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.   

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!   

Hello again everyone.  I just returned from speaking at the Forex Traders Association in Houton on Saturday.  I want to say thank you to every one there for hosting me and having such a great event.  I want to especially thank Mona and Anton.  I hope to see you all again soon.

So this week we are faced with digesting the worst   NFP report since 1974 and at the same time anticipating the FOMC meeting next Tuesday.  I have been and continue to talk about the turn back down in the Dollar and that overall theme remains in play. I continue to look at Dollar rallies as selling opportunities.  Also I am going out on a limb and saying this about oil…we will see $125 a barrel again before we see $25…if i am right it has huge implications for all markets but especially the Canadian.  Stock markets are expected to be choppy at best this week a they too begin to anticipate the next FOMC meeting and more importantly the implication of the next cut…

Hello again everyone.  Well here we are again with another Freaky Friday.  These Friday’s have seen tremendous volatility in the past few months and today is no exception.  I make a habit of not trading Friday afternoons as these late day swings are often very violent.  I also no longer hold trades over the weekends as gap openings on Sunday night have become the rule rather than the exception.  It does appear that a more macro turn in the Dollar is underway.  I will be looking to buy dips in the Majors against the Dollar early next week.  Have a great weekend everyone, I will see many of you in my webinar on FXstreet.com Monday at 10:00 EST.

Hello everyone.  I wanted to briefly introduce myself.  My name is Derek Frey and I am the head trader at O&F Futures, FOREX, & Options.  I have been a regular on FXstreet.com for almost 5 years now.  Many of you may have been to one of my webinars.  I also want to thank Rob Booker for all of his great posts.  I will be taking the “Postcards from the Edge” Blog over as of today.  I will attempt to post daily with some of my insight into the days market action.  So now that all of that is out of the way lets get started with today’s outlook:

Today we are seeing the markets continued to be gripped by fear.  The Auto industry really did not put on a good show yesterday in Congress so investors are fearful that the “big three” may be left to fail.  Today we expect many of the pairs to see expanded volatility.  The Euro remains the one currency that has not yet broken its support levels.  If these levels hold we could see a sizable rally off of them but first we need a catalyst for the rally.  None of the economic reports this week have spurred a rally but we are seeing a few things on the horizon that indicate a near term top in the Dollar is being put in.  Be careful these next few days as some sort of government action or intervention seems imminent