Gbp/Jpy is to retest its recent Low at 117.00 near term ?

Technically, the currency pair Gbp/Jpy is now testing the support at 120.80 ( 38.2% Fibo Retr) inside the Ichimoku Cloud in the Daily Chart.

The next immediate Ichimoku Cloud bottom support located near 120.00, and breaking it may reveal the recent Low near 116.50.


Fundamentally, the all time strengthening of Jpy and the imminent weakness on Gbp near term may speed up the bearish decent rather rapidly.

Euro/Chf is to retest its recent Low near 1.2130 again ?

The endless problems on  political/ economic / Bond spread and upsurging Bond yield over 7.0% , and with free pouring of bad news from EU, we predict that the Euros -Chf  currency pegging policy may fail rather quickly.

The currency Pair Euro/Chf has stalled near the 1.2450- 1.2420 region which may signal the formation of Temporary Top.

The Trading indicators on Longer term time frames (H4, Daily, Weekly) have shown bearish divergence.

We predict that Euros/Chf currency pair may retest the 1.2300 shortly, the Ichimoku Cloud top support on the H4 / Daily Chart.. The breaching of this support may expose the recent Low near 1.2100-1.2000

Gbp/Usd is to retest its support near 1.5540 soon ?

The economic calender on GBP is heavy on this Wednesday (Today).

We predict the downgrading of Economic growth numbers by more than -1.0%, and the Employment may hit sky high above expected numbers.

With the risk aversion momentum and the relative (positive) up move of Dollars right now, , we therefore expect the currency pair Gbp/Usd will go down considerably which is also conformed by the Chart Indicators in Bearish momentum..

Technically, The currency pair will retest the 1.5710 support (Support #3 on the chart)., and  Breaching this level may expose the next structural support at 1.5543  rather quickly.

Euro/Usd to breach 1.30000 by end of November ?

The  positive  retail sales numbers especially the Autos Sales  has strengthened  the Dollars.
Tomorrow, the Italian new PM Monti is to announce his new economic policy which has slowed down the dumping of Euros upfront..
The  weak Spanish auction, and the  Italian 10-year yields back over 7.3% and blowouts in periphery spreads have brought negative sentiments to Euros too.


Technically, the Euro/Usd is now retesting the structural support near 1.3360( See the Attached Daily chart). The bearish sentiments with  confirmation from all the Indicators are pointing down towards the psychological 1.30000 level near terms

The wave "e" has been the forecast dip near /below 1.3000 near term,

Aud/Usd is to retest its next support near 0.9528-0.9500?

Technically,  the Weekly chart shows that  Aud/Usd currency pair is now submerging in the Ichimoku Cloud , testing both the Supports 1.0045(38.2% Fibo Retr) and 0.9774 (23.6% Fibo Retr), and  breaking both these supports may expose the Critical Ichimoku Cloud bottom supports near 0.9528.

The seemingly Double top formation (near May and July 2011) has further enhanced  the Bearish sentiments on this Aud/Usd currency pair near terms.

Longer terms we forecast the Aud/Usd may go down near 0.9500 by December , 2011

Currency Cross Correlation-- How to use it to trade PROFITABLY ??

What is Currency Cross Correlation ??

The easiest way to see the composition of a cross currency is to observe the underlying currencies. If you opened three charts side by side on your screen, say the GBPUSD, USDCHF and the cross GBPCHF, and made them bold, large candlesticks on the 1 MINUTE chart, you can observe the tick by tick nature of the moves. The cross currency pair is nothing except the relationship of the strength between the underlying two pairs. Basically, the cross is nothing more than an algorithm of the relationship between the underlying pairs. The cross does not move on it's own accord, as in a standard supply and demand relationship (like contracts in the Futures markets traded on an exchange). Rather it moves in a dance in step with the underlying currencies.

There are 9 possibilities of correlation (in the Strength-Weakness relationship), but before I list them, I must state that an understanding of the BASE currency (the FIRST pair listed in a currency combination) and the DIRECTION of the candles is an absolute MUST to understand strength and weakness. Strength is occurring in the BASE currency and is demonstrated by a candle moving UP. The opposite is true, as well, going down. This can cause some confusion when one sees the USD getting stronger against one currency and at the same time get weaker against the other (this is what happens when the GBPUSD moves more than say, the USDCHF. When the USD gets equally stronger against both the GBP and the CHF at the same time, the GBPCHF stays FLAT. It can be a bit confusing to fully grasp this when trading strength and weakness, but like anything, practice sharpens the skill. Taking 30 full minutes of fully observing this at a busy time in the market, will make the relationship with the cross clear. I's a good exercise for newer cross traders.

Example: GBPUSD candles moving up STRONG and USDCHF candles moving UP STRONG = GBPCHF moving up STRONG (Actually this means that the USD is getting weak against the GBP and at the same time the USD is getting strong against the CHF) Interpret: Candles on BOTH GBPUSD and USDCHF are moving up together strong = STRONG move up on GBPCHF (but, at almost 1.7:1 ratio!! GBPJPY doing this is almost a 2:1 ratio!)

The 9 Strength-Weakness Correlation positions:

1. GBP/USD Up and USD/CHF Up - Cross will move UP STRONG (Primary trade objective moves)
2. GBP/USD Down and USD/CHF Down - Cross will move DOWN STRONG (Primary trade objective moves)

3. GBP/USD Up and USD/CHF Down equally - Cross will REMAIN FLAT (Don’t trade these moves)
4. GBP/USD Down and USD/CHF Up equally - Cross will REMAIN FLAT (Don’t trade these moves)


5. GBP/USD Up and USD/CHF FLAT - Cross will move UP MODERATELY (Can bring decent profits)
6. GBP/USD FLAT and USD/CHF Up - Cross will move UP MODERATELY (Can bring decent profits)

7. GBP/USD Down and USD/CHF FLAT - Cross will move DOWN MODERATELY (Can bring decent profits)
8. GBP/USD FLAT and USD/CHF Down - Cross will move DOWN MODERATELY (Can bring decent profits)

9. GBP/USD FLAT and USD/CHF FLAT - Cross will remain FLAT (Market is undecided – leave alone)


Correlation trading like this is actually a type of Triangular Arbitrage, where we are exploiting the ineffieciencies of the market (completely legal and respectable) and knowing these 9 possibilities brings about a greater awareness of looking at two currencies and getting enough valid information to trade a third / cross currency. 



Most people think that the crosses move on their own accord, with separate support and resistance, etc. like the underlying currencies. The crosses hit S and R when the underlying currencies do, not on their own! But it truly looks like the crosses are moving on their own accord a chart! This is the biggest understanding about crosses.