The GBP/USD looks like it may be forming a head-and-shoulders top pattern. Looking at the weekly chart, you can see the right shoulder is almost complete.

 

Check out our lesson on Reversal Patterns and other Price Patterns http://www.pfxglobal.com/education-price-patterns.html

This week's interest-rate announcement from the Bank of England (BOE) could be enough to send the pair back down to the neckline.

Click here for the rest of the article: http://www.pfxglobal.com/pfx-blog/po...n-gbp-usd.html

Today marks an interesting crossroads for the US equities market, and potentially the USD. Equities have been channeling since early January, and some of the troughs are pretty deep, which is not surprising, considering volatility the past two months.

But take a look at what a Fibonacci retracement study shows us on the SPX today (that's the S&P 500 index). We're right at that 38.2% resistance line that we've bumped up against twice now, before eventually dropping back down to the 0% support line

  

(On a related note: Wade's charts for the EUR/USD can be found here: http://www.pfxglobal.com/eur-usd/eur...ard.html#step3)

The question now, is: Are we bumping again this time? Or a will we see a break? And what might the result mean for the USD? I'd love to hear what you all think about a potential break. But no matter what happens, no matter which way it goes, it's important for forex traders to watch.

If we see a breakout, it's one of few signals in a long while that the US market is beginning to reverse the trend. It may not mean an overall bullish sentiment, but it at least signals a break from the current channel funk.

A bounce off resistance, means a continuation of the current channel, and that the US economy isn't healthy enough to push equities higher. This likely means no legs for the USD against the majors.

Especially considering the chart below (IEV, the iShares index tracking the S&P Euro 350), where European stocks have already broken out of the channel.

Have a look at more forecasting and technicals for the EUR/USD here: http://www.pfxglobal.com/eur-usd/eur-usd-dashboard.html

and for the USD/JPY here: http://www.pfxglobal.com/usd-jpy/usd-jpy-dashboard.html

 

4/07/2008 – EUR/USD – Dynamic support and resistance in the form of diagonal trendlines can often describe price action exceptionally well. On the EUR/USD daily chart, as shown, the highest uptrend line (in green, labeled “1”) extends right through the center of price action, depicting the angle of ascent in a very precise manner. A solid trendline like this often acts convincingly as both support and resistance at various times during its lifespan. Starting out as support back in August 2007, this line turned into resistance after a breakdown, then support after a breakout, and is now acting once again as resistance, as of this writing. Therefore, barring another breakout to the upside to challenge the all-time double-top high reached within the last several weeks, the abovementioned trendline should continue to act as resistance for the near-term. In the event of a move back down, clear support to the downside resides around the last low in a newly-forming horizontal trading range (in yellow, labeled “2”). This low is in the 1.5350 region and coincides with a key 38.2% Fibonacci retracement level (the low-to-high retracement span being measured from the low on 2/7/2008 to the all-time high reached on 3/17/2008).

James Chen
Chief Technical Analyst
FX Solutions

IMPORTANT NOTICE: These comments are for information purposes only. The information contained on this document does not constitute a solicitation to buy or sell by FX Solutions, LLC., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Opinions, market data, and recommendations are subject to change at any time. Forex trading involves substantial risk of loss and is not suitable for all investors.

(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; horizontal support/resistance levels in yellow; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)

 
 

The USD is looking a bit stronger over the last week. With the likelihood that the G7 will partially focus on the USD's devaluation over the last few years we could see more of that in the near future. That means opportunity for forex traders. In a light news week there is going to be plenty of speculation about the future of the USD and the role the economies represented by the G7 will play. In today's video podcast I will discuss where I think this will have the biggest impact in the majors.

While several of the USD quoted pairs look very overbought, I think the real opportunity to take advantage of a stronger USD will be the USD/JPY and USD/CHF. Partially as a result of a continued rebound on the USD but partially because the change in capital flows that would cause would be reflected most strongly in those two currency pairs.

I am also looking forward to a possible contrarian pick of a bullish GBP/USD towards the latter end of the week. Coming on the heels of the anticipated rate cut from the BoE, that may sound a little strange but the technicals look interesting and trader sentiment could shift towards a stronger GBP if the rate cut is received as an effective economic adjustment.

To see the podcast, click here: http://www.pfxglobal.com/podcast/pod...tal-flows.html

This is the first in a news series at PFX on building trading systems.

What you will learn:
- Systems use rules to define entries, exits, position sizes and expectations
- System traders make two mistakes you should avoid
- How to avoid bias and concentrate on what really matters
- What backtesting can tell you besides potential profits.

Retail traders, or traders responsible for their own proprietary account, are generally looking for a system or trading strategy (or multiple strategies) that will help them make decisions, manage risk and ultimately turn a profit. Most traders around the world deal with these struggles and successes, in all markets.

I would broadly define a “trading system” as an approach that prescribes entries and exits, position sizes and expectations. In this, and subsequent lessons, we will look at each of these three components and also discuss the impact of investor psychology, technical analysis and fundamental analysis on the creation and implementation of a strategy.

Building a system is not complicated, but execution can be difficult. This means that proper preparation is key to success. As we progress through this course, we will build a few systems and walk through the decision making process together.

At PFX we naturally have a longer term bias towards FX investing and system building, because it minimizes the retail trader’s biggest enemy – trading costs – without adding significant disadvantages. However, the ideas discussed herein are just as valid for short term traders.

In this section we will start our discussion by preparing to overcome the two most common issues that system builders face. These are issues that appear specifically in the system building phase, and can doom a system before you can even begin working on an implementation and money management strategy.

The two common issues faced by System Building and Trading:

1. Attribution bias
2. Over-optimization.

Attribution bias is not an issue unique to traders. It’s experienced by people in all aspects of life, but can be detrimental to trader’s success. The issue appears when you attribute a causal relationship between two things that have no clear relationship.

For the rest of the article and a video, click here: http://www.pfxglobal.com/video-archi...ng-biases.html