Month: August 2010

Hello trading fans! Last week gold provided the market with a scare when it temporarily broke its long term uptrend line (kindly see my previous blog here). As you know, a break of an uptrend could spell disaster given the possibility of a reversal. Hence, it’s a good thing that gold managed to pull itself back above the uptrend line again. Gold actually found a nice support at 1,160.00 after it cut through the uptrend line. And now that it is trading above it once more, it’s safe to say that it could continue its journey back north. A break, however, of the uptrend support could once again push it towards 1,160.00. In my opinion, it is imperative for it to clear its all-time high 1,265.05 to be able to extend its present uptrend. A failure to do so could send it in consolidation mode. Worse, gold could even reverse and give back at least part of its gains.

Fundamentally, the demand for gold rose last week, pushing its price up, when the US’s GDP printed a slower-than-projected growth of 2.4% (versus 2.5%) after expanding by 3.7% during the first leg of the year. Prior to that, both core and headline durable goods for the month of June also unexpectedly fell by 0.6% and 1.0%, respectively. This week, frail US economic data has continued to subdue the confidence in the market, causing investors to seek shelter in gold. Pending home sales (-2.6%) and factory orders (-1.2%) likewise posted some unexpected declines.

Gold could experience some volatility tomorrow with the release of the US’s non-farm payroll (NFP) report for the month of July. US firms are seen to have slashed a total of 59,000 workers on top of the 125,000 that was retrenched in June. But if the ADP’s estimate is correct (according to them, US firms did not cut any jobs but even added 42,000 more), risk appetite among investors could return which could spell a retracement in the very short term as they move their funds to riskier assets. Worse-than-expected results, on the other hand, could spur risk aversion which would benefit the safer instruments like gold.

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MrPoker, one of eToro’s top traders
shares tips with eToro’s community

Profile:

Age: 26
Country: Denmark
Family status: Engaged
Occupation: Investment adviser
Experience: Practiced
First deposit at eToro: USD 1000
Preferred currency pair: EUR / USD
Hobbies: Sport, Economy

Q: Why are you trading with eToro?
A: It’s a very easy to use and orderly trading platform. I enjoy trading with it more than other platforms I’ve tried in the past.

Q: How did you hear about eToro?
A: Through Neteller.

Q: What is the most important lesson you learned about trading so far?
A: One must be careful with leverage. You think that you’ll make more profits with higher leverages, but mostly you’ll just lose your money more quickly.

Q. What is the most important tip you can give to new traders?
A: To have a clear strategy from start. Don’t just gamble on random trades. Work out a strategy, or get one from a friend, or from eToro’s community, and then stick to it no matter what.

Q: Give me a general description of your trading technique / approach?
A: I usually enter a trade after the price has reached resistance levels, and then I adjust my exit point according to the strength of the trend.

Q: Please recommend a possible trade to our readers.
A: Sell EUR/USD at 1.32.

Q: How long did it take before you started making profits?
A: I started making profits right away, but then again I’ve had years of professional training as an investment adviser, so I would’ve been very disappointed if I didn’t.

Q: How much money do you currently trade with?
A: Around 20,000 USD.

Q: What do you consider to be the number one trading mistake to avoid?
A: Losing your cool. If you want to make consistent profits you have to always trade rationally and not let your emotions get the best of you.

Q: What is the part you love most about eToro?
A: I like the way they treat serious traders, such as the nice bonuses and the personal account manager. I often find his advise very useful and helpful.

Q: How much money have you withdrawn from eToro so far?
A: 22,900 USD.
Q: How much profit have you made so far with eToro?
A: 17,000 USD.

Forex Interview provided by eToro

By Yan Petters – Crude oil recently saw a sharp bullish movement that was initiated on July 30th. A barrel of crude oil gained close to $7 in less than a week, taking the commodity as high as the $82.90 level. However, after several failed attempts to breach through the $83.00 level, crude oil seems to be trading within a narrow range, and might even face a technical correction today.

• The chart below is the crude oil 4-hour chart.
• The technical indicators used are the Bollinger Bands, Slow Stochastic, MACD and Relative Strength Index (RSI).
• The bullish channel that took place until August 3rd seems to have reached its peak at $82.90.
• For the last couple of days, crude oil saw modest fluctuations, without showing a clear trend.
• The Slow Stochastic provides a series of bearish crosses at the moment, stating that the bullish trend is losing momentum.
• The MACD has completed a bearish cross for the first time in almost 2 weeks, suggesting that a bearish correction might take place soon.
• The RSI has declined below the over-bought zone and continues to point down, further indicating that a bearish move could be imminent.
• Crude oil’s two significant support levels appear to be at the $81.55 and the $81.00 levels.
• The next significant resistance levels seem to be located at the $82.60 and the $83.00 levels.
• Once crude oil will breach both of the levels (either support or resistance), it will be a strong indication for the beginning of a long-lasting trend.

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

The US Weekly Unemployment Claims is the primary publication today and will likely determine the level of the USD when it is released at 12:30 GMT. The other main releases that are set to dominate forex trading, especially for currencies such as the dollar and EUR, is the publication of the European Minimum Bid Rate at 11:45 GMT. Traders may find good opportunities to enter the market following these significant announcements.

Economic News

USD – Dollar Rises on Positive Economic Data

The US dollar rebounded from an eight-month low against the yen on Wednesday and rose against the EUR as encouraging US employment and service sector data prompted traders to unwind bets against the US currency. As a result, the dollar rose 0.6% to 86.25 after falling to around 85.30, it’s lowest since November. The dollar experience similar behavior against the EUR and closed at 1.3150.

A report showing the economy added 42,000 jobs was welcome, but traders said it would take far more good news to reverse the prevailing bias against the greenback, which has shed some 6% against major currencies since July. Job and income growth are needed to encourage Americans to spend and help revive an economy that’s shown signs of slowing. While planned job-cut announcements have posted their third straight month-to-month gain, they’re hovering close to the seven-year low reached in April.

Looking ahead to today, the most important economic indicator scheduled to be released from the US is the Unemployment Claims at 12:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may continue to boost the USD in the short-term. Traders are also advised to follow Treasury Sec. Geithner’s speech at around 16:00 GMT. This speech is likely to impact the dollar volatility. Traders are advised to watch closely, as this is likely to set the pace of the dollar going into the rest of the week’s trading.

EUR – EUR Drops against the USD and GBP

The EUR fell back against the dollar Wednesday as the latest euro-zone data disappointed growth prospects and lowered inflation expectations for the region. By yesterday’s close, the EUR fell against the USD, pushing the oft-traded currency pair to 1.3150. The 16 nation currency also saw bearishness against the AUD and closed at 1.4352

The pound also fell against the dollar as a report showed the UK Services Purchasing Managers Index fell to a 13-month low and came in well below analyst expectations, with the set of July PMIs suggesting the rate of growth in the UK economy slowed at the start of the third quarter. The services PMI index came in at 53.1, down from June’s 54.4, with new business growth slowing. The July services PMI was the third PMI survey released this week, all of them showing a distinct weakening trend.

Investors may want to look out for 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.

JPY – Yen Weakens vs. Majors

The Japanese yen saw a bearish trading session yesterday, losing ground against most of its currency crosses. The JPY fell against the USD after several days of recovery, while the GBP/JPY cross also rose to around 137.20.
Some of the respite came against the yen, as talk intensified that the Japanese government might put pressure on the Bank of Japan to loosen monetary stance even further in an effort to stop the yen from rising any more. Japanese Finance Minister Yoshihiko Noda has encouraged such talk by his repeated warnings about the damage that a strong yen can inflict on the Japanese economy while failing to suggest that the authorities will intervene.

As for today, Japan will be absent from the economic calendar. The JPY’s trends will be affected by the rallies of its primary currency pairs. It seems the USD and EUR are expected to continue a volatile trading session today and their crosses with the JPY will likely be as well. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today, especially the US Unemployment Claims and Europe’s Minimum Bid Rate.

Crude Oil – Oil Prices Stable Above $82 a Barrel

Crude Oil prices were little changed on Wednesday, near its highest level in three months, at more than $82 per barrel after a US oil inventories unexpectedly declined and economic reports showed service industries and payrolls rose more than forecast in July.

Inventories of crude oil fell 2.78 million barrels to 358 million, the department said. Supplies were forecast to drop by 1.65 million barrels.

As for today, the US Weekly Unemployment Claims report will likely determine crude’s next move, with any mildly positive elements within them likely to keep the price on its upwards direction.

Technical News

EUR/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.

GBP/USD

For the last two days the Cable has consolidated around the 1.5880 level without making any significant movements. However, a flag formation on the daily chart implies that an uptrend is about to be initiated. Going long with tight stops might be a good strategy today

USD/JPY

The recent volatility in the pair sees the USD/JPY trading between the 85.00-86.00 levels. The 4-hour and weekly chart’s oscillators indicate that this volatility is likely to continue. Additionally, the daily chart signals that yesterday’s bullish trend may continue. Going long with tight stops may be a preferable strategy today.

USD/CHF

This pair is still in the midst of a steady uptrend which is not yet showing any sign of leveling out. The RSI and Momentum on the daily chart are still positively sloped indicating that there is still plenty of steam left in this bullish move. Once this pair breaches the 1.0595 level it’s likely to make another sharp break upwards.

The Wild Card

AUD/USD

On the daily chart the moderate bullish price movement continues within the upwards channel which still has yet to be breached. The hourly chart is also joining that notion with the Slow Stochastic pointing to the continuation of upwards momentum. Next testing point should be around 0.9245. Forex traders have a good opportunity to enter what appears to be the beginning of a steady rising trend.

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.

Forex Market Review & Analysis by Finexo.com

The Dollar’s recent downtrend against the majority of its currency counterpart came to a halt yesterday, after reports showed that the U.S. added more workers than expected and the service industries grew faster in July. The Greenback eased up from an eight-month low against the Yen and gained for the first time in three days versus the Euro, after the ADP Non-Farm Payroll (Payrolls excluding government agencies) increased by 42,000 workers last month,  marking its sixth consecutive monthly gain.

Moreover, Service industries grew at faster than expected rate in July, reflecting an increase in employment and reducing the risk that U.S. economic growth will slow in the second half of the year. Commodity based currencies such as the Canadian and Australian dollar remained up against the greenback, with the Canadian closing yesterday’s trade at its highest price since May.

Up ahead today, there are many key economic releases, with the main focus on the ECB and BOE rate announcements. While both central banks are expected to hold their key interest rates at 1.0% and 0.5% respectively, any significant comments made by policy makers, with respect to the growth or inflation outlook, will have an impact on the currencies.

EUR/USD

The Euro edged down against Dollar ahead of the European session, just hours before the ECB rate announcement. The 16-nation common currency slipped to fresh daily low of $1.3143 during the late Asian trade.  Meanwhile, the ECB is expected to hold its key interest rate at 1.0%, for the 16th consecutive month.

On Tuesday, the Euro hit a 3-month high of $1.31260; but has since then fallen, mainly to recent Dollar’s strength. Technically, the pair’s upward movement is still intact and would require a break below 1.30 before its rally is truly over.

GBP/USD

Met with renewed selling pressure, the Cable fell to a 3-day low, as concerns over the strength of the U.S. economic recovery eased following yesterday’s positive U.S. data. During the European session, the Pound slipped to $1.5826, its lowest level since August 2nd.

Today, the BOE is expected to leave both its official banks rate, as well as its Asset Purchases Facility unchanged. Officials’ comments, depending on how cautious or optimistic they are about the recent improvement of the UK economy, will give some sign to the markets about future interest rate decisions. Therefore, a more conservative stance could put some selling pressure on the pair while a more hawkish tone could provide the pair with support for upward movement.

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.

By eToro – Profit taking was the theme in the EUR/USD, as traders used 1.33 as a pivot point to take profits.  After some consolidation, the Euro should resume its climb.

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.

USDCHF broke above 1.0475 resistance, suggesting that a cycle bottom had been formed at 1.0347 level on 4-hour chart. Further rally is still possible later today and target is to test 1.0675 key resistance. As long as this level holds, the price action in the trading range between 1.0347 and 1.0675 is treated as consolidation of downtrend from 1.1730 (Jun 1 high), one more fall to 1.0200 is still possible after consolidation. However, above 1.0675 will indicate that the fall from 1.1730 had completed at 1.0347 already, then the following upward movement could bring price to 1.1000 area.

Daily Forex Forecast

By CountingPips.com

The US dollar was mixed against the other major currencies today in the forex markets while the US stock markets advanced following the better than expected ADP employment and service industry reports. The dollar was higher on the day versus the euro, British pound sterling, Japanese yen, Swiss franc and the Canadian dollar while trading lower against the Australian dollar and the New Zealand dollar, according to currency data at the end of the US trading session.

US stock markets, after a down day yesterday, finished their trading session higher with the Dow Jones industrial average up by 44.05 points while the NASDAQ rose by 20.05 points and the S&P500 advanced by 6.78 points. Oil edged down by just $0.10 to level at $82.45 while gold  increased by $8.50 to trade at the $1193.70 level.

ADP Employment adds 42,000 workers

The ADP private employment report released today showed that companies added a total of 42,000 workers in the month of July and marked the sixth straight monthly increase for private employers. July’s employment data follows a revised increase of 19,000 workers added in June and surpassed market forecasts that were looking for a gain of approximately 33,000 jobs for the month.

Leading the way in job creation in July was the service sector which registered an increase of 63,000 workers while the goods-producing sector showed a decrease of 21,000 workers. Manufacturing jobs reversed course and fell by 6,000 workers for the month after increasing for the past five months. The construction sector declined by 17,000 workers while the financial sector was close to unchanged, shedding 1,000 workers.

Large businesses registered no change in workers for July while medium-size businesses added 21,000 workers. Small businesses or companies with less than 50 workers saw employment payrolls rise by 21,000 for the month.

ISM Non-Manufacturing data rises

U.S. Non-Manufacturing economic data, released by the Institute for Supply Management, showed that service-sector economic activity rose for a seventh straight month in July. The ISM Report On Business index readings for economic activity increased to 54.3 percent in July from a 53.8 percent level in June and surpassed economic forecasts which were expecting the ISM index reading to register 53.0 percent. A score in the index that is above 50 is considered to be growth and less than 50 is considered to be contraction.

Economic sectors tracked for July that showed increasing index scores were new orders, employment and new export orders while business activity, supplier deliveries, inventories, prices and the backlog of orders all had percentage point decreases for the month.  Notably, the exports index showed positive growth for the month with a 4.0 percent increase after registering a contracting level in June while the imports index was flat in July.

By GCI Forex Research

Fundamental Outlook at 1400 GMT (EDT + 0400)

USD

Dollar performance was mixed during the Asia session as modest gains against the euro and the AUD were counterbalanced by further losses against the yen. Asian equities were softer after US equities finished in negative territory. The US pending home sales index disappointed, falling -2.6% m/m in June vs. the consensus estimate of a +4.0% gain. US yields continue to push lower as fears over a US deflation scenario continue to make headlines in the financial press. Our US economists think deflation is unlikely. Nevertheless, US 2y Treasury yields closed at a record low, partly due to press speculation that the Fed will consider re-investing the cash from maturing mortgage-bond holdings at next week’s FOMC meeting.

Only 8 out of 24 analysts who have made EUR-USD forecasts for the end of 2011 expect the EUR-USD exchange rate to rise by then. And only one of them forecasts an appreciation by more than 2.2% during this period. All in all, even most dollar bears expect the EUR-USD exchange rate to move sideways at best in the long term. These forecasts might have to be adjusted considerably. Before that has happened, there is not much reason fort he upward trend in EUR-USD to end.

EUR

Eurozone PPI was slightly weaker than expected at 0.3% m/m and 3.0% y/y. Tame inflation numbers should prevent the ECB from shifting expectations too quickly despite better growth figures. Eurozone retail sales for June are due later today.

JPY

Japanese Finance Minister Noda warned that he would closely watch foreign exchange movements but declined to comment on whether Japan will intervene. He reiterated that excessive currency moves are bad for the economy and a stronger yen erodes corporate profits. The comments are clearly a step forward but we do not believe volatility or headline rates have moved towards worrying levels yet.

Chief Cabinet Secretary Sengoku said that domestic demand is not picking up yet, likely implying that a weaker yen is still needed to support exporters. Sengoku also noted that money is flowing into government bonds globally.

GBP

UK construction PMI was much lower than expectations at 54.1 (cons. 58.0). The figures support expectations of a slowing in the real estate sector and would prove worrying for the BoE. Services PMI is up next, ahead of the BoE meeting, where we do not expect any change in policy.

TECHNICAL OUTLOOK

EURUSD 1.3416 next

EURUSD BULLISH Upside potential toward 1.3416 with next resistance lying at 1.3692. Near-term support comes in at 1.2981 ahead of 1.2733

USDJPY BEARISH As long as resistance at 88.12 holds, expect the negative momentum to move market towards 84.83 ahead of 81.85.

GBPUSD BULLISH Upside potential targets 1.6069 with scope for 1.6458 next. Near-term support comes in at 1.5696 ahead of 1.5400

USDCHF BEARISH Focus is on 1.0131; break of the level would expose 0.9918. Near-term resistance is defined at 1.0480 ahead of 1.0676

AUDUSD BULLISH Momentum is positive; expect the gains to target 0.9389 ahead of 0.9850. On the downside, initial support lies at 0.8896 ahead of 0.8634

USDCAD BEARISH Violation of 1.0139 would open up the way to next support lying at 0.9931 key low. Initial resistance is defined at 1.0396 ahead of 1.0587.

EURCHF NEUTRAL Model is bullish with focus on 1.3819 ahead of 1.4041 key high, initial support lies at 1.3511 ahead of 1.3342

EURGBP BEARISH Focus is on 0.8252 break of which would expose further weakness towards 0.8068 ahead of 0.7809. Near-term resistance lies at 0.8416 ahead of 0.8532

EURJPY NEUTRAL Remains heavy below 115.49 with next resistance defined at 117.50. Near-term support comes in at 110.02 ahead of 107.32 key low.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.