Published On:Monday, 19 December 2011

Posted by Muhammad Atif Saeed

We are approaching the end of quantitative easing program (the famous QN2) and still not see significant results. As mentioned in several of our analysis, the weakness of the manufacturing area and especially the housing sector remains latent for Americans.

The beginnings, permits and home sales graphs 3 and 6 months are bearish, and this contributes to a weak dollar. To make matters worse, jobless claims were again reaching 478K shoot late last month. This has improved slightly and fell again to the 409K, however it takes much more than that to inject a dose of confidence among investors.

Careful not to think about because the EUR / USD fell 900 pips’s the dollar was strong and we must provide them with wine. Check your vital information and see that the European data show a severe imbalance in this humble forum have detailed many times. Similar opinion is the well-known analyst of CNN Money, Paul La Monica who thinks the dollar recovered against the euro, “especially with the problems of European sovereign debt reappeared in financial stocks and the economy is not U.S. was miraculously cured. “

According to Kathy Lien Forex trader, “the data show that the U.S. recovery progresses very slowly and explain why the Fed has been parsimonious to normalize monetary policy, so much so that recent economic reports confirm that they are unwilling to apply any measure. ” For Kathy, almost all members of the FOMC (Federal Open Market Committee) agreed that the first step should be to stop reinvesting principal payments on the values ??of the agency and soon after the bonds; raise the interest rate in second place and then to sell the asset as a third phase.

The objective aims to reduce the size of the central bank’s balance sheet, which would certainly a small step toward tightening monetary policy. In other words, in simple language for you this means that while the Fed does not raise the interest rate will even weaker dollar for several months.

Let alone the dollar and see a very interesting movement happened a few days ago and greatly clarified because a trader to work with contrasting economies. During early February of 2011 the GBP / CHF (Pound vs Swiss Franc) came from a strong bass performance, falling about 1,600 points. For the May 4 and was in the levels of 1.4180 and 1.4150 and expected a correction in prices (an upward corrective movement). The first key question is: Will lowering the GBP / CHF? And if so, at what point we could sell it right? Consider:

For the United Kingdom (UK) high volatility indicators as gross domestic product, the manufacturing index, housing, industrial production, unemployment, consumer confidence among others, with downward trends were that the pound depreciated against a stronger economy. The British economy has a deep contraction in spending highest since 1945 and an inflation rate that each day they are out of hand. According to senior analyst Andrew Wilkinson Futures USA, “Every day expectations of a possible rise in interest rates in the United Kingdom evaporate, tax problems do not stop stop.” And this of course generates an uncertain context of the British currency.

And a couple who comes knocking is no doubt the Swiss Franc. During 2010 and 2011 so far has been pretty solid Switzerland as well as several economies Commodities. Its strength lies in bullish found their export sectors, production, feeling of entrepreneurs and business climate. It also has a GDP which is bullish and one of the lowest unemployment rates among developed countries. That makes the Swiss Franc getting ahead and strengthened against the pound, and you can win the battle. This my dear friends we can only see in the currency, so this world is so exciting. In conclusion, the context for selling is still intact and there should scare us a correction as the fundamentals tell us that we are in tune with the market.

But even more attractive is to win pip’s (exchange points) combining information adequately. The issue now was how far to go and how great is the trading is that different methods agreed on the point of entry. In the first graph shows a 20-Bollinger Bands periods denoting great price volatility. By 11 May the Superior Banda and gave us a sell signal, also supported in the 1.4500 area approximately the price was at a significant level of resistance or Congestion Zone (ZC). This level of sales is represented by the blue triangle.

But not only that. If you toward the path of a Fibonacci retracement could clearly see that the ZC was at the level above 38% Fibo which is a good level to sell. And see what it offered us Bollinger Bands. Once the sale, there are possible exit points (red triangles), matching levels of support which we have provided income for 250 and 350 pip’s in peace. As we said. “If you are in tune with the market trading becomes much easier and very understandable, which I think is an invaluable lesson in trading. At least Meditel.

Some subscribers are asking me an opinion on the Yen. In my opinion I see weak. Japanese GDP continues to fall in plots of 3 months and 6 months. This indicator is at -3.7% annually and contracted in the second quarter, putting the country into a technical recession. The March earthquake had a significant impact on consumer spending and the normal functioning of the supply chain and manufacturing. According to analysts expect a recovery of these indicators only in the third quarter. Currently the USD / JPY is moving in the levels of 81 and 82 yen per dollar and I do not see a particular strength to this currency today.

Well friends, has been a pleasure. We know that good information leads to trust, that is why we always ask that operate with discretion and responsibility. Not operate to operate. Only then will understand the financial markets.

Credit to: Daniel Arturo Ruiz Bravo