Month: November 2010

By Andrew Daigle

Everyone is talking about it. It’s the newest get rich quick scheme on the block and you want a piece of the action. Who wouldn’t? But before you go any further, it’s good to spend some time to familiarize yourself with some of the basics. What is forex? Forex stands for foreign exchange, i.e. the currency of any country anywhere in the world, such as the US Dollar, the Chinese Yuan, the British Pound and so on. The concept of forex trading implies that one currency is exchanged for another; hence it is also called currency trading. There exists a huge international forex market where currencies are bought, sold and traded.

The forex market is one of largest financial markets in the world. And the amazing thing is that Sunday to Friday, it is a 24 hour market, it does not close daily like the stock market. Further, it is an international market, so it is bigger than almost any domestic stock market could ever be. Speculators on the forex market make money depending on the movements of the market and many have their own forex trading strategy. The most widely traded currencies are the US Dollar, the Euro, the British Pound, and the Japanese Yen. As you can see, these are the world’s most powerful economies, implying that due to the amount of trade going on in these countries, businesses in these countries need plenty of foreign exchange.

As a speculator or forex trader, one would take a position on a country, depending on what one believes are the future prospects for that country and then either buy or sell its currency. For instance, if you believe that the US dollar will depreciate against the Euro, as a forex trader, you would sell US dollars right now at a higher price with the expectation of buying them from the market at a lower price when the US dollar depreciates. You will make the differential between the higher price and the lower price per dollar that you sold. Since you did not actually have stock of US dollars at the time you sold, this is called a short position.

The opposite of this is a long position, meaning that you believe the US dollar will appreciate and as a forex trader, you buy US dollars in hopes of selling them at a higher price when the market for them goes up. This is a simple long trade. There are plenty of forex currency trading systems to help you maximize your profitability.

An understanding of factors that go into successful forex currency trading is essential when you decide to become a forex trader, or maybe eventually a broker. The main factors that interact to form the basis for the trade are time, currency, interest rates and exchange rates. A solid understanding of these elements and their interplay is what makes a good forex trader.

The internet is a big driving force in the increased popularity of forex currency trading. With the introduction of the internet into every home, the average person now has gained access to the huge forex market. Earlier a playground for rich individual investors or huge institutions like financial companies and banks, the international forex market is now open to you and millions of others. And people are already tapping it to make their private fortunes.

About the Author

Andrew Daigle is the owner, creator and author of many successful websites including ForexBoost at http://www.ForexBoost.com and http://forex-trading-system.typepad.com , Free Forex Training Resource for the Novice and Advanced Forex trader.

USDJPY stays below a falling trend line from 94.98 to 85.92, and moved sideways in a trading range between 80.30 and 81.98 for several weeks. The price action in the trading range is more likely consolidation of downtrend from 94.98. As long as the trend line resistance holds, downtrend is expected to continue and another fall towards 79.75 (1995 low) is still possible, only a clear break above the trend line resistance could indicate that the fall from 94.98 is complete.

For long term analysis, USDJPY remains in downtrend from 94.98, further decline towards 79.75 (1995 low) would more likely be seen.

Weekly Forex Analysis

by David Adams

I think the reason most people get into trading and quickly leave trading is the illusion that there are millions to be made in a very short period of time. This conception of trading is simply not true. Granted, there are many traders who make millions every year trading the markets. One of the richest men in the world, Warren Buffett, made his billions simply trading the market. But the simple fact is most traders won’t make millions trading, and in the first couple of years you probably won’t even make $100,000. You can make a nice living though, and as you hone your trading skills your income will increase exponentially.

Day trading is not a get rich quick scheme. I wish I could tell you differently, but the truth is that you must master a skill set and then learn to execute that skill set consistently and accurately. This is not an overnight process, and you cannot expect yourself to trade flawlessly from the beginning. You will make mistakes, many mistakes, and those mistakes will cost you money. The idea is to learn from your mistakes and gradually minimize them. Eventually, you will make very few mistakes and you will realize sizable monetary rewards. Don’t expect to get to this point in a few weeks though. Learning to trade takes time, effort, study, and experience.

Even more daunting is the idea that good traders are always students of trading. I read at least one book about trading every month. Some of the books are very good, and other books are not so good. The point is, I am always learning about the craft of trading and trying to get better, even after 25 years of trading. There is a world of knowledge out there and I am anxious to absorb all the knowledge I can.

Learning to trade is an investment in you. Once you have developed your trading skills you need never want for a job or career. You can trade, and there are very few people that trade well. Most cannot stand some of the failure you experience at the beginning of your trading career and give up. As a matter of fact, most traders give up. The few that continue to trade reap the rewards of their diligence. It takes a strong sense of self discipline, a high degree of resilience, and a pit bull dedication to trading in order to succeed.

There is some good news though, if you can make it through the first year or two you will have a sound foundation for future success. One of the things that I highly recommend is developing a firm foundation in trading. Getting a firm foundation entails learning how the market works, and understanding the market is not necessarily logical. This creates a dichotomy, of sorts, because humans are by nature logical beings. The results are we are logical beings trading an illogical market. It’s no small task to learn to trade, but the ultimate rewards are well worth the effort. I will never have to look for a job, I don’t ever have to retire, and I can work the hours of my choosing. Does it get any better than that?

But if you’re looking for fast riches and make stacks of money in the first year, trading is not for you. Of course, I read the advertisements claiming day traders using a certain system make millions of dollars using that system in their first year of trading. I don’t buy it, because I have traded for a long time and know that no single system can produce consistent results in the many market conditions that are always present. A good trader understands the mood of the market on a given day and adjusts his trading to that market mood. No trading system can accommodate and profit in the many market conditions that exist. It’s your brain that makes the adjustments and allows you to profit.

In summary, you will not get rich immediately should you decide to become a trader. If you are impatient and careless you will not even be a trader very long. On the other hand, if you build a firm foundation on which to build your trading you stand a great chance of making better than average money than the 9 to 5 corporate worker. That’s enough for me.

I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit.

About the Author

Would it be convenient to receive valuable trading tips every night in your email? You can sign up for our free video series by Clicking here These videos contain advanced trading strategies and will enhance your trading knowledge immeasurably. Best of all, they are free!

On the 19/10/10 China surprised investors by raising interest rates. This sparked a worldwide sell-off in stocks, commodities and emerging-markets currencies as investors lowered their expectations for Chinese growth. We have seen growth in China at double digit pace and as a result this is seen as a key driver of the global economy. Independently, it would appear that the global recovery is starting to lose steam with the talk of further quantitative easing from western nations on the way. China, like the rest of the world, had cut interest rates several times between September and December 2008 as the financial crisis took hold. This increase in interest rates is the first since December 2007. One explanation for this is that inflation is at its highest level since November 2008. Meanwhile, raising rates will also aid in restricting lending and at the same time to help cool the economy. Some forecasters are expecting a further two 25 basis point hike over the next 12 months.

At the recent G20 meeting currency was the hot topic of discussion as talk of “currency wars” and protectionism had been high on the agenda in recent weeks. Central to this debate is the political pressure the Chinese Yuan continues to find itself under. China has been openly criticised by the Obama administration of keeping the Yuan undervalued. One reason for the U.S pushing for the Yuan to be revalued is to help deal with its trade deficit. According to government statistics, U.S imports from China were worth $296.4 bn. in 2009 while its exports to China accounted for only $69.5 bn. leaving a deficit of $226.90 bn.

After the G20 meeting, the Chinese Yuan strengthened from its steepest slide in 22 months on the optimism that policy makers will head calls from the US to strengthen the Yuan. US Treasury Secretary Timothy Geithner stated in an interview on the 23/10/10 that Chinese officials understand it is in the interests in both of domestic growth and global economic stability to let the Yuan strengthen.

However, in addition to the redressing global imbalances and pressure from the US, a more domestic case for revaluing the Yuan is starting to emerge. Firstly, China wants to move away from a purely export led economy and move towards a domestic demanded fuelled economy. As a result of China’s record pace of expansion the modestly wealthy workforce have cash to spare. To add to this, a new breed of consumer is growing outside the centres such as Shanghai who desire foreign goods. As a result of a weaker Yuan, it is harder for the Chinese consumer to satisfy this desire. If China is serious about boosting a domestic demand economy it will have to let the Yuan strengthen. This would in turn encourage the companies within China to start importing foreign goods to fuel this demand. This could ultimately have a ripple effect on the whole economy from shipping and transportation to retail and foreign direct investment throughout China.

It will be interesting to see how this situation will develop. Beijing is attempting to cool the economy gradually by raising interest rates and restricting lending, but is this enough? China is certainly making all the right noise and is letting the Yuan appreciate, albeit at a slower pace than what many of its global counterparts would like. With arguably the worst of the global recession behind us, China could well have got its timing right. The need to combat inflation and China’s growing appetite for foreign consumer goods gives the People’s Bank of China an appropriate backdrop to let the Yuan appreciate at a quicker pace. Only time will tell if China is just playing diplomatic lip service or whether it is serious in addressing the global imbalances.

About the Author

Jamie Jemmeson is an MSTA qualified technical analyst and trader at Global Reach Partners. Global Reach Partners is a market leader in supplying commercial forex trading services and hedging strategies including trading Spot Forex.

By ForexPros – U.S. non-farm payrolls rose more-than-expected last month, official data showed on Friday.

In a report, the U.S. Department of Labor said non-farm payrolls rose to a seasonally adjusted 151.00K, from -41.00K in the preceding month whose figure was revised up from -95.00K.

Analysts had expected U.S. non-farm payrolls to rise 60.00K last month.

About the Author

ForexPros.com
Forex Pros offers a diverse set of professional tools for trading in forex, futures and CFDs. These include real-time data streams, technical and fundamental analysis by in-house experts, and a widely used economic calendar.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar stabilised during the Asia session although trade was light due to a holiday across much of South East Asia. EURUSD traded 1.4184-1.4249, USDJPY 80.61-80.99. Asian equities are significantly stronger after the S&P500 earlier closed +1.9% ahead. Gold retreated slightly to $1387.88/oz at the time of writing, but it remains near record highs. Crude continues to advance and set an overnight high of $87.22/bbl. The Fed’s pledge to “regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information” means that incoming US data is probably now even more important than usual. Our US economists expect +70k for total payrolls and +75k for privates versus consensus of +60k and +80k, respectively, and an unchanged unemployment rate of 9.6%. The latest initial jobless claims surprised to the upside, at 457k, but our economists note this reading covered the final week of October, beyond the sample week for the October payroll report. That said, any results broadly in line with expectations are unlikely to help the dollar in the current environment. But if the payrolls data surprise strongly on the upside, the dollar could temporarily strengthen and both risk-seeking positions and dollar shorts could face some profit taking into the weekend, with USDJPY the most likely beneficiary.

EUR

The ECB kept its policy unchanged as expected and President Trichet’s statement was largely in line with previous comments. Trichet said the policy stance remains accommodative, with medium-term inflationary pressures contained, and policymakers remain on track to examine exit options at the next meeting. He said the ECB could move interest rates before removing all non-standard measures, but beyond that he offered very little further policy guidance. During the Q&A, he dodged several questions on the Fed’s latest decision, the euro and sovereign bond spreads. When asked about the US dollar policy, he said he does not believe the US is pursuing a weak dollar policy. But even as policymakers continue to talk about exit strategies, Eurozone peripheral spreads remain elevated and could keep investors nervous about pushing euro strength too far.

Final revisions for PMI’s across Europe were released with some diverging patterns. Manufacturing numbers were more positive across Germany, France and the Eurozone but the figures for services trended downwards. On a geographical basis, a clear pattern is emerging of struggling peripherals in contrast to Germany, with the other core countries, such as France, sitting somewhere in between.

GBP

The BoE kept its policy rate unchanged as expected and no explanatory statement was offered. Cable jumped following the decision as fears that the BoE could follow in the Fed’s footsteps went unfounded.

Chancellor Osborne commented that the UK economy is “growing faster than expected” but highlighted that there were still broader concerns over the world economy, a situation which remains “choppy”. He did say, though, that Gilt yields show that the UK is “out of the financial danger zone.” While Osborne is confident they will see the austerity measures through, we remain cautious on sterling in the medium term as austerity could hamper growth.

TECHNICAL OUTLOOK

EURUSD BULLISH Rise through 1.4159 triggers another bullish run towards 1.4373. Support is at 1.3992

USDJPY BEARISH Little support below 79.75 till 77.91. Resistance at 81.99

GBPUSD BULLISH Upside potential targets 1.6379 with scope for 1.6458 next. Support comes in at 1.6080.

USDCHF BEARISH Break below 0.9463 would open up the way towards 0.9225. Upside capped at 0.9972

AUDUSD BULLISH Momentum is positive; next resistance at 1.0222, measured target. Support at 0.9891 ahead of 0.9542 reaction low.

USDCAD BEARISH Outlook is bearish; the pair eyes 0.9981 ahead of 0.9820. Resistance at 1.0156.

EURCHF BULLISH Violation of 1.3924 would open up the way towards 1.4041. Near-term support at 1.3540

EURGBP NEUTRAL 0.8942 and 0.8652 mark the near-term directional triggers.

EURJPY BULLISH Upside pressure on 115.68; scope for 116.68 and 119.33 next. Support comes in at 112.83

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.

By Russell Glaser – For the past 2 months the EUR/CHF has made a correction in the long term downward trend. But the failure of the pair at the 200-day moving average line shows the upward momentum has stalled. This presents an opportunity to trade with the long term trend.

The EUR/CHF corrected more than 50 % of the late May to early September move.
But the correction looks to have halted near the 200-day moving average line. As such, the long term bearish trend should resume.

A signal to enter the trade may be taken from two places. The first may be a close below the 20-day moving average line. This moving average line previously served as a nice support during the correction and could also later act as a resistance in the future. The second signal may be given when the RSI (14) breaches below the rising trend line.

The first support level (S1) is found near 1.3460, the 38.2% Fibonacci retracement level from the late May to early September move.

A protective stop can be placed above the significant technical barriers of the 200-day simple moving average, the current downward sloping trend line, and the 61.8% Fibonacci retracement level of the late May to early September move. The stop should be located just above the August pivot of 1.3920. This would give a risk of roughly 350 pips. Should the pair close above this level it would signal a shift in the long term trend to the upside.

Traders can target a level above the swing low for the pair at 1.2760. This would give a potential profit of approximately 700 pips and a decent profit to risk ratio of 2 to 1.

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

Crude oil and gold reached level highs Thursday as investors turned to commodities amid concerns over the effect of the Federal Reserve’s 600 billion quantitative easing plan on the U.S. dollar and the U.S. economy.

Economic News

USD – Dollar Plummets versus Higher Yielding Currencies

The Dollar dropped versus riskier currencies such as the euro and British pound and reached record lows versus the Australian and New Zealand dollar amid fears the Fed’s 600 billion bond buying plan will prove detrimental to the USD. The Fed’s plan to buy $600 billion of U.S. Treasuries over the next eight months, unveiled Wednesday, was slightly higher than market expectations. The possibility of further quantitative easing in the future put further pressure on the greenback

The concern is that the program will prove ineffective in boosting the U.S economy while flooding the markets with cheap dollars. Investors turned to riskier currencies and commodities as an alternative investment.

Today, the USD may see further pressure with the release of the Non-Farm Employment Change and Unemployment Rate at 12:30 GMT and the Pending Home Sales at 14:00 GMT. Investors are also advised to follow Ben Bernanke’s speech at 18:00 GMT for any clues regarding the future of monetary policy.

EUR – EUR Trades above $1.42

The EUR traded above $1.4200 Thursday, testing its highest level since January, over concerns about the future of the greenback after the Federal Reserve announced a $600 billion bond buying program in order to stimulate the lackluster U.S economy.

The euro is currently trading around $1.4205, up from $1.4132 late Wednesday. It reached a high as $1.4282 Thursday. The EUR received a further boost versus the USD when the European Central Bank kept rates steady, adding momentum to the euro’s rally.

The pound appreciated against 15 of its 16 counterparts, climbing above $1.62 after the Bank of England kept the interest rate steady at 0.5% kept its bond-purchase program unchanged. The sterling also received a boost as a report showed that housing prices rose by more than expected. The U.K. pound reached a high of $1.6294 from $1.6092 Wednesday, and is currently trading around $1.6265.

Today, traders are advised to follow the British PPI input at 9:30 GMT as well as the Euro-Zone retails sales data at 10:00 GMT.

JPY – JPY Down versus Rivals as Demand for Safe Assets Wanes

The JPY is little change Friday morning as the Bank of Japan on Friday kept interest rates unchanged at a range of zero to 0.1% and held off on easing monetary policy, as the Federal Reserve’s bond buying plan did not trigger yen gains sharp enough to warrant an immediate policy response.

The Japanese currency was down for a 4th day as speculations the global economic recovery is gaining hold dampened demand of the safe haven asset. The yen fell to 114.78 per euro from 114.71 in New York yesterday, when it touched 115.42, the lowest level since Oct. 7. The currency is at 80.84 per dollar from 80.75 yesterday.

OIL – Crude Trades Near $87 a Barrel

Oil’s rally continued Thursday, as the dollar dropped on the Federal Reserve’s decision to expand quantitative easing to bolster the U.S. economy. Crude advanced to a seven-month high, approaching $87 a barrel after the Fed said Nov. 3 it will buy about $600 billion of Treasuries over the next 8 months. The low dollar boosted the appeal of commodities as an alternative investment.

Oil for December delivery climbed as much as 32 cents, or 0.4%, to $86.81 on the New York Mercantile Exchange. Spot crude is currently trading near $87 a barrel. Futures have gained 8.9% in the past year.

Technical News

EUR/USD

After yesterday’s steep rise some downward correction may be seen for the pair today. The RSI for the pair is floating in the overbought territory on the 4 hour and 8 hour charts and a bearish cross is seen on the daily chart. Furthermore, a breach of the upper Bollinger Band is seen on the daily chart indicating an imminent downward move may be expected. Going short for the day may be advised.

GBP/USD

A breach of the upper Bollinger Band is seen on the daily chart, indicating an impending downward move. The pair’s RSI is floating in the overbought territory on the daily and 4 hour charts while a bearish cross is seen on the 4 hour, 8 hour and daily charts’ Slow Stochastic. Going short for the day may be advised.

USD/JPY

The pair seems to be range trading at the moment between $80.60 and $81.20, with most indicators in neutral territory. Waiting on a clearer direction for the pair may be advised for today.

USD/CHF

After a sharp decline the pair may be seeing some upward correction today. A breach of the lower Bollinger Band is seen on the 8 hour chart, indicating an imminent upward movement. Williams Percent Range on the 8 hour chart supports upward pressure. The RSI for the pair is floating in the oversold territory on the 2 hour, 4 hour and 8 hour charts with a bullish cross seen on the 4 hour and 8 hour charts’ Slow Stochastic. Going long for the day may be a good option.

The Wild Card

AUD/CAD

A breach of the upper Bollinger Band is evident on the daily chart, indicating an impending downward move. The RSI for the pair is floating gin the overbought territory on the 4 hour chart while a bearish cross is seen on the 4 hour and daily charts’ Slow Stochastic. Forex traders may be advised to go short for the day.

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 CountingPips.com

Today’s Important Economic News Releases – November 5, 2010

• Japan Bank of Japan interest rate decision
• Australia RBA quarterly monetary policy
• Australia foreign reserves
• United Kingdom producer price index, October
• Eurozone retail sales, September
• Germany factory orders, September
• Canada employment change & unemployment rate, October
• United States nonfarm employment data, October
• United States unemployment rate, October
• United States pending home sales, September

See full Calendar here

USDCAD continues its downward move from 1.0372 and the fall extended to as low as 1.0009 level. Resistance is at the downtrend line on 4-hour chart, as long as the trend line resistance holds, downtrend is expected to continue and one more fall towards 0.9979 previous low support is still possible, only a clear break above the trend line resistance could indicate that a cycle bottom is being formed.

Daily forex Forecast