InvestMacro FX

By Scott Downing

The Elliott Wave Principle focuses on the behavior of humans and how that behavior impacts the stock market. Rather than acting in an unpredictable manner, Ralph Nelson Elliott (in the late 1920s) noticed that the market actually ran in repetitive cycles – which were a result of investors’ reactionary behavior to outside influences. The principle was published in Elliott’s books The Wave Principle and Nature’s Laws – The Secret of the Universe. Elliott believed that humans are rhythmical beings, so all human decisions and actions could be predicted in rhythms. So basically, we have a stock principle based on human behavior.

While Elliott’s Wave Principle is based partially on the Dow Theory, it expands on the belief thanks to individual wave aspects that Elliott uncovered. According to Elliott, an impulsive wave follows the main trend – and it is comprised of five other waves, a pattern that runs infinitely (these are wave degrees). Each impulse wave is followed by a corrective wave, which occurs in threes – creating a five/three pattern.

Robert Prechter et al are among the biggest proponents of Elliott Wave theory. The long-term record of such analysis is a bit spotty though — they have called some big market moves very well, yet also been on the wrong side of some gigantic long-term moves.

There are waves inside the waves – you can notice that in each of the uptrends (1, 3, and 5). Waves 2 and 4 are the corrective waves, completing the cycle. Each of those impulsive waves is made of other five/three patterns, as this pattern occurs infinitely. An Elliott Wave is fractal – meaning that each wave can be broken into parts in an infinite manner.

For those who utilize these techniques, they break down waves into degrees of the pattern, each with its own name. These degrees are not classified by their form; not by their size or duration. Therefore, waves of the same degree may have different sizes or durations. The waves are named:

o Grand Supercycle (the longest) o Supercycle o Cycle o Primary o Intermediate o Minor o Minute o Minuette o Subminuette (the shortest)

The Grand Supercycle can take years to complete while the subminuette can take mere minutes to run its course. Bottom Line: Elliott Wave (and Wave Theory in general) is fairly hard to quantify and utilize as a practical trading technique. Certainly there is a logical basis to the fact that “waves” occur both in nature and the stock market — and the psychological implications of various waves/trends from investor behavior are important, as well. Wave Theory technical analysis practitioners tend to be “true believers”, but testing and measuring indicators for short-term active investing based on these theories/methods can be difficult.

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About the Author

Scott Downing is a Research Analyst with BigTrends.com. Scott’s columns are published in the Daily TrendWatch and Market Commentary. He also manages the SMARToptions recommendation service.

By James Oleander

It appears that trading without indicators has become a lost art form. If you have been day trading for a little while or are a seasoned veteran, you know that there are more trading indicators than ever. There are indicators now that basically just put the word “buy” or “sell” on your trading chart to let you know when to open and close a trade. The problem is does anybody actually know why you are buying or selling at that point? It just seems like people are content to just take their chances allowing a robot to make their trading decision for them.

What many people don’t realize is, that many of these indicators are just telling the trader what has already happened, hence they are known as lagging indicators. The problem is that the markets don’t follow some kind of set plan. Just because something worked a few times in the past doesn’t mean that its going to continue to work. The market is constantly evolving. The use of lagging indicators will never account for that fact. Traders seem to be satisfied just taking their chances with indicators such as MACD, stochastics, and moving averages. To many traders, these indicators represent success and failure.

The day a trader is finally able to clear their screen and look at a chart of the respective currency pair, without any clutter, is the day they take their first step to understanding the forex market. A trader can then look at price action at its purest form. Indicators have made traders a bit lazy. They are basically using them as an interpreter of the market. The price moves a certain way and their indicator, in its own way, is translating what that move means. Well, if instead of using a translator to play the forex market, if traders actually learned the language of price action, these lagging indicators would be obsolete.

About the Author

forex reviews.

Source: ForexYard

Rising equity markets continue to push investors towards riskier assets and away from safe haven currencies such as the USD and JPY. Traders today will be following the Unemployment Claims release for further signs the U.S economic recession is easing.

Economic News

USD – Dollar Drops Against the Majors as Equities Rally

The Dollar recorded an extremely volatile day of trading as a variety of factors helped push up the demand for riskier assets, whilst reducing the demand for safe-haven positions. Equity markets in the U.S. rallied as many companies in the U.S. recorded far better-than-expected results. These led to major banking shares, such as Bank of America and Citigroup making remarkable gains yesterday. The market also continued to move on the better-than-expected U.S. consumer confidence figures from Tuesday. The equity market surge and Dollar decline was also owed to Tuesday’s impressive U.S. Consumer Confidence figures.

The USD tumbled by more than 130 pips against the EUR in yesterday’s trading to close at 133.22. This is much owed to the fall in demand for safe-haven currencies, as it seems that the U.S. recession may be bottoming out. This is despite poor U.S. GDP figures that were released yesterday. The Dollar also made losses against the GBP to end the day down 125 pips at 148.30. However, versus the JPY, the USD finished higher 0.6% or 60 pips as the demand for the safe-haven Yen plummeted in yesterday’s trading. This was largely owed to news that the economic situation in Japan, China and the U.S. was starting to improve.

As of today, there are a number of important U.S. economic data releases that are set to be released. The most important of which are the Unemployment Claims, Personal Spending, and Personal Income figures that are set to be released at 12:30 GMT simultaneously. The market is likely to be very volatile on the release of these figures. Additionally, later on today, the market is likely to take into account the poor U.S. GDP figures that were released yesterday. Therefore, the USD may reverse some of the losses that it made yesterday against its major currency crosses as investors may return to the safe-haven Dollar. We could see the EUR/USD trading near the 1.3200 level by the end of the day.

EUR – EUR Soars Versus the USD

The EUR experienced a bullish day of trading yesterday, mainly due to the European Consumer Confidence figures, showing its first month on month rise in 11 months. This added to the news from across the developed economies from the U.S. to Japan that the worst of the global economic recession may be over. The bullish equity markets in the Euro-Zone and in Britain were partly due to that of the U.S., partly due to the upgrade of British banks by brokers, and the fall in demand of safe-haven currencies. The EUR made its most notable gains against the USD in Thursday’s trading.

The EUR gained about 130 pips against the Dollar in Wednesday’s trading as demand for safe-haven currencies plummeted as the global economy begins to pick up. The pair closed at the 1.3322 level. The EUR/JPY cross rose by an impressive 210 pips to 129.90 as demand for the most safe-haven currency of all as of late plummeted as indicators from Japan showed that her economy had improved in April. Against the Pound, the EUR did make marginal gains as fears of a prolonged European recession dissipated slightly. The pair closed up 15 pips at 0.8980.

Looking ahead to today, the Euro-Zone and Britain are set to publish a number of important data releases. These include the British Nationwide HPI at 6:00 GMT and the Euro-Zone Unemployment Rate at 21:00 GMT. These figures are likely to determine the GBP and EUR’s strength going into end of week trading. Forex traders are also advised to closely follow statements coming from U.S. President Barack Obama and the U.S. Federal Reserve, as the forex market is likely to be very volatile to this.

JPY – Yen Plummets as Economy Improves

The Yen plummeted yesterday against its major currency pairs as the current economic recession in the world’s second largest economy seems to be bottoming out. The JPY slid over 60 pips Yen to 97.54 Yen per Dollar as the Yen’s demise was compounded by strong U.S. consumer confidence figures. Thus the most safe-haven currency as of late plummeted as a result of both improvements in Japan and America’s economy. The JPY also slid against the EUR, dropping a massive 210 pips to finish the day’s trading at 129.90. The Pound also made inroads into the JPY as the confidence of the U.S. equity markets swept Europe, and reduced demand for the safe-haven JPY.

As the Japanese equity markets reopened yesterday after a bank holiday, shares soared as the global economy showed signs of bottoming out. This is following good U.S. Consumer Confidence figures from Tuesday, European Consumer Confidence figures from yesterday, and positive Japanese data releases on Wednesday. The bearish JPY yesterday was compounded by impressive factory production figures, showing their first increase in 6 months. All these factors helped pour investors away from the Yen and into the riskier equity market. Today, the Household Spending and Unemployment Rate figures are likely to help determine the JPY’s strength in late trading. The USD/JPY could break the 98.00 resistance level by the end of today’s trading.

Crude Oil – Jumps 4%

The price of Crude Oil ascended by $2 or 4% yesterday to $51.44 a barrel. The increase comes despite the higher-than-forecasted Crude Oil Inventories data release. Much of the black gold’s bullishness was owed to the weak Dollar and optimism about a quicker than anticipated global economic recovery. Data coming from the U.S., Japan, China, and the Euro-Zone in the last 2 days helped bring back investors confidence into the equity and commodity markets

As a result of the renewed optimism, investors decided to return to the Crude Oil market. Moreover, the weaker Dollar added to the effects of Crude’s gains on Wednesday. What we will now have to see is can Oil maintain this bullish momentum? Maybe in the medium-term this may be possible. However, in the short-term high Oil prices are less likely, especially as the U.S. is expected to release poor Unemployment Claims data later on today. Traders may look for profit taking after yesterday’s bullish trading session. Crude could drop back to the $50.50 mark.

Technical News

EUR/USD

Yesterday’s bullish trading session may have strengthened this pair a bit too far. This could be inferred as the 4-hour chart shows the pair trading in the over-bought zone on the RSI. The chart also shows a bearish cross has formed on the Slow Stochastic. These two signals indicate an imminent downward correction. Traders may also notice the hourly chart’s Bollinger Bands tightening, indicating the potential for a violent breech. Going short could be the right play today.

GBP/USD

The 4-hour chart shows the Cable trading in an overbought state on the RSI with a bearish cross on the pair’s Slow Stochastic Oscillator. This indicates the potential for a downward correction. The Bollinger Bands show the most recent price move has originated at the upper border, indicating the potential to go all the way to the lower border. Traders may want to be short on this pair.

USD/JPY

Despite the pair failing to break the 98.00 mark, the recent upward correction that has occurred the past two days may have the potential to continue. The daily chart shows a bullish cross has formed on the Slow Stochastic Oscillator, indicating the upward momentum could continue. The price is also floating in the oversold region on the RSI. Going long might be a good strategy.

USD/CHF

The recent volatile upward movement has pushed the price of this pair into the over-sold territory on the RSI of the 4-hour chart, indicating an upward correction may be in the works. The recent bullish cross on the hourly chart’s Slow Stochastic supports this notion. Going long might be wise decision today.

The Wild Card – Oil

After yesterday’s bullish trading session, the commodity is showing strong bearish signals. The 4-hour chart shows a bearish cross has formed, pointing to a future downward correction in price. The same chart also has the price floating in the over-bought zone. This could give forex traders the opportunity to go short today on crude oil.

Forex Market Analysis provided by Forex Yard.

© 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 Fx Research

€

The euro appreciated sharply vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3340 level and was supported around the US$ 1.3120 level.  Some dominant themes emerged during the North American session.  First, the Federal Open Market Committee decided to keep its federal funds rate target between 0% and 0.25%.  The FOMC reported “Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.  In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of financial and economic developments.”  The Fed’s decision was unanimous.  Second, former Fed Chairman Volcker reported no systemtically important U.S. banks will fail.  This comment was made before the results of the current stress tests are made known on Monday.  It is already being reported that Citigroup and Bank of America are likely to be told to raise a significant amount of additional capital with some whispers indicating BoA may need to raise an additional US$ 70 billion.  Third, the U.S. Q1 gross domestic product declined an annualized 6.1%, more-than-expected.  In eurozone news, EMU-16 economic sentiment indicator improved to 67.2 in April from a record low of 64.7 in March, the first improvement since May 2007.  European Central Bank President Mersch talked about the ECB’s ability to change monetary policy further, saying “We have made all the parameters of our framework more flexible and maybe there is still a small margin in this area for decisions to come.  But also in the framework of our principal instrument, which is short-term interest rates.”  Many dealers believe the ECB will initiate quantitative easing in May.  It was also reported that German new plant, machinery orders were off 35% y/y.  Additionally, EMU-16 March private sector loan growth eased to 3.2% following a 4.3% annualized growth rate in February.  These data confirm the credit crunch has reduced bank lending substantially.  M3 money supply growth fell to 5.1% in March from a downwardly revised 5.8% in February.  ECB member Stark reported “there is no evidence in the euro zone of imminent deflation.”  Euro bids are cited around the US$ 1.2765 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥97.15 level and was supported around the ¥96.35 level.   Japanese financial markets were closed overnight and liquidity was reduced during the Asian session.  Big drivers in the yen continue to be risk aversion and the global swine flu outbreak.  Traders were less risk adverse overnight, particularly after European economic data printed stronger-than-expected.   The Nikkei 225 yesterday stock index lost 2.67% to close at ¥8,493.77.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥128.65 level and was supported around the ¥126.60 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥143.70 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.40 level.  The Chinese yuan appreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8245 in the over-the-counter market, down from CNY 6.8270.

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.

The U.S. Federal Open Market Committee concluded its monetary policy meeting by holding the U.S. interest rate steady at its record low level. The FOMC had cut the interest rate to a new target range of 0 percent to 0.25 percent on December 16th and said today “that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”. Today’s unanimous committee decision to keep the rate unchanged was widely expected by market forecasts.

The Fed statement accompanying the rate decision commented on the U.S. economy, “Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit.”

GDP contracts in 1st Quarter by more than expected.

The U.S. economy contracted in the first quarter of 2009 by more than expected according to the latest release by the U.S. Commerce Department. The advance estimate report released today showed that the U.S. Gross Domestic Product contracted at an annual rate of 6.1 percent in the January to March quarter following the 6.3 percent GDP contraction in the fourth quarter of 2008. Today’s GDP numbers surpassed the 4.7 percent contraction that the economic forecasts were expecting for the first quarter and marked the first time since the 1974-1975 period that GDP has shrunk for three quarters in a row.

Contributing to the decreased GDP for the fourth quarter were declines in business inventories, exports and housing. Exports declined sharply in the quarter as exports of goods and services decreased by 30.0 percent after falling by 23.6 percent in the fourth quarter.

On the positive side, consumer spending, which makes up approximately two-thirds of U.S. economic activity, increased in the first quarter by 2.2 percent after decreasing sharply in the previous two quarters.

Forex – U.S. dollar falls in Forex Trading today.

The U.S. dollar has been falling in forex trading today against most of the major currencies.  The dollar has declined versus the euro, British pound, Canadian dollar, Australian dollar, New Zealand dollar and Swiss franc while gaining versus the Japanese yen.

The euro has advanced versus the USD for the second day as the EUR/USD trades at 1.3287 in the afternoon of the US trading session at 3:08pm EST after opening the day at 1.3186 according to currency data from Oanda.

The British pound has also climbed for the second day in a row as the GBP/USD trades at 1.4764 after opening the day at 1.4705.

The dollar has gained ground against the Japanese yen today as the USD/JPY has increased from its 96.91 opening to trading at 97.67.

The dollar has fallen against the Canadian dollar after opening at 1.2135 earlier today to trading at 1.2012 later. Meanwhile, the USD has also declined against the Swiss franc as the USD/CHF has gone from 1.1413 to trading at 1.1364.

The Australian dollar has gained for the second day in a row versus the USD as the AUD/USD trades at 0.7274 after opening today at 0.7135 while the New Zealand dollar has also increased versus the USD as the NZD/USD trades at 0.5747 after opening the day’s trading at 0.5653.

EUR/USD Chart – The Euro advancing sharply today versus the US Dollar in Forex Trading for the second day in a row.

By John S. Houston

As technical indicators go, the ADX often gets lost in the weeds compared to the more popular MACD, RSI and Stochastics. However, if used properly the ADX can be a big help in trading the Forex profitably. The Average Directional Index was developed by Welles Wilder, a prolific researcher and writer on the financial markets. Investopedia describes the ADX as an indicator that is “used to determine when price is trending strongly”. There are three components to the ADX: the DI+ line tells us when there is a positive, upward trend prevalent in a given market; conversely the DI- line tells us when there is a negative, downward trend. The last component is the ADX line itself which tells us the strength of the trend. I like to make the DI+ green and the DI- red…since on my charts green bars show upward moves and red bars show downward moves.

The ADX is used like this: when the green (DI+) line crosses above the red (DI-) line, then a positive, upward trend is gaining dominance in the market and you can expect prices to rise. When red crosses above green, just the opposite happens, a negative/downward trend is coming into play. Now, if the ADX line is rising as well, that tells you the strength of that move is increasing. If the ADX registers a reading of 20 or below, we say there is no trend in place. A reading between 20 and 25 suggests a weak trend. When the ADX is above 25 a strong trend -up or down- is present. Remember, the ADX doesn’t tell which way the market is moving, only the strength of the trend. Look to see whether the green or red line is on top to get the direction. That’s it in a nutshell. There are other considerations such as which time frame is best to use…which currency works best with this, what are the optimal settings, what are the best times to trade…and more. Do you need to keep your eye on the chart all day? There are good answers to all this which I will address in subsequent articles.

About the Author

John Houston has been trading the Forex for over five years. He’s studied under some of the best brains in the business focusing on Elliott Wave, fundamental and technical indicators and various trading systems. John has used several Expert Advisors and is proficient with MT4. He is in the course of developing an ebook on using the ADX to trade the Forex profitably. Watch his blog for updates.

By Frank Kollar

Fibonacci ratios and Elliott Waves help us look ahead and be prepared for what the financial markets will do over the coming weeks and months.

What are Fibonacci Ratios?

Leonardo Fibonacci was a 13th century accountant who worked for the royal families of Italy. In 1242 he published a paper entitled “liber abaci.” The basis of the work came from a two-year study of the pyramids at Gizeh.

Fibonacci found that the dimensions of the pyramid were almost exactly the same as the golden mean or (.618).

Fibonacci is most famous for his Fibonacci Summation Series which enabled the Old World in the 13th century to switch from Arabic numbering (XXIV=24), to the arithmetic numbering (24), that we use today. For his work in mathematics, Fibonacci was awarded the equivalent of today’s Nobel Prize.

Fibonacci Summation Series

The Fibonacci Summation Series takes 0 and adds 1. Succeeding numbers in the series adds the previous two numbers and thus we have 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 to infinity. At the eighth series, by dividing 55 by 89, you have the golden mean: .618. If you divide 89 by 55 you have 1.618.

Do you see the pattern? 1+1=2, 1+2=3, 2+3=5, 3+5=8, 5+8=13…..

These ratios, and several others derived from them, appear in nature everywhere, and in the financial markets they often indicate levels at which strong resistance and support will be found. They are easily seen in nature (seashell spirals, flower petals, structure of tree branches, etc.), art, geometry, architecture and music.

Why are they important to the financial markets? Because the markets tend to reverse right at levels that coincide with the Fibonacci ratios. Whether you see this as cosmic or coincidence makes little difference. It happens and tens of thousands of traders make decisions based on Fibonacci ratios, thus amplifying the results.

For example, if the Nasdaq rallies 100 points and then corrects, it will often correct 61.8%. Right at, or close to the 61.8% retracement (you have heard us use this term many, many times) the Nasdaq is likely to reverse and start advancing again. Of course it is not this simple. Fibonacci support and resistance levels can fail. There are other Fibonacci levels which may turn the markets (78.6%, 127.2%, 161.8%, etc.). But the fact that it does happen is what is called a trader’s “edge.”

A trader has an edge when he knows the probabilities of a particular action are greater than normal. Trading strategies are built around this information, or multiple similar probabilities.

Elliot Wave Patterns

Elliot Wave Patterns, in short, are usually a three or five wave series of advances, or declines, that define a trend. They are the result of crowd psychology, and thus are usually more reliable when found in broader based indices, such as the S&P 500 Index, Nasdaq Composite Index, etc.

Typically, if the S&P 500 Index moves higher in a 5 wave pattern, and then falls below the top of wave 3, it signals the start of a retracement that normally consists of 3 waves.

In a bear market it works the other way. A five wave pattern defining a declining trend, which is then reversed by a 3 wave rally, which eventually reverses and another five wave pattern begins to the downside.

Finding a wave pattern that completes at a strong Fibonacci support or resistance level can be a very reliable indicator of a change in trend.

By having an Elliott Wave pattern complete right “at” a Fibonacci support or resistance level, you in essence have increased the probabilities of being correct.

Trading Patterns

Because the markets often move in 5 wave and 3 wave patterns, and the turning points that create these patterns are often at Fibonacci support and resistance levels (61.8, 161.8, etc), you can expect that eventually, a way would be found to use them to forecast the future direction of the financial markets.

There are several trading patterns used by advanced traders, including day traders, which take advantage of the combined strength of Elliott Waves and Fibonacci retracements.

These patterns commonly repeat in stock and index charts and traders who use them are called “pattern traders.”

Although pattern recognition is a potent tool in trading, we suggest that no one try using them without thorough training in pattern trading. There is more to it than just knowing the patterns, including risk management and money management, without which the patterns are more likely to cause headaches than profits.

An excellent book on such patterns is, “Profitable Patterns for Stock Trading” by Larry Pesavento. Larry is an authority on trading patterns, and I studied with him at his home in Arizona some years ago.

How We Use Them

At FibTimer, we use Elliott Wave Theory and Fibonacci support and resistance levels to map out where we think the financial markets are headed.

Recognizing that these tools are NOT always right, we use them to prepare for what is to come, but not for actual trading decisions. It is always good to have a feel for what the markets will do so that we are ready emotionally for the trading decisions ahead.

Although both Fibonacci support and resistance levels and Elliott Wave theory are good tools, they fail too many times to be used for market timing. Many would disagree with this statement, but our research shows that over the years they will give accurate forecasts only about 50% of the time.

They are great when looking at previous chart data, but because there are so many variables, they are not as accurate looking forward. Good… Useful… But not good enough for us.

All trading signals at FibTimer are generated by non-emotional and non-discretionary trend indicators. Our trend indicators catch “every” trend and when a trend fails, they quickly tell us to reverse so any losses are very small. Much better for “profitable” market timing as our market timing trade history pages show.

There is no way to separate emotions from market analysis. If a strategy offers variables that need to be interpreted, emotions will sway those interpretations. It is human nature and cannot be avoided.

This is why FibTimer follows non-discretionary trend following indicators… so that emotions cannot sway any buy or sell decision.

About the Author

editor:  www.fibtimer.com

By Fast Brokers

The EUR/USD is flying, bolting through all three of our downtrend lines after bouncing off our previous 1.2987 support.  Investors came in defense of 1.30 with serious volume.  The currency pair is presently testing April 24 highs and it appears to have more room to run should today’s data from the U.S. come in positively.  The EUR/USD’s considerable strength is rooted in better than expected earnings from Spain’s Santander, the EU’s largest bank.  Since we are in a financial crisis, positive earnings from banks can be a real driving force.  However, all bets are off until the currency pair can plow through April 24 highs towards April 13 highs.

The sustainability of the EUR/USD’s momentum will rely upon today’s Prelim GDP number from the U.S.  Therefore, keep an eye on the S&P futures since the two investment vehicles are positively correlated.  If the S&P can break out of April highs, we expect the EUR/USD to follow suit.  On the other hand, if the GDP data disappoints, we could see the EUR/USD buckle into its downtrend.

Altogether, the fact that the EUR/USD has rallied from 1.30 is a very positive sign for the uptrend.  April 28 lows were comfortably above April 21 lows, and the EUR/USD has popped through our 3rd tier downtrend line.  Therefore, the ingredients are on the table for a sustainable rally.

Fundamentally, we find resistances of 1.3261, 1.3329, 1.3389, 1.3420, and 1.3470.  To the downside, we see supports of 1.3236, 1.3208, 1.3170, 1.3127, and 1.3089.  The 1.30 area serves as a psychological cushion with 1.35 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.3268.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither 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 Fast Brokers

The Cable is climbing as investors find an appetite for risk ahead of America’s Prelim GDP number.  A better than expected Prelim GDP would likely send the major Dollar pairs higher since it would give support to the argument that the global economy is stabilizing.  Yesterday’s better than expected CBI Realized Sales data gives the Cable some added strength ahead of America’s GDP release.  With Britain’s Nationwide Home Price Index coming tomorrow, the Cable should have some real directional ammo to play off of.  A global sign of economic healing could add fire to the uptrend’s belly with the Cable creeping towards April highs.  On the other hand, if the U.S. Prelim GDP number disappoints, we wouldn’t be surprised to witness a fire sale.

April highs and the highly psychological 1.50 level serve as the key obstacles towards a noteworthy uptrend in the Cable.  Meanwhile, the GBP/USD still needs to fight through our 2nd tier downtrend line and 3rd tier uptrend line.  The Cable has certainly built up a nice base since 4/20, which should act as solid near-term protection to the downside.

Fundamentally, we find resistances of 1.4773, 1.4826, 1.4870, 1.4905, and 1.4951.  To the downside, we see supports of 1.4730, 1.4667, 1.4626, 1.45667, and 1.4532.  1.45 serves as a psychological cushion with 1.50 acting as a key psychological barrier. The GBP/USD is currently exchanging at 1.4742.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither 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 Fast Brokers

The USD/JPY is at a standstill after yesterday’s banking holiday.  The volume in the currency pair has been subdued as investors await the Prelim GDP data from the U.S. today, followed by Japan’s Prelim Industrial Production number in the evening PST.  The USD/JPY is sitting at a key juncture, the inflection point of our 1st tier downtrend and 2nd tier uptrend lines.  Therefore, we expect the USD/JPY to awaken with all of the incoming news.

Japan’s economy continues to struggle with an overall appreciated Yen squeezing the nation’s export industry.  Therefore, investors have been reluctant to appreciate the USD/JPY considerably even during flights to safety.  Both the Japanese and American economies remain mired in the economic crisis with long interest rate swaps close to nil.  Hence, we continue to see the behavior of the USD/JPY reflect comparative economic performance.

The USD/JPY is still trading at dangerous levels and could be very close to giving way to its powerful downtrend.  If this should happen, we could see a retest of March lows with the currency pair headed towards our 1st tier uptrend line.  On the other hand, if economic data from Japan and the U.S. manages to outperform, the currency pair may choose to hop back above its 2nd tier uptrend line in a sign of stability.

Fundamentally, we maintain our resistances of 97.11, 97.98, 98.56, 99.20, and 99.79.  To the downside, we hold our supports of 96.33, 95.55, 95.04, 94.48, and 93.57.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 96.78.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither 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.