Market Analysis for Week of 07 September 2014?

QUESTION:

Could you provide a market analysis with trading tips for the coming week starting 07 September?

ANSWER:

Yes! We are very happy to provide this kind of analysis, not only to highlight potential trade set-ups for you to watch out for, but also to enhance your learning with some real-time market analysis.

Each week we like to send out our thoughts on the Forex market, not only to highlight potential trade set-ups for you to watch out for, but also to enhance your learning with some real-time market analysis.

This week we’ll begin with our monthly and weekly forecasts of the currency pairs worth watching. The first part of our forecast is based upon our research of the past 11 years of Forex prices, which show that the following methodologies have all produced profitable results:

Let’s take a look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:

Monthly Forecast September 2014

We forecasted that the pair most likely to change in value significantly during the month of September would be EUR/AUD, which we expected will fall in value. This pair has been the strongest mover in the market over the previous 1 month, 3 month, and 6 month periods. It has already moved in our forecast direction by almost 2% this month.

Weekly Forecast 7th September 2014

There were no strong weekly movements against longer-term trends last week, so we take no position. It was a fairly active week with an increase in volatility. The movements were in line with prevailing trends, with the AUD and USD strong and the GBP, EUR and to a lesser extent the JPY being weak. Almost half of the major and minor pairs changed in value by more than 1%, so this was a more volatile week than we have seen for some time.

Previous Monthly Forecasts

Monthly Forecast August 2014

We forecasted that the pair most likely to change in value significantly during the month of August would be EUR/GBP, which we expected would fall in value. We were correct, the result was as follows:

We forecasted that during July, it was probable that EUR/CAD would fall. The cross fell by
a total of -0.06% during the month.

We made this forecast with one day of June remaining, and on that remaining day prices moved significantly. Therefore, we revised our forecast to say that the pair most likely to change in value during the month of July was USD/CAD, and not EUR/CAD. USD/CAD actually rose in value by a total of 2.66%.

The results for June’s forecasts were as follows:

Key Support/Resistance Levels for Popular Pairs

At the FX Academy, we teach that trades should be entered and exited at or very close to key support and resistance levels. There are certain key support and resistance levels that should be watched on the more popular currency pairs this week, which might result in either reversals or breakouts:

Let’s see how trading some of these key pairs last week off key support and resistance levels could have worked out:

USD/JPY

We expected the level at 105.40 might act as resistance, as it is a key swing high point and a 6-year high price. We are in a strong upwards trend, so caution needs to be used. However fading these key inflection levels can be profitable by getting us in right at the beginning of a major reversal. The H4 chart below shows how during the end of the New York session last Thursday, the price broke and closed above the high (1), but the subsequent next candle printed a bearish inside candle (2). The candle was immediately followed by another bearish inside candle, which gave another opportunity for a short entry.

EUR/JPY

We expected the zone from 135.94 to 136.00 might act as support, as it had acted previously as both resistance and support. Note how these “flipping” levels can work really well. The H4 chart below shows that last Thursday this pair fell extremely heavily, but later found some support late in the New York session at the support zone. A semi-bullish inside candle formed at (1), from which the price rose. The price then fell again, but again found support at the zone with the final candle of the week closing as a bullish inside candle. It can take a while for the price to turn around after such a strong and sharp fall, but if the price action begins to rise as next week begins, it would indicate that there will be some kind of move up from here, and it would be increasingly safe to take a long trade.

 
من أجل أن تكون قادراً على إستخدام كافة مزايا الموقع الإلكتروني يرجى تفعيل جافاسكريبت في إعدادات المتصفح الخاص بك.