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EUR/USD AUD/USD Forecast Review 30 Dec 11

Good day forex traders.

The end of 2011 is almost here. Did you notice the low volume and low liquidity conditions in the forex market?

In the previous AUD/USD and EUR/USD forecast reviews recently, we noted that movement was slow. Having said so i mentioned that due to the low volume conditions, unexpected spikes may happen.

It did.



Looking at the EUR/USD 1 hour chart above, we noted a sharp drop from 1.30+ to the 1.28+ region. This is a drop of around 200 pips. Such a move might have wiped out many long positions. 

It was reported that an under performing bond auction conducted by Italy brought about concerns that the Euro Zone budget deficit crisis is still very much a threat to the global economy. This probably triggered risk aversion.

If you notice the red lines in the chart above, regular readers of the website will know that these are possible support and resistance regions that i identified based on studying years of data of the charts of the EUR/USD. It has served me well in 2011. 


Looking at the AUD/USD 1 hour chart above, we noted that the currency pair was a victim of the risk aversion event. It is crucial to note however that it has since almost recovered from the dip and this indicates that the main issue is probably still the euro currency due to it’s underlying euro zone economy. This is why diversifying in forex may be a good idea.

Once again as we are currently experiencing low volume and low liquidity in the forex currency exchange market, staying on the sidelines may be a good idea. If you really must trade, proper money management is a must!

Trade Safely.

Related Forex Articles from the Koala Forex Training College.

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