Where are the Forex Spread Betting Markets Heading?

Posted on | July 30, 2010 |

In the forex spread betting markets the Euro continues to battle higher against the dollar without seeming to be able to sustain the critical move above the $1.3000 level.

We have now been hitting the $1.3035/50 area for weeks. Occasionally we pull back down a bit but the forex spread betting market always returns to this mark.

Standing on the sidelines it is possible to see from the various data that the market is still, even after a 10¢ reversal, short of Euros. This lopsidedness is continuing to have an effect on market direction.

At the moment it is not the US Dollar bears who are continually under pressure as they were throughout the first half of 2010. Currently the boot is very much on the other foot. Every move higher for the Euro/Dollar rate puts more short-sellers under water. It’s also interesting to note that we have now almost entirely reversed the “break out Sovereign debt move” which started around the beginning of May. This can clearly be seen in the charts you get from FinancialSpreads.com and IG Index.

Looking in more detail the Euro has price resistance at $1.30035 and above here more resistance around $1.3110. To the downside the price support is building nicely circa $1.2965 and also around the $1.2880 mark.

The Pound is also looking bullish against the US Dollar and is having its own battle a little north of the $1.5600 level.

Investors are selling the spread trading Sterling/Dollar market at all prices above $1.5600 and are building up heavy short positions. The recent move up to $1.5650 has probably proved worrying for these short sellers. Nevertheless, just like the Euro, the attempted break higher ran out of steam.

It’s difficult to judge where the Sterling/Dollar market is going however shorting the market is dangerous. For now, the momentum is definitely Sterling bullish.

Risk Warning

Spread betting is a leveraged product. It carries a high level of risk to your capital and, as it is possible to lose more than your initial investment, it may not be suitable for all investors. Therefore, ensure you understand the risks involved and seek independent advice if necessary. The tax treatment of spread bets may be subject to change in the future

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