May 19, 2014

The State Of The Forex Markets In May 2014

It's been a while since my last blog post as I've been busy with a few other projects, so today I thought it would be a good idea to take a look at the current state of the forex markets right now in May 2014.

So listed below you will find summaries of the latest technical patterns and trends on the long-term charts of the GBP/USD, EUR/USD and USD/JPY pairs, which are obviously three of the most popular pairs that many people like to trade.

GBP/USD

The GBP/USD pair has been in a long term upward trend since around July/August last year, in no small part to the strength of the British economy in recent times. You only need to look at theĀ consistently rising 200 day EMA (exponential moving average) for evidence of just how strong this trend as been.

Looking at it now, it still appears to be showing a lot of strength. Although the supertrend indicator has recently turned red, ie bearish, on the daily chart, the supertrend is still bullish on the weekly chart, and looks strong on the monthly chart, where it turned from red to green earlier this year, with the price moving strongly above the EMA (200) on this time frame as well.

So although we may see some short-term weakness and possibly a slight pullback to the 200 day moving average on the daily chart, I can see the GBP/USD continuing to inch higher in the coming months.

EUR/USD

The EUR/USD pair has also been trending upwards in recent months, although not as strongly as the GBP/USD pair because we have seen several retracements back to the 200 day exponential moving average on the daily chart, for example.

Looking forward, it is hard to predict with any degree of confidence where this pair is headed in the coming months. It is still in a rising trend, as evidenced by the positive supertrend indicator on the weekly and monthly charts, but it's looking weaker on the daily time frame, and it also looks as if this longer term trend is starting to run out of momentum.

So I wouldn't be surprised if this pair remains range-bound in the near future, or starts to slowly drift downwards as the long-term trend starts to run out of steam.

USD/JPY

The USD/JPY has been in a strong upwards trend for many months now, thanks in part to the recovery in the US economy. However there are a few signs that this upward trend may now be over.

For a start, this pair has stalled below the EMA (200) on the long-term monthly chart, and although the supertrend indicator turned green on the weekly time frame, the price has drifted sideways rather than begin a new leg higher.

Most significantly, the price has today fallen below the 200 day EMA for the first time since October 2012, and is starting to look very weak on the daily price chart. So I wouldn't be surprised to see the price fall below the critical 100.00 mark in the near future,and maybe down to 93.00-95.00 looking further ahead.

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1 Comment on The State Of The Forex Markets In May 2014 »

July 21, 2014

Yohay @ 9:26 am:

Great insights and good to see you write again! I do hope we see some volatility in EUR/USD and USD/JPY after long periods of slow moves…

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