Forex Weekly Forecast

As a part of the new service, we'll be making our recommendations on the twice daily alerts and posting commentary and market movements over here on the blog. This is not what we'll do longer term, but for now it will suit us just fine.

As we entere our short term trade in the euro, we can see that Friday gave us a bearish outside day. That occurs when a candle or bar on a chart has a close below it's open, and when the body of the candle is larger than the previous one. In this case, it marks a whole days' activity, which generally gives us a more reliable signal. Remember, the longer term the time frame, the more reliable it is for technical analysis.

Also, the euro bumped up against long term resistance on Friday and was unable to pierce it. This give us another clue that some "down time" ought to be ahead. Of course, we won't reveal our proprietary entries and exits here as this is a public forum, but those of you who have gotten your alert today will know what to do!

For our longer term sterling trade, we began a very nice move on Friday and now find ourselves well in the black by about 1%. Remember, by the time this is over, we want to be looking at something in excess of 5% for just a few weeks work. You can't beat that anywhere. But the current account balance for the UK was released earlier today and was nearly double the rate forecast. This is not good. Remember the CAB, is derived from subtracting imports from exports. As a rule, you weant you account balance to be positive, which means that you are exporting (selling) more than you are importing (buying). If not, then as a national economy, you are spending more than you are making, which is never good. However, the sterling fell sharply and then bounced nearly 100 pips after it hit the 200MA on the 4 hour chart.

We should also note that the price fell below the 200MA on the daily chart on Friday...a bearish signal.

For the rest of the day the news calendar is pretty light; we have some news coming out for Canada. But as the week wears on, we have the Consumer Price Index for the UK. AS the index rises, it is generally thought to be indicative of rising inflation. It is the presumption that a central bank will have to raise interest rates, in order to combat rising inflation. That is generally very bullish for a currency. When CPI is falling, defaltion is believed to be on the rise, and no interest rate hike will be forthcoming. That continues to depress a currency. The CPI is expected to be above the target rate of 2% ( and has been for a little while), but no major economy is in a position to raise rates, especially not the UK. However, even though the CPI is above the target rate, the rate is projected to fall on a monthly basis and a yearly one as well. On Wednesday the UK will be releasing it's unemployment figures, which are also expected to fall, and could be a bullish effect on the currency. Wednesday will also bring US Advanced Retail Sales. Traders look to these numbers to see how consumers are spending, and if they are bringing their dollars back into the market. Until they do, it is impossible to expect a real recovery. (Don't hold your breath!) We will also get the minutes of the US Fed Mtg. These can produce quite a bit of volatility as the Fed often comments on the future expectations of the economy.

Thursday will bring us the US PPI (Producer Price Index) another inflation gauge...but again it is expected to fall.

Friday will bring the last in the inflation measures this week in the US CPI or Consumer Price Index, again, no real increases are expected.

That should wrap us up for this morning.

Happy Trading!

Bill
www.thefxtradingmasters.com
bill@thefxtradingmasters.com