentum, and the moving averages in the 1H chart also show bearish orientation (higher periods above the lower periods).

With 95.50 broken, The next key support pivot is near 92.50. If the market does indeed extend lower toward this target, USD/CAD’s 1.0050-1.0060 key resistance area might be hard to hold as well.

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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

Previous: USD/CAD Forms Double Top After Favorable Canadian Employment Data (5/11)

USD/CAD 4H Chart 4:02PM EDT 5/14/2012

The USD/CAD formed a double top on Friday after better-than-expected employment data gave the CAD a boost. However, as risk aversion from the Eurozone pushed up the USD, as well as pressured oil prices, which is correlated to the loonie.

The USD/CAD therefore invalidated the double top patter and rallied back toward last week’s high. Last week, the market cracked a key resistance at about 1.0050 and reached 1.0060. To start this week, during the 5/14 US session, the USD/CAD held below 1.0050 again.

Risk sentiment will be key to shaping the USD/CAD’s path in the next few days, as most of this month’s key US and CAN releases came in the last couple of weeks. There are some US releases like retail sales but its going to be the risk sentiment from those releases that determine the strength of the USD. (USD will gain in risk aversion, fall in risk appetite). The FOMC meeting minutes could be surprise if it brings up QE, but most likely will not in my opinion.

With risk appetite, the USD/CAD has a bearish outlook. The market has the 0.9950 level in sight in the short-term. For now, the bearish outlook is within a ranging market, so the target is limited to the middle of the consolidation range. Note that this is above the 50% retracement and the 200 SMA in the 4H chart, so reaching this level would even be within the context of a developing bullish market.

Risk aversion can continue to boost the USD vs. CAD with a push above 1.0060 opening up 1.0100 as well as opening up the bullish outlook toward the 1.03 handle, and a resistance pivot at 1.0315. Note that in the daily chart, a break above 1.0060 would also clear the 200-day SMA, and provide a bullish signal as well.

USD/CAD Daily Chart 5/14/2012 4:08

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Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.