Preview of the Week of Feb. 21-25

By Dan Eduard

The next week promises to be quite volatile as a large amount of significant news out of the US gets set to be released. Following this week’s bearish run from the USD, investors are anxious to see whether the dollar will be able to stage an upward correction.

USD traders will want to pay particular attention to Tuesday’s CB Consumer Confidence figure, as well as Wednesday and Thursday’s Existing and New Home Sales figures. Early predictions are showing that each figure is likely to improve slightly over last month. In addition, Thursday’s Unemployment Claims figure is likely to generate heavy activity in the marketplace. After this week’s disappointing figure, all eyes will be closely watching to see if the number of unemployed people drops in the US. If so, the dollar may turn out to have a profitable week.

The euro is also likely to see some volatility next week. In addition to specific indicators like Monday’s German Ifo Business Climate and Friday’s French Consumer Spending figure, traders will want to focus on any news regarding euro-zone debt. The last few weeks has seen the 17-nation single currency drop as renewed sovereign debt worries in the euro-zone caused investors to turn away from the currency. It appears that the euro will not be able to stage a consistent recovery until a concrete plan is established to combat the debt issues.

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.

Will the Euro’s Rally Continue?

Source: ForexYard

Last week, one of the most notable trends in the market was the bullish euro. By Friday, the euro was once again boosted on speculation that the ECB will hike interest rates in February. Today, several economic releases are expected from the euro-zone. Will the euro see another bullish session?

Economic News

USD – Dollar Closes a Bearish Week Following Weak U.S. Economic Data

The U.S. dollar fell against most of its major currency counterparts during last week’s trading session. The dollar saw a 300 pip fall against the euro and a 250 pip drop against the British pound. As a result, the EUR/USD has crossed the 1.3700 level and the GBP/USD is trading near the 1.6250 level.

The dollar depreciated last week against most of the major currencies following disappointing economic releases from the U.S. The Long-Term Purchases report has shown that global demand for U.S. stocks, bonds and other financial assets fell in December. Net buying of long-term equities, notes and bonds totaled $65.9 billion during the month compared with net buying of $85.1 billion in November.

In addition, Retails Sales in the U.S. have increased less than projected in January. Purchases increased by 0.3 percent, the smallest gain since a drop in June. Sales at retailers were depressed by a drop in demand at building material stores and restaurants in the U.S.

As for the week ahead, the most impacting economic releases from the U.S. look to be the Consumer Confidence, the Existing Home Sales, the Durable Goods Orders, the New Home Sales, and the Preliminary Gross Domestic Data. Traders are advised to follow these reports as each and every one of them has potential to boost market’s volatility. Traders should also note that the dollar might see fewer fluctuations today as U.S. banks will be closed in observance of President’s Day.

EUR – Euro Strengthens vs. Rivals on Increased Risk-Appetite

The euro saw a bullish trend against most of the major currencies during last week’s trading session. The euro gained about 300 pips against the U.S. dollar, and the EUR/USD pair has crossed the 1.3700 bar. The 17-naiton currency also saw a 180 pips gain vs. the Japanese yen.

The euro strengthened last week following a U.S. stock market rally. The rally has boosted risk-appetite in the market, and as a result increased demand for higher-yielding assets, such as the euro and the British pound.

The euro was also affected by the bearish dollar. The dollar weakened last week after several economic reports have shown that the U.S. economy is recovering at a slower pace than estimated.

Last, the euro gained after a European Central Bank board member Lorenzo Smaghi hinted that an interest rates hike may take place soon in order to fight the rising inflation.

Looking ahead to this week, traders are advised to follow the leading economic releases from Germany, as any economic data from the euro zone’s largest economy is likely to impact the euro. Traders are also advised to follow speculations regarding a possible interest rates hike, as these speculations have potential to further support the euro.

JPY – Reduced Risk-Aversion Weakens the Yen

The Japanese yen fell against most of its major currency rivals during last week’s session. The yen dropped about 180 pips against the euro and about 240 pips vs. the British pound. The GBP/JPY cross has reached as high as the 135.45 level last week.

The yen fell last week as reduced risk-aversion, caused by a rally of U.S. stocks, has boosted demand for higher-yielding assets and weakened demand for safe-have currencies, such as the yen.

In addition, it was reported last week that Japan’s economy contracted for the first time in five quarters. Gross Domestic Product shrank an annualized 1.1 percent in the three months ended in December 31. As a result, China’s economy overtook Japan’s as the world’s second largest for 2010.

As for this week, traders are advised to follow the leading economic releases from the Japanese economy, such as the Trade Balance and the Tokyo Core Consumer Price Index. Positive data might correct some of the yen’s losses.

Crude Oil – Crude Oil Climbs Back To $91.65 a Barrel on Middle East Unrest

Crude oil began last week’s session with a falling trend, and reached as low as $83.85 a barrel. However, the trend has then promptly reversed, and crude gained to $90.95 by Friday. As this week’s trading begins, crude continues to rally, and is currently trading near $91.50 a barrel.

Crude oil rally continues as violence escalated in Libya, increasing concerns that crude supplies from the Middle East will be disrupted. Following the protests in Tunis and Egypt, the unrest has spread to Libya and Libyan leader Muammar Qaddafi’s son has warned that a civil would risk the country’s oil wealth.

As for this week, traders are advised to first and for most follow the developments in the Middle East. If the protest in Libya will proceed, and in case that the unrest will spread to Iran as well, crude prices could undergo another rally.

Technical News

EUR/USD

There is a very distinct bullish channel formed on the 4-hour channel, as the pair is currently floating in the middle of it. Nevertheless, as a bearish cross takes place on the chart’s Slow Stochastic, it seems that a bearish correction might take place. Going short with tight stops could be the right strategy today.

GBP/USD

The cable recently saw several failed attempts to breach through the 1.6260 level. Currently, as the 1-hour chart’s Bollinger Bands are tightening, it seems that the pair might see another attempt shortly. If the pair will manage to cross the 1.6260 level, it might spur a sharp bullish move; otherwise the pair might undergo a modest correction today.

USD/JPY

Ever since the USD/JPY pair has peaked at the 83.95 level, it’s been dropping constantly, and is currently trading near the 83.10 level. In addition, as the MACD on 4-hour chart continues to point down, it seems that the pair’s bearish move might proceed today. Going short seems to be the right choice today.

USD/CHF

There is a very accurate bearish channel formed on the 4-hour chart, as the pair is currently floating in the middle of it. In addition, as both the Slow Stochastic and the RSI on the daily chart are providing bearish indications, it seems that the pair might see another bearish session today, with potential to reach the 0.9320 level.

The Wild Card

Crude Oil

After falling below the $84.00 level, crude prices began recovering, and a barrel of crude is currently trading near $91.50. In addition, the daily chart’s MACD has lately completed a bullish cross at a relatively low level, signaling that the bullish move has more steam in it. This might be a great opportunity for forex traders to join a very popular 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.

Why Silver’s Rising Price will Outpace Gold’s

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No doubt every trader in the market at this week’s start noticed the sudden surge in commodity prices. Precious metals like Gold and Silver in particular have gained an exorbitant amount over the past month. But are their price movements on par with one another?

Looking at the fundamental side, the tensions spreading across the Middle East and North Africa have indeed carried a high impact on commodity prices; Gold and Crude Oil especially. Oil’s price rise appears in line with the safe-haven Gold, but fundamental factors affecting the speculation of oil supply disruptions are more likely behind Crude’s latest price moves and may be more sharply affected by developments in the region.

Gold and Silver, on the other hand, are affected not only by risk flight, but also technical speculation, as well as industrial demand, in the case of Silver.

The difference between these latter two is particularly interesting for traders. Whereas Gold has a large market of buyers and sellers, the Silver market is relatively thin, leading to higher volatility in silver trading.

Gold’s rising price was fueled by a large market of technical buyers who have been purchasing on dips following the break past $1340 per troy ounce. Silver, however, has breached its 30-year high price level, meaning there is little technical data a trader can base his/her trades on from reviewing the charts.

The lack of historical resistance lines above where Silver currently trades, as well as the thin market of Silver traders, means Silver prices possesses an above-average tendency to become overextended. Silver is also tied with electrical component industries as well as solar panel producers, which have seen rising profits over the past few years on recent hi-tech surges and energy diversification, respectively.

Gold prices are approaching the strong historical resistance level of $1420 an ounce, but Silver has no such historical line in sight. Analysts are using this information to anticipate a bullish run in Silver prices over the next week or two, whereas Gold may find resistance relatively soon and dip back down towards the $1340 price level.

Stock Trading Education For Dummies

By Cedric Welsch

For the person who is just trying to study how the stock market works, the business of trading stocks may seem quite difficult at the start. In fact, the entire stock exchange business may prove to be quite hard to understand for somebody who doesn’t even have a single clue yet what stocks are really all about – let alone the very idea of how the trading of these stocks is being done as a process. However, because of its growing popularity, you will never run out of available resources to turn to, in order to get well familiarized with its entirety as a profit generating investment medium.

When you begin your study and research around the subject of stock trading, it won’t be surprising if you immediately stumble upon various strategies that can get you profits really quick. The most basic principle of creating profits through trading is by being able to purchase stocks at a low price and then selling them for a much higher price. Now how basic can that ever get, in order for you to understand the principle of making profits through trading?

If you are ever to make profits out of your trading efforts, there is one task that you really need to be good at, and it’s the task of finding out which specific stocks you will want to focus your attention and energy onto. Another very important thing you should also be keen at doing is the task of knowing when exactly is the appropriate time to begin trading already. Just becoming really good with these two basic requirements will immediately give you the advantage you need in order to really make some profits.

However, as simple as it may sound, there is a lot more to those basic trading requirements than you could ever comprehend in just one sitting. In fact, just the task of finding the right stocks to invest upon can begin to become a little bit complicated once you begin to dissect it. You need to know what kinds of stocks are best qualified to be considered for trading. So, to determine those stocks, you need to learn a little bit of history and background on each one of your targets.

If finding the right kind of stock will already be a challenge for you, then wait till you get to the task of determining the most appropriate time to begin your trading activities. If you do a little bit of reading about this subject, some will suggest that the start of the week is the best schedule for trading. Another suggestion you might also read is the strategy of holding your stocks until you come to a certain point of timing where profits can be most prevalent for that specific stock. But then again, there are also requirements that you need to further learn to master just that single holding technique.

While you will be presented with several ideas, suggestions and opinions in your research and study about the stock exchange market, always keep in mind the basic principles of trading and you will be just fine.

About the Author

Learning from the best online stock trading reviews sites can be really profitable. Therefore, it is a must that you know which are the best online stock trading sites.

Forex Demo Trading – What Are the Benefits

By David McKean

If you are a beginner and want to start trading then the first step is to buy a forex trading account. There are many options available in the market when you go for buying a trading platform. You should always go for a trading platform that offers you a free demo account. Any broker who is confident of his platform would offer a trial accounts to new potential customers.

Once you get the forex demo trading account you should try out its trading techniques and features. No doubt going in for a forex demo trading is a time consuming but it would prove to be a wise decision in the long run. You can easy find different training sites which would offer you a demo forex trading accounts for anywhere from a day to 6 months. You can switch to a full-fledged account when you feel you’re confident and comfortable with a particular trading platform.

Apart from the above listed advantage forex demo trading also lets you test your broker. The best approach is to look for different brokers and try different demo accounts and narrow your choices with each demo account usage. This technique will help you to test how different brokers work with you and how comfortable you are working with their trading user interface.

The better you understand a trading application, the less time it will take you to learn to use different trading techniques and hence the faster the trading would be and the more you can then earn.

The bottom line remains that the opportunity to demo a trading account, its knowledge and techniques before buying is a wise decision. Having a good knowledge of the trading account before buying will help you in trading especially when large amounts of money is at stake. Do not bother about the time that you may spent on a demo account as it is time in building confidence and this confidence can help you make huge profits.

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Find out more about forex trading tutorial and how it can help you with successful forex trading

Can You Really Learn to Trade the E-Mini’s and Make Money?

By David Adams

There are a number of statistics that are bandied about regarding the success rate of new traders. The general statistic that you hear quoted is a 90% failure rate within the first three months. It would be hard for me to dispute this statistic, as I see waves of traders enter the market without training and attempt to become millionaires. It doesn’t work like that, and the exchanges are not ATM machines that spit out money to the uninitiated.

Let me say from the onset that this is a difficult question to answer. E-mini traders come in varying degrees of intellect and trading acumen. In reality, the traders that have the highest natural aptitude in trading stand the very best chance of succeeding. That being said, I have trained many successful traders who persevered through hard work and diligence.

There are a number of statistics that are bandied about regarding the success rate of new traders. The general statistic that you hear quoted is a 90% failure rate within the first three months. It would be hard for me to dispute this statistic, as I see waves of traders enter the market without training and attempt to become millionaires. It doesn’t work like that, and the exchanges are not ATM machines that spit out money to the uninitiated.

As an aside, I had a double major in college. I earned a degree in business and another degree in performance piano. Of course, the degree in piano was far more difficult than a degree in business. One of my teaching professors in the piano department once told me that if I wanted to be the best I “had to want it.”I have never forgotten these words, and they apply to all facets of life, especially trading e-mini contracts.

Let’s talk about the reasons people fail.

1. Many traders simply lose interest in trading before they become competent. Trading is a lot of work and some traders simply don’t devote the time and effort necessary to master trading concepts.
2. Many traders do not have the prerequisite skills or temperament to be effective in trading.
3. A large number of traders never master the psychological side of trading. There is a general concession that it is enough to learn the setups to be successful. Nothing could be further from the truth. Managing trades and managing your trading account are essential skills in the trading experience.

I keep fairly careful records on the outcomes of my trading education and find that about 50% of the traders in my programs succeed. In relation to the 90% failure rate, that is something of which to be proud. Just the same, 50% of the students in my program fail, and that is a disheartening statistic. The cold reality of trading is that some traders are never going to be effective and should find other work, or another career.

Of course, there is some good news, many e-mini traders go on to have successful careers in the trading business. This success is a function of natural aptitude, mental toughness, and a desire to succeed. I have met very few traders who possess these three attributes that are not successful. In order to trade successfully, you “have to want it.” There are no magic oscillators, breakthrough indicators, or trading techniques that will assure your success. Only careful study of a tried and tested system, then mastering that system, will give you the potential to succeed and e-mini trading.

From a personal standpoint, I have vowed over the past 25 years to quit trading more times than I count, but I keep coming back for more and have traded very successfully over the vast majority of my years in training. You can too.

In summary, we have looked at the overall failure rate among new traders. The numbers can be very disheartening and discouraging. We have also pointed out that one of the keys to success is perseverance and hard work. Just the same, not all traders succeed and that is a fact of life. With proper training and hard work I think most people can learn to trade successfully, some traders are more successful than others; that’s also a fact of life.

About the Author

Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here

Gold Likely to Enter Downward Correction

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Gold prices rose significantly in the last week and peaked at $1396.76 an ounce. Gold has made a significant upward correction, which can be directly correlated with the bullish trend of the EUR/USD cross. However, the daily chart is suggesting that a recent upward trend is losing steam and a bearish correction is impending. This recent activity has raised the stakes for traders. From here on, the forex and commodity markets will see very high volatility indeed.

• Below is the daily chart for gold by ForexYard.

• The technical indicators used are the Slow Stochastic, RSI and Williams Percent Range.

• Point 1: The Slow Stochastic indicates an impending bearish cross, signaling that the next move may be in a downward direction.

• Point 2: The Williams Percent Range has peaked at the 0 marker and has turned bearish; this means that there may actually be a strong level of downward pressure.

• Point 3: The RSI signals that the price of this pair currently floats in the over-bought territory, suggesting downward pressure.

Gold Daily Chart
gold 21-2-2011

Trading Myths – Risk to Reward Ratios

By Doug West

I’ve never been a big fan of Risk-To-Reward ratios. There are a million ways to calculate them for one thing. It is simple to say that you want a 2 to 1, or a 3 to 1, or a 4 to 1 ratio, but where do you start, and where do you get out of the trade? Do you base that on someone’s pivot points (another trading aid that has MANY formulas), or some other formula?

The problem I have with Risk TO Reward ratios is that I have seen them cause traders to hold trades too long. I am a firm believer in taking profit when the market makes it available to you. If you don’t, you can let a profitable trade become a loss. I’ve seen this happen time and again when someone is putting too much weight on some magic ratio.

I do see the attraction with these ratios. If you can get a 2 to 1 risk to reward ratio, you can actually lose over half your trades (if you make sure your losses are 1/2 the size of your winners), and still come out on top! Sounds great in theory, but in live action I find much harder to accomplish.

The problem is that you NEVER know what the market is going to do next, I don’t care how many formulas you go by, or how many indicators you look at! Those indicators are all based on formulas too.

Here is another problem, whose formula do you go by? Ted’s, Jed’s, Ed’s, or Fred’s formula? There are a TON of them to choose from.

In the long run I have found that you will do a LOT better by just taking what the market gives you, and cutting your losers short. If you do that consistently, you will be way ahead of those who look to some arbitrary ratio on their trades. They may work for longer term investments, but with day trading I like to stay in the moment and take what the market is offering. OH, I see my set up coming, I’ve got to go!

About the Author

Doug West has worked in Financial Planning and Investment training for over 20 years. Get his No-Cost Audio Report on how you can Secure Your Retirement with Free-Online Tools:

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Learn the art of simple Mini-Dow Index Trading.

Forex trading – learning it the hard way

By Vytautas Zilenas

A newbie that comes to the Forex market expecting to make millions in a matter of a few months usually gets disappointed quite quickly. If he/she spends just a few weeks on a demo account and rushes to open a real one, the chances are that his/her real account will be shattered within a few weeks, hopefully a few months. Financial markets present lots of opportunities to make money, but even more to lose it. From my own experience I can say that the only way you are going to become successful in Forex is by learning it the hard way, making mistakes, trying and losing, trying again and losing again and finally arriving at conclusion that Forex is not for you, or by finding some good forex trading strategies and following them with a sound money management system and proper discipline.

Understanding of conditions is the first step to success

My favorite author on investing and speculation is Jesse Livermore. He lived, traded and wrote in the beginning of last century but his great experience and tips are still valuable today as they were one hundred years ago. Jesse used to say that if you want to be successful you need to understand market conditions, which means: you have to see if the market is in a range, a trend or it goes sideways. Then, you have to be able to use an appropriate strategy for those market conditions. If you neglect this and continue trading spontaneously jumping from one strategy to another without any plan and methodology, you will definitely ruin your account. Blowing up your account is not necessary, but unfortunately it happens till traders learn to see market conditions and act accordingly on the knowledge they have gained.

You have to develop your own trading strategies and systems

Learning from others is very good; however you should develop your own trading strategies and systems in order to be successful. People are different and they create different trading methods that best suits their personality. My trading style might not be very good for you as you are a unique trader you’re your unique goals and expectations. If I risk 5 percent on my trades, it does not mean you have to do the same, because your monthly or annual targets might be different from mine. Having that in mind I can say with conviction that buying signals from some signals’ provider is a temporary strategy. Why? Well, what would you do if something happens to that signal provider? What if he starts giving you bad signals? And are you going to become a professional trader by following somebody’s signals? I guess not. I do not mean to belittle the usefulness of those companies and traders that provide forex signals, I just want to stress the point that if you want to be a professional trader you have to use your own head. If you just want others to trade for you or suggest you how to trade, then forex signals are for you.

About the Author

There are many more tips that could be given but I am going to do it in my future articles. If you want to find out more about the subject you can read how forex trading system can be applied under different market conditions reading about basic forex trading strategies and by watching a video about application of forex signals.

Middle Eastern Worries Investors In 2011

By James McKee

Investors world wide have greeted the problems in the Middle East with continued anxiety as the wave of revolution spread from Tunisia to Egypt and now elsewhere. The severe loss of life and property that has occurred in Egypt already has stirred a wave of controversy in the Western world. Western currencies could end up taking a tumble in the near future if these problems begin to affect oil production. The USD and all other major currencies are inherently dependent on the consistent availability of oil, without this most precious of commodities the world cannot function.

Besides the obvious consequences in the energy market destabilization between China and Europe could cause serious consequences with regard to trade and ease of communication. China has been expressing a large amount of interest in both Europe and Africa as of late investing in their economic stability and infrastructure. Instability in the Middle East could hinder these efforts causing harm to both China and Europe; the whole world truly is invested in a solution. Although the problems of economic hardship and inequality have gone ignored for decades citizens of countries such as Egypt have said “enough”…and the consequences are all too real.

Waiting until the whole world was more or less at an impasse financially has resulted in the very least amount of aid going to the Middle East by way of the west aside from political posturing. The United States has a vested interest in the stability of countries such as Egypt since without a presence in this area of the world production and manufacturing would be undermined and as a result the USD would suffer. Those on the Forex currency exchange should take care to mind the status of uprisings in at-risk countries in the Middle East. These countries have been powder kegs for years now and the fuse has been lit.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.