Month: December 2009

By Anton Eljwizat – The EUR/GBP cross has experienced a bearish trend for the past two weeks. However, it seems that this trend may be coming to an end, as described below. Forex traders can take advantage of this imminent up movement by entering long positions at an excellent entry price.

• The technical indicators used are the Slow Stochastic, Relative Strength Index (RSI), and Williams Percent Range.

• Point 1: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 2: The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• Point 3: The Williams Percent Range has peaked at the -100 marker and has turned bullish; this means that there may actually be a strong level of upward pressure.

EUR/GBP Daily Chart

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Adam Hewison – We have made a number of videos on the dollar index and in my latest video I show you some of the aspects we outlined in our previous video that have come to pass.

The positive divergences on the MACD indicator which we discussed last time have kicked in and pushed the dollar index higher. Longer-term major trend for the dollar index continues to be negative. In this short video you’ll see what the market is doing now and what we expect it to do in the future.

As always our videos are free to watch and there is no need to register.

Watch the New Video Here…

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Source: ForexYard

The dollar rallied yesterday around renewed sovereign debt fears in Greece and traders taking a hard look at when the Fed will begin to tighten U.S. monetary policy. A glut of European data releases will be driving trading into the weekend. With the holidays and New Year approaching, today’s volatility may become a factor as trading desks begin to thin out.

Economic News

USD – Dollar Climbs to Three Month High Versus the EUR

The Dollar once again made large gains against a basket of currencies during Thursday’s trading, climbing to a new three month high. Fueling the appreciation of the dollar were fears of Greece defaulting on their sovereign debt as traders looked to avoid the euro. Analysts are also forecasting just when the Fed will initiate its tightening of U.S. monetary policy.

Today the dollar rose by more than 0.9% versus the euro to close at 1.4389, up from an opening price of 1.4522. Driving the change in the exchange rate was the downgrade of Greek sovereign debt by the rating agency, S&P. The firm also warned of potential future downgrades unless major changes to the fiscal status of the nation are undertaken. The downgrade of Greece is weighing on the EUR as traders are now looking at the U.S. economy in a better light relative to the European economy. This is also causing traders to reexamine the potential of the Federal Reserve to increase interest rates. No change was made at the conclusion of the FOMC meeting on Wednesday; however, with the rally of the U.S. dollar, the Fed may reevaluate its decision at it next meeting.

Friday’s trading will be highlighted with a glut of news events and economic data releases from the Euro-zone. The prime market mover will be the German Ifo Business Climate. The survey from manufactures, builders, and retailers is highly respected and shows a high correlation with the German economy. The indicator is s scheduled to be released at 4:00am GMT. The trend of the strengthening dollar may continue into today’s trading day with the EUR/USD seeing a significant support level at 1.4270.

EUR – Greek Sovereign Debt Sinks the EUR

Traders and economists alike are taking a hard second look at the European economy after S&P downgraded the sovereign debt of Greece yesterday. This is causing a shift of opinion on which economy is recovering from the recent recession faster; the U.S. or Europe?

As the debate rages, currency traders are showing their true colors. Some feel the EUR’s run may have extended too far as the EUR/USD climbed to a height of 1.5143 in late November. Since then the pair has fallen and is now trading below the 1.4350 level. Causes of this have been an improvement in U.S. economic sentiment, a potential tightening of U.S. monetary policy and rising interest rates, and the view of overall weakness in the EU economy.

While the stronger economies of Germany and France seem to be pulling out of the economic recession due to large government stimulus packages and previous EUR weakness, the smaller, less fiscally responsible nations of Greece, Spain, and Austria may hold the Euro-zone economy back in its recovery when compared to U.S. One advantage the United States has over the European Union, when it comes to fiscal responsibility national cohesion with only one decision making body in the federal government.

JPY – Yen Rises Against Dollar Where Others Fail

Despite the dollar’s appreciation yesterday against most major currencies, the Yen showed significant strength as the USD/JPY dropped 0.7% and is now trading at 89.5656. In earlier trading, the pair failed to break the significant 89.00 support line.

Japanese officials worry that a strong Yen may have an adverse affect on the Japanese economy. Yesterday, comments were made from deputy Prime Minister Kan, noting he supports a weak yen. A weakening yen could be a blessing to Japan. A falling yen would make Japanese exports cheaper on the world markets, thereby boosting the economic recovery of the island nation and avoiding a second recession.

Crude Oil – Dollar Strength may be putting a Dent in Crude Prices

Crude oil prices were seen falling yesterday but were able to regroup and finish the day even as the dollar rose against the EUR. Prices fell to a low of $72.87 from $74.79 yesterday as the dollar rose against the EUR 0.9%. Crude prices have typically moved in the opposite direction of the dollar’s movement. While this proved to be a positive for crude oil prices during times of dollar weakening, the dollar’s recent bullish run could put a dent in crude oil’s price appreciation.

As economic sentiment improves in the U.S., crude traders may feel the pinch of a stronger dollar. This is natural as the price of crude oil is denominated in U.S. dollars. A rising dollar makes crude prices more expensive and less attractive. A rise in U.S. interest rates would also be a negative for crude oil. With these factors, we could see crude oil drop back down to a fair value of $70.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-sold territory on the daily chart’s RSI indicating an upward correction may be imminent. The upward direction on the hourly chart’s Momentum oscillator also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

GBP/USD

The 4-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. Going long with tight stops might be the right strategy today.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF

The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s Stochastic Slow signals that a bearish reversal is imminent. . Going short with tight stops might be a wise choice.

The Wild Card – Gold

Gold prices are once again dropping, and it is currently traded around $1105.40 per ounce. And now, the daily chart’s RSI is giving bullish signals, indicating that gold prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Market Movers of the Day

Asia-Pacific

*New Zealand Business Confidence down to 38.5 from a previous 43.4

*Japanese Leading Economic Index up to 89.4 from 87.5

Europe

*UK Retail Sales surprised for the worst at -0.3% MoM

*UK CBI Distributive Trades better than expected at 13

*Swiss ZEW Economic Expectations down to 54 from a previous 56.4

Americas

*Canadian CPI higher than expected at 1.0% annualized

*Canadian Core CPI higher than expected at 1.5% annualized

*US Initial Jobless Claims worse than forecasted at 480K

*US Continuing Jobless Claims better than forecasted at 5186K

*US Philadelphia Fed Manufacturing Survey surprised for the better at 20.4

The Overall Sentiment

Equities

US stock markets dropped driven by losses from Citigroup, which sold shares at a discount, and negative sentiment from an increase in Initial Jobless Claims. Yesterday’s hawkish rhetoric from the Fed has also prompted investors to sell equities and turn to the Dollar for safety. At 20:00 GMT, the S&P was down by 0.8% and the Dow had lost 1%. In Europe, the British FTSE 100 dropped 1.9%, its biggest decline in three weeks, as the UK Retail Sales surprisingly fell 0.3% in November. The downgrading of Greece’s credit rating continues to weigh on European markets and financial institutions. The DAX declined 1%, led by losses from Germany’s largest banks.

Forex

The Dollar strongly advanced across the board after the Fed left rates unchanged yesterday but outlined the conclusion of most of its emergency measures by February 2010. EUR/USD reached its lowest level in three months at 1.43. Commodity-linked currencies retreated as investors abandon high-yielders and look for the Dollar and Yen’s safe-haven status. The Australian dollar extended losses below 0.89 against its US counterpart and USD/CAD climbed to the 1.07 level. The Pound dropped on disappointing Retail Sales numbers, with an intraday visit underneath 1.61 against its US peer. The Yen gained versus all majors with USD/JPY still battling around the 90 level.

Commodities

Gold plummeted below $1100 as the Dollar’s strength and the prospects of closer-than-expected rate hikes diminished the demand for the yellow metal. Silver dropped as well, approaching the $17 level. Crude Oil retreated in early trading hours after yesterday’s rally but recovered to sustain trading around $72.50.

The Day Ahead

The day will start with Bank of Japan’s rate decision at the end of a two-day policy meeting, for which market expectations are pointing to an unchanged 0.10% as deflation continues to loom over Japanese economy. Moving to the European session, German PPI is expected to show a 0.2% rise for November, and positive figures are forecasted for both the IFO Expectations and Business Climate, anticipating positive sentiment in the Euro-zone for the short-term. UK Public Sector Net Borrowing and the EU Trade Balance are also due for release. Canada Wholesale Sales is estimated to show a 0.3% increase for October in the only economic piece of data coming for the Americas.

Technical Analysis

EUR/GBP DAILY

Bullish Scenario– The support at 0.8835 holds and the cross bounces back up developing a new bullish cycle.

Target A– 0.8975

Target B– 0.9150

Bearish scenario– A break of 0.8835 downwards generates a strong bearish swing, targeting the 0.87 support.

Target A-0.87

Target B–0.8550

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

Written by ForexCycle.com

USDCHF’s uptrend from 0.9959 extends to as high as 1.0507. As long as the channel support holds, uptrend could be expected to continue and further rally is still possible to 1.0550 area. However, next short term cycle top is nearing and 1.0507 could possibly be another cycle top on 4-hour chart. Key support is at 1.0345, a break below this level will confirm the cycle top and indicate that the rise from 0.9959 has completed, then range trading between 1.0250 and 1.0507 could be seen to follow.

By CountingPips.com

The U.S. Leading Indicators Index published by the Conference Board today increased for the eighth straight month in November. The Leading Indicator Index, which measures future economic activity, registered a 0.9 percent increase in November following a revised increase of 0.3 percent in October and a 1.2 percent gain in September. November’s increase surpassed the market forecasts which were predicting a gain of 0.7 percent for the month.

The coincident index, which is viewed as a measure of the current economic activity, increased by 0.2 percent in November while the lagging index edged down by 0.4 percent after declining by 0.2 percent in October.

An economist at the Conference Board, Ken Goldstein commented on the report saying, “The indicators point to a bright new year. The U.S. LEI increased for the eighth consecutive month. Looking ahead, we can expect a slowly improving economy through 2010. The Conference Board Coincident Economic Index™ (CEI) for the U.S. also increased in November. Employment largely held steady, making this the first month since December 2007 that it did not make a negative contribution to the index.”

Weekly Jobless Claims rise.

A release by the U.S. Labor Department showed that weekly U.S. jobless claims increased in the week that ended on December 12th. New jobless claims grew to a total of 480,000 unemployed workers, an increase over the prior week by 7,000 workers. A 4-week moving average of unemployed workers fell by 5,250 workers from the prior week to a total of 467,500.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending December 5th increased by 5,000 workers to a total of 5,186,000 unemployed workers. A four week moving average of continuing claims declined by 106,750 to 5,318,250.

US Dollar higher in Forex Trading today.

The U.S. dollar has been trading higher today against the other major currencies in the spot forex market.  The dollar has been stronger versus the euro, British pound, Australian dollar, Canadian dollar, Swiss franc, New Zealand dollar and the Japanese yen in the afternoon of the U.S. session at 3:06pm according to currency data by Oanda.

Meanwhile, the U.S. stock markets have been lower in trading today with the Dow Jones having gained by lost over 90 points while the Nasdaq has been down by around 20 points.  The S&P500 has fallen by almost 9.50 points to trade around the 1,099.30 level at time of writing.  Gold has declined today by approximately $32.40 to trading around the $1,103.10 per ounce level while oil has been about unchanged to trade at $72.65 per barrel.

AUD/USD Hourly Chart – The Australian Dollar falling today versus the US Dollar in forex trading. The AUD/USD has declined three days in a row and the downtrend has broken through the psychological level at 0.9000, continuing its decline into the 0.8870 area.

By Adam Hewison – We are already in the “silly season” and what I mean by that is after December 15 most traders are not serious about the markets and they’re not committed to any large positions for the balance of the year.

I’ve had a number requests to do a video on gold, so here it is. As you will see in the video, gold has fallen back to an area that should provide support, however it will remain choppy and thinly traded for the balance of the year.

I strongly recommend that if you’re not in gold, to wait until we see more interest and activity coming into 2010.

As always our videos are free to watch and there is no need to register.

Watch the New Video Here…

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

By Creztor Tessel – You have most likely heard of Japanese candlesticks before, but might not realize just how useful and extremely effective they can be for a trader. Japanese candlesticks can give you an immense edge over your competition, regardless of the market or instrument you trade. This charting style began in Japan in the 1700’s and spread quickly around the world starting about 25 years ago as traders realized the advantage of using them to plot charts. Traders who use these kinds of candlesticks on their charts can quickly see the power that they offer to those who understand them and the insights that they can give a trader into market sentiment.

Perhaps the biggest advantage to a trader who uses Japanese candlesticks is that they allow you to understand and gauge the sentiment of the market. Other charting styles lack this feature as they are nothing more than straight lines plotted on a chart. These lines make it extremely difficult for new traders to get any kind of feel about the sentiment of the players in the market and what price may do in the near future. Japanese candlesticks allow you to see at a glance if the buyers had power, the sellers had power, a combination of the two and much more. Being able to read or have an insight into the sentiment of the market gives you a massive edge regardless of the market you trade. Why? Knowing the sentiment of the market allows you to know in advance what future price movement may be and where price may go. Knowing what may happen in the future in advance allows you to prepare and modify you trades before price has even begun to move, allowing you to get into position early and repeat more profits from the market. This gives you a massive trading edge over other traders.

The second advantage of using Japanese candlesticks is that they in themselves can be used to signal potential trade setups. Many traders rely on indicators such as moving averages to enter and exit trades. These indicators are useful, but they themselves are based on price. Being able to read and understand Japanese candlesticks means that many traders use nothing more than price to know when a potential trade entry or signal may be forming. They no longer need or rely less on other indicators. The way in which they are drawn and how they allow a trader to gauge sentiment of the market makes it easy for a trader who can read and understand them to see when potential trades are setting up. Knowing that the buyers have control may warn that any short or sell trade you have open may be at risk and you should close out to profit your profits. In turn, knowing the buyers have gained control may signal an excellent opportunity to enter in a buy trade and go long with the upcoming market movement.

Japanese candlesticks can give you a massive trading edge by knowing in advance where price may move and being able to gauge market sentiment and have a feel of what other traders may be thinking. They are a tried and tested charting style and today are used by many bank and professional traders with profitable results.

About the Author

To learn more about Japanese candlesticks visit the swing trading website today for other great and invaluable swing trading tips, tricks and information on how to swing trade any market.

By Sylvain Vervoort – Let’s have a look at candlestick top reversal patterns. I will discuss bearish patterns with the engulfing pattern, dark cloud cover, harami, evening star, abandoned baby, hanging man and shooting star pattern and more.

Before looking at the top reversal patterns we have to define the rules for a top reversal to be a valid pattern.

* A top reversal is only possible AFTER an uptrend. * Most patterns need a confirmation. * A confirmation must appear one up to three candles after the pattern. * This confirmation is at least a closing price lower than the previous closing price and preferably a big black candle, high volume with the new down move, a falling window, or breaking support. * A reversal pattern during price consolidation must be considered a continuation pattern. * For best results, you must combine candlestick patterns with Western technical analysis. * An unconfirmed pattern has no further meaning.

An engulfing bearish pattern in an uptrend is a small white body, not a doji, followed and enclosed by a bigger black body. Though not necessary, it is better when the black body also encloses the short shadows of the white candle. An exceptional occurrence at the end of an uptrend is a black body followed by a bigger white body; this is called a last engulfing pattern.

A dark cloud cover in an uptrend is a bigger white body that is followed by a black body with a higher opening price than the white body; however, the black candle closes below the midpoint of the white body. Confirmation is required.
A bearish counterattack is a white candle in an uptrend, followed by a black candle, where closing prices of both candles are at the same price level. Confirmation is a must.

A bearish harami in an uptrend is a black or preferably a white body, followed by a small white or black candle that is completely covered by the first candle body. A top reversal signal after confirmation. White-black and white-white combinations are the most common.

A bearish harami cross pattern in an uptrend is a black or preferably a white body followed by a doji that is completely covered by the first candle body. A bearish harami cross pattern needs confirmation.

An evening star is a bigger white body, followed by one or more small black or white bodies with a rising window above the closing price of the first white body. The black candle that follows ideally lays 50% or more within the first white body and has a falling window with the previous candle body.

An evening doji start is a bigger white body, followed by one or more doji’s with a rising window above the closing price of the first white body. The black candle that follows ideally lays 50% or more within the first white body and has a falling window with the previous doji. This is a stronger reversal pattern than the evening star.

A bearish abandoned baby pattern is an evening star with a small body or doji star with a window between the doji and the white and black candle, resulting in an island reversal. The island can have more candles and more than one doji.
A hanging man is a small white or black body close to the high price. It has a long lower shadow, with a minimum size of twice the height of the body. There is a very small shadow or no shadow at the top. A dragonfly doji, a doji with open and close price at the level of the high price, is a specific version of the hanging man pattern. Confirmation is required.

A bearish shooting star is a small white or preferably a small black body, near the low price. It has a long shadow above, minimum twice the size of the body. It has a very small shadow or no shadow below. There is a gap between the bodies of the bearish shooting star and the previous candle. A top reversal only after confirmation. A bearish gravestone doji is a bearish shooting star where the opening, closing, and low prices are all about the same.

Three black crows are three black candlesticks with each subsequent bar making lower closing prices, close to the low of the bar. Opening prices of candles two and three are preferably within the body of the previous candles. Many times, there will be a small reaction before the new downtrend is resumed.

This is the end of my overview of candlestick top reversal patterns. Next article we will have a look at candlestick bottom reversal patterns.

By Anton Eljwizat – Following a report from the U.S. Department of Energy yesterday, showing a decline in crude oil supplies, prices shot up and are now being traded at over $74.00 a barrel. However, I will illustrate below that the oil may very well be heading for a reversal. Forex traders can take advantage of this imminent downward movement by entering short positions at an excellent entry price.

• The technical indicators that are used are the Relative Strength Index (RSI), Slow Stochastic and MACD.

• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 4: The MACD indicates an impending bullish cross, which may signal a downward movement is going to occur in the near future.

Crude Oil 4-Hour Chart

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.