Month: July 2010

Source: ForexYard

The U.S currency declined against the EUR on Thursday after European Central Bank President Jean-Claude Trichet calmed investors’ concerns about European bank stress tests and the central bank’s liquidity programs. Positive employment data in the U.S. also encouraged investors to move away from the safe havens of the dollar, Japanese yen and gold and into equities.

Economic News

USD – Dollar Falls after Jobless Claims Data

The U.S dollar dropped against most of its major counterparts as the International Monetary Fund raised its global growth forecast and U.S. initial jobless claims dropped last week, spurring demand for higher-yielding assets. Initial claims for unemployment benefits in the U.S. decreased to 454k in the week ended July 3 from 475k in the previous week, the Labor Department reported.

Against the yen the greenback rose to 88.20 yen, up 0.6% on the day and edging further off a seven-month low of 86.96 yen hit at the start of the month, as yields on U.S. Treasuries rose, making them a bit more attractive to Japanese investors.

Today, a lack of news events will likely lead to a low liquidity situation in the marketplace. Traders are warned that in situations like these, erratic price movements can occur for seemingly no reason. With the USD fairly bearish at the moment, expect price changes to work against the greenback.

EUR – EUR Hits Session Highs

The European currency touched a 2 month high against the U.S dollar on Thursday as U.S. and Australian economic data restored faith in the global economic recovery and boosted appetite for higher-yielding currencies.

A report in the United States showing a drop in weekly jobless claims also helped support the euro-zone single currency and other riskier assets. The EUR climbed to as high as $1.2700, its highest since mid-May, and was last up 0.3% at $1.2672.

The EUR also appreciated on speculation that stress tests for European banks were assuming smaller losses on Greek bonds than some investors anticipated. European Central Bank President Trichet said that the publication of stress tests should be followed by action where needed. He also emphasized that the ECB is still providing unlimited liquidity to the financial system. Analysts said that a move to $1.30 in the EUR may hinge upon the results of the stress tests for the European Banks, but Trichet’s encouraging words should provide support for the currency in the next few days.

JPY – Risk Appetite Pushes the Yen Lower

The yen was one of the day’s biggest losers as gains in European and U.S. stocks prompted investors to shed long positions in Japan’s currency. Lower-yielding currencies like the yen tend to fare poorly when investors show a greater appetite for risk, seeking higher-yielding currencies and assets like stocks and commodities.

The yen traded near a 2 week low against the EUR as renewed signs the global economy is weathering Europe’s debt crisis sapped demand for the relative safety of the Japanese currency. The yen is set for its biggest weekly drop against the Australian dollar since December as Asian stocks extended a global rally after the European Central Bank President said the economic recovery is gaining momentum. Japan’s currency was at 77.57 against the Australian dollar from 77.52 yesterday, and is set for a 4.9 % drop this week.

Crude Oil – Oil Rises Above $75 a Barrel

Crude prices rose nearly 2% Thursday as positive sentiment about the global recovery dominated the market and an inventories report included a surprisingly large decrease in crude stockpiles. Crude oil gained $1.37 to settle at $75.44 a barrel. It was oil’s first rise above $75 a barrel in a week as markets were responding to an overall positive mood across most assets on Thursday.

The optimism stemmed from a positive read on the job market and a boost for global growth expectations from the International Monetary Fund, as well as comments from the European Central Bank soothing fears about bank stress tests.

Nevertheless, while the general trend for crude is bullish, the unleaded gas markets numbers continues to show lackluster demand and might put pressure on the entire energy complex in the days to come.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-bought territory on the daily chart’s RSI indicating a downward correction may be imminent. The downward direction on the 4-hour chart’s RSI also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

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/JPY

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

USD/CHF

The pair has recorded much bearish 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 bullish reversal is imminent. Going long with tight stops may turn out to pay off today.

The Wild Card

AUD/USD

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the 8-hour chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

Forex Market Analysis provided by Forex Yard.

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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 – The Euro rallied as investor saw the 17% stress on Greek bonds as relatively benign.  The Euro tested the 1.270, and is likely to continue to push higher toward 1.30 . 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.

The euro seems to be locked into a bullish trend as investor confidence in the global economic recovery seems to be on the rise. How long this trend lasts will largely be determined by economic indicators from around the world.

Here is a roundup of the days main events:

8:30 GMT GBP – PPI Input

While being more volatile than the CPI, producer prices have also exceeded expectations, showing that inflation is on the rise in the U.K. Following last month’s drop of 0.6% in PPI Input (the main figure), a rise is expected now. Also PPI Output is expected to rise and boost the Pound.

Assuming that the PPI Input comes in at its forecasted level of 0.1%, traders can assume that the GBP will make some gains against its main currency rivals throughout today’s trading. At the same time, if a negative figure is released, investors may turn to safe-haven assets, thereby boosting the USD.

12:15 GMT CAD – Housing Starts

The Housing Starts Report is an annualized number of new residential buildings that began construction during the previous month. This figure might be disregarded if there’s a big surprise in the employment data. After topping 200K, the number of starts slowed down and dropped to 189K last month, causing some worries. We’ll now see if this was a one time drop or a change of trend for USD/CAD.

Should the Housing Starts figure come in at the forecasted 193K, traders can assume the CAD will move up against the greenback in afternoon trading. That being said, an unexpected drop could help the USD after a fairly bearish week.

GBPUSD formed a sideways consolidation in a narrow range between 1.5080 and 1.5240 for several days. Lengthier sideways movement is still possible later today. Near term support is at the lower boundary of the price channel on 4-hour chart (now at 1.5027), As long as the channel support holds, the sideways movement is treated as consolidation of uptrend, another rise to 1.5400 is still possible. Key support is at 1.4873, only fall below these levels could indicate that the upward movement from 1.4346 is complete.

Daily Forex Forecast

By Forex4you.com

Many people start trading Forex because they have heard that you can make a lot of money relatively quickly and easily. After all trading is what all those guys on Wall Street do who drive expensive sports cars and live in luxury apartments isn’t it, and if they can make caboodle’s of cash why can’t I, right?

Well, the first thing you need to know is that forex trading isn’t easy and whilst the rewards can be high they are not generally so for beginners. As far as the guys on Wall Street go, well, whilst some may be excellent traders, most manage other people’s money and they might not be quite so wealthy if they were trading with their own accounts.  Nevertheless once you have mastered the art of trading there is no better way to ensure financial security. I spoke to one successful Forex trader who described his trading experience like “owning my very own private cash machine.” When he wants some money he simply opens up the laptop, starts trading and after a while – bingo! There it is, a cool $500!

It’s a tantalizing thought being able to magic money out of thin air like a fantasy wizard but in truth where does the money actually come from? One of the things you need to be aware of is that the ‘money’ actually comes from other traders who are losing money on their positions whilst you are making money on yours.

It’s a difficult concept to grasp but all currencies are traded in ‘pairs’ like the US dollar and the Japanese yen (written USD/JPY) so when you buy dollars you buy them with yen and someone on the other side of the transaction is buying yen and selling you the dollars. If the dollar strengthens against the yen you make money but the other person has lost money.

This point is important because essentially trading Forex is a competition and in order to make money you have to consistently outwit the other participants in the market. It is this that makes trading ‘difficult’ because you will be up against seasoned pros and people who work for banks with massive research and analysis departments behind them.

So how do you compete in the Forex market? Well, obviously, at first you will start at the bottom of the pile so you may lose some money. It is important therefore to make sure that isn’t too much money. Start by trading small amounts. Many brokers such as forex4you now offer small lot sizes so you can trade in 10s or even single units of currency.

It’s probably not a good idea to chuck in the day job straight away – start by trading in your spare time. Try to trade longer term with small amounts rather than putting the mortgage on a single short term turn of the dice. Longer term trading is easier than intraday trading as the volatility is more controlled, and the beauty of Forex is that it is a 24 hour market so you can trade anytime day or night.

Secondly educate yourself in the dynamics of the market. Learn about technical analysis either from books or by taking a course. Most countries have official bodies or technical analysis societies which run excellent courses. A good grounding in the major techniques is a must.

Become an amateur economist. You need to understand at least the basics of the financial world and how it works. Learn about the factors which influence currency trading such as interest rates, central banks and economic data. Follow the news and political events as these also often influence movements in the Forex markets.  Don’t believe those stories you read about it being easy to make 80% a month. Only very experienced Forex traders can hope to achieve these sorts of returns. Initially you will be looking to break even or make small wins. If you don’t have a million dollar account it is unlikely you’ll be able to start trading full time straight away. Even if you get good it helps to be well capitalized. Many traders who make it past the first hurdle and learn to profit from the market fall at the next because they can’t actually make enough. Remember it’s a slow process like fermenting wine so keep grafting away and eventually the profits will come and your account will grow but don’t put yourself under too much pressure at first.

Next and just as important learn to know yourself; understand your own particular frailties and be aware of how they affect your trading decisions. Many say discipline is important but this is only part of it, self knowledge is probably more important as it will help you become self aware of emotional extremes. Over confidence and under confidence – or put a more traditional way ‘fear and greed’ – describe the cycles of feeling that all market participants go through as they trade. Basically don’t trade when you are over confident or the chances are you will give all your winnings back to the market. After a good run of wins you need to be able to walk away from the table just at the moment when you probably feel most confident and most tempted to make another big trade. It is important to remember that no-one can be right every single time and all traders go through losing streaks. This is where you need to develop resilience. It is often the case that in the depths of despair lie the first glimmerings of hope – and glitterings of riches. You need to be able to get through a string of loses and keep trading even when you least want to, as it is often at moments like that, in the depths of despair, that the best opportunities present themselves.

The final most important piece of advice is to keep going whatever. View trading as an art which you have decided to dedicate a portion of your life to mastering not a means to quick riches. The majority of traders give up too soon or lose all their money too quickly and so miss out on the possible wealth they might have made if they had stuck at it. Remember, the longer you trade and the more experience you amass the higher up the ladder you will get. The more experienced you become the more traders there will be in the market who are less experienced than you and from whom you can make money. If you hang in there, there is more chance you will be the one on the right side of the trade not the other way round, so enjoy the ride, make trading fun, love it with a passion and you’ll get there eventually!

About the Author

Article courtesy of Forex4You.com

By Elliott Wave International

Ralph Nelson Elliott discovered the Wave Principle in the 1930s. Over the decades, his discovery was kept alive by a handful of individuals. A few of those, such as Bolton, Prechter and Frost, educated investors on how to use pattern analysis in financial markets.

To help out Elliott Wave International’s readers in learning the basics of the method, we put together a free 10-lesson online tutorial. Here’s an excerpt. To get it in full, look for details below.

EWI’s Basic Elliott Wave Tutorial
Lesson 1, excerpt

At that time [of his discovery], with the Dow in the 100s, R. N. Elliott predicted a great bull market for the next several decades that would exceed all expectations at a time when most investors felt it impossible that the Dow could even better its 1929 peak. As we shall see, phenomenal stock market forecasts, some of pinpoint accuracy years in advance, have accompanied the history of the application of the Elliott Wave approach.

Under the Wave Principle, every market decision is both produced by meaningful information and produces meaningful information. Each transaction, while at once an effect, enters the fabric of the market and, by communicating transactional data to investors, joins the chain of causes of others’ behavior. This feedback loop is governed by man’s social nature, and since he has such a nature, the process generates forms. As the forms are repetitive, they have predictive value.

The market…is not propelled by the linear causality to which one becomes accustomed in the everyday experiences of life. Nor is the market the cyclically rhythmic machine that some declare it to be. Nevertheless, its movement reflects a structured formal progression. In markets, progress ultimately takes the form of five waves of a specific structure.

Three of these waves, which are labeled 1, 3 and 5, actually effect the directional movement. They are separated by two countertrend interruptions, which are labeled 2 and 4, as shown in Figure 1-1. The two interruptions are apparently a requisite for overall directional movement to occur.

At any time, the market may be identified as being somewhere in the basic five wave pattern at the largest degree of trend.

Read the rest of this 10-lesson Tutorial and see multiple charts now, free! All you need is to create a free Club EWI profile.

By Adam Hewison – We’ve had a number of requests to do a video on crude oil,
so here it is. This market has been largely trapped in a
broad trading range with support coming in around $70/barrel
and resistance around $80-85/barrel. In this new video, I
show you some of the other factors that could tip this market
one way or the other.

As always our videos are free to watch and there is no need to
register. I hope you enjoy the video and please leave your
comments.

Go to the latest Crude Oil Video Now….

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

By Adam Hewison – This market has surprised many people as they were
expecting gold to continue up to the $2000 level
without any problems. Normally when you have such
the unanimous viewpoint, the markets tend to go
the other way. The reason for this is that everyone
who is bullish is normally long the market. The current
breakdown in the yellow metal has not changed the overall
longer-term bullish trend for this market.

The question is, how far will the gold move to the downside,
and where is support? In this new video we point out some very
positive signs as well as some troubling aspects that we see in
this market.

This is a video I think you will get a lot out of and as always
you are free to watch it without registration. I hope that you
have the time to comment about this video and share your thoughts
on the gold market.

Watch the New Gold Video Now…

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

By Adam Hewison – The current rally in the S&P 500 is bringing this market back to key levels
of previous support. Normally when you see rallies back to a previous support
level, that support level then acts as resistance.

In our earlier videos, we discussed the death cross as well as some of the
other key indicators that continue to remain negative on this market. Today,
however, I pinpoint exactly where we think this market is going to run into
trouble and where you should perhaps look to go short.

You are free to watch this video with no obligation and no need to register,
but I would really like to get your feedback on this video as well as this market.

Watch the New Video Now…..

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

By CountingPips.com

The European common currency reached a fresh two-month high versus the US dollar in Forex trading as investors risk optimism has continued on a data-filled day today. The dollar has fallen to other risk currencies such as the Australian dollar, New Zealand dollar and Canadian dollar while the American currency has managed to trade at higher levels versus the British pound, Swiss franc and the Japanese yen.

The euro touched the 1.2700 exchange rate for the first time since May 12th today before retreating a bit lower from the highpoint. The European currency continues to rally versus the dollar from the four-year low point reached on June 7 and from a more recent low point of 1.2151 reached on June 29th.

Helping to boost the risk optimism in the market today was a report by the IMF that raised their growth projections for 2010. The IMF forecasts that global growth will reach 4.6% in 2010 after a previous estimate that global growth would register 4.2% for the year. Although the IMF projects higher growth, it cautions that the European sovereign debt crisis presented risks to this outlook.

Asia will continue to be the driver of growth as the IMF forecasts Asia to rise by over 7% this year while the US is forecasted to grow by 3.3%, Japan by 2.4% and the euro area by 1.0%. Also, the United Kingdom is forecasted to grow at 1.2% in 2010 while Canada is expected to increase by 3.6%.

Other economic reports released today included a much more than expected rise in Australian employment for the month of June, according to the Australian Bureau of Statistics. Australia’s economy added approximately 45,000 workers in June following a decline of approximately 23,000 workers in May and topped forecasts expecting a gain of 15,000 jobs. This news had a positive impact and boosted the Australian dollar in early forex trading action.

The European Central Bank and the Bank of England had their interest rate announcements today and both held their rates at their current levels as widely expected at 1.00% and 0.50%, respectively.

Economic news out of the U.S. today showed that weekly jobless claims decreased by more than expected in the week that ended on July 3rd, according to a release by the U.S. Labor Department. New jobless claims fell by 21,000 workers to a total of 454,000 unemployed workers while the 4-week moving average of unemployed workers decreased by 1,250 workers from the previous week to a total of 466,000.

Market forecasts were expecting jobless claims to come down to 460,000 workers following the prior week’s 475,000 claims.

Workers seeking continuing claims for unemployment benefits for the week ending June 26th also decreased for the week. Continuing claims dropped by 224,000 workers to a total of 4,413,000 unemployed workers while the four week moving average of continuing claims dropped by 18,750 workers to a total of 4,554,000.

Forex Chart: EUR/USD Daily –The euro/dollar pair increasing higher in Forex trading today and touching the 1.2700 exchange rate for the first time in two months. The daily chart below shows this pair is trading right at the downward trendline that has held since December 09 and presents the euro/dollar with a challenge to its recent rally from off it 4-year lows in early June.