>> More view consolidation come before the new cycle of weakness Scandi

EUR/Sek setbacks have once been very well supported in advance the level of 8.75 and the market appears to once more be tempting to carve a bottom for the new force to the area of 8.90 on upcoming sessions. Ultimately, only back below 8.75 deny and gives reason to worry.
USD/Sek remains very well supported on any form of dip and risk here is force to upper range several days recently by 6.88. A break above will accelerate, then just one back below 6.57 delays.
USD/Nok even though the market has been confined to a consolidation of several days, dips have been very well supported and we continue to see the evidence of a possible breach of this range in reverse. Locate rear thrust over 5.84 to confirm prejudices and to accelerate the gains. Only back under 5.65 would delay and give reason to worry.
EUR/NokLooks to be finally attempts to establish a basic shape after very well provided in recent weeks. The last break back above 7,49 triggered a a double bottom that has already achieved its goal of 7.60 area. From there, look for additional gains to 7.75 in the coming weeks. Ultimately, only return 7.45 under deadlines.

::= Two Proven Ways to Trade a Consolidation Zone

Oftentimes after a currency pair has been in a trend for a time, it will begin to consolidate or trade in a range. A trend trader can cease to trade the pair until it begins trending again or they can adjust their trading strategy so they can utilize what the market is giving them.

The NZDUSD currency pair is currently providing the trader with a consolidation zone.

Let’s take a look at the Daily chart of the pair below…

The pair has been consolidating since about the first week of March. During the consolidation it has respected a support level of .8086 and a resistance level of .8281…a range of 195 pips.

To a trader who would be interested in trading the pair while it is in the range, they could buy the pair when it is trading very close to support and place a stop below the lowest wick outside the range. Should the pair continue its pattern of trading up from support, the trader could set a limit at or close to the top of the range to exit the trade profitably.

When the pair is trading very near the top of range at resistance, a trader could short the pair with a stop just above the highest wick outside the range. Should price action continue to trade down from resistance, the trader could set a limit at or close to the bottom of range to exit the trade profitably.

Since this consolidation zone is just barely above the 200 Period SMA, there is not really a strong trading bias either to the upside or the downside on this pair.

A key to remember in range trading is not to enter a trade while price action is in the middle of the range. When price is in the middle, the trader loses the “edge” of which way the pair is more likely to move. Also, with price in the middle of the range, the placement of the stop will be a greater distance from the entry, thereby taking on a greater amount of risk.

We must remember that a consolidation zone can end at any time. Price can “breakout” of that zone/range at any time. For that reason it is imperative that protective stops be in place on a trade at all times.

Speaking of breakouts, when that occurs, here is how a trader can handle it…

If price simply breaks above/below the zone, a very aggressive trader can choose to enter at that point. A break to the upside would mean that a trader would take a long (buy) position with a stop below the bottom of the range.

However, as can be seen on the chart, there are several points where price broke out of the range, both above and below it, and then moved back within the range before the Daily candle closed. In other words price “wicked” above/below the range. In each of these cases the aggressive trader who entered on those entry signals would either have been stopped out or had to endure strong movements against their position.

A more conservative way to trade a breakout would be to hold off on entering the trade until a candle closes outside the zone. A candle closing outside the range (where the body of the candle remains outside the range as opposed to simply “wicking” outside the range) will signal a greater likelihood that the trade will continue to move in the direction of the breakout.

€€€€€ EUR/NOK Looking to Turn Higher Following Latest Consolidation

EUR/Sek setbacks have once been very well supported in advance the level of 8.75 and the market appears to once more be tempting to carve a bottom for the new force to the area of 8.90 on upcoming sessions. Ultimately, only back below 8.75 deny and gives reason to worry.

USD/Sek remains very well supported on any form of dip and risk here is force to upper range several days recently by 6.88. A break above will accelerate, then just one back below 6.57 delays.

USD/Nok even though the market has been confined to a consolidation of several days, dips have been very well supported and we continue to see the evidence of a possible breach of this range in reverse. Locate rear thrust over 5.84 to confirm prejudices and to accelerate the gains. Only back under 5.65 would delay and give reason to worry.

EUR/NokLooks to be finally attempts to establish a basic shape after very well provided in recent weeks. The last break back above 7,49 triggered a a double bottom that has already achieved its goal of 7.60 area. From there, look for additional gains to 7.75 in the coming weeks. Ultimately, only return 7.45 under deadlines.

European Market Update: Markets in consolidation mode as it awaits for more clarity on Greece

Share This Story:Tuesday, February 07, 2012 5:52:29 AM TradeTheNews.com European Market Update: Markets in consolidation mode as it awaits for more clarity on Greece***Economic Data***
- (EU) ECB: €1.8B borrowed in overnight loan facility v €2.8B prior; €503.4B parked in deposit facility vs. €511.4B prior
- (RU) Russia Jan Official Reserve Assets: $505.4B v $505.0Be
- (ZA) South Africa Jan Net Reserves: $49.1B v $48.9Be; Gross Reserves: $51.5B v $49.9Be
- (FI) Finland Nov GDP Indicator: 1.3% v 0.5%e
- (FI) Finland Dec Preliminary Trade Balance: -€475M v -€335M prior
- (FR) France Dec Trade Balance: -€5.0B v -€5.4Be
- (CH) Swiss Jan Foreign Currency Reserves (CHF): 227.2B v 254.3B prior
- (CZ) Czech Dec Trade Balance (CZK): 10.5B v 5.5Be
- (DK) Denmark Dec Industrial Production M/M: 5.6% v 0.3%e; Industrial Orders M/M: 19.4% v -2.5% prior
- (HU) Hungary Dec Preliminary Industrial Production M/M: -7.4% v 3.5% prior; Y/Y: 6.7% v 9.3%e
- (TW) Taiwan Jan Total Trade Balance: $0.4B v $2.3Be; Total Exports Y/Y: 16.8% v -17.0%e; Total Imports Y/Y: -11.9% v -16.7%e
- (HK) Hong Kong Jan Foreign Currency Reserves: $292.8B v $285.4B prior
- (AT) Austria Jan Wholesale Price Index M/M: +1.4% v -0.6% prior; Y/Y: +1.8%v 3.4% prior
- (NL) Netherlands Dec Industrial Production M/M: 1.4%v 0.0%e; Y/Y: +1.4 v -0.9%e; Industrial Sales Y/Y: No est v 6.7% prior
- (SE) Sweden Jan Budget Balance (SEK): -14.6BB v -90.8B prior
- (SI) Singapore Jan Foreign Reserves: $245.5B v $237.7B prior
- (NO) Norway Dec Industrial Production M/M: -2.2% v +0.9% prior; Y/Y: -4.9% v -1.2% prior
- (NO) Norway Dec Manufacturing Production M/M: -0.3% v 0.1%e; Y/Y: 0.6% v 0.0%e
- (ZA) South Africa Q4 Unemployment Rate: 23.9%% v 24.8%e
- (IS) Israel Jan Foreign Currency Balance: $77.1B v $74.9B prior
- (PT)) Portugal Dec Industrial Sales M/M: -6.1 v +1.0% prior; Y/Y: -5.5% v +2.0% prior
- (DE) Germany Dec Industrial Production M/M: -2.9% v 0.0%e; Y/Y: 0.9% v 4.3%e
Fixed Income:
- (ZA) South Africa sold total ZAR2.1B vs. ZAR2.1B indicated in 2017, 2026 and 2041 bonds
- (DK) Denmark sold total DKK8.11B in 2021 and 2039 Bonds
- (GR) Greece Debt Agency (PDMA) sold €812M vs. €625M indicated in 26-week Bills; Avg Yield 4.86% v 4.90% prior; Bid-to-cover: 2.72x v 2.80x prior
- (EU) ECB allotted €109.5B in 7-Day Main Refinancing Tender vs. €110Be at fixed 1.0%
- (HU) Hungary Debt Agency (AKK) sold HUF55B vs. HUF40B Targeted in 3-Month Bills; Avg Yield 7.32% v 7.41% prior; Bid-to-cover: 2.69x v x 2.73x
- (UK) DMO sold £4.0B in 1.75% 2017 Gilts; Avg Yield 1.121% v 1.102% prior; Bid-to-cover: 1.82x v 2.02x prior; Tail 0.4bps v 0.4bps prior
*** SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM ***
***Notes/Observations***
- Australia's RBA unexpectedly left its Key Rate unchanged
- Japan's MOF data confirms stealth intervention (1st since March 2004)
- IMF warns that China GDP could be cut in half if European crisis escalates
- China banks cuts exposure to Europe
- China could post a January deficit due to effects from the week long Lunar New Year holiday (Current expectations is surplus of $9.1B)
Equities: FTSE 100 -0.30% at 5876, DAX -0.50% at 6728, CAC-40 -0.40% at 3390, IBEX-35 -0.80% at 8761, FTSE MIB flat at 16,391, SMI -0.20% at 6134
- European shares declined during the session among stalling Greece talks and mixed corporate earnings. The Greek government is struggling to progress on planned austerity measures which has triggered concerns over a contagion in the Eurozone. Fitch noted that Eurozone crisis is likely to be prolonged as a consequence while Citigroup analysts forecast chances of Greece exit from the EMU at 50% within 18 months vs prior forecast of 25-30%.
- In corporate earnings, UBS[UBSN.CH] slipped after announcing very disappointing figures. Profit fell over 76% due to losses in the investment banking unit. Revenues in capital markets were also lower across the board. UBS noted that traditional improvements in first quarter activity levels and trading volumes may fail to materialize fully, thus essentially giving a profit warning for Q1. Earnings follow the same trend of Deutsche Bank which also disappointed investors last week. BP [BP.UK] also slipped after missing analysts estimates even though the dividend increase was a positive development. Earnings had however increased thanks to higher crude prices. In M&A news, Glencore agreed to merge with Xstrata [XTA.UK] which would value Xstrata at approx £38.3B. However, two of its top five investors, Standard Life and Schroders, said they would vote against the merger as it undervalues the shares of Xstrata.
Speakers: - EU's Juncker commented that Greece could not be forced from the euro and added that if there was an exit, then other states would have to invest 'unimaginable' sums
- EU's Kroes: EU would not get into trouble if Greece was forced to exit EMU
- China State Administration of Foreign Exchange (SAFE) commented that while foreign exchange inflows have slowed there had not been large outflows seen.
- Spain Econ Min de Guidos commented in an address to parliament that the Spanish economy was slowing down significantly but reforms should help growth in H2 of the year
- Greece PM Papademos to meet with party leaders regarding decision on fiscal rules today at 16:00 local time (15:00 GMT). To meet with PASOKs George Papandreou, New Democracys Antonis Samaras and the leader of Popular Orthodox Rally (LAOS), Giorgos Karatzaferis. The Greece PM to send new loan terms to party leaders ahead of meetings
- Greek debt swap might include State companies according to the local press
- ECB Coeure: Emerging markets should use reserves to stabilize international monetary system . The IMF could borrow excess reserves to support stressed EMU States. Countries with undervalued exchange rates risk high capital inflows - China's PBoC: Reiterated it would continue to adopt a "prudent" monetary policy and guide loans to certain sectors such as agriculture. To move forward with asset securitization and ensure available credit for first time home buyers
- BoE member Salmon commented that he recommended not to weaken reforms to speed implementation. Policy makers should not cave in to the temptation to speed up financial sector reform by watering down tough new rules for banks and financial markets. The BOE was opposed to broadening the definition of capital proposed under international accords known as Basel III that were aimed at making banks better able to absorb losses
- China might increase its domestic fuel prices as of Feb 8th with diesel and gasoline prices seen rising by CNY300/ton
- Iran parliament said it was prepared to ban oil exports to some EU countries
Currencies:
- Overall price action remained locked with recent ranges as market participants await concrete debt agreement out of Greece. Overall the Euro downside of late has been limited despite Greek debt concern but the 1.3220 January high is providing stiff resistance.
The AUD remained underpinned around the 1.08 handle during the session aided by the unchanged RBA rate decision earlier today.
Political/ In the Papers:
- FT comments addressed the discussion between officials in Greece. Greece's unity government is expected to meet later today to discuss planned reforms. According to one official, "much" of the bail-out package has been agreed upon, including cuts equal to €3B in health care, defense and local government spending over the next two years. An additional €1.2B in cuts still need to be approved by the Troika before the Greek prime minister meets with political leaders.
- For 2012 European business sentiment continued to receive negative expectations as some analysts anticipate corporate defaults to rise. The FT article included comments from various analysts. BNP estimated that the corporate bond default rate will increase from 2.6% to about 4% by the end of 2012. Similarly Morgan Stanley expects the corporate bond default rate to rise to 5%, while Bank of America expects the rate to hit 5.9%
- According to the Times, dozens of French businesses are considering relocating to the UK if French presidential candidate Hollande defeats President Sarkozy. Hollande had already stated the he is seeking to cut the deficit by increasing taxes by €11.8B for the wealthy, and by €17.3B for businesses. He also added that SMEs are to be protected, and that there will benefits corporate tax rates cuts (wealth tax plan to include top income tax rate of 45% for incomes of €150,000/yr min).
- British Labour party leader Ed Miliband cautioned that youth unemployment has reached an "emergency point" and could cost as much as £28B by 2022. The Commission on Youth Unemployment released a report on Monday and noted that the youth unemployment is the biggest challenge facing Britain and a "time bomb" for the public finances. Currently one in five young people are unemployment, education or training; 250k unemployed for more than a year.
***Looking Ahead***
- (NL) Netherlands Debt Agency (DSTA) to sell €5.0B indicated in new 2.25% 2022 DSL bond
- 5:45 (CH) SNB's Jordan speaks in Geneva
- 6:00 (PT)) Portugal Dec Industrial Sales M/M: No est v 0.5% prior; Y/Y: No est v 1.4% prior
- 6:00 (DE) Germany Dec Industrial Production M/M: 0.0%e -0.6% prior; Y/Y: 4.3%e v 3.6% prior
- 6:30 (CL) Chile Jan Trade Balance: $1.2Be v $394.0M prior
- 6:30 (CL) Chile Jan Copper Exports: No est v $3.2B prior
- 7:00 (EU) ECB announces allotment in 7-Day Term Deposits to offset Gov Bond Purchases (SMP); To drain €219.0B
- 7:00 (EU) EFSF chief Regling
- 7:45 (US) Weekly ICSC Chain Store Sales
- 7:50 (CA) Bank of Canada Senior. Dep. Gov. Macklem speaks in Toronto - 8:00 (PL) Poland Jan Total Official Reserves: no est v $97.9B prior
- 8:30 (DE) German Econ Min Roesler - 8:30 (CA) Canada Dec Building Permits M/M: +1.0%e v -3.6% prior
- 8:55 (US) Weekly Redbook Retail sales
- 9:00 (EU) (EU) ECB forex reserves w/e Feb 3rd: No est v $273.3B prior
- 9:00 (MX) Mexico Nov Gross Fixed Investment: 5.8%e v 4.9% prior
- 10:00 (US) Fed Chairman Bernanke testifies to Senate banking Committee
- 10:00 (GR) Greece PM Papademos to meet with party leaders regarding decision on fiscal rules
- 10:00 (HU) Hungary Jan Budget Balance (HUF): No est v 1.734T prior
- 10:00 (US) Feb IBD/TIPP Economic Optimism: 48.6e v 47.5 prior
- 10:00 (US) Dec JOLTs Job Openings: No est v 3.161M prior
- 10:00 (MX) Mexico International Reserves w/e Feb 3rd
- 11:30 (US) Treasury to sell 4-Week and 52-Week Bills
- 13:00 (US) Treasury to sell $32B in 3-Year Notes
- 1300 (DE) German Chancellor Merkel
- 15:00 (US) Dec Consumer Credit: $7.0Be v $20.4B prior
- 16:30 (US) Weekly API Energy Inventory data
- (US) Republican Colorado Caucus
- (US) Republican Minnesota Caucus
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