Month: March 2011

Traders flocked to the safety of the US dollar and the Swiss franc following reports of Saudi police firing on protesters in the Saudi Kingdom. In response, equities sold off and crude oil trimmed its losses in volatile trading.

In the New York session, uncharacteristic volatility was felt with the dollar rising sharply versus the euro and the pound. The dollar built on its gains for the day after reports hit the wires of Saudi demonstrators being met by gunfire to break up protests.

In response to the news, the EUR/USD fell to a fresh low at 1.3775 following the report. The Swiss franc gained versus the dollar and the euro while crude oil prices came off of their lows for the day and surged more than $2 in less than an hour.

The Dow Jones Industrials Average had its worst day since August 2010, finishing down 1.9% and closing below 12,000 for the first time since January 31st, though the index did manage to finish off its lows. The NASDAQ was also down 1.8%.

The Saudi report contributed to the negative tone of the trading day that began with a downgrade of Spanish sovereign debt by Moody’s. Traders were also disappointed when the Bank of England decided not to raise interest rates, prompting traders to sell the pound.

Market sentiment has quickly turned from the previous week where traders were focusing on higher yields in the Eurozone when euro was pushing to new highs. This week the European debt crisis has reemerged combined with geopolitical concerns in the Middle East which has caused a rush to the dollar as a safe haven play.

Tomorrow traders will be eyeing the EU Economic Summit for progress by European finance ministers working towards a resolution of the European debt problem. US core retail sales and UofM Consumer Sentiment are also on tap.

Written by FastBrokers House

EUR/USD down at 1.3840 from early 1.3875, but off session low 1.3802.  Moody’s came out early announcing they’d downgraded Spain.  Stops through 1.3840 and 1.3830 tripped in quick succession on way to 1.3802.

Middle Eastern buying resurfaced around the lows and that was that.  Much talk of sizeable buy order placed down at 1.3800.

Trailing intraday buy stops above 1.3850 have just about survived subsequent rebound, with trading having gotten rather lacklustre after early fun and games.

More sell stops now seen through 1.3790.

Cable pretty much unchanged at 1.6160.  Early sell-off tripped stops through 1.6140 on the way to session low 1.6121 before recovery. Large UK corporate seen notable buyer around lows.

USD/JPY pretty much unchanged at 82.90.  Talk of  semi-decent sell interest up at 83.00 (at least half a yard) so far capping rally attempts in a rather disinterested market.  It’s not as though half a yard is that much, certainly for USD/JPY.

Market Commentary provided by FastBrokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

Written by FastBrokers House

It has been a reasonably active session in Asia with first the New Zealand rate cut, then Australian job numbers abd finally the Chinese trade data to guarantee some volatility.

The AUD/USD was trading at 1.0105 before the jobs data but fell sharply to 1.0066 on the headline number. Once traders dug a little deeper into the data, the AUD/USD jumped straight back up to 1.0115. The Chinese data, whilst worse than expected, did not come as a total surprise as there had been rumours that the Chinese would engineer a poor number in order to help their negotiating position in upcoming US trade talks. The AUD/USD fell heavily nonetheless, from 1.0090 to a low of 1.0032. Ranges: 1.0032/1.0117

Most of the other pairs have followed the AUD/USD lead. EUR/USD opened at 1.3900 and tried to push higher first up but encountered some decent selling at the session high of 1.3925. The Chinese data and the falling AUD/USD encouraged these early session longs to bail. Ranges: EUR/USD 1.3865/1.3925, EUR/CHF 1.2898/1.2940

Cable has followed the lead of the other pairs, lagging in both directions. Traders have been unwilling to put on much risk ahead of tonights MPC. Ranges: 1.6172/1.6216, EUR/GBP .8566/90

USD/CHF .9277/.9319, USD/JPY 82.67/89

Market Commentary provided by FastBrokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regarded neither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Zac, CountingPips.com

Today, I am very pleased to bring you a new trader interview with Chris Vermeulen, the founder of the popular newsletter and trading website at TheGoldandOilGuy.com. Chris is an experienced trader in stocks, commodities, currencies, futures and ETFs. At the TheGoldandOilGuy.com, Chris provides clients and traders with an ETF and Stock Trading Alert Service complete with daily pre-market videos, intraday chart analysis & updates and ETF trade signals.

If you enjoy the interview, we have secured free access for CountingPips readers into Chris’s site to check out his trading style, analysis and signals (see end of interview).

Q: How did you become involved in the financial trading world?

When I was 16 years of age my dad received a marketing booklet in the mail from Larry Williams about trading commodities showing how much money could be made trading futures. I bet I read that book 20 times… Of course back then futures trading and the internet were completely different from what they are today, as there was no way that I could trade futures at a young age nor could I do it online…

It was that marketing booklet which got me turned on to trading at a young age.

A couple years later during college I became hooked on watching CNBC and eventually opened up a trading account buying up tech stocks and did very well at it. Luckily I took all my profits and bought trading books, courses and attended trading seminars with all the profits I generated. A couple years later, the tech bubble collapsed teaching me that I didn’t know how to make money in a bear market, but again I was lucky because I had spent almost all my money on trading education which provided me with the tools to learn to make money in a falling market environment.

Over the years I have jumped around trying all the different types of trading opportunities, from stocks, options, etfs, currencies, and futures. After trading the different types of investments I was able to select which fit my personality and time frames the best. I now focus on a mix swing trading stocks and ETFS and day trading SP500 futures.

Q: What markets do you mostly trade and was there something particularly attractive to you about these markets?

My main focus is on the SP500 (broad market) along with gold and silver.

The SP500 is great because you can trade Futures, ETFS or high beta stocks using my trading signals. Depending on the setup and time frame which the setup occurs I will choose which way to trade that particular opportunity. Also the volume on these instruments make it easy to enter and exit positions which is also very important.

As for gold and silver, they move much differently and I found my edge to trade them several years ago using a mix COT data, momentum, volume, ratios and price patterns.

Q: How did you get your trading education? Did you learn by demo trading, did you have a mentor?

Paper trading was something I did for a couple years before I did any real trading, simply because of my age and the lack of money. I think paper trading played a huge roll in my success because I was able to trade without any emotions for 2 years. I followed in John Murphy’s footsteps of technical analysis. I learned most technical analysis from his book “Technical Analysis of the Financial Markets” and the balance was a mix of learning a small gold nugget from each book or seminar I took along from analyzing the market over time building real life experiences of how to manage winning and losing trades.

Q: How often do you trade, are you a full-time trader? Do you trade longer or shorter times?

I am a full time trader with my main focus on swing trades lasting 5-90 days in length. That being said I always manage to get a few day trades in when an opportunity pops up on the intraday charts. The time frames I trade are the 1,10, 60 minute charts, along with the daily and weekly.

Q: Do you use more technical analysis or fundamental analysis, both? Do you take sentiment analysis into your decision making?

I think technical analysis is the most crucial part of trading simply because you can only make money when the price moves in your favor. That being said if you have a company with great fundamentals along with great looking technical’s, you stand a better chance of winning/making more money.

Sentiment is a very big part of my trading as I follow it each and every minute in real time. I have some custom indicators I created which allow me to spot short term extreme sentiment levels for both swing trading and day trading.

Q: Do you have any favorite economic indicators or favorite technical indicators that you feel are most reliable?

Yes, I like some indicators very much and when used together they provide excellent low risk trading opportunities. These indicators may seem basic, I find that I read and use them in a different way than the general public which gives me an edge.

Price charts

Volume analysis

Understanding Chart Patterns

Total Put/Call Ratio

NYSE Advance/Decline Line

US Dollar Index
Custom Sentiment Indicator

Q: What market(s) do you generally keep an eye on, maybe that are outside of the ones that you trade?

While I keep a close eye on the bond market, only recently have I started to trade them using the bull and bear ETFs for them. I also like some of the food commodity ETFs for trading things like sugar and livestock to name a couple. I also cannot leave out currency ETFs. Currencies are now very speculative and move like stocks so these are also becoming a larger portion of my trading activity.

Q: In conclusion, do you have any advice to anyone that may be just starting out in trading? Is there anything in particular that you wish you had learned when you started out?

Sure there is…

You must have multiple trading strategies if you want to pull money consistently from the market. The market goes through phases of trending and non-trending, each market condition requires a different trading strategy in order to take advantage of it. I use two strategies one which is for trending markets and another strategy when prices trade sideways or become choppy.

You must have clear trading rules and be disciplined enough to follow them (proper risk/reward ratios, stops, position size, trade the setups, money management). This is actually the hardest part of trading.

And, always stay positive! If you follow your rules and you have a losing trade, it simply means you are avoiding potentially larger losses and managing your position which is a must in this business. Remember there will always be another trade just around the corner and will be times when you lose a bunch of trades in the row, streaks where everything you touch makes you money. During losing streaks simple trim your position size until your strategies are in sync with the market again.

Thank you Chris for taking the time to answer my questions!

*Special Bonus – For readers looking to see more of Chris’s trading style, analysis and updates, he has given CountingPips readers a special free offer into his trading world. You’ll also get four free reports, his trading signals and more.

Access Chris’s Trading World here

By GCI Forex Research

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400)

USD

The dollar made significant gains during the Asia session after February trade data out of China disappointed consensus expectations. Although Lunar New Year celebrations are likely the cause of the unexpected deficit, investors were in no mood to take chances, and the US dollar strengthened against all its G10 peers. Earlier the NZD experienced some weakness of its own when the RBNZ cut the policy rate by 50bp (only a 25bp cut had been expected by consensus). This triggered an immediate 50-pip selloff in NZDUSD, but it soon partially retraced. EURUSD traded 1.3865-1.3925, and USDJPY traded 82.58-82.88. Asian equities are also weaker, after the S&P 500 finished down -0.14%. Gold and brent crude were both tightly range-bound. Our analysts expect initial jobless claims to tick slightly higher to 370k, while still leaving the broader downtrend intact.

EUR

Newswires reported that a French government source said EU leaders will not discuss Greek debt restructuring at the upcoming summit on Friday.
Sovereign bond yields remain elevated, and while the ECB’s apparent determination to push towards policy normalization has supported the euro over the past week, sovereign risk concerns are clearly coming back to the forefront, capping euro upside.

CHF

The CPI print was stronger than consensus at 0.5% y/y. While the Swiss franc strengthened on the data, we doubt this stronger inflation print will be enough to shake the SNB out of its current stance. Relative central bank tightening expectations continue to favour EURCHF upside, supporting our long EURCHF trade recommendation.

AUD

The AUD got a small boost from a mixed February employment report which on balance slightly beat expectations. Although employment fell by -10.1k (cons. +20k), full-time jobs expanded by 47.6k. The unemployment rate was steady and in line with consensus at 5.0%.

NZD

The RBNZ cut the OCR by 50bp, taking the policy rate back to its crisis low of 2.5%. Governor Bollard noted that the recent earthquake has caused ‘immense disruption to business activity’, and that economic activity nationwide would be negatively impacted. The RBNZ expects GDP growth will be ‘quite weak’ in H1, but this will eventually give way to a “very large reconstruction program by 2012″. As far as policy guidance is concerned, Bollard added that the “current monetary policy accommodation” will need to be removed once the rebuilding phase materializes, although he was clear that “future monetary policy adjustments” will be guided by incoming data.

TECHNICAL OUTLOOK
EURJPY 114.19 support.
EURUSD BULLISH Rise through 1.3989 would open up 1.4036/86 area next. Support is defined at 1.3833.
USDJPY NEUTRAL Near-term resistance at 83.07, while support is at 82.21.
GBPUSD NEUTRAL Recovery through 1.6344 required for resumption of uptrend. On the downside, pullback through 1.6126 would expose 1.6072.
USDCHF BEARISH As long as resistance at 0.9392 holds, expect losses towards 0.9262/00 zone ahead of 0.8951 next.
AUDUSD NEUTRAL 1.0202 and 0.9944 mark the near-term directional triggers.
USDCAD BEARISH Currently holds support at 0.9668 ahead of 0.9600. Resistance is defined at 0.9776.
EURCHF BULLISH Support at 1.2788 holds, initial resistance at 1.3040 ahead of 1.3086.
EURGBP BULLISH Move above 0.8636 would open up 0.8654/72 area. Near-term support is at 0.8479.
EURJPY BULLISH As long as the cross maintains above 114.19, expect gains to target 116.00/65 and 118.07.

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 GCI Forex Research

AUDUSD Movement

For the 24 hours to 23:00 GMT, AUD strengthened 0.07% against the USD to close at 1.0098.

In Australia, seasonally-adjusted unemployment rate declined to 5.0% in February, from 5.1% in January. Additionally, in the US, wholesale inventories rose by 1.1% (M-o-M) in January, greater than market expectations, following an upwardly revised 1.3% rise posted in December.

In the Asian session at 4:00GMT, the pair is trading at 1.0040, 0.57% lower from the New York session close.

LME Copper prices rose 2.0% or $189.8/MT to $9,609.5/ MT. Aluminium prices rose 1.8% or $44.5/ MT to $2,579.3/ MT.

The pair is expected to find first short term resistance at 1.0096, with the next resistance levels at 1.0151 and 1.0225, subsequently. The first support for the pair is seen at 1.0022, followed by next supports at 1.0003 and 0.9929 respectively.

The currency pair is trading below its 20 Hr and 50 hr moving averages.

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 Anton Eljwizat

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, as I demonstrate below, the 8-hour chart signals that a bullish reversal is imminent. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.

• The technical indicators used are the Slow Stochastic, Williams Percent Range, and Relative Strength Index (RSI).
• Point 1: There is a “doji” candlestick that has formed on the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may be in an upward direction.

• Point 3: The Relative Strength Index (RSI) signals that the price of this pair currently floats in the over-sold territory, indicating upward pressure.

• Point 4: Williams Percent Range also supports the upward direction.

• The volatile downward movement which occurred prior to this upward correction has generated these indicators, and there appears to be room for this correction to continue.

EUR/CAD-8 hour Chart

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 BOE will take center stage as the British central bank is expected to hold interest rates steady. The market has priced in a 1 in 5 chance of a surprise interest rate increase at today’s meeting.

Economic News

USD – Two Day Dollar Rally Stalls

A lack of economic data kept the dollar in check yesterday as traders took a pause in this week’s dollar buying. However, the Canadian dollar reached its strongest level versus the US dollar since November 2007.

Before the opening of the US trading session the EUR/USD reached a high of 1.3940. However, the pair finished the day up only slightly at 1.3904. Traders sent the pair lower early in European trading pushing the price to a new weekly low but were unable to drive the pair much lower than the 1.3860 level. The failure of the pair to close below this support level does not bode well for the greenback. As such, the recent pullback may be assumed to be technical in nature and further gains for the pair may be recorded. Resistance for the EUR/USD come in at Monday’s high of 1.4035 and the November high at 1.4280.

The Canadian dollar has put in a strong performance with the recent surge in oil prices. Yesterday the pair fell below the psychological 0.9700 support level and currently stands at its lowest level since November 2007. A lack of support on the charts is apparent and thus the pair and could continue its decent lower, targeting the November 2007 low at 0.9054.

Today traders will be focusing on US weekly unemployment numbers which should continue to show improving data as last month’s jobs report displayed positive attributes of a recovering, albeit slow US unemployment picture. Also trade balance data will be released from both the US and Canada.

EUR – British Interest Rates Due Up

Traders are anticipating today’s Official Bank Rate announcement from the Bank of England which should be the highlight of the trading day. Expectations are for the BOE to hold interest rates steady at the current level of 0.50% with no adjustment to the 200B Asset Purchase Facility.

Inflation continues to rise above forecasted levels of the BOE as the central bank attempts to balance the inflationary risks versus a rising interest rate environment that could hurt British economic growth rates. GDP rates are expected to be on the light side, especially with a round of belt tightening to come as the British government attempts to reign in government spending and rising deficits.

As such, economists are forecasting rising British interest rates with expectations of a 1 in 5 chance of the BOE surprising the market today with an interest rate hike.

Currently the GBP/USD is trading near the 1.6200 level. Resistance is located at last week’s high of 1.6340. Support for the pair is found at the rising trend line off of the mid-February low which comes in today at 1.6090. A breach of this level could spur further losses to the 1.5960 support.

JPY – New Zealand Cuts Interest Rate; Japanese GDP Contracts

Yesterday the Reserve Bank of New Zealand slashed interest rates by 50 bp to bring the new rate lower to 2.5% from 3.00%. The move comes as the government tries to spur growth following 2 earthquakes, the most recent damaged New Zealand’s second largest city. The RBNZ stated the loose monetary policy will remain in place until the rebuilding phase has passed.

In response, the New Zealand dollar lost further ground versus both the US dollar and Aussie dollar with the NZD/USD falling to its lowest level since December. The pair is currently testing the 0.7340 support level. A break below this price may trigger further technical selling of the pair with a target at the August 2010 high at 0.7200.

The Japanese economy shrank in Q4 with the decline more than economic forecasts. Japanese GDP contracted at an annualized rate of 1.3%. The previously reported number showed the Japanese economy contracted by 1.1%. However, a bright spot accompanied the report as machine orders rose in January by 4.2% which was well above market expectations.

The USD/JPY looks to be holding below the 83.00 level and could turn lower with support coming in at 82.50, a level that coincides with the 55-day moving average. A move below this level would target 82.20 followed by 81.50.

Crude oil – US Crude Stocks Rise More than Expected

Spot crude oil prices were on the rise with renewed fighting in Libya. US crude oil inventories showed higher than expected levels but did not sink crude oil prices.

At the end of the trading day, spot crude oil prices were trading slightly higher at $104.80 after opening the day at $104.24. Price volatility was on the low side as recent trading has been volatile in the commodity after prices pushed to a new yearly high at $107 on Monday.

Continued attacks by forces of Col. Qaddafi in Libya have kept crude oil markets on edge with no end in sight for the violence. Rebel groups vow to continue the fighting despite attacks by the Libyan air force and heavy armor.

US crude oil supplies showed crude oil stocks were at higher than expected. The weekly US crude oil inventory report released numbers positing a 2.5M barrel rise in US stocks. Forecasts were for a rise of only 0.8M barrels.

Despite the higher than expected inventory levels, crude oil prices still managed to close with small gains. Further price increases in the commodity should be expected given the continued violence in the Libya and the threat of unrest spreading to additional oil producing nations. A short term target of $107 is currently being eyed by traders.

Technical News

EUR/USD

The trend remains robust as a failure of the pair to close below the support line at 1.3860 suggests the recent dip may be technical in nature. Rising moving averages point to further gains in the pair with a first target at this week’s high of 1.4035, followed by the November high at 1.4280. A move below the 1.3860 could spur selling to the 1.3740 support.

GBP/USD

The pair looks to be losing momentum as the daily chart is beginning to show divergence between the price and the momentum (14). The failure of the pair to move above the 1.6400 level twice also does not bode well for the uptrend. Traders may want to begin moving stops higher in case of breakdown in the price. Support is found at 1.6025 and 1.5960.

USD/JPY

The pair appears to be range bound with few signals being offered. As such, better entry opportunities may be found elsewhere. Support comes in the 55-day moving average at 82.50. Resistance is located at 83.00.

USD/CHF

The pair is trading in a bearish flag pattern with the price moving between defined levels at 0.9370 and 0.9200. We may expect a breach lower with an estimated move of the flag pattern coming in at 290 pips. The first test will be at 0.9200. After the swing low on the daily chart, support is absent on both the daily and weekly charts.

The Wild Card

USD/CAD

Yesterday the pair fell below the psychological 0.9700 support level and currently stands at its lowest level since November 2007. A lack of support on the charts is apparent and thus the pair and could continue its decent. Forex traders should be targeting the November 2007 low at 0.9054.

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.

This pair’s indicators appear to be revealing an upward corrective signal. The 8 hour chart Stochastic (slow) show impending and fresh bullish crosses, respectively, which highlights the impending upward movement of this pair. The Relative Strength Index also show that the price of this cross currently floats in the oversold territory, supporting the notion that forex traders may wish to go long on this pair today to catch the impending corrective swing from the bearish spike experienced these past several days.