Just a quick note to let those who might be interested know that Dustin Pass and myself will be doing a webinar this evening in which we will be talking about Forex Training.  He is the registration info for any of you who wish to join us. 

https://www2.gotomeeting.com/register/149794221

One of the most basic things about trading is support and resistance.  Yet many do not fully understand how to find what is a “good” or “true” support or resist level.  I will attempt to clear this up once and for all.  The chart above is a current daily chart of the Eur/USD on it you can see a red line that i drew to indicate where the strongest level of support is.  So how was able to find that?  Simply by finding what the last most significant resistance level is.  And that is the “secret”  Real support was formally a resistance level and real resistance was formally a support level.  This works in all markets and timeframes but is most relevant on the Daily time frame.  The only exception is if it is making an all time new high or low.  So if you want to find support look for resistance and if you want to find resistance look for support.  Feel free to email me directly at derekf@forextradersdaily.com if you have questions.   

What can i say about Trichet other than it is breath of fresh air to have at least one central banker in the world who is both not afraid to speak his mind and does it very clearly too boot!  Trichet has told us exactly what he intends to do in the near future which is NOTHING!  So he is telling us that he is done moving rates in any direction in the near term.  What a wise man!  This will effectively put a bottom in on the EURO for the near term.  In my recent posts I mentioned that we are looking for the Dollar to begin weakening again and this is the Fundamental catalyst that will facilitate this next wave down in the Dollar.  This will not be a one way street of course, it never is, but overall we expect that the Euro will hold above the 1.25 level.  We continue to buy major dips in most of the majors against the Dollar.  Even though the US has rates at zero we can still go lower!  How you ask?  The same way we got here in the first place…simply by printing more money!  While rate will not actually go below zero the effective rate can and as it does we will see the Euro continue to appreciate against the Dollar.   

Hello again everyone.  I just wanted to do a quick post and alert you to the fact that my models are indicating a high probability that the Dollar strength we have seen post NFP is waning already and could turn lower again this week.  We are exiting any remaining long Dollars, with the exception being the USD/JPY pair, and beginning to look at short Dollar trades against the majors.  Lots of reports still to come out this week so lots of data for the markets to digest.  

Well all i can say about 2008 is thank goodness it is over.  2009 should shape up as another wild one.  We expect to see a lot of volatility on the back of this weeks NFP report and that volatility will likely carry through the inauguration of Obama.  Then he has his 100 days and we will see how the markets react to all of “fixes”.  Republicans will try and pretend that they are fiscally responsible which is just a ridiculous joke but it is the hand they intend to play so we are likely to see them tying to stone wall any rescue packages and Obama may end up being lucky to get 10 days let alone the traditional 100.  The Battle has just begun so strap yourself in and get ready for some fireworks!

Happy holidays everyone!  I hope this holiday season finds you happy and healthy.  Take a moment to reflect on the good things in your life.  Many of us, especially as traders, focus on the negative, and need to be reminded of all the good things around us.  2008 has been a wild year and one that will not soon be forgotten, at least not without a lot of help from captain Jack :).  I suggest trading very little these next few weeks as liquidity will steadily dry up as the rest of the year grinds on.  Near term we expect some more Dollar strength but that strength is temporary at best and we will be fading it as always.  Be safe the rest of the year and lets all make 2009 the best year yet here on FXStreet!   

That is really all one can say about yesterday’s FOMC decision.  I have seen a lot in my time but i must admit i did not see that one coming.  So now it presents us with a new challenge…on one hand they are willing to do whatever it takes to fix the current situation and on the other hand they have now exhausted their traditional ways of managing these crises.  So will their new and untried can of tricks save the day?  History shows that it is not likely.  Even though we did not expect this extreme action by the Fed we do see Dollar strength coming on the back of this move.  We are looking to accumulate Dollars these next few days that we expect to hold into the first week or so of 2009. 

So this week we have the FOMC meeting which should set the tone for the rest of the year.  Everyone expects them to cut rates down to .50%.  This is really not the main story.  The main story will be what new “tricks” they try and create now that they have run out of their traditional “ammo”.  This foolishness should continue until at least the inauguration.  Once Obama takes over and begins opening up all the “books” the game is likely to shift dramatically again.  This week we are expecting a counter intuitive rally in the Dollar after the FOMC cuts rates.  This flies in the face of Econ. 101 but has been the case in all other major rate cuts.  Look at how far the Euro has rallied since the ECB cut for example.  We are expecting something similar to come out of the FOMC meeting though we expect it to be short lived and basically a sucker rally in the Dollar.  Look to continue to sell Dollars on rallies as we have consistently said in this post these last few weeks.   

Markets woke up stunned today to find out that what was thought to be a done deal with the Automakers turns out not to be.  The dog and pony show surrounding this has been ridiculous.  On top of that we learn about more fraud in the stock market.  Our overall system is in such bad need of an overhaul and yet no one has any ideas.  I hope that the light Obama says he sees at the end of the tunnel is a way out instead of another freight train.  The Dollar has now made a clear turn lower as i have been talking about in other posts.  The Dollar will likely see a dead cat bounce next week on the back side of the FOMC announcement but do not be fooled by it.  The Dollar is dead, now it is just a matter of burying it.