For the past few months, the articles that we have published could not be more than enough to emphasize the weakness of the US Dollar as depicted in the right hand chart of the USDX as of the 17th of September. In-spite of the good economic numbers that came out such as the consumer confidence from the University of Michigan 70.2 which was much better than expected for September and the US industrial output at 0.8%in August, on top of the upward revision for July of 1.0% jump plus the national home-builders Association figures showing an 18 to 19 pts. market activity index increase that should have left some room for the US Dollar to move even on an adjustment and this figures were the highest from 2008.

Even as the volumes in the FX market have been deteriorating as reported by the Reserve Bank of Australia of a 2.5 Trillion decrease from October 2008 to April 2009; some investors have decided to jump into equities with more confidence that has been apparent since August sending the S&P higher by 1.5% to 1068 and closing on the 1120 level which is 50% of the entire retracement of the decline. This was the first time that such confidence was showing in the market as a positive sign that risk appetite was also back in the market inspite of the dollar's decline.

However, at the back of the investors mind the US Trade Deficit has widened by 16.3% in July, the largest increase since 1999 to 31.96 Billion in July from 27.49 billion in June. This has weighed heavier for investors as the US Dollar broke down further for the year 2009 in the price levels of 76.23 low not far from the historical support at 75.90 first inital support.

The EUR/USD has made its new high for the year 2009 at the price level of 1.4736 and is now targeting the 1.4866 September 8 peak price. While the GBP/USD has underperformed and working around the 1.6516 price levels to this writing and have not shown any real strength except that they both are following the 2nd leg which we have mentioned before. Please refer to our previous hub page on: Trend following Strategy 1 & 2 plus some very useful information on : FX Trends & Investment. This will give you a better understanding of how the Trend once confirmed and have been reinforced by market sentiments would be there for a long period of time as it is fundamentally supported and not on a technical basis.

Although, the previous formations on the EUR/USD and the GBP/USD have shown way ahead the Elliot wave formation on both charts on a weekly basis. As the Weekly charts are far more reliable to analyze and use the 4 hour charts as the entry / exit strategy which can be quite useful once you can get the hang of it.

As for Gold, the longer term outlook since we have been tracking the price since August at the USD 942.50 and have proven time and again the major indicator as we have presented in one of our hub pages on the : US $ Index - best Technical Guide in measuring the foreign currency majors and the precious metals for that matter. We may not have been able to get the highest price levels, however our financial objectives were met ahead of the closing of the third quarter for the year with the assistance of this indicator as a guide in our trades.

This summary report is best used as an example in formulating strategies while trading the Foreign Exchange Market; that diversification is the key element in spreading the risk inherent with trading and at the same time being able to maximize the full potential of the market. Hedging strategies is basically used as a cushion to absorb any adverse price fluctuation taken against the initial trade when it becomes negative from the direction of the prices.

As a market summary, the " Trend " established not only with the precious metal on Gold and the European Currencies may have taken some time to achieved, but patience do play a huge role for the investor who decides to trade the FX market. And a reasonable, yet appropriate amount should always be considered to improve tolerance levels on the accounts, as wild price swings are always ever present in this market. And that substantial losses may occur at the least expected time. Trading the FX market is not for everyone; so consult your financial adviser as well as your financial conditions before engaging in this volatile market.

Good Luck and Happy Trading!