Forex Trading Signals Using TCI Technical Analysis

We are reviewing the current trends of major Forex pairs and providing trading signals for EUR/USD, GBP/USD, JPY/USD, EUR/NZD, and USD/CHF. The following analysis is based on our TCI model, which focuses on short-term trends but not intraday moves. Read more about ► Trading Center Indicator (TCI)

These signals are aimed at traders who hold positions from a few days to a few weeks, not intraday traders. Before sharing our latest Forex signals, we will review our previous trading signal/report on Google’s share.

Previous Signal/Report on Google

Our last report on Google proved accurate and delivered good profits, especially for derivative traders. We predicted a bullish trend and set a target of $900 to $1,000 per share. When the signal was issued, Google was trading around $857. Today {Goog} is at $889, after reaching $920 a few days ago. The short-term rally in Google’s share is expected to last until the end of May 2013 at most. A technical correction is likely soon, affecting not only Google’s share but also the entire Nasdaq market. This correction should be purely technical and may last for a couple of weeks.

» Google {GOOG} Technical & Fundamental Report -May 2013

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TCI Forex Trading Signals (Mid-Term Forecast)

Here are some TCI forecasts for popular Forex pairs:

1. EUR/USD ↑ (Uptrend after May 28, 2013) – Currently 1.2850

EUR/USD appears to have finished a short-term bearish move and is entering a correction phase that should bring an uptrend. This uptrend won’t be strong unless supported by new macroeconomic data. More analysis, charts, and data on EUR/USD are shown below.

2. USD/CHF ↓ (Downtrend after end of May 2013) – Currently 0.9660

The short-term uptrend in USD/CHF is likely ending soon, probably within the next few days. TCI peaks on May 28, 2013. After that, USD/CHF is expected to trade lower.

3. GBP/USD ↓ (Downtrend until mid-June) – Currently 1.5080

The TCI outlook for GBP/USD is turning negative. We expect GBP/USD to decline during the first half of June 2013.

4. EUR/NZD ↓ (Short-term correction) – Currently 1.5970

Following the recent uptrend, TCI suggests EUR/NZD will have a moderate correction.

5. USD/JPY ↓ (Short-term correction) – Currently 101.40

According to TCI, USD/JPY is clearly overbought. However, there are no signs of a strong drop since the long-term trend remains very bullish. We expect a mild downtrend for a few weeks to let the market adjust before USD/JPY moves to new highs again.

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EUR/USD Historic Chart Analysis

Below is a multi-chart of EUR/USD, accompanied by explanations.

Chart: EUR/USD

The multi-chart above shows EUR/USD data. The statistics cover a long period from early 1990 up to the end of May 2013. It includes four types of charts, which we’ll explain one by one:

1. Line Chart

This is a classic line chart showing daily EUR/USD quotes. The black line is the daily price, while the red dashed line (– –) is the 250-day moving average. About 250 trading days equal one calendar year.

2. TCI Chart

Readers familiar with the Trading Center know our TCI analysis. We have improved the TCI model by adding new factors like daily volatility size. The included TCI chart is a Long-TCI view set to 3 months.

3. Volatility Chart

This chart shows important changes in EUR/USD historical volatility. Volatility here is measured as the percentage difference between the daily High and Low prices. Notice that when volatility peaks, trend reversals often follow.

4. Volume Activity Chart

This chart shows key changes in daily trading volume.

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TCI Data

Below is the full TCI data table for the upcoming period.

According to TCI, EUR/USD will likely finish its short-term downtrend by May 28, 2013. If a trend reversal happens before that date, the downtrend cycle may not complete. This means the downtrend could last longer, probably until the second week of June 2013.

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Eurozone from a Macroeconomic Point of View

Despite the problems and recession in the Eurozone, some positive signs are emerging. The troubled Southern countries are reducing their deficits, and Portugal has recently re-entered the debt markets. Greece is also improving. In May 2013, Greek banks completed issuing new capital, which restored their financial health. Since May 1, shares of Greek banks have given investors huge gains of up to 250%.

New Member in the European Union on July 1

Croatia will officially join the EU on July 1, 2013. Its membership was approved by the German parliament on May 16, 2013. Croatia will likely be the last country to join the EU for several years, unless the European Central Bank (ECB) adopts a more flexible currency policy. Current inflation worries and ECB policies are slowing new memberships.

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The US Economy and Mr. Bernanke

Ben Bernanke, chairman of the Federal Reserve, recently supported the Fed’s $85 billion per month stimulus program. When asked if this program might create bubbles, he said major asset classes, including stock markets, were generally aligned with fundamentals. Bernanke also said the US government budget cuts are making economic recovery harder. When asked about risks of the Fed’s policy, he said: “There is no risk-free strategy here.”

What does this mean? The Fed will keep focusing on growth and reducing unemployment, so no changes in US interest rates are expected soon. The current US interest rate is 0.25%.

 

■ Giorgos Protonotarios,

Free Forex Trading Signals & EUR/USD Technical Analysis

for TradingCenter (23th of May 2013)