Fx Addicts Weekly Analysis

Volume 1

July 2011

Week In Review - Sunday July 17, 2011 until Saturday July 23, 2011 And A look Forward - Sunday July 24, 2011 until Saturday July 30, 2011

Under The Cover: - Europe Fixes Debt Issues - Euro Rallies - Second Quarter US & UK GDP This Week - Potentially Great Selling Opportunities in USD/CHF & EUR/JPY

Hedge Yourself Against Today’s Market Unknowns Swap Ignorance For Education

Fx Addicts Weekly Analysis

Fundamentals hursday’s European debt resolutions were positive for the Euro. Euro Zone leaders pledged ħ109 billion and private investors pledged ħ50 billion for a total of ħ159 billion in additional funds to bail out Greece BOE QSPW JEF ĕ OBODJBM TUBCJM JUZ UP PUI FS &VSPQFBO OBUJPOT XJUI QPUFOUJBM FYQM PTJW F EFCU JTTVFT ć F &VSPQFBO ' JOBODJBM 4UBCJM JUZ ' BDJM JUZ &' 4' XJM M CF BM M PXFE UP M FOE ĕ OBODJBM M Z TUSBQQFE HPW FSONFOUT GVOET UP SFDBQJUBM

ize banks and also to buy government bonds in secondary markets. With the addition of ħ159 billion to the BM SFBEZ DPOUSJCVUFE I VOESFET PG CJM M JPOT PG &VSPT BM M PG &VSPQF NBZ BDUVBM M Z BW PJE UPUBM Ä• OBODJBM DPM M BQTF 8 I JM F &VSPQF NBZ I BW F BW PJEFE Ä• OBODJBM " SNBHFEEPO GPS OPX UI FSF BSF TUJM M NBOZ QSPCM FNT GPS FBDI FVSP ; POF country and the Union as a whole. All the money to stabilize the debts of a few nations has to come from the many. In PSEFS UP BDDPNQMJTI UIJT UIPTF DPVOUSJFT UIBU IBWF MBSHF EFCU JTTVFT XJMM OFFE UP ESBTUJDBMMZ DVU CBDL TQFOEJOH ć PTF DPVOUSJFT UI BU BSF NPSF TUBCM F Ä• OBODJBM M Z BOE I BW F QM FEHFE GVOET XJM M BM TP OFFE UP DVU TQFOEJOH UP QSPW JEF UI F OFFEFE Ä• OBODJBM BTTJTUBODF 1BZJOH EPXO EFCU JO UI JT XBZ M JNJUT HSPXUI XI JDI JO UVSO SFEVDFT HPW FSONFOU SFW FOVFT XI JDI JO UVSO NBLFT JU NPSF EJÄ?

DVMU UP QBZ PÄŒ HPWFSONFOU EFCU *U JT B WJDJPVT DZDMF UIBU OFWFS IBT B HPPE PVUDPNF GPS BMM JOWPMWFE In the U.S. the debate continues to raise the debt ceiling. If the ceiling is not raised it will most cerUBJOM Z CF B HM PCBM DBUBTUSPQI JD Ä• OBODJBM FW FOU 3 BUJOH BHFODZ EPXOHSBEFT XJM M USJHHFS NBOZ JOW FTU NFOU GVOET BOE PUIFS IPMEFST PG 6 4 %FCU UP TFMM UIF EPXOHSBEFE EFCU ć BU XJMM GPSDF VQ EFCU QSJD JOH XIJDI XJMM JO UVSO DBVTF NPSF EPXOHSBEFT BOE BHBJO B WJDJPVT DZDMF XJMM FOTVF UIBU XJMM CF EJÄ?

DVMU UP stop. It would most certainly hurt China (holds $1.4 trillion in U.S. Debt) and Japan (holds just under $1.0 trillion in U.S. debt) both of which have their own economic issues to deal with; Japan more so than China.

&DPOPNJD *OEJDBUPST GPS ć JT 8FFL ć JT XFFL XF XJM M HFU B ĕ STU M PPL BU TFDPOE RVBSUFS ( %1 OVNCFST GPS UI F 6 4 BOE UI F 6 , &YQFDUBUJPOT BSF GPS B JODSFBTF JO UI F 6 4 BOE BO JODSFBTF PG JO UI F 6 , # PUI FTUJNBUFT BSF M PXFS UI BO UI F ĕ STU RVBSUFS PG 2011 and both certainly are low in historical terms. U.K. GDP will be released on Tuesday and the U.S. on Friday.

Page 2

Fx Addicts Weekly Analysis

Technical Analysis for the Week EUR/USD On a daily chart the Euro looks to be slightly over bought; see the circle on the TUPDIBTUJDT ć JT EJWFSHFODF JO UIF , and the %D is signaling a turnaround or B DPOTPMJEBUJPO GPS B GFX EBZT ć VST day’s large surge put price action right back into the consolidation triangle we had been in since late April. Friday’s sell PČ XIJMF OPU VOFYQFDUFE Bę FS WFSZ strong up days and 350 pips, is disappointing. It is as if there was not a lot PG DPOĕ EFODF JO UI F BDUJPOT CZ UI F &V SPQFBO 6 OJPO UP UI XBSU B ĕ OBODJBM DPM

MBQTF ć F &VSP TIPVME IBWF DPOUJOVFE higher one more day, Friday, to at least 1.4550. Monday’s session will need Daily EUR/USD to close somewhere above 1.4550 to prove further continued advancements against the Dollar. If not, the Euro will TFMM PČ UP SFDFOU MPXT CFMPX Looking at the EUR/USD monthly chart you can see we are above the minor trend line drawn from the highs back in 2008. While nothing including trend lines are absolute we can conclude from a combination of indicators that a market will go in a certain direction. In this case we can say that the market is above the trend line and that JU DPVM E CF GPSNJOH B CVM M Ę BH NFBOJOH the Euro will gain against the Dollar in the coming months. Or, we can take an alternative view and say that this is now the second time the market has been at UIFTF MFWFMT BOE JG JU GBJMT JU XJMM TFMM PČ ć FSF JT TUJMM POF NPSF XFFL MFę JO UIF month and a lot can happen in that week. Monthly EUR/USD Overall looking at all charts and fundamentals we can predict that the beginning of this week, Monday and 5VFTEBZ XJMM IBWF B EPXOXBSE CJBT TUBZJOH XJUIJO UIF DPOTPMJEBUJPO USJBOHMF PO UIF EBJMZ DIBSU ć FO UPXBSET UIF FOE PG UIF XFFL B TNBMM SBMMZ UP UIF NPTU SFDFOU IJHIT -BUFS JO ć VSTEBZ T TFTTJPO PS FBSMZ 'SJEBZ JG UIF 6 4 DPO gress has not agreed to raise the debt limit, and if the President has not invoked the 14th amendment and raised UIF EFCU MJNJU UIFO SBUJOH BHFODJFT XJMM TUBSU UP EPXOHSBEF 6 4 EFCU ć F %PMMBS XJMM CF TPME BOE UIF &VSP XJMM CF DPNF UIF TBGF IBWFO *G UIF SBUJOHT BHFODJFT NBLF UIJT NPWF TPPOFS JO UIF XFFL UIFO UIF %PMMBS XJMM TFMM PČ TPPOFS Page 3

Fx Addicts Weekly Analysis USD/CHF Daily, weekly and monthly charts of the Dollar Swissy show the long term weakness of the Dollar or the long term strength of the Swiss Franc; however one chooses to look at the DSPTT ć F %PMMBS IBT CFFO TMJEJOH BHBJOTU UIF Swiss Franc since 2001; ten years. Technically, there is no indication that this will change. Any rallies should be met with selling. Earlier last week there was a good technical bottom on the daily chart, it has since faded and now looks as though those lows will be exceeded later UIJT XFFL ć F TUPDIBTUJDT PO CPUI UIF XFFLMZ and monthly charts are pathetically low with UI F NPOUI M Z T Ę BU M JOJOH GPS UI F QBTU NPOUI T Clearly a very oversold market. Look to sell any rallies that last 2 days and/or 250 pips or NPSF 1SPĕ U QPJOUT DBO CF TFU BU QJQT XJUI TUPQT PG QJQT ć JT JT BOE IBT CFFO B WFSZ good market to trade short for the last 10 years.

Page 4

Fx Addicts Weekly Analysis EUR/JPY ć F :FO DPOUJOVFT UP TIPX TUSFOHUI BHBJOTU the Euro both in the short term as well as the MPOH UFSN "ę FS UIF &VSP GFMM PWFS QJQT in three months against the Yen in 2008 the Yen has resisted any rallies by the Euro. Last ć VSTEBZ XIFO UIF &VSP SBMMJFE EVF UP UIF debt restructuring it did not enjoy the same strength against the Yen as it did against the %PMMBS 4JODF UIBU TFMM PČ BOZ NFBOJOHGVM rallies by the Euro against the Yen have been outstanding selling opportunities, both short UFSN BOE MPOH UFSN ć F SBMMZ UIJT QBTU XFFL by the Euro should really be treated the same.

Technically, if the Euro were to rally in Monday’s or Tuesday’s session up to the resistance level around 113.50 it would be an even better selling opportunity. Stops could be even tighter placed just above 114.05 with a 50 pip USBJM BOE QSPĕ U UBSHFU PG ć JT JT B W FSZ I JHI QSPĕ U QPUFOUJBM USBEF XJUI B GBJSM Z M PX SJTL

Page 5