Month: August 2010

Good day to you my Forex friends! Here’s an update on the EURUSD or the fiber as what they call it on Wall Street. The last time I covered the pair (please see my previous post here), it had just broken down from a head and shoulders formation. Since then, the pair has rallied to form what appears to be a rising wedge pattern. In case you do not know, a wedge is generally a continuation pattern as it just represent a short term rebound in prices. Such rally could be due to profit taking or short covers. At present, the pair is encountering some resistance at the neckline of the head and shoulders. If it’s unable to move past the neckline and it falls below the support of the rising wedge, it could slip at least back to 1.2600 level. Further weakness could push it all the way down to the previous low at 1.2150.

The highlight of the week for the euro zone will be the the European Central Bank’s monetary policy decision on Thursday (September 2). The ECB is expected to hold its interest rates again at 1.00% following a drop in German yields. 30-year yield, for your information, have dropped to below 3.00%. And despite the “cheap” borrowing costs, inflation at least in Germany remains subdued. In fact, the latest month-over-month German CPI reading reads at 0.00%. With consumption and inflation low, the ECB would likely be a little dovish about its short term forecast on the euro zone’s economy as a whole. Such could then send investors back to the safety of the USD.

More on LaidTrades.com …

Welcome to another week of stock trading my friends! Last week I noted the possibility of a breakdown in the Dow Jones Industrial Average (please see it here). Well, guess what. The broader S&P 500 appears to confirm where the Dow and the US economy are heading. As you can see from the $SPX’s weekly chart, the index has been forming a head and shoulders pattern. Remember that a couple of month’s ago it already attempted to breakdown but failed. Of course, it was a good thing that that did not happen. The question is, will it be able to avoid a breakdown this time around? Well, the S&P 500 rebounded very well last Friday with a gain 1.66% to close at 1064.59. It, however, would need to print a lot more than that to be completely out of the woods. You see, a a break below the formation’s neckline around the 1,000.00 region could send the broader index just below 850.00. Notice also that both the RSI, which is already below 50, and the MACD, which is in the negative region, are now indicating that the index’s downside move is starting to pick up speed. Let’s just just hope that the index is able to rebound and move past the peeks of the two shoulders and the head to resume its uptrend.

Existing home sales sunk by 27.2% to a 3.83 million seasonally adjusted annual rate which was below the market forecast of 4.72 million in July. This marks the accounts lowest tally since 1999! New home sales also weakened significantly to 276,000 from 315,000. Last year, sales were supported by the government’s tax credits. Sales, however, became subdued when this program expired. As I’ve mentioned in my previous post, perhaps the government could support the industry by re-introducing the same program to encourage home buyers.

Last Friday, Fed Chairman Bernanke’s said that he foresees a rebound in the US economy in 2011. He added that the Fed is prepared to use another set of “unconventional measures” if the economy does not pick up as desired in the near term. Do I hear quantitative easing? Well, the Fed’s benchmark interest rate is already at 0.00-0.25% so the next thing that the Fed can do is to do another set of QE and/or reduce the financial institution’s reserve ratio to provide more liquidity in the market.

In my opinion, both the Congress and the central bank should work hand in hand in order to prevent the economy from collapsing again. Because if it does collapse, the average Joes would find themselves in worse shoes. Unemployment would almost certainly pick up with a deterioration in market confidence. This would not only affect the US but would also send shockwaves across the globe. There is no such thing as a perfect decoupling because of globalization and trade. Hence, if the US sinks, other economies, even the emerging ones would find themselves in a very difficult situation.

Anyway, the week will kick off for the US with the release of the Conference Board sentiment index on tomorrow (August 31). The CB consumer sentiment is forecasted to rise slightly to 50.9 from 50.4. Though the market’s confidence as of late has been obviously dampened due to the disappointing home sales figures. ADP employment change results and the ISM manufacturing index are also due on Wednesday (September 1). The ISM index is seen to have softened a bit to 53.3 from 55.5. Remember, however, that the latest tally of the Philadelphia Fed Manufacturing index showed a drastic drop to -7.7 from 5.1. Such could also reflect in the ISM’s number. On Thursday, pending home sales, which are anticipated to have dipped again by -1.5% after already losing by 2.6%, will be reported. still, a worse-than-projected count could happen given the previous results of the new and existing home sales. The spotlight, of this week though will be the NFP report of Friday. Firms are seen to have slashed another 101,000 jobs which could push the economy’s unemployment rate to 9.6% from 9.5%.

Given the recent data and the present market forecast, worse-than-expected results are very much likely in at least one of the accounts. Such could send the market back to risk aversion mode which then could send the major indices into critical levels. Still, anything is possible. Let’s just hope for the best and prepare for the worse. But given the uncertainties, I suggest that you at least lighten your positions in equities.

More on LaidTrades.com …

By Dan Eduard – Gold prices have been rising substantially over the last few weeks, as the commodity is being seen more and more as a safe haven while the pace of the global economic recovery is being questioned. As we will show through a number of technical indicators, prices may have reached a saturation point, meaning a downward correction could take place.

For our analysis, we will be looking at the 8-hour chart for gold, provided by Forexyard. The technical indicators being used are the Relative Strength Index (RSI), the Williams Percent Range and the MACD.

1. As can be seen, the RSI is currently trading right above the upper resistance line, at the 70 level. This is typically seen as a sign that gold is in overbought territory and a bearish correction is likely to take place.

2. The Williams Percent Range is trading right at the -20 level. Anything above this level is considered to be overbought, and is usually considered to be a sign of impending downward movement.

3. The MACD has formed a cross well above the moving signal in a clear indication that the commodity has reached a saturation point in the market. Traders can expect downward movement, as investors are likely to begin selling off their positions.

Forex Market Analysis provided by ForexYard.

© 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 Dan Eduard – Today’s primary news events will be circling the US and Canada at 12:30 GMT since both economies are scheduled to release a series of figures at that time. The US dollar has been climbing steadily since last week as the market looks to this Friday’s release of Non-Farm Payrolls for more certainty and direction in this time of risk aversion.

Today’s leading news events:

12:30 GMT: CAD – Current Account

– The Current Account is a measure of the difference between a country’s exports and imports and acts as one gauge of a nation’s trade balance. Canada’s deficit has grown somewhat worse than forecasted these past few months, and if today’s reading is anything similar we should see the CAD take a minor dive against some of its currency rivals.

12:30 GMT: USD – Personal Spending

– The Personal Spending report is one of the more important data releases for the US economy, but its impact is muted since the Retail Sales report is issued approximately two weeks earlier. Nevertheless, this report measures the percentage change of consumer spending across the United States for the previous month, making it an accurate gauge of consumer confidence, spending, and growth. If this figure comes in line, or higher, than forecasts, we should see the USD continue to gain a bit more in today’s trading.

Forex Market Analysis provided by ForexYard.

© 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.

Source: ForexYard

This week may provide the decision point for the USD. With Non-Farm Payrolls due this Friday, the uncertainty surrounding the American recovery will undoubtedly be made clearer. Today’s report on US personal spending at 12:30 GMT may provide a glimpse into other growth prospects before this week’s more important data releases get published.

Economic News

USD – USD’s Rise Slowing Prior to NFP Week

The rising value of the US dollar over the past week has begun to meet resistance against a number of currency pairs. The EUR/USD fell as low as 1.2600 on Friday, before returning to trade near 1.2745 in today’s early morning hours. The GBP/USD also hit as low as 1.5390 before popping back up to 1.5545 today.

The sudden rise in risk aversion was one explanation being offered for this most recent USD boost. The American economic recovery is currently being viewed as standing on shaky ground. Estimates are putting growth at lower figures than previously thought, and other data is not supporting the once optimistic signals towards growth. This has led many investors to temporarily shift away from riskier assets and seek safety in the dollar.

This week may provide the decision point for the USD however. With Non-Farm Payrolls due this Friday, the uncertainty surrounding the American recovery will undoubtedly be made clearer. Today’s report on US personal spending at 12:30 GMT may provide a glimpse into other growth prospects before this week’s more important data releases get published.

EUR – EUR Set for Gains; Market Awaits Clearer Direction

The EUR remains in bearish trading patterns against most of its rivals, except for the Japanese yen. The flight away from riskier assets as of late has convinced many investors to seek out safer assets. The EUR/USD currently trades around 1.2745, up slightly since Friday; the EUR/GBP trades near 0.8200 down a bit from last week.

Fiscal concerns continue to plague Europe and, despite forecasts for a sluggish economic recovery in the US, the euro zone remains categorized as too risky for many investors at this time. As such, the EUR continues to trade lower, but recent signals have indicated that risk appetite may be on the rise, with news about monetary easing in Japan and the potential for more positive employment figures from the US NFP report on Friday.

The euro zone will be absent from today’s economic calendar, making the US dollar today’s primary currency for investors. It isn’t likely that any of the major pairs will see sharp movements today or tomorrow, given that this week will experience very significant data releases on Wednesday and Friday. It is more likely that we should expect sluggish, thin trading environments until those releases.

JPY – Bank of Japan to Alter Monetary Policy; Yen Weakening

The Japanese economy has been brought sharper into focus this past week with news surrounding the speculation that the Bank of Japan (BOJ) will alter its monetary policies to help weaken the yen. It appears the BOJ has called for an emergency meeting this morning to discuss easing its monetary policy.

With the USD/JPY rising towards highs unseen in over a decade, Japan appears anxious to push back against its currency’s rising value but is hesitant in doing so. While the JPY continues to advance, the BOJ has appeared to have come to the decision to alter its policies and attempt a weakening of its currency before its export industries suffer any further. This morning’s policy statements by the BOJ will likely set the trend for the yen for the next few weeks.

Crude Oil – Oil Prices Rising on Market Optimism, Growth Forecasts

The price of spot crude oil has dipped as low as $71 a barrel this past week. However, as of this morning, news of a speculative drop in safe havens such as the USD and JPY has helped bring commodity prices back up slightly. The price of crude oil has rebounded back above $75 a barrel as a result.

Last week’s rising dollar was explained as being part of risk aversion. This week it appears as if risk aversion has begun to come to an end and the USD is expected to drop a fair amount. Optimism about a speedy recovery is back in swing and this has many speculators forecasting a rise in oil demand. If this speculation proves true then we should see oil prices reaching back towards $78 a barrel, if not higher, over the next few weeks.

Technical News

EUR/USD

A number of technical indicators are showing this pair is in overbought territory, indicating a downward correction could occur today. The Relative Strength Index on the 4-hour chart is approaching the upper resistance line, while the Williams Percent Range on the 8-hour chart is right at the -20 mark. Traders are advised to go short with tight stops today.

GBP/USD

Most technical indicators are showing the pair trading in neutral territory at the moment, which typically means that no major price shifts will occur today. That being said, the Relative Strength Index on the 8-hour chart is showing the pair in overbought territory, meaning the potential exists for a downward correction. Traders may want to take a wait and see approach today, as a clearer picture may present itself later on.

USD/JPY

There are a number of technical indicators showing that this pair is currently in overbought territory, meaning a bearish move is likely at some point today. This includes the Stochastic Slow on the 4-hour chart, which shows a cross has formed above the upper resistance line. In addition, the Williams Percent Range and Relative Strength Index on the 8-hour chart both show the pair as overbought. Traders are advised to enter into short positions today.

USD/CHF

Technical indicators are showing that the pair is in oversold territory, meaning upward movement may occur later in the day. The MACD on the 8-hour chart is showing a cross has formed well below the signal, while the Relative Strength Index on the daily chart is hovering right along lower support line. Traders are advised to go long in their positions today.

The Wild Card

Russell 2000

According to a number of technical indicators, the Russell 2000 has reached overbought territory and is likely to fall over the course of the next day. The Relative Strength Index on the 4-hour chart is hovering right over above the upper resistance line, while the Williams Percent Range on the 8-hour chart is currently well about the -20 level. CFD traders may want to enter into short positions today, as a bearish correction is likely to occur.

Forex Market Analysis provided by ForexYard.

© 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 – Equity markets rebounded late in the week as slightly better than
expected revised GDP 1.6% from 2.4%when the market was
expected a revision down to 1.4%. Additionally, Ben Bernanke
comments that the Fedwould ensure a recovery in the US markets
gave the markets a reason to celebrate. For the week, the S&P500
Index fell 0.66 percent.

Click here for the full 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.

EURUSD remains in downtrend from 1.3333, and the bounce from 1.2587 is treated as consolidation of downtrend. Resistance is at the upper border of the falling price channel, as long as the channel resistance holds, downtrend is expected to continue and next target would be at 1.2500 area. However, a clear break above the channel resistance will indicate that a cycle bottom is being formed on 4-hour chart, then further rise towards 1.2921 key resistance could be seen.

Daily Forex Forecast

By Albert Thompson – Best Forex Trading Strategies

In this article will analyze main strategies in the way finding the Best Forex Trading.

Try a Demo Account
A lot of traders make use of demo account to perfect their best Forex trading strategies before getting embarking on real trade. The demo account gives you opportunity to trade, practice and perfect your strategies without your real money

Automated Forex Program
Automated software is a program which serves as robots that can start and end trades on your behalf in the foreign exchange market. The automated software require internet access to market information which results to finding high and profitable trading opportunities which they will invest in. As soon as they locate a trading opportunity which they calculate as being low risk, they will perform the trade with whatever capital you have given it. The program will go ahead to track the trades performance, making sure that you are not losing and the trend continues. The moment the trend changes, it trades the now bad investment away, protecting you from debt and loss.

This program will completely take trading out of your hand and you do not have to worry about the market trends. Using automated programs is one of the best Forex trading strategies for beginners and traders who do not have much experience.

Signal generator program
Another major program for foreign exchange trading strategies is signal generator. This program acts like stock picker but in the world of Forex. The program keeps constant watch on the market behavior round the clock similar to the automated trading program to locate high probability and trends that are reliable, but it will not perform your trade and will not invest for you either. The signal generator will generate and send the pick to you and expects you to trade according to the information it has given you. Definitely this will require that you know how to put them into action and trade. It is usually recommended for traders who want to be in control of their trading.

Broker’s control program plus Automated Forex Program
Another and very important strategy is to find the best Forex trading method is to focus in the possibility of having tools to analyze broker’s behavior. Almost everybody thinks that the broker, normally the robot or software owner will do his best to maximize investors profits, and by this reason investor usually trust and don’t think that it would be useful to control, to keep the eye on the brokers trades.

You should think that once your money goes out of your pocket, it goes directly to broker’s hands, so logically it would very important that the best Forex trading must allow the investor to “spy” brokers operations. In the market there is a technology named BDT -Broker-Detection Technology- that you can check here Best Forex Trading What this technology do in really simple terms, is that analyze each trade extracting a vital piece of information, then displayed on your trading chart.

It should inform about facts like trades per day, velocity, (return per dollar multiplied by the number of times it trades each day), risk per trade. Also should work with outstanding profitability on FOUR of the main currency pairs, the EUR/USD, USD/JPY, GBP/USD and the USD/CHF. And it would be excellent if also works with ECN Brokers as well as 4 or 5 digit Brokers.

Summary
If you are really committed with the best Forex trading strategies then you must consider Drew Collison who is an automated Forex trading consultant with vast knowledge of the market and he provides information on what you should know before getting involved with the Forex market and how to go about it, just click in this link Best Forex Trading

About the Author

Albert Thompson is a professional Forex Market Investor specialized in Forex Robots and control over brokers. Their articles and conferences are excellent references to discover the secrets behind brokers, and Forex Trading. http://auto-forex-trading.info

By Ethan Cruz – Have you actually wondered why is it that quite number of traders succeed inside the forex trading market while 90% of foreign exchange traders fall short to accomplish accomplishment? Below are 10 significant good reasons:

1) Trying to find Uncomplicated and Quick Money

I have to emphasize that forex trading isn’t really a get rich fast scheme. Achieving a steady lucrative results out of fx trading is difficult. It needs some foreign currency training, fortitude, self-control, emotion management, and so forth. to get you to the world of productive currency trading.

2) Seeking the Holy Grail

I have people asked me, “What will be the best foreign exchange trading process around?” There is not this kind of trading techniques in foreign exchange trading. Several foreign currency traders invest many years seeking to come across the Holy Grail of foreign currency trading, but failed to discover a single. The major cause may be the forex trading marketplace modifications each individual moment.

3) Inadequate Proper Training

One of the good reasons forex traders fail is since they really don’t have sufficient appropriate education/ training. Some people who came into foreign exchange trading really don’t even open a foreign currency book or educate themselves about foreign currency trading. You need certain forex trading instruction education, a fx course, a forex trading method after which a mentor to coach you.

4) Deficiency of Discipline

Discipline is so essential in fx trading that it is going to reward you by accumulating your earnings in case you abide to it, and could turn your forex trading account into absolutely nothing whenever you lack of it.

5) Not enough Tolerance

Foreign currency traders chase after the price simply because they do not need to miss a golden trading chance. In forex trading, there’s no such factor as golden opportunity to me due to the fact every foreign currency trading setups are equally important.

6) No Cash Management

Most forex traders entirely overlook in regards to the danger of foreign currency trading. They only consider about how significantly they’ll win and never strategy for your worst. Funds management limits your chance on each and every single buy and sell to ensure that you’re capable to buy and sell tomorrow, the future week, month and many years.

7) Failure to Manage Feelings

Be a perfectionist in pursuing your foreign currency trading plan. Stay calm should you lost a buy and sell, you know that you will find infinite odds to generate an winning chance back. Do not let greed take above you!

8) Having Unrealistic Expectations

People occur into forex trading thinking they’re going to be prosperous and generate tons of cash, from $1,000 after which reaching $100,000 in a very brief time frame. You will know why that’s untrue if you could have gotten my totally free forex ebook.

9) Not enough Mentorship and Assist

Once you might have a trading method, getting a mentor not only offers you foreign exchange suggestions, but in addition the capability to get nearer to achievement as your understanding curve is going to be shorten, your doubts answered and self-confidence boosted.

10) Looking for Excitement

Some other foreign exchange traders may possibly feel it is quite fascinating to trade the forex trading market, but to me, foreign currency trading is dull if I desire to be worthwhile and strain free of charge.

Additional Resources:

10 Online Foreign Exchange Trading Traps
How To Avoid The 5 Trading Myths In Forex Trading
10 Mistakes In Forex Trading

About the Author

The author, Ethan Cruz, is a professional forex trader who teaches traders how to trade the foreign currency market for their long term financial freedom.

You can now download a free and proven currency trading business plan at http://www.toptradingsutra.com/

By Warren Seah – A stop loss order will automatically close a trade at a set level in order to prevent further losses. If a buy order has been placed, then the stop level is set at a price that is lower than the buying price. On the other hand, if a sell order was triggered, then the stop will be placed above the selling price.

A general rule is that the exit strategy must coordinate with a trader’s entries and his overall trading system. For trending system, it is required that the trader set a bigger stop loss level which allows more room for the trade to breathe. If it is a contrarian system or breakout system, a small stop loss should be set so that trade will exit immediately if it is a bad trade. Thereby, traders’ loss will be limited in such forex trading system.

There are a variety of stops that one can incorporate into a system.

1. Initial Stop This is the first stop set at the beginning of the trade. This stop is identified prior to entering the market. It is used to calculate the position size of the position at which to trade and this is also the largest loss a trader will take in the current trade.

2. Trailing Stop Develops as the market moves. This stop enables the trader to lock in profit as the market moves in the favor. Trailing stop ensures that the stop loss follows the price movements closely as the trend develops. This is to prevent any sudden market movements from taking out profits should the trend starts to reverse.

3. Two Bar Trailing Stop This is used in a trend if the market seems to be losing momentum and a reversal is anticipated.

4. Moving Average Trailing Stop Moving average indicator is most common used for trailing stop loss.

5. Average True Range Trailing Stop Also called ATR indicator. This indicator is mostly used by turtle traders or trend following traders to determine market volatility and place their stop loss away from volatitily and protecting their profits at the same time.

6. Parabolic SAR Trailing Stop Another indicator widely used for placing your stop loss.

6. Channel Trailing Stop Also a commonly used trailing stop technique for turtle traders or trend following traders.

Is Your Stop Loss Selection Based on Market Dynamics?

It means that have you taken in to account market conditions that will tell you how much room you need to give the trade to breathe so that your trade will not be exited due to market noises and repeatedly stop out? There is no perfect stop loss strategy but the most ideal stop loss strategy has to be discovered and worked out by the trader via back testing and forward testing.

About the Author

Warren Seah

Forex Trailer is a fully independent software EA which manages traders’ positions in the foreign exchange market. Forex Trailer ensures they are closely monitored to close for optimum profits. It works by managing the trader’s stop loss level or take profit levels and thereby locking in profits for the trader.

Download Your Stop Loss EA Now