Month: November 2010

Source: ForexYard

Ireland appears closer to an acceptable agreement regarding an EU/IMF jointly sponsored bailout package to assist its financial bodies with debt. Concern over a debt contagion spreading to the other peripheral economies of Spain, Portugal, and Greece, have grown over the past few weeks, with a bearish EUR resulting from risk aversion.

Economic News

USD – USD Losing Ground as Traders Price in EUR Gains

Forex traders appear to have taken their profits from shorting the EUR/USD last week. Speculation that a bailout for Ireland is near execution has lifted risk appetite out of the doldrums. The EUR/USD has bounced off the 1.3450 support line and risen back towards 1.3750 over the past two trading days.

The US dollar appears to also be in a bearish pattern against most of its currency rivals this morning. Against the Japanese yen, the greenback has leveled-off, losing about 25 pips in early trading. The USD/JPY looks to be trading within a flat range between 83.00 and 83.65. Versus the British pound the USD has given up more ground, moving from 1.5945 to as high as 1.6010 in late-Asian trading.

With no news expected out of the United States today, forex traders appear to have their attention focused on any news regarding the bailout of Ireland’s financial institutions. As commodity prices jumped this morning, trailing behind the expectations of a falling USD, investors appear to be pricing in a downturn for the greenback in this week’s trading. Forex traders should keep an eye on EUR news and commodity prices this week for an accurate gauge of sentiment towards the dollar.

EUR – EUR Bullish as Irish Debt Woes Ease

Ireland appears closer to an acceptable agreement regarding an EU/IMF jointly sponsored bailout package to assist its financial bodies with debt. Concern over a debt contagion spreading to the other peripheral economies of Spain, Portugal, and Greece, have grown over the past few weeks, with a bearish EUR resulting from risk aversion.

The euro was trading as low as 1.3447 against the US dollar; 111.03 versus the Japanese yen; and 0.8448 against its European counterpart, the British pound, by the middle of last week. However, the 16-nation single currency has pared much of those losses and currently sits between 0.4% – 0.9% higher against each of those currency rivals.

With a light news day expected, traders will be on the lookout for any further announcements regarding the acceptance by Ireland of the joint-sponsored bailout package. If no package can be agreed on then there’s a chance the EUR will enter another round of free-fall. But with acceptance of a bailout appearing to be around the corner, many traders are anticipating a bullish EUR by canceling their short positions and going long on the currency.

JPY – EUR/JPY Strongly Bullish on Recent Euro Gains

Asian stocks began to climb last Friday as global markets took positively to the potential Irish bailout. If the Irish finance minister proposes an acceptance of the EU/IMF bailout this week, we could see the EUR gaining strongly against its currency counterparts, including the JPY. The EUR/JPY was up strongly in trading this morning, gaining over 40 pips to trade at 114.70 this morning.

With the US dollar taking losses from profit-taking, and a shift into higher yielding assets among speculators, the USD/JPY appears to have turned downward this morning, falling slightly from 83.54 towards 83.30 in today’s early hours. With little market news being published today, these trends may hold steady for until Tuesday.

Crude Oil – Oil Prices Gaining from Resurgent EUR

The price of Crude Oil appears to have rebounded over the past few trading days as the US dollar weakens against the euro. With the possibilities for a bailout of the Irish economy in the days ahead, the EUR appears to be climbing against its principal rival – the USD – and this has driven commodity prices higher as a result.

With little news expected from the US and Europe in today’s trading, most speculators will be watching for any announcements as to the situation in Ireland. If the debt contagion appears to be spreading to Portugal and Spain we could see a correction to the EUR’s recent gains. However, if Ireland takes the bailout and the debt seems momentarily contained, the 16-nation single currency should continue rising, pushing commodity prices higher in the short term.

Technical News

EUR/USD

The price of this pair appears to have just entered the over-bought region on the weekly RSI, suggesting downward pressure is beginning to increase. If the pair approaches the 1.3800 resistance line today, we could see this pressure taking effect in the form of a correction back towards 1.3740. Going long with tight stops appears to be preferable at the moment.

GBP/USD

This pair appears to be consolidating at the 1.6000 price level on the daily chart. With most indicators floating in neutral territory, it seems the pair is awaiting a fundamental shift before deciding direction. Waiting for a clearer signal may be a wise move today.

USD/JPY

This pair continues to float deep within the over-bought region of the daily RSI, highlighting the significant level of bearish pressure. A recent bearish cross on the daily Stochastic (slow) supports the notion of a downward correction. Going short may turn out to be a good decision this week.

USD/CHF

With a price above the 80 line, high inside the over-bought region of the daily RSI, it appears downward resistance is mounting against this pair. A minor consolidation pattern seems to have formed on the daily chart, with a tip near 0.9915. There is a distinct possibility of a bearish turn this week with targets at 0.9800 and 0.9650.

The Wild Card

Gold

A long-term buildup looks to be mounting on the price of Gold this week. The weekly RSI has the price cascading downward and almost exiting the over-bought region. The weekly Stochastic (slow) has a similar movement. There also appears to be a head-and-shoulders candlestick formation near completion on the daily chart, suggesting an upward target of $1,380 could be within reach before forex traders have a brilliant opportunity to catch the massive impending downturn that tends to follow the formation of a head-and-shoulders. Downward targets after the formation’s completion could be as low as $1,320, with further room on the downside.

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.

Written by Emerging Market Capital FX (EMCFX.com)

This will depend on the risk tolerance, long-term goals, realistic expectations and margin.

In the currency market there is more liquidity for large gains and losses. Why? The currency market trades $3.2 trillion in volume each day vs. the U.S. Dow Jones Industrial, which would take them 60 days to match the volume. In the currency market we are riding the coat tails of the larger participants i.e. central banks, large governments, bond market and large sovereign buyers that can push the market in a single direction.

The risk tolerance for an investor is different according to each individual goal. This type of an investor can be measured by how sophisticated they are in diversification of multiple investments. There are many types of sophisticated investors who have a complete understanding in risk/reward ratio’s, which means they can handle and afford losses. In turn they know they can receive a large gain. These investors would typically use a minimum 20% of their portfolio to increase their assets. This would be considered a conservative diversification.

Long-term goals need to be addressed at the beginning of any investments this can be a 5 year, 10 year or longer. Using a longer term gives you peace of mind by using a discipline trading strategy.

Realistic expectations would be a 1% return each month conservatively with a 12% annual return on investment. This would give you peace of mind.

There are many different sizes in margin, for this topic we will use a 100:1 ratio. This would mean we would be using a $1,000 margin requirement for each unit. For this margin the pip value is $1. Also, using up to 10% of the equity for a discipline trading strategies – i.e. entry points, scalability, and exit points. In order to trade effectively and to have a conservative trading strategy a minimum $100,000 investment for this type of margin would minimize the risk exposure.

In summary, the currency market is the most liquid market based on the margin requirements. The sophisticated investor can handle and afford losses to reap a large gain. Long-term goals are in the best interest for the investor for peace of mind. Realistic expectations should be addressed at the beginning. A complete understanding on margin requirements will help minimize risk exposure for long-term gains.

© 2010 EMCFX

About the Author

Mark Baker as one of the most dedicated and hard working independent providers of forex managed funds to individuals from low to high wealth portfolios. We offer transparent real time platforms for peace of mind. Emerging Market Capital FX (EMCFX) can be your alternative source for forex managed funds. Find out more about how to minimize your losses in your portfolio and regain your wealth at http://www.emcfx.com

By Thomas Bainbridge

It’s 2010 and the US Oil market is now at its highest level since the falls from $147 in July 2008.

Despite the market being at a recent high, at the moment it continues to be a dangerous market to bet against. One must speculate that the appalling winter weather across the Northern Hemisphere might be depleting reserves more than forecast.

There is room to both the upside and also the downside and the markets are very volatile at the moment. This is particularly true around the weekly oil inventory numbers. Having said that, we recently saw that, for those who were very quick, there were opportunities on both sides of the market.

During a recent data release, the immediate reaction to the oil inventory data took the price $0.60 higher and then $1.50 lower in the next few minutes, only to reverse once again and rally $2.50 over the rest of the session.

If you are interested in the trading the oil markets then an increasingly common form of trading that many investors are turning to is spread trading. The speed at which you can trade as well as the easy access to markets like Oil, Gold and World Currencies make it worth investigating further.

There are downsides to all forms of investing and with spread trading you need to be careful because you can lose more than your initial investment.

Nevertheless, spread betting solves a lot of problems when it comes to tax, simplicity, speed and the range of options.

For example, there is no capital gains tax, no stamp duty and no income tax on spread betting*.

You can, of course, place crude oil spread bets online. You can also get that personal service over the phone. There is the added benefit that some of the most popular markets can also be traded outside normal market hours. For example, during the week, you can trade both US Oil and Brent Crude Oil 24-hours a day.

As mentioned, any form of speculative investment does have its risks but there are a few steps you can take to reduce your level of risk. Keeping small stake sizes is a useful risk management technique.

Also, adding a Guaranteed Stop Loss to your spread bet can help to reduce the risks. If you start losing money on a market and the market continues to move away from your position then your spread bet will be closed. So whilst you will have lost money on the trade, you won’t lose any further funds even if the oil market continues to move against your original trade.

Before you trade though, note that spread bets do carry a high level of risk. Before trading, ensure that spread betting matches your investment objectives. Familiarise yourself with the risks that are involved. If necessary, seek independent advice.

* According to current UK and Irish tax law. Tax law can be changed or may differ depending on your personal circumstances.

About the Author

A leading financial author based in the heart of London’s Financial District. Thomas Bainbridge is a respected commentator on the commodities markets.

EUR/CAD

Daily graph: http://www.real-forex.com/charts-daily/November2010/EUR_CAD_DAILY_221110.JPG

About 3 weeks ago, an important decrease process started for the pair. About a week and a half, a very important breakdown of the support level of 1.3946 changed that support into a resistance.

During the last few trading sessions, the decrease was partially corrected until it reached the resistance of 1.3946. A vain breach of that resistance occurred, suggesting the end of the technical correction and the beginning of a new bearish trend.

In order to catch the created opportunity to go “Short”, an additional confirmation, which is the identification of a decreasing configuration on One-Hour graph, is required.

Potential Trade

1H based graph: http://www.real-forex.com/charts-daily/November2010/EUR_CAD_1H_221110.JPG

The required configuration should appear with the breakdown of the support 1.3900 (1H support).  Following that breach, entry orders may be launched. Following is one option:

–        “Limit” order on “Short” position 10 pips below the mentioned support, meaning 1.3890.

–        “Stop loss” order on the last peak appeared, which is 1.3938.

–        1^st degree for “Take Profit” on the following support, 1.3942.

AUD/USD

Daily graph: http://www.real-forex.com/charts-daily/November2010/AUD_DAILY_221110.JPG

After an important increasing process which last 2 months, the pair started to decrease back a few sessions ago. As part of the decrease, the pair clearly broke down the support of 0.9973 and currently, is making its way to the following support: 0.9661. When this support will be reached, three outcomes are possible:

1)      Test of the support: Indication of close reversal, potential for “Long” trades.

2)      Stop on the level: It could be better waiting for a “Parking” of about a session and a half, and then entering a “Long” order.

3)      Clear and sharp breach of the support: It could be safer waiting for a small correction and, after the identification of a decreasing configuration on 1H graph, go “Short” along with the new trend.

Have a profitable day!

Real-Forex team

By Thomas Bainbridge

If you are looking to trade crude oil then some of the most important data that affects both the US Crude Oil and UK Brent Crude Oil markets are the weekly inventories.

Every week US Oil inventories are released at 15.30 BST and the market often turns into a rollercoaster both before and after the data is released.

If you had been looking at the numbers recently you would have noticed that US Crude has broken through the $84 per barrel marker. In the futures markets it looked like traders hunted down weak short positions until there were none left.

Crude oil is now at its highest level since September 2008. We can certainly expect higher prices in the garages again.

The breaking effect of higher energy costs has not been factored in very much to growth prospects. However the implications for European and US growth are not exactly wonderful. On top of weakened bank lending capacity, higher personal taxation and impending public sector spending cuts we now also have oil climbing inexorably higher.

The UK is very dependent on the mobility of its workforce and commercial fleets. Every squeeze on the price of delivering this will impact growth further down the line.

The $82/84 resistance level for Crude Oil had stood firm for quite some time. At the moment we are grinding steadily higher. If that continues then there may be something of a scramble for commercial consumers to cover their forward risks, ie airlines, haulage etc. We may see prices accelerating higher in the short term.

This said inventories are still looking good. If demand does increase then the supply part of the equation will hopefully give us some leeway.

If you are looking to speculate on the crude oil markets then spread betting offers quick and simple access to both the US Crude Oil and UK Crude Oil (Brent) markets.

Being able to ‘short’ a market provides obvious opportunities. You do not have to speculate on markets to go up. If your analysis suggests that the US Oil market will go down you can speculate on it to go down. If your research indicates that the price of Brent Crude Oil will go up you can spread bet on it to go up.

Also note that spread betting is tax free. Trading profits do not incur stamp duty or capital gains tax*.

So where to trade? The Financial Services Authority regulates the spread betting companies based in the UK.

Note that a number of firms offer the usual benefits of letting you trade outside market hours. Some offer trades on thousands of global markets. Some companies, like InterTrader will also let you trade markets such as the FTSE 100, DAX 30, Crude Oil and Gold from Sunday evening all the way through to Friday evening. Genuine 24 hour trading.

Please note though, with spread betting you can lose more than your initial investment. Before trading, ensure that spread betting matches your investment objectives. Spread bets carry a high level of risk to your capital. Familiarise yourself with the risks involved. Seek independent advice if necessary.

* Based on current UK and Irish tax law. Tax laws may vary if you live outside of the UK or Ireland.

About the Author

A leading financial author based in the heart of London’s Canary Wharf. Thomas Bainbridge is a respected commentator on the crude oil spread betting markets.

Written by Emerging Market Capital FX (EMCFX.com)

Risk is the tolerance level an investor can handle or afford to lose. All investments have some risk including stocks, 401k, mutual funds, bonds, futures, options, derivatives, currency, forex, etc… For example, a 401k plan has lost nearly 40% in the past year. How will this affect the investor? Could he have done something to control or manage the loss in his 401k? The majority of investors rely on brokers’ or bankers’ knowledge to inform them on their losses. But in reality these brokers and bankers don’t mange their funds. They pool the funds and a fund manager manages these accounts. The investors will never be able to discuss their retirement with these fund managers. Only hear the excuses from the broker or banker.

Here is another example, the majority of day traders will buy only as many stocks as they can afford. When the stock they purchased goes against them the only thing they can do is hold the shares or stock certificates until they rebound. There is nothing else they can do until then. This is not a trading strategy but holding a share and hoping it goes up. But what if the stock goes against them for over a year or longer. All you can do is watch these shares or missed opportunities evaporate. Unfortunately, this happens every day by many.

There are day traders who will trade the currency market and over 90% of them lose their money on margin calls because they fail to realize or understand how margin requirements work. Opening too many positions over exposes these traders. Greed is the culprit. This is inexperience rather than a risky market sending these day traders to failure.

A fund manager understands how to manage risks and what risk tolerance an investor has. Some investors would like to see a better return on their investment or have a clear understanding of realistic expectations. They need to understand that there is no such thing as a guarantee of a 40% or 400% return each month. A more realistic expectation can be a 1% return on their investment each month.

Currency trading is only risky when you don’t know how to manage the risks or by doing nothing at all. Understanding margin requirements and being proactive is key. Having a trading strategy – entry points, scalability, and exit points along with formulas and ratios is essential for a disciplined trading strategy to help minimize risks. © 2010 EMCFX

About the Author

Mark Baker as one of the most dedicated and hard working independent providers of forex managed funds to individuals from low to high wealth portfolios. We offer transparent real time platforms for peace of mind. Emerging Market Capital FX (EMCFX) can be your alternative source for forex managed funds. Find out more about how to minimize your losses in your portfolio and regain your wealth at http://www.emcfx.com

By Daniel Shaw

It doesn’t matter with what Singapore brokers or trading platforms you are trading. If you don’t have your own trading strategy, it will be very hard for you to make a constant profit on Forex market. Before you start trading with large amounts of your own funds, we recommend you to take your time and develop your own trading strategy using demo or mini real Forex account. Once you create a trading strategy and make sure that it works for you and let’s you make profit on Forex market, you can go ahead and invest your funds in trading.

Pay attention that almost every trading system is based on two main parts, that are crucial in online trading: the system of entry the market and exit from the market. In order to guarantee yourself success in trading Forex online the first thing you need to learn is when it is good to open the trading position and when to close it. This is exactly what you need to target while creating your own trading strategy. This knowledge about the market and the information when it is better to start your trade can be gained with the help of both technical and fundamental analysis and of course practice. In general your trading system must give you signals for certain actions that you have to follow. The purpose of the system is to help you find the market situation, when opening a position gives you the biggest potential for income with smallest risks.

When trading on Forex markets, every trader must look for the way to minimize his risks and at the same time make profits. The professional traders determine the risks by the levels of support or resistance. They usually use the stop-loss and take-profit orders to secure their trades. The stop-loss order must be set no closer than 20-30 points from the support and resistance levels on the condition that you don’t risk more than 5% of the total funds in one position. The take profit order must be set on the next level of support or resistance in the direction of price movement. After your position is opened you need to watch it and change your stop-loss and take profit orders if necessary. As the price moves your direction, you have to move the stop loss further from the losing area to the break-even zone and so on in order to guarantee you less losses and even profit in case if the market changes its direction. The most important factor using this strategy is to find the right entry point. Once you have found the right moment to open position, the market is in your pocket.

The purpose of the exit system is first of all the protection of your main capital and of course gaining profits. The successful trading system must be targeted for minimizing the risk of losses but not seeking for huge profits. If you learn how to minimize your risks while trading Forex, you will definitely make profits while trading Forex. Those trading systems that are based on the analysis of Elliott Waves, provide with an accurate way to find the optimal entry and exit points with the lowest risk or trading losses.

About the Author

Daniel Shaw has many years of experience in online Forex trading. Visit his site Trading in Singapore to learn more about Singapore Trading.

After touching 0.9971 resistance, USDCHF traded in a narrow range between 0.9855 and 0.9997. Key support is at 0.9855, a breakdown below this level will indicate that a cycle top has been formed at 0.9997 level on 4-hour chart, then another fall towards 0.9463 previous low could be seen. On the other side, above 0.9997 will indicate that the pair remains in uptrend from 0.9548, then next target would be at 1.0100 area.

Daily Forex Signals

By forex-fxtrader.com

I have had quite a few of my mentor group members asking me to explain what is going on in the currency markets at the moment. The simple answer is indecision. Nobody seems able to decide which currencies economy is in the bigger mess, so in the meantime the herd swings wildly up one day & down the next. The slightest hint of a rumour and we lurch off in another direction.

I warned a couple of days ago that I was going into “wait and see mode”. Why? Many pundits were predicting a big $US recovery & I showed how big daily & monthly trend lines were being broken, but I was not convinced. A member sent me a quotation to the effect that a change of direction in the currency market was similar to an aircraft carrier doing a 360º turn, i.e. very slow and steady.

Its not helped by the fact that world finance ministers are trying to resolve the crisis by methods that have never been seen before on a global scale, namely the largest economies are simply printing more money.

The Blind Leading the Blind?

All of this does lead one to question the logic of our leaders.

“Dr. Bernanke unfortunately does not understand economics, he does not understand currencies, he does not understand finance. All he understands is printing money…. His whole intellectual career has been based on the study of printing money. Give the guy a printing press, he’s going to run it as fast as he can,” said hedge fund legend Jim Rogers.

“The low price Gordon Brown (then British Chancellor/Finance Minister) got for selling our gold wasn’t caused by bad luck. It was a staggering display of economic incompetence that has landed taxpayers with a £7 billion black hole.” In brief, Brown warned in advance that he was going to sell the UK’s gold reserves. The gold market was in the doldrums anyway & where did his announcement of a huge increase in the supply take price? You guessed it!

To see the full article on the staggering incompetence of this sale click here: Daily Telegraph

Thankfully this charmless politician who presided over the economic boom years in the UK with the catch phrase “prudence” has now left office. This is not intended to be a political statement on my behalf, I admit to voting for Tony Blair before I emigrated from the UK. Something my ex-business partner reminds me almost daily, 13 years later 

It does make you wonder though as to the calibre of our “leaders” who are supposed to be steering us through this economic mayhem. There is a video clip thats been doing the rounds this week on YouTube where one explanation of quantitive easing is offered.

I have not posted it here as there is some mild profanity and I do not under any circumstances want you to think I am making political statements, BUT if its true about Goldman Sachs involvement in the sale of treasury bonds, back to the treasury, then its difficult to wonder what is going on in the world!

If you wish to view the video go to YouTube and type in “quantitative easing explained”

The Forex Traders Week Ahead

In recent weeks we have had some incredibly small moves on many pairs. Last weeks Euro/$ opened and closed within 20 pips, as did the Aud and the Cad has done the same on the monthly so far! So how can we possibly calculate the direction of price in the coming days? With great difficulty.

My best advice for the week ahead is that we concentrate on daily charts & smaller. However there is a mixture of big scheduled news, e.g. FOMC, big non scheduled: The Irish crisis, Portugal and possibly Spain, plus Japanese Bank Holiday on Tuesday – and the slight matter of Thanksgiving long weekend for many which starts on Thursday.

As a result we will have to try and steer our way around these announcements & definitely do not be in more than one Euro trade at any one time.

Markets never stay like this long term, learn to wait for more predictable ones to return. As I point out in the video, you are going to have to use your own discretion on most pairs this week.

The best potential I can see is that there are quite a few daily triangle break outs developing as I show in the video below.

By Thomas Bainbridge

Many traders and investors have trading rules and tips to help guide their investments. To me too many tips are on a particular trade and do not focus on strategies. At the same time too few tips are based on how to reduce your risks.

If you are a short term investor and trading the markets between anything from 1 minute to 3 months then you have probably come across spread betting. Of course, as with all investments such as trading shares, funds, pensions, housing etc, you can lose money. With spread betting you can lose more than your initial investment.

Having said that, with spread betting your risks can be reduced by using a Stop Loss. A Stop Loss works as an automatic request to close your trade if your position moves against you by a preset amount. Note that some stop losses are not guaranteed.

Also there is a wide variety of markets available through spread betting and investors are not limited to stocks and shares. You can trade stock market index values, foreign currency pairs and commodity prices. This brings me nicely on to my next point, try to trade the markets you know. If you have little experience of the US stock market but have a good appreciation for the Crude Oil markets then you are probably better off trading the Oil markets.

Also, keep your direct trading costs as low as possible and enjoy the fact that broker’s fees and commissions are not charged on spread bets.

Furthermore, be tax efficient when you trade and take that that there is no income tax, capital gains tax or stamp duty to pay on spread bets*.

Don’t restrict yourself to normal market hours. Naturally the news that affects the markets comes out 24 hours a day. The 24 hour trading that some spread betting companies now offer provides a host of interesting opportunities. The underlying markets will still close but you can carry on trading markets like the German DAX, Japanese Nikkei, UK FTSE, Gold and major Currencies from Sunday night all the way through to Friday.

And when the news does come out make sure you can trade. In order to spread bet you do not take possession of any stocks, assets or resources. You are just speculating on the future price of a market. This allows you to place trades quickly and with little fuss; a very useful feature in fast moving markets.

So whilst there are many plus points, you still need to remember the potential downside. Ensure that spread betting matches your investment objectives. Familiarise yourself with the risks involved. Spread betting does carry a high level of risk to your capital. Seek independent advice where necessary.

* Tax law can be changed or may differ depending on your personal circumstances.

About the Author

A leading financial author writing from the heart of London’s Canary Wharf. Thomas Bainbridge is a respected investor and commentator on the UK spread betting markets.