Technical Roundup for the Forex Week

Sunday, 12 September 2010

We looked at many different currency pairs from a technical perspective last week, including the USD/JPY, EUR/USD, NZD/USD, GBP/USD and the CAD/CHF. This coming week, we will be taking a look back at how our recommendations panned out, and we will of course be offering more recommendations for you to take advantage of.

So, what exactly were our preferred trades from last week? Let's start off with the USD/JPY. This currency pair never fails to impress us. Last week it set a fresh low for the year (for the last 15 years in fact) and following this we saw a slight bounce as the Bank of Japan expressed once more its utter disgust at the current levels of the Yen.

This was somewhat unexpected, and as we said in our recommendation, our preference was for a new low to be set early in the week. When that happened, we also recommended that traders put a contrary trade on the currency pair – which meant buying the USD/JPY when it broke below the previous low. This is something which usually would be undesirable; however we believed that the settings in this particular currency pair were ideal for such a trade.

And we were correct. Having broken down to new lows, the currency then shot back up in a fashionable rebound style, only to close the week well above the new low that it set. Traders who took advantage of that recommendation should have made a tidy profit on this trade.

Another thing we discussed was the range trading going on in the Cable. For those who don't know this term, the Cable refers to the GBP/USD currency pair. The price action of the Cable has been particular boring (to put it bluntly) lately, and hence we called the range trading particularly unexciting.

To update you, as at the time of writing this, the range remains unbroken – so we will certainly be looking for a breakout at some point during this week on the GBP/USD. Should this happen, we will be placing our trade in the direction of the breakout to look to profit from momentum through the upper or lower resistance / support band.

As far as next week is concerned, we will be looking to utilize more 4 hourly and weekly charts to bring you the best coverage of the FX markets.