EURUSD traded in a range between 1.3698 and 1.4152. Initial support is at 1.3860, as long as this level holds, another rise towards 1.4152 key resistance is expected later today, a break above this level could indicate that the uptrend from 1.2587 (Aug 24 low) has resumed, then further rise 1.4500 is possible. However, below 1.3860 will suggesting lengthier consolidation in the trading range is underway, then deeper decline towards 1.3698 could be seen.
By CountingPips.com
George Soros, the legendary hedge fund manager, shares his opinion on the US economy and what policies the Obama administration should enact to best get the economy running again in an article for the New York Review of Books.
Soros says that the United States and China have been talking past each other on their respective economic concerns and that the world economy would be better off if they would listen and take each others “recommendations”.
Soros also gives his take on the right and wrong ways to help get the US out of its economic funk:
The right policy is to reduce the imbalances as quickly as possible. This can be done in a number of ways, but cutting the budget deficit in half by 2013 while the economy is operating far below capacity is not one of them. Investing in infrastructure and education makes more sense. So does engineering a moderate rate of inflation by depreciating the dollar against the renminbi. What stands in the way is the misconception that budget deficits must be reduced to help the economy recover, a notion that has been exploited for partisan political purposes. There is a real danger that the premature pursuit of fiscal rectitude may wreck the recovery.
After marking a new historical high at $1,386.82 per ounce back in October 14, gold appears to have lost its upward momentum as it slid back to a low of $1,314.60. In my opinion, however, gold’s recent correction is very much warranted due to the fact that it was already trading at an extreme overbought condition. It also exchanged in a rather fast pace, marking new a new-all-time high after the other in succeeding trading days. In any case, gold may once again resume its upward trend after it found support at the uptrend line and at the $1,320.00 marker. A hidden bullish divergence, where the prices register higher lows and the stochastics marking lower lows, can also be seen. This occurrence suggest that buying interest could again make a comeback. Furthermore, this morning’s bullish gap adds to signs that the demand for this precious metal is indeed increasing once more.
Gold’s rebound was helped by the broad-based selling in the USD when the G20 officials said that it won’t engage into a “competitive devaluation” of their respective currencies in order to promote their countries’ export industry Rather, it said that it would just let the market dictate the forex valuations. So given the US Fed’s openness to do another money-printing scheme (quantitative easing) to encourage spending, traders maybe beginning to shun away from the greenback again. Another event that could place some selling pressure on the USD is when China allows the Yuan to trade more loosely and thus become stronger against the US dollar. Chinese officials could do so by selling more of their dollar reserves in the market. Such, of course, would dilute the USD, making investments in other instruments like gold more attractive.
More on LaidTrades.com …
By Chris Vermeulen, thegoldandoilguy.com
Last week was volatile thanks to China raising their interest rates a quarter basis point. This rate hike caused the Dollar to spike in value which in turn forced equities and metals to sell off sharply. This one day event caused equities to break below a short term support level causing a large number of protective stops to be triggered. This added more selling pressure causing the market to be down nearly 2.5% at one point but a late day bounce recouped a good chunk of the drop.
Wednesday & Thursday the market had a nice rally making back all of losses and then some. But Thursday afternoon we saw the market slip below a key short term support level and triggered another wave of stops. The market continues to resilience because it recovered into the close saving the day.
After Thursday’s end of day rally, we had expected a typical light volume session which typically chops around in a sideways or slow grind higher.
I have put together a short video covering last weeks price action along with that I feel is likely to unfold this week.
Chris Vermeulen
thegoldandoilguy.com
By CountingPips.com
The latest Commitments of Traders (COT) report, released on Friday by the Chicago Mercantile Exchange, showed that futures speculators decreased their bets in favor of the major currencies against the US dollar. Non-commercial futures positions, those taken by hedge funds and large speculators, were overall net short the US dollar by $25.8 billion against the other major currencies, down from a total short position of $29 billion on October 12th, according to data published by Reuters.
Speculators long positions declined against the British pound sterling, Japanese yen, Australian dollar, New Zealand dollar, Canadian dollar, Swiss franc and Mexican peso while slightly adding to long positions in the euro.
EuroFx: Currency specs were net long the euro against the U.S. dollar by 46,748 contracts as of October 19th. This is an increase of over 5,000 contracts following net long positions of 41,511 contracts on October 12th.
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 betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. Open interest is the number of open contracts that have not been closed by a transaction or by delivery.
GBP: The British pound sterling positions fell slightly to a net of 5,796 contracts after being long on October 12th by 8,066 positions. The latest data marks the second straight week the long positions have edged lower.
JPY: The Japanese yen net long contracts decreased slightly for second straight week to 45,856 long contracts as of October 19th from 48,285 net long contracts reported on October 12th.
CAD: The Canadian dollar positions decreased lower following two straight weeks of increases to a net total of 30,740 contracts after totaling 43,786 net longs on October 12th.
CHF: Swiss franc long positions declined to 11,235 long contracts as of October 19th after totaling a net of 19,947 long contracts on October 12th. This marks three straight weeks of decreases following a rise to their highest level in almost a year October 5th.
AUD: The Australian dollar positions decreased lower for third straight week after reaching their highest level since April on September 28th. AUD futures contracts declined to a net amount of 59,181 long contracts as of October 19th from 67,691 long contracts on October 12th.
NZD: New Zealand dollar futures positions declined lower to a total of 15,331 long contracts after a total of 16,573 long contracts the week before.
MXN: Mexican peso long contracts edged lower as of October 19th to 82,125 net long positions from 86,218 longs the week prior. The latest data interrupts a streak of five consecutive weekly increases.
COT Data Summary as of October 19th, 2010
Large Speculators Net Positions vs. the US Dollar
Euro: +46,748 contracts from +41,511 contracts on October 5th
British pound sterling: +5,796 contracts from +8,066 contracts
Australian dollar: +59,181 contracts from +67,691 contracts
Canadian dollar: +30,740 contracts from +43,786 contracts
Japanese yen: +45,856 contracts from +48,285 contracts
Mexican peso: +82,125 contracts from +86,218 contracts
New Zealand dollar: +15,331 contracts from +16,573 contracts
Swiss franc: +11,235 contracts from +19,947 contracts
Go to the Commitment of Traders CME raw futures data
Further COT Resources from around the web:
By Rita Ruvinski – Over the last month, the British poundhas been steadily losing ground to the Japanese yen. The yen, widely considered to be a safe-haven currency, has been making gains across the board as investors continue to shy away from risk taking. Since September 16th, the GBP/JPY pair has gone down over 200 pips. As we will demonstrate through a number of technical indicators, the pair may be due for an upward correction.
We will be looking at the daily chart for GBP/JPY cross. The technical indicators we will use are the, Bollinger Bands, Stochastic Slow and the Relative Strength Index (RSI).
Point 1: Traders will notice the bullish cross formed below the support line on the Stochastic Slow. Typically when a cross, such as the one shown here forms, an upward correction takes place.
Point 2: Finally, in what may be our strongest signal yet of an impending bullish move, the RSI is floating in oversold territory, and has been for some time. Traders can take this as a sign that the pair will see an upward correction in the very near future.
Point 3: The pair is currently trading along the lower band, indicating that an upward correction is due to take place. Furthermore, the Bollinger Bands are beginning to widen, spreading farther apart. This typically means that a price shift is likely to take place.
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 GCI Forex Research
Fundamental Outlook at 0800 GMT (EDT + 0400)
USD
The outcome of the G20 meeting seemed to boost the risk appetite, but it was not until a strong Australian PPI reading was reported that the US dollar began to weaken significantly. EURUSD traded in a range of 1.3917-1.4044, and USDJPY traded 80.90-82.20. Asian equities were slightly firmer and US stocks closed fractionally ahead on Friday, inspired by the latest Q3 earnings and the prospect of further Fed easing drawing ever nearer. The G20 failed to agree on specific limits for current account imbalances. On the subject of FX intervention, G20 countries pledged “to refrain from competitive devaluation”. Nevertheless, delegates agreed to remain vigilant to “disorderly movements in exchange rates”, with the aim of reducing the risk of “excessive volatility in capital flows facing some emerging countries”. This does not suggest a willingness to engage in coordinated intervention, but is rather an acknowledgement that policy decisions in advanced economies “including those with reserve currencies” can create problems for emerging markets. Treasury Secretary Geithner said that the US, Europe and Japan recognized the importance of preserving FX stability, and he reaffirmed that the policy of the US is to support a strong dollar. Philadelphia Fed President Plosser said he is not convinced that more asset purchases will help the economy at this juncture, and said Fed policymakers hold differing views on the relative merits of “shock and awe” versus incremental asset buying. Director of Research Waller at the St. Louis Fed said the probability of further easing being announced on Nov 3 is “probably pretty high”, adding that a case could be made for an initial easing of $500 bn followed by subsequent steps of $250 bn.
EUR
The German Economy Minister Bruederle said intensive G20 discussions took place on US liquidity policy, by which he presumably means the policy of quantitative easing. He said he does not support an increase in US liquidity as it indirectly influences the exchange rate.
Referring to the debate over G20 current account imbalances, ECB President Trichet implied that a focus on Germany’s large trade surplus alone would be misguided, and that the current account of the EU as a whole should instead be considered. Trichet added that, according to some G20 participants, the monetary policy of advanced economies could create problems for EM.
JPY
After the G20 meeting, Finance Minister Noda said that he had gained an understanding from his G20 counterparts on Japan’s policy of FX intervention, and that Japan would continue to take decisive steps on FX as needed. Noda added that he does not expect the debate over current account imbalances to be settled at the upcoming G20 Summit on Nov. 11-12.
Against expectations, the adjusted trade balance for September was broadly stable despite the stronger yen, coming in at ?587.6 bn (cons. ?495.5 bn, prev. ?570.2 bn).
AUD
The AUD got a significant boost from a much stronger than expected Q3 PPI rising +2.2% y/y (cons. +1.4%, prev. +1.0%). This suggests upstream price pressures are intensifying, which should keep the RBA hawkish, although Wednesday’s Q3 CPI will still be key to the November policy decision.
RBA Governor Stevens spoke but offered few clues on the likely path of the policy rate. He showed his determination to maintain the RBA’s 2-3% target range for the cash rate and said higher inflation will not be tolerated. He said mining investment is now at its strongest since the 1960s, and would very likely increase further.
CAD
Canadian CPI was slightly stronger than expected on a monthly basis at +0.2% m/m (cons. +0.1%), but the headline annualised rate was in line at +1.9% y/y, and probably not strong enough to force the BoC back onto a more hawkish track. Core inflation actually dipped to +1.5% y/y (cons. +1.6%). Retail sales meanwhile were much stronger in August, growing +0.5% (cons. -0.1%, prev. +0.1%).
CAD
Ahead, Canada CPI readings for September will be released as will retail sales for August.
TECHNICAL OUTLOOK
EURCHF 1.3924 resistance.
EURUSD BULLISH Remains constructive above 1.3637/1.3559 support zone, trigger to bear trend. Resistance at 1.4159 ahead of 1.4373.
USDJPY BEARISH Outlook is bearish, expect extension of downleg towards 79.75 ahead of 77.91.
GBPUSD BULLISH Holds above 1.5606 keeping our focus on the upside. Resistance at 1.5942 ahead of 1.6107.
USDCHF BEARISH Recovery has scope for 0.9918 breakout low. Next big support below 0.9463 at 0.9225.
AUDUSD BULLISH Upside gains held at 1.0004; move above the level would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low.
USDCAD BEARISH Remains heavy below 1.0380/1.0407 area. Initial support at 1.0162 ahead of 0.9981.
EURCHF BULLISH Violation of 1.3665 triggers acceleration of gains towards 1.3924. Near-term support at 1.3456 ahead of 1.3265.
EURGBP BULLISH Move above 0.8908 exposes 0.9039 next. Near-term support defined at 0.8773.
EURJPY BULLISH Focus is back on the upside; expect gains to target 115.68 and 116.68 next.
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.
Source: ForexYard
As the market’s get set for another week of heavy trading, investors are eagerly awaiting a speech from the Fed Chairman today, scheduled to occur at 12:30 GMT. Traders will want to watch out for any mention regarding the size of the Fed’s plan for quantitative easing, which is likely to occur as early as next month. The dollar may take further losses today if investors continue to doubt the pace of US economic recovery.
Taking a quick look at last week’s trading, the dollar saw some heavy market movement against its main currency rivals. A mid-week return to safe haven assets led to huge gains for the USD against the euro. Ultimately, the dollar reversed courses once again, and by week’s end, the EUR/USD pair was once again trading around the 1.4000 level. The greenback performed better against the UK pound and Swiss franc. The GBP/USD is pair is down almost 100 pips from the middle of last week, although moderate bullish movement was seen in overnight trading. The USD/CHF pair saw continuous upward movement last week, and is currently trading around the 0.9730 level.
Today, traders will want to pay careful attention to Fed Chairman Bernanke’s speech, scheduled to take place at 12:30 GMT. Bernanke will likely hint at the scope of the quantitative easing measures set to take place in the US next month. Should the speech renew investor confidence in the troubled US economy, traders can expect the dollar to make some afternoon gains, particularly against the euro.
Turning to the rest of the week, traders will want to pay attention to Tuesday’s US Consumer Confidence report, as well as a batch of significant news set for Wednesday. Early predictions are for slight increases in many of the indicators over their previous releases. Whether this means that US economy is finally improving is yet to be seen. What is for certain is that the dollar is set for a big week.
Starting off the week, the euro continues to make gains on the safe haven US dollar and Japanese yen. The EUR/USD pair has gone up over 100 pips in overnight trading, and currently stands at the 1.4030 level. The EUR/JPY pair has moved up close to 50 since markets opened, and is currently trading at around the 113.75 level.
Analysts attribute the euro’s gains to renewed investor concerns about the US economy ahead of a speech from the Fed Chairman later today.
Today, in addition to the US news scheduled to be released, traders will want to pay attention to the euro-zone Industrial New Orders figure, set to be released at 9:00 GMT. A significant increase over last month’s figure is predicted. If so, the euro is likely to receive a boost in morning trading.
As for the rest of the week, traders will want to pay attention to a batch of French and German indicators set to be released. Germany in particular, which represents the largest economy in the euro-zone, tends to have a large impact on euro values. The German economy has seen steady upward momentum as of late. Positive news this week will likely help the euro against its main currency rivals.
The USD/JPY pair has tumbled close to 40 pips since markets opened for the week and is once again set to fall below the 81.00 level. The yen had begun to lose ground against its US counterpart late last week, but following the G20 summit that occurred over the weekend, has once again resumed its bullish trend.
The summit ended with a pledge from the participating countries to not actively devalue their currencies. Traders will remember that the Bank of Japan did just that several weeks ago, in an effort to weaken the JPY. Japan is dependent on a week yen in order to boost its vital export industry.
With the yen once again gaining on the dollar, investors are eagerly waiting to see if Japan will maintain its pledge of non-interference in the marketplace. Comments from officials in Japan are not encouraging, and traders will want to pay close attention for any surprise moves the BoJ may make this week. If something indeed happens, expect the USD to spike against the yen.
Following a late week rally on Friday, crude oil prices continued to move up in overnight trading. Currently right around the 82.30 level, oil is up close to 70 pips since markets opened. Analysts attribute oil’s bullish movement to the downward pressure the US dollar has experienced as of late. Investors often turn commodities like crude oil as an alternative investment when the dollar is down.
Today, with no news forecasted that will directly impact oil prices, traders will want to pay close attention to the Fed Chairman’s speech at 12:30 GMT. Should the speech mention in any detail the level of quantitative easing the Fed is likely to implement to help revive the stalled US economy, the dollar may go down further. If the dollar does indeed drop following the speech, traders can anticipate that oil prices will increase further as a result.
The Williams Percent Range on the 8-hour chart indicates that this pair may be approaching overbought territory, and could see a downward correction in the near future. The Relative Strength Index (RSI) on the 4-hour chart is approaching the overbought zone as well. Traders will want to watch out for the RSI moving above the 70 line, in which case a bearish move would likely occur.
Most technical indicators show this pair trading in neutral territory. This typically means that the pair has yet to decide what direction it will be taking in trading today. Traders may want to take a wait and see approach, as a clearer picture will likely present itself later on.
Most technical indicators show this pair approaching oversold territory. Traders may want to pay close attention to the Relative Strength Index (RSI), on the 8-hour chart. Should it drop below the 30 level, the pair may see an upward correction in trading today. Going long with tight stops may be the preferred strategy.
After making some fairly substantial gains in trading late last week, this pair appears to be now trading in neutral territory. With technical indicators showing no clear direction at this point, traders may want to take a wait and see approach for the pair today.
The Stochastic Slow on the 4-hour chart shows a bearish cross forming. Typically, this is seen as a sign of an impending downward move. This theory is supported by the Williams Percent Range on the 8-hour chart, which is well into overbought territory. Forex traders will want to go short with tight stops today.
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.
USD/CHF
Daily graph: http://www.real-forex.com/charts-daily/251010/CHF_DAILY_251010.JPG
About a week ago, the pair started to increase after a long bearish trend. During this increase, a resistance at 0.9727 has been crossed, confirming the uptrend started. The strength of last week’s candles suggests that the bulls may still winning against the bears for quite a long period.
Our analyses estimate the pair will correct 33% of the previous downtrend until the next resistance at 0.9906 and may even break it.
An opportunity for a “Long” trade may be created by the identification of an increasing configuration on One-Hour graph.
Potential trade
One Hour graph: http://www.real-forex.com/charts-daily/251010/CHF_1H_251010.JPG
Our analysts estimate the creation of the required configuration once the resistance (ONE HOUR graph resistance) of 0.9804 will be broken. Our analysts’ transaction:
NZD/USD
Daily graph: http://www.real-forex.com/charts-daily/251010/NZD_DAILY_251010.JPG
Once the resistance 0.7625 reached, the pair decreased for a few sessions but was stopped by the support 0.7425. Actually, the pair is based above the support, and until now, didn’t success in breaking that support.
This stop suggests a reversing trend very soon, which should continue until the resistance 0.7550 and even higher, opening the opportunity to trade “Long”. Two options may confirm this new trend:
Have a profitable day!
Real-Forex team.
Sponsored by Real-Forex 
By Warren Seah – Let’s start off with an introduction of what stop loss is which is an order placed with a broker to sell a security when it reaches a certain price. It is designed to limit the loss of a security position of an investor and often termed as stop order or stop market order.
In the case of trailing stop loss, it is just a set of more complex rule for stop loss to automatically shift accordingly to market conditions whereby the trailing stop loss behaviour is predetermined by the trader. More often than not the employment of trailing stop loss is overlooked with preference on the focus of entry strategies by many traders.
If you have experienced trading before and you tried to outsmart the market without a stop loss, how many points do you allow the market to move against you? 100points, 200points or 1000points? If it happens, how do you handle such a situation or did you just lay battered and bruise over the huge losses you have incurred because of your stubbornness?
I have been through such situations before and it was a torture until I have learnt my lesson on placing stop loss. Upon further experimentation with stop losses, I have come across something even more powerful which is the trailing stop loss.
The trailing stop loss order is beneficial in that it will follow the movement of the market when the order starts to profit. When you profit, the stop loss you set will move up a certain number of pips set by your own trailing stop rules as the market moves in favour of your trade position. Otherwise should the market go against your position, the stop loss will stay where it last trailed and will exit the trade should the market price hits your stop loss.
For example, if I am trading currency and I bought EUR/USD at 1.3000 with a stop loss of 1.2800. the market price rose up by a 100 points, at this point if I were to shift my stop loss to break-even point, I will just be trading on the risk of my profits and any other further movements upwards allows me to ride on the profits.
In short, if the market continues to move in your favour, trailing stop loss will rise along with it, locking in your profits whenever the market price reaches a certain level. If the market goes against you, the trailed stop loss is there to limit the damage on your profits or in the worse case even it does not trail, you do have your fundamental stop loss level in place.
As you progress further in your trade, never forget the number one rule which is to protect yourself in the market at all times. Only by having protective stop or in a more advanced case which is the trailing stop loss that you can prosper in the markets or survive another day even after a bad fall.
Feel free to use this article on your website or ezine as long as the following information about author/website is included.
Warren Seah
“Introducing 11 Exit Strategies, What Every Disciplined Traders Need … Go Without It You Could End Up Being A PIP VICTIM Just Like Thousands Of Traders Out There.”
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