With the combined experience of trading the Foreign Exchange Market and price action based on current as well as historical prices may provide a significant indication of where the next directional market movement will take place. However, other than looking at the technical charts which would also show the support and resistances based on lines / channel extensions.

By using the different technical tools such as the Fibonacci Retracement and Gann line Theoryjust to name a few is good to use as reference points. But by knowing the more important psychological currency price levels where major reactions took place from historical movements are equally important to take note of. Although, this can only be known to the trader / investor who happens to be trading during such time in the Forex market.

That is why it is collectively essential to take notes of events that provide fuel to prices and market participants reactions based on events and none eventful movements even on thin market holidays while trading this market. For these are the times where major players would take advantage of the market's vulnerabilty in the absence of such eventful news from any of the three major market sessions.

The current market condition and the previous week's movement in prices are one of those moments in time where price levels are vital than other technical indicators. Others may or may just simply disagree, however keeping an open mind on such special cases can be a learning process whether it is a right or wrong market call.

The previous week ending October 09, 2009 was a clear example of a price signal significant enough to provide a clear direction of the market movement. Although, a certain process of deduction and elimination was done before such conclusive analysis was made. As we all know that the 'Trend confirmation ' on the depreciating US Dollar / USDX has been reinforced by the persistent bias sentiment of the market, it was clear that new lows for the USDX would be made. And true enough in our target objective was achieved on the 9 th of October were the USDX touched its important support price of 75.91 which was the lowest price for the week. 

With the reinforced dollar decline from the beginning of the year of 2009 and gained a more significant momentum on the 3rd quarter; the US dollar as represented by the USDX have plunged in an orderly manner to the psychological support price of 75.90 basis points. This may probably be the higher bottom from the all time low of 70.90 historical low, although there is no actual justification on this regard but can only be speculated as such. As shown on the USDX chart as of October 12, 2009 the USDX is making a normal reaction after a downturn. On a cyclical level the downturn towards the low is aligned with the quarter ending of the year which our research have concluded that such a slow US dollar recovery may still be possible in a slower pace.

Alignments on the US dollar movement is also in sync with the other foreign currencies making record levels like the Gold prices at the levels of USD 1,061.50 new highs, the USD/JPY at the levels of 87.11 established Oct. 07, 2009 of the same week, when the USDX registered its 75.91 low as of the end of Oct. 09,2009. In tandem with this movement is the USD/CHF move to its price levels of at 1.0180 low; also made it interesting because based from the past trading experiences this have occurred more in line with the move of the US dollar Index.

At this point in time, the choice of which currency would be best to trade with is the next question. Although, the sentiments for the weaker US dollar still maintains as the dominant factor; the EUR/USD has been the prevailing currency that has sustained its strength touching for the second time the price levels of 1.4816 from its previous high of 1.4883 last September 23, 2009. With some expected minor corrections on a day to day basis comparing and the relative weakness of the GBP/USD which started from the weak UK manufacturing Index which prompted the start of the down move for the currency.

Therefore, the EUR/GBP and the EUR/JPY are the two most favorable cross rates to trade with as the USD/JPY has touched its initial support price of 87.10 in line with the Index's low price.. USD/JPY correction from its recent low will support the directional movement of the EUR/GBP as well as the EUR/JPY higher. While the GBP/CHF will move downward in parallel with some corrective weakness of the GBP/USD before it continues to move higher and the USD/CHF heads lower respectively.

And not leaving out the performance of the Aussie Dollar and the New Zealand dollar where registered highs was also established at 0.9088 and 0.7451 respectively. We may also anticipate a corrective movement this coming weeks ahead falling short of a much anticipated market corrective move.

With the GBP/USD corrective movement back down to the 1.5705 price levels will be of help for the dollar before moving back up again and to complete its Elliot wave we have mentioned in our previous hubpages. Although, the more significant remarks from the Fed Chairman Ben Bernanke and the unexpected narrowing of the US trade deficit did boost the upward recovery although it may be seen as a temporary relief by most analyst while others may disagree.

Good Luck and Please choose Wisely!