FX.co ★ There have already been a lot of contradictions on diagrams.

There have already been a lot of contradictions on diagrams.

The results of the trading session last week did not cast any light upon the further prospects for this or that currency. The week closing was just the same as the previous weeks: the same levels, the same ranges, the same news. Firstly, American companies reports pleased market participants, but to the end of the week everything returned to the same way and bad reports appeared. The market participants are still trying to find the signs of economy recovering, others — vice versa and we have some kind of the balance. It is not difficult to notify, that the currency quotations slowly go upward. What is it? An originating trend or timid attempts to rewriting of the maximum level in order to sell more expensive?

If to take into account all the fundamental picture in all the countries, then I will not say that there are a lot of positive maments in these news or there is no hint that economies have been recovering from the crisis. Let\'s take the economy of Russia, for example.

According to the Federal Service of State Statistics investments into the capital stock remained at the level of 18.2%, compared to the same period in 2008, so during the first quarter — by 15.6%, in the second quarter - by 20.0%, in June the increment of decrease (20.1%) slowed a little, compared to May (23.1%).The decline in the production sector showed the decrease of 14.8% on quarter, including the reduce of 14.3% for the first quater and 15.4% - for the second one. The dynamics in the manufacturing sector is 1.4% worse; hard cheese is marked in non-metallic mineral commodities sector, transport and machinery(the triple rundown of output); everything is the same in shipping equipment, electrical engineering, electronics and optics (in 2.5 times). The annual growth in agricultural sector in June, as in May amounted to 0.2%. The cattle population reduced by 2.3%, as a result — meat outturn jumped by 6.1%, milk output — dropped by 0.4%. Construction sector showed an annual decline by 19.6% versus the level of 21.9% in May.

There are a lot of similar statistics across the Eurozone, not just as we have, but not much better. The data from the Great Britain is more positive. So the question according the end of global finance crisis is very polemic. So, how to sell or buy in this situation? Because of all these, the most correct way is to have a short — term positions and do not try to predict the currencies motion for a month in advance and more.

In conclusion we get that the fundamental background, expectations of the second crisis wave and the whole logical situation are still in favor of sales and risk — free assets. I did not remember that time when the market was such a heavy one.

From the fundamental point of view everything is rather clear, but from the technical one there have already been a lot of contradictions on diagrams. I drew all the diagrams below in order not to divide the text into small parts.

On the pound daily diagram there is the same figure of trend continuation, borders of which the pound can not break through for some weeks long. Here, the pound found the support level at 28MA, now this support holds it from the decline for the second week. The overall picture on this diagram is flat. On monthly schedule — the zone 1,6590-6620 the resistance zone is 200 MA and Fibo levels are 50,0 and 23,6. There is a strong resistance level in this zone. So, it will be technically correct to try sales above mentioned zones. At a steady breaking through of these levels the closing price of the month (we have only one week to this event) will be the targets near 1,77-1,7800.

On the Euro daily diagram there is the same figure of trend continuation. And the same conditions, but the figure has not broken through. There is a strong resistance level near 1,4400-4420. The additional resistance level is a green median «b», which the Euro is still not able to break through, the only negative fact is that it is upgoing. The overall picture is widening flat. The resistance zone 89MA on a weekly graph is near 1,4300-4330, which the Euro is testing for the third time, the previous two of them were not success ones. Again it will be technically correct to sell above mentioned zones. At the breaking through these zones the upper targets will be far away near 1,5200-1,5400. After that a daily figure of trend continuation and a monthly figure «double bottom» will come into force.

Yen\'s diagrams are easier. There is a sharp downward trend, currently the price is in the middle of this channel. It is logical to sell from its upper border - 96,00-96,30. That gets in line with a daily resistance zone in the form of 200EMA. The medium ress is in the zone of 95,80 – 89ЕМА. The overall picture on the diagram is the downgoing trend.

As a result to all said above: the diagrams are rather contradictory. From one hand, it is very easy to catch pairs for purchase at this moment, frankly speaking, it is technically correct, but from the other hand, everyone is afraid of it, because there are some signals for buying. I do not like to trade for breaking through, I like the tactics of trading from ress and supp or tactics of really broke through levels. So, I wrote above all my thoughts about where and how to trade. Everything is clear from the fundamental point of view, but the market is still susceptible to investors\' sentiment. Today we risk, tomorrow — not. Let\'s really start to work!

Have a good trading week!

July 27, 2009.

Alexey Goncharov.