My analysis for next week

Fundamental

(analysis sourced from dailyfx.com)

Last week, GBP finished higher against the USD on the back of strong economic data such as Jobless Claims which rose less than expected (39k vs. 60k) and CPI which was 0.2% above BoE’s expected inflation level of 2.0%.

However, with UK economic calendar almost empty next week, GBP/USD movement will be dictate by news in the US. Key economic data from US in the week ahead are; existing home sales (forecasted to stabilize), US 1Q09 GDP (expected to be market moving if it miss estimates), and outcome of FOMC (expected to leave the rate unchanged at 0.25%).

AUD is also set to face selling pressure as an uneventful economic calendar yields to a reversal in risk appetite across financial markets. Short-term studies reveal that a trade-weighted average of the Aussie’s value against a basket of top currencies is now 97.8% correlated with the MSCI World Stock Index.( whoaa I’ve just knew this..heheh). But what is so important about this almost perfect correlation? Well, the MSCI index is looking to make a double top to the previous high in Nov 2008 from the rally since mid-March 2009. This suggests that continued weakness in risk appetite looms ahead, threatening to bring the AUD along for the ride.

Technical

From my technical indicators, several pairs such as GBP/USD, GBP/JPY, and AUD/USD are looking toppish and are due for some corrections. However bear in mind that LT upward trendline is still intact. My inclination is towards the sell side, with a tight stop loss slightly above the peak while my TP is either 1.5 or 2 times the SL. My entry point would be based on the price action i.e formation of the candlesticks. A break of the trendline would push the pairs even lower.

These are some screenshots of the pairs mentioned:

P/s: Please bear in mind that these are my own analysis and intended for me only and it does not tend to be any recommendation whatsoever. Please do your own analysis first before placing any trades.

T.A.Y.O.R – Trade at your own risk!!!