Month: June 2010

Source: ForexYard

The Dollar slid against its major currency counterparts following a rally in global equity markets. The rally prompted investors to turn to higher yielding riskier assets and away from the USD. With recent market optimism, traders may continue to see a small downward trend in the U.S. Dollar as its positions are unwound in exchange for higher yielding assets.

Economic News

USD – Dollar Drops on Renewed Risk Appetite

The U.S dollar fell against most of its major currency rivals yesterday, hitting its lowest level in nearly a week against the EUR, as gains in stocks and commodities prompted investors to wade into riskier currency trades. By yesterday’s close, the USD fell against the EUR, pushing the oft-traded currency pair to 1.2250. The Dollar experienced similar behavior against the GBP and closed at 1.4740.

There was a quiet day of news from the U.S. as there were no major economic data releases on the calendar yesterday. However, FOMC Member Bullard spoke about the state of the U.S. economy. He pointed out that the U.S. economy is likely to have achieved “complete recovery” in the third quarter, though employment growth will continue to lag behind. This has caused investors to buy commodity-linked and higher-yielding currencies.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.

Today’s TIC Long Term Purchase release is expected to have a strong impact on the U.S currency. Any result could be a surprise, and the dollar could go either way as a result. In any case, traders are unsure how the market will react to today’s data. A weak report could feed risk aversion, boost treasuries and actually aid the dollar. Then again, a better than expected result might be seen as a sign of relative U.S. economic strength, and lift the dollar.

EUR – EUR Gains as Stock Market Rallies

The EUR rallied yesterday against the dollar as gains in global stock markets lifted risk appetite and prompted traders to pare back bets against the single euro-zone currency. The EUR moved further away from a recent four-year low to trade above $1.2250, its highest in more than a week. Stronger-than-expected euro zone industrial output further boosted the currency. Euro zone industrial output in April surged year-on-year more than in any month in almost two decades, reassuring investors the recovery could be gathering pace.

Sterling pound was also given a boost against the dollar as the UK’s newly created Office for Budget Responsibility said it expected government borrowing to fall slightly faster than originally thought. The pound was up around 1.3% versus the dollar at $1.4740 and outpaced the EUR slightly to trade at 82.95 pence.

Today, there is plenty of economic news coming out of both Britain and the euro-zone that will determine the GBP and EUR levels by the end of today’s trading. From the EU, there is the German ZEW Economic Sentiment figure. From Britain, the most important news will be the CPI figure and Inflation Report Hearing. All of these news events will be important in helping set the strength of the GBP and EUR in this week’s trading.

JPY – BOJ Monthly Rate Report on Tap Today

The Japanese Yen completed yesterday’s trading session with mixed results versus the major currencies. The JPY fell against the GBP yesterday, pushing the oft-traded currency pair to 135.10. The JPY was broadly unchanged vs. the EUR yesterday and closed its trading session at around the 111.95 level. The JPY did see some bullishness as well as it gained 40 points against the USD and closed at around 91.70.

The Japanese market should have a heavy effect on the JPY versus its major currency counterparts, as the Overnight Call Rate will be announced today. The rate is expected to remain unchanged but traders should pay close attention to the BoJ Press Conference that will follow to look for any predictions of Japan’s economic future. A bullish statement could lead some traders to believe the BoJ is forecasting a rosier financial climate in Japan.

Crude Oil – Crude Prices Up on Improved Economic Outlook

Oil prices rallied by 2 % to around $75 a barrel during yesterday’s trading session as renewed optimism about the global recovery boosted the outlook for fuel demand and sent Asian and European stock markets to their highest level in four weeks.

Oil received an early lift from data showing euro zone industrial production in April surged year-on-year more than in any month in almost two decades, giving investors renewed confidence about the global economy.

A weaker U.S. dollar tends to boost the price of dollar-priced commodities as it lowers the price to holders of other currencies and reduces the value of the currency oil producers receive for their product.

Technical News

EUR/USD

The Relative Strength Index on the 8-hour chart shows the pair trading well in overbought territory, indicating that a bearish correction could take place later today. This sentiment is echoed by the Stochastic Slow on the daily chart, which shows a cross forming above the upper resistance line. Traders are advised to go short with tight stops today.

GBP/USD

According to the Relative Strength Index (RSI) on the 2-hour chart, the pair is overdue for a downward correction, as it has been trading in overbought territory for some time. Most other indicators, including the RSI on the 8-hour chart, show the pair approaching, but not quite in, the overbought region. Traders are advised to go short today.

USD/JPY

Most technical indicators, including the Bollinger Bands on the daily chart and the Stochastic Slow on the 8-hour chart, show the pair currently trading in neutral territory. Taking a wait and see approach may be the preferred option for today.

USD/CHF

According to the Stochastic Slow on the 2-hour chart, the pair is currently trading in neutral territory following last night’s bearish cross and subsequent downward correction. Most other indicators do not give a clear direction for the pair at the moment. Traders are advised to wait for a clearer picture to present itself before entering into this pair today.

The Wild Card

Nasdaq 100

The Stochastic Slow on the daily chart shows a cross forming above the upper resistance line, indicating a bearish correction is due to take place in the near future. This sentiment is confirmed by the Relative Strength Index on the 8-hour chart, which shows the CFD in overbought territory. Traders are advised to go short with tight stops today.

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 Analysis by Finexo.com

EUR
The euro’s rally showed signs of faltering yesterday, as Moody’s decision to cut Greece’s debt rating to junk reminded forex traders that Europe’s debt crisis is from over. Release of the news just before Monday’s closing bell saw the pair slip back down and head towards $1.22. While expected, the news of the downgrade curbed an earlier burst of short covering that took the currency to almost $1.23 – its highest level in more than a week.  Moreover, the single currency dropped to a new 19-month low against the British Pound and retreated from a near one week high versus the Japanese Yen.

Major upcoming events include the German ZEW report, which is expected to show that Europe’s leading economy is on a solid path to recovery. Last month’s number reflected the economic turmoil in Europe, and as result the figure fell to 45.8. German exporters have been benefitting from the weaker euro, and a stronger ZEW number could indicate that the recent debt crisis might be moderated by economic recovery. Economists predict a small recovery in the key economic figure to 48.7 points, a reflection of the relative stability seen over the course of the past few weeks.

GBP
Official comments to reduce public borrowing have boosted the British currency. However, news of Moody’s downgrade of Greece’s debt has renewed risk aversion – resulting in a stronger Dollar and a weaker Pound.  As a result, after trading just above 1.4800 yesterday, the GBP/USD turned bearish and consolidated around 1.4740. Today’s Inflation Report Hearing will be significant in gauging the BOE monetary. A higher inflation figure could be bullish for the pound, as investors would this to lead to higher interest rates in the near future.

JPY
The Yen was little changed after the Bank of Japan announced its decision to hold the overnight call rate steady at 0.10%. The central bank announced that it will offers up to ¥3 trillion in loans to commercial banks in a new loan plan aimed at redirecting money to industries with high growth potential.

Forex Market Review & Analysis by Finexo.com

Disclaimer: Trading the foreign exchange (Forex) carries a high level of risk, and may not be suitable for all investors. All information and opinions contained on this website are to be used for general informational purposes only and do not consitute investment advice.

By Dan Eduard – For today’s technical tips, we will be looking at the ForexYard 8-hour chart for MSCI Taiwan. As will be shown, following a prolonged upward trend lasting several days, the CFD is overdue for a bearish correction.

The technical indicators we will use to support our theory are Bollinger Bands, Relative Strength Index (RSI) and Stochastic Slow.

1. As is clearly shown, the CFD is currently trading at the upper support line of the Bollinger Band. This typically indicates that a trend reversal is likely to take place in the near future. In addition, traders can see that the Bollinger Bands are beginning to widen, indicating a price shift is likely to occur soon.

2. If we refer to the RSI chart, it is seen that the CFD is currently trading well above the upper resistance line. Usually when we see an instrument this high in overbought territory, a bearish correction is imminent.

3. Finally, the Stochastic Slow provides us with confirmation of our original hypothesis. As is clearly shown, a cross has formed above the upper resistance line. This lends further support to the theory that a downward correction will take place soon.

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 eToro – For the fifth out of 6 days, the Euro has climbed touching 1.2300, as investor continue to take more risk despite rising Spanish yields.  The short covering should continue to 1.2500, if the Euro is able to clear the 20-day moving average at 1.2230.Click here to read the full daily Review

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.

By Elliott Wave International

Some people like to get outside on the weekends, maybe playing tennis or working in the yard. Some people like to visit their friends or cook a big meal or go out to see a movie. And some people who are passionate about their work — such as Elliott Wave International’s futures analyst Jeffrey Kennedy — like to stare at hundreds of price charts on their computer screen to find patterns that point to trade setups. We used to worry for his health but not anymore, because he’s been doing it for years and he comes up with some neat stuff. A case in point is his discovery of a two-bar pattern that he named the Popgun. Find out more in this excerpt from the Club EWI eBook, called How to Use Bar Patterns to Spot Trade Setups.

* * * * *
Excerpted from How to Use Bar Patterns to Spot Trade Setups by Jeffrey Kennedy

The Popgun
I’m no doubt dating myself, but when I was a kid, I had a popgun – the old-fashioned kind with a cork and string (no fake Star Wars light saber for me). You pulled the trigger, and the cork popped out of the barrel attached to a string. If you were like me, you immediately attached a longer string to improve the popgun’s reach. Why the reminiscing? Because “Popgun” is the name of a bar pattern I would like to share with you this month. And it’s the path of the cork (out and back) that made me think of the name for this pattern.

The Popgun is a two-bar pattern composed of an outside bar preceded by an inside bar. (Quick refresher course: An outside bar occurs when the range of a bar encompasses the previous bar and an inside bar is a price bar whose range is encompassed by the previous bar.) In Chart 1 (Coffee), I have circled two Popguns.

So what’s so special about the Popgun? It introduces swift, tradable moves in price. More importantly, once the moves end, they are significantly retraced, just like the popgun cork going out and back. As you can see in Chart 2 [not shown], prices advance sharply following the Popgun, and then the move is significantly retraced. In Chart 3 [not shown], we see the same thing again but to the downside: prices fall dramatically after the Popgun, and then a sizable correction develops.

How can we incorporate this bar pattern into our Elliott wave analysis? The best way is to understand where Popguns show up in the wave patterns. I have noticed that Popguns tend to occur prior to impulse waves – waves one, three and five. But, remember, waves A and C of corrective wave patterns are also technically impulse waves. So Popguns can occur prior to those moves as well.

As with all my work, I rely on a pattern only if it applies across all time frames and markets. To illustrate, I have included two charts of Sirius Satellite Radio (SIRI) that show this pattern works equally well on 60-minute and weekly charts. Notice that the Popgun on the 60-minute chart [not shown] preceded a small third wave advance. Now look at the weekly chart [not shown] to see what three Popguns introduced (from left to right), wave C of a flat correction, wave 5 of (3) and wave C of (4).

There’s only one more thing to know about using this Popgun trade setup: Just be careful and don’t shoot your eye out, as my mom would say.

EURUSD’s bounce from 1.1876 extends to as high as 1.2297 level. Now the pair is facing the upper boundary of the price channel on 4-hour chart. Key support is now at 1.2100, as long as this level holds, one more rise to test the channel resistance is possible, a clear break above the channel resistance will suggest that the fall form 1.3817 (Mar 17 high) has completed at 1.1876 already. However, pullback would more likely be seen before breaking above the channel resistance, and a breakdown below 1.2100 key support will indicate that a cycle top has been formed and the bounce from 1.1876 has completed, then another fall towards 1.1800 could be seen.

Daily Forex Forecast

By Adam Hewison – Markets can get oversold, but when is a market really oversold?

In my new video I show you a specific example of how markets can become oversold, stay that way, and why sometimes a relief rally doesn’t change anything.

This is a short video and it’s one I highly recommend watching as it will help you in the future to be aware of the oversold phenomenon.

I invite you to take a look at this new video with no registration and no charge.

Watch the short new EUR/USD Video Here..

I’m also interested in your views or strategy dealing with an oversold market, just leave us a comment below.

All the best,

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

By CountingPips.com

The latest COT data out on Friday showed that futures speculators have increased their long bets for the U.S. dollar against the euro as of June 8th, according to the Commitments of Traders (COT) data released by the Chicago Mercantile Exchange.

Non-commercial futures positions, those taken by hedge funds and large speculators, were net short the euro against the U.S. dollar by 111,945 contracts after being net short the euro by 93,325 contracts the week before on June 1st. The net short euro positions had declined for three straight weeks from the record high of 113,890 weeks as of May 11th before the June 8th data was released.

The COT report is published every Friday by the Chicago Mercantile Exchange (CME) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are expecting that currency to fall against the dollar and net longs expect that currency to rise versus the dollar.

Other major currencies net short in the CME futures market against the dollar as of June 8th were the British pound, Japanese yen, Swiss franc and New Zealand dollar while the Australian dollar, Canadian dollar and Mexican peso all had a net long amount of contracts.

The British Pound Sterling net shorts increased to 74,680 from a total of 70,454 were reported net short on June 1st while the Swiss franc positions were net short 11,415 contracts after 14,724 net shorts the week before. The Japanese yen net short position was 12,547 contracts on June 8th compared with 6,484 net short contracts on June 1st as investors have trimmed their yen short positions quite a bit from being short 65,612 contracts on May 4th to 12,547 on June 8th.

The New Zealand dollar futures positions fell over to the short side of 869 short contracts after being net long 15,586 contracts on June 1st as NZD positions have fallen for four straight weeks.

The Australian dollar futures positions have declined for eight weeks in a row, according to the data. AUD positions were net long by 8,435 contracts as of June 8th, a decrease in long positions after totaling net 15,045 long contracts on June 1st and down from a total of 80,674 longs on April 13th.

The Canadian dollar long positions were net by 22,510 contracts and almost unchanged after 22,154 net longs the week before while the Mexican peso long contracts edged lower for the week to 17,426 long contracts from 19,773 longs the prior.

COT Data Summary (vs. the US Dollar)

Euro record net shorts at 111,945 contracts
British Pound net shorts at 74,680
Swiss Franc net shorts at 11,415
Canadian Dollar net longs at 22,510
Australian Dollar net longs at 8,435
New Zealand Dollar net shorts at 869
Mexican Peso net longs at 17,426
Japanese Yen net shorts at 12,547

Go to the Commitment of Traders CME futures data

How Candlesticks Can Turn Your Portfolio Gold

By Adam Hewison – I have just finished a short video on the spot gold market using Japanese candlestick charts. In this new video I show you some important elements that you would not necessarily see using traditional Western charts.

I invite you to take a look at this new video with no registration and no charge.

Watch the New Gold Video Now…

Whether you agree, disagree, or just want to comment on this video, please do so below.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

By ForexYard – A slow news day as well as general improved investors’ sentiment helped push riskier currencies higher versus the safe heaven USD and JPY. The EUR’s rallied against the USD was helped by an unsexed jump in Euro-Zone industrial output which signaled the industrial sector has so far not been greatly affected by the Euro-Zone debt crisis.

The EUR is trading at $1.2240, up from $1.2077 late in New York Friday. The USD is at Y91.91 against the Yen, from Y91.62. The EUR is up at Y112.45 from Y110.65. The U.K. Pound was higher at $1.4731 from $1.4516.

Sterling moved higher as the country’s borrowing forecasts were cut to GBP106 billion in 2012 to 2013, from GBP110 billion seen earlier. Furthermore, over the weekend, Bank of England monetary policy committee member, Andrew Sentance, hinted at a possibility of imminent interest rate hikes to battle growing inflation which help support the Pound versus the USD as well as EUR.

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.