April 4 (Bloomberg) — Marie Diron, senior economic adviser to Ernst & Young, talks about the outlook for interest rates in the euro zone. She speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.”
GBP/USD Continues to Recover
By Russell Glaser
The GBP/USD is strengthening after the late March selling that followed the publication of the UK budget on March 23rd. Today’s stronger than expected construction data shows the market may be too pessimistic the British economy and the GBP/USD.
The British economy received some good news following the release of the construction PMI in Britain which came in at 55.4, a slight decline from last month’s result of 56.5. Economists had forecasted a decline to 54.7.
This brought strong bids to sterling. At the opening of the New York trading session the GBP/USD continued to recover to 1.6160 from its opening week price of 1.6110.
The much needed support for the British economy comes after a sell-off in the pound following a new high for the GBP/USD and the publication of the UK budget on March 23rd. After the budget release, the GBP sold off across the board despite rising 10-year gilt yields and falling short sterling futures have fallen. Thus, traders expect British interest rates to rise in the near term which should be a positive for sterling.
Looking at the GBP/USD, a sell-off occurred following the pair reaching a new high for 2011 at 1.6400 and the pair dropped as low as 1.5935 where the GBP/USD found support near the 100-day moving average (red line). To the downside, the 1.5870 retracement from the January to March move is a viable support, as well as the 200-day moving average (black line) at 1.5850 which could come into play and coincides with the rising trend line off of the May 2010 low.
As the GBP/USD continues to recover, the first resistance level is today’s high at 1.6180, followed by an initial target at the March high of 1.6400. A breach of this level would then set market players to target the November 2009 high at 1.6875.
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.
Forex CT 4-4-11 – Daily Forex Market Commentary
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
ForexCT Afternoon Thoughts 04-04-11
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
The Best Fx Trading Hours ‘ Know The Answer To This
By Cedric Welsch
Answering the question of when the best Forex trading hours are can be difficult since the answer is going to vary based on a trader’s favorite currency pairs. All action in the Forex markets is done with currency pairs, and since the time zones can vary greatly this means the best times to trade the U.S. Dollar (USD) could be far different from the ideal moment for dabbling with the Japanese Yen (JPY).
A general rule of thumb among many currency traders is that the more activity in a given market, the better a time it is to trade. This means that each nation’s currency experiences a nine hour window each day when their nation’s markets are open and busiest. That’s when the most trades are happening with a currency pair involving that currency because there’s more action to profit from. Going on Eastern Standard Time, this means the best frame to act on a U.S. Dollar based currency pair is from 8:00 a.m. to 5:00 p.m.
However, you also need to know when the markets for other nations are open compared to your time zone in order to work during optimal Forex trading times. So a trader living on the East Coast of the United States who wants to trade in the Yen needs to know that Japan’s markets are open from 7:00 p.m. to 4:00 a.m. in Eastern Standard Time. Sydney, home to Australia’s trading markets, opens at 5:00 p.m. EST to 2:00 a.m. EST and obviously Great Britain, New Zealand, and Switzerland will all have their own market hours as well.
Knowing the optimal hours for Forex currencies compared to your time zone is only the first step. For some pairs, there might be two markets that overlap. For example, New York City and London overlap four hours of each trading day, meaning that is an especially good time to look at the currency pair of the U.S. Dollar and the Great Britain Pound. These market overlaps can be the busiest trading times for both currencies, making it even more important for traders to jump into the frenzy.
At the end of the day, there’s little question that finding the best market times correlates directly with what pairs are being traded and when that nation’s normal trading hours are. This doesn’t mean that profit can’t be made during other times of the day, but by trading during the best Forex trading hours the chances of profiting increase.
About the Author
The habit of forex news online reading is an investor’s asset.
Many forex trading reviews are read by successful investors.
ECB Rates and Federal Reserve Policy
Source: ForexYard
The highlight of this week’s trading will be Thursday’s ECB Minimum Bid Rate. Traders will be expecting an initial increase of 25 bp and wording from the ECB that this week’s adjustment to the interest rate is not just a one off increase but the start of normalizing European monetary policy which would continue to benefit the euro. However, given last Friday’s strong non-farm payrolls data, today’s speech by Fed Chairman Ben Bernanke in Atlanta will carry extra significance. Should Bernanke come out with a more hawkish tone, this could be the beginning of a turnaround for the dollar.
Economic News
USD – Non-Farm Payrolls Data Supports US Economic Recovery
The jobs report for March showed a gain of 216K jobs on expectations of 191K new jobs added. The report was further supportive as the February numbers were revised higher to 194K from 192K. The unemployment rate surprisingly dropped to 8.8% from 8.9%. Also showing improvement was the ISM Manufacturing PMI which came in above expectations at 61.2 with economists forecasting only 61.1.
It is difficult to deny the improvement shown in the US economy. Five consecutive months of job growth boasts well for the economic recovery. The pickup in labor market conditions should now begin to influence the Federal Reserve and the wording in the Fed’s next statement could contain a more upbeat tone, emphasizing the labor market’s improvement in contrast to the consistent stubbornness of unemployment that is typically highlighted.
Given last week’s group of Fed members that came out in in favor of tightening US monetary policy and scaling back the Fed’s $600B quantitative easing program, Friday’s strong jobs data will bring to the forefront the debate for policy normalization in the US. Thus today’s speech by Fed Chairman Ben Bernanke in Atlanta will carry extra significance in the FX markets. Should Bernanke come out with a more hawkish tone, this could be the beginning of a turnaround for the dollar.
EUR – ECB Interest Rate Decision
Expectations are running high for the ECB not to disappoint the markets with an interest rate increase at this Thursday’s ECB meeting. ECB President Jean-Claude Trichet and other members of the ECB have taken huge strides to prepare markets for an increase in EU interest rates.
On Thursday ECB Governing Council member Nout Wellink stated his backing for winding down of ECB support and liquidity provisions. He highlighted the risks of continuing to print more money and a loose monetary policy. Last Monday Trichet continued with his hawkish rhetoric, highlighting inflationary data that continues to come in above the ECB’s target of below 2%.
Markets currently expect the ECB to increase interest rates on April 7th and it appears that the ECB has put its mandate for price stability ahead of the concerns for the indebted peripheral nations of Greece, Ireland, and Portugal.
While a 25bp increase may already be priced into the euro, there may be further room for euro appreciation should the ECB continue to pre-commit to interest rate hikes. A signal of further interest rate increases during the accompanying ECB press conference would be a catalyst for the euro. However, a change in US interest rate expectations is a risk to the 17-nation currency’s appreciation.
In early overnight trading the EUR/USD moved above the first resistance level at 1.4280 but quickly pulled back below to 1.4230. A target for future gains in the EUR/USD may be found at the January 2010 high at 1.4580. A move above this level would cause a significant shift in long term momentum, potentially triggering gains to the November 2009 high at 1.4270. To the downside, support comes in at last week’s low at 1.4020, followed by 1.3860.
JPY – Yen Weakness Continues
The sell-off in the yen versus the dollar and the euro continued on Friday and may extend further into this week’s trading. Talk of a renewal of the carry trade has added momentum behind the yen’s recent decline that began after the coordinated intervention by the G7 in the FX markets. Also supporting yen weakness has been a rebound in global equity markets following the selling that occurred after the geopolitical unrest in Libya and the natural disaster in Japan.
A catalyst for further declines in the yen would be higher relative yields. The ECB is expected increase interest rates by 25 bp this week and market watchers will be keying in on potential for further ECB rate hikes. Following last week’s hawkish comments by multiple Fed members and a strong non-farm payrolls report, a reevaluation of US monetary policy would continue to keep the yen on its back foot.
USD/JPY resistance is found at last week’s high of 54.70, followed by the trend line falling off of the June 2007 high which comes in at 85.40. The September 2009 high of 85.90 may also come into play with a significant resistance level at the May 2010 low at 88. Support is found at the 200-day moving average at 82.90 followed by a retracement objective to 81.50.
OIL – Crude Prices Up on Improved Economic Outlook
Crude oil prices surged to a 2-1/2 year high near $108.50 a barrel last week on stronger-than-expected U.S. jobs growth in March and weakness in the dollar.
The Labor Department said non-farm payrolls rose by 216,000 compared with economists’ estimates of a rise of 195,000. The February figure was revised upward to 194,000 from an estimate of 192,000, while the unemployment rate fell to a two-year low of 8.8% from 8.9% a month ago.
A weaker U.S. dollar tends to boost the price of dollar-priced commodities as it lowers the price to holders of other currencies and reduces the value of the currency oil producers receive for their product.
Looking ahead, traders are advised to watch carefully the global stock markets and the major economic indicators which will be published from the U.S. in order to predict the next movement in oil prices.
Technical News
EUR/USD
The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the 8-hour chart’s Stochastic Slow signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice.
GBP/USD
The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 8-hour chart’s RSI is already floating in the overbought territory indicating that a bearish correction might take place in the nearest future. When the downward breach occurs, going short with tight stops appears to be the preferable strategy.
USD/JPY
There is a fresh bearish cross forming on the daily chart’s Slow Stochastic indicating a bearish correction might take place in the near future. The downward direction on the 8-hour chart’s RSI also supports this notion. Going short with tight stops might be the right strategy today.
USD/CHF
The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic is providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.
The Wild Card
Oil
Crude prices rose significantly in the last month and peaked at $108.70 a barrel. However, the 8-hour chart’s RSI is floating in overbought territory suggesting that a recent upwards trend is losing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.
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.
E-Mini Trading: Consolidation Patterns and Channels
By David Adams
Trading in a channel means many things in e-mini trading because trading channels come in all sorts of shapes, directionality, and length. There are also some semantic issues when discussing channels or consolidation patterns. For example, what I consider a retracement is often called a flag, in technical jargon. Nonetheless, it is a consolidation. There are also short sideways periods when the market takes a breather before resuming a trend. And finally, there are longer periods of range bound consolidation or channels which present some difficult trading issues.
As a day trader, it is important to identify which type of pattern you may be entering. Has there been a definite uptrend or downtrend in the market and the price action has started to move sideways? Or has the trend taken a short breather and retraced upwards or downwards (depending on whether the movement is to the upside or the downside) and there are indications that it may resume its initial trend? Or, has the trading range been narrow and easily defined for several hours?
The purpose of this article is to discuss the last type of consolidation channel. Short sideways movement and retracement patterns are all very tradable and will be the subject and other articles, as there are lengthy discussions needed to truly understand these patterns. On the other hand; long, range bound channels will be the topic of our discussion today. My thesis on these long range bound channels will be fairly straightforward; generally speaking, they are a black hole that will happily suck money from your trading account.
Long periods of market action in a defined channel should be an indicator to most traders that the market is in near equilibrium. It is also not unusual to notice that the volume in these extended channels is often light. Yet I watch traders on a daily basis pound away at these narrow channels hoping the market will break out to the upside or to the downside. It rarely does. As a matter of fact, though trading channels often have a plethora of small breakouts, which sends the retail traders into a near buying or selling frenzy, they usually and casually retrace back into the original channel, leaving the retail trader with a loss or, at least, in a very unfavorable position relative to their breakeven point.
That being said, the trading action inside these channels sometimes appears logical and rhythmic, following what seems to be a predictable serpentine pattern bouncing off the resistance and support that are the channel parameters. Again, these patterns entice many inexperienced traders and to entering trades inside the channel. Most of the action inside a trading channel, or range bound consolidation pattern is random in nature. Traders who enter a trade inside the channel often learn a harsh lesson in the randomness of channel trading. In short, I avoid trading inside a channel and wait for better opportunities, trades with higher probability for success.
There are a large number of articles I read before writing this article. Most were published by trading educators extolling the virtues of channel trading, so I must assume that my position on channel trading is a minority opinion. On the other hand, I have been fortunate enough to trade with some of the best traders in the world and they avoid trading in channels at all costs. Quite simply, the risk reward ratio is not particularly favorable and at some point the price action will break out of the channel. If you are on the right side of the breakout or breakdown, you will have a wonderful day. On the other hand, if you’re on the wrong side of the breakout or breakdown, your day will be less than wonderful.
In summary, we have pointed out there are various types of channels and some are good candidates for trades, while the extended sideways consolidation-type pattern offers little for most traders. Further, I have stated that trading in extended channels is a low probability proposition and I avoid trading these patterns.
About the Author
Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here
Identify Buying Conditions
By Taro Hideyoshi
In my earlier articles, we have learned indicators, chart patterns, money management and other pieces of successful trading. In this article, let us review those pieces and puzzle them together in order to find conditions we prefer for entering a trade.
Although we talk about conditions for buying or buy triggers in this article, you can apply them for short selling.
The very first thing to do when you are making a decision to enter a trade is to evaluate overall market. When you want to go buy, it is better to enter a trade while market is going up. Sometimes some stocks may go up while market is going down. Those stocks may hover in positive territory for a while, but overall negative market conditions will erode price surges.
When you pick a stock to buy, choose a leading stock in an industry sector that is a current market leader. For example, you see the banking industry currently serve as a market leader, so you target to analyze stocks in this sector to find the prominent stock and place it in your watch list.
Do not forget to check out the fundamental even you are technical traders. When you found a prominent stock, you have to check the company’s fundamental health especially when you intend to hold a position for days or longer.
At this point if your target stock looked good, it is time to open the chart and analyze it technically. The price should have formed a base or is in uptrend. When the price breaks out, make sure it has strong volume.
Take a look at moving average (MA), is the price below or above the MA? If you want to go long, the price should be trade over MA and heading up (not too far from MA).
Also look at your indicator, if you want to go long but the relative strength index (RSI) is in overbought zone. It is not safe to buy. It is better to buy when RSI is in oversold zone and hooking to the upside.
In conclusion, here are the conditions to buy or buy trigger list. You should check against the list when you trade.
1) Evaluate market condition
2) Find a stock that is a leading company in a leading industry
3) Check the company’s fundamental
4) Analyze the chart to find the entry point when all indicators output the same signal
About the Author
Taro is an experience trader who trades in stocks, futures, forex. He strongly focuses on technical analysis, trading systems and money management.
If you would like to find more articles on MetaStock Tutorials, MetaStock Formulas, Trading Systems and Money Management. Please go to MetaStock Trading System.
Daily Market Review for the 04.04.2011
AUD/USD
Time: 08.30 Rate: 1.0385
Daily Time frame
Strategy: Short
As was mentioned on the 31st of March the pair made an upward movement from 0.9705 without retracement, in the opening of the trade the week continued to increase and got to point D of the ABCD movement in 1.0420 the area is used as a strategy for retracement of at least 38.2% Fibonacci (1.0150).
As can be seen by the graph bellow:
Potential trade
Short under the trade period of Asia 1.0380.
Stop: 1.0510 – over the 161.8% Fibonacci of the last downward movement.
First target: 1.0250 – 23.6% Fibonacci of the upward movement.
Second target: 1.0150 – 38.2% Fibonacci of the upward movement.
EUR/JPY
Time: 09.00 Rate: 119.80
Strategy: short
Daily Time Frame
The pair fulfilled without retracing the goals assigned to it in the previous reviews and continued itself up, the next important resistance level is 122.00-121.80 the retracement of 50% of the big downward movement and 161.8% Fibonacci of the range (green area).
In addition, the final target of the highest range (about 900) pips is situated in the area of 125.00.
As can be seen by the graph bellow:
4 hour time frame
The pair is situated in a major momentum movement that brought the RSI indicator which is situated in the over bought for a long time, in the breakdown of the broken red line, the indicator of the pair is expected to stop the upward movement and to create one third retracement of all the upward movement from the bottom.
As can be seen by the graph bellow:
Potential Trade:
Short after arrival to 122.50-121.80 (blue area) and half of the broken red line which is down in the RSI indicator.
Stop: 122.60
First target: 119.00
Second target: 116.50
RISK DISCLAIMER
Forex trading involves high risk. Before any trade, you should consider carefully the investment objectives and the level of risk. The data sent by mail is not necessarily real-time data or precise. Real-Forex is not liable for the losses resulting from the utilization of the data. Real-Forex (Finnocorp Trading Solution Ltd
.) is not liable for losses or damages as a result of reliance on the information provided by e-mail or on the overall data, quotes, charts, signals buy / sell. It is hereby clarified that the investor must be aware of risks involved in trading in financial markets, which is a form of investment that may contain potential risks.
Real-Forex team
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Don’t Just Trade In Forex By Chance, Trade Based On Knowledge
By Cedric Welsch
The Forex Trading business is one of the hottest markets to invest in. The most lucrative traders on the market typically have their hands in foreign currency exchange. Smart investors have found profits rolling in after watching this market for trends and making strategic moves. It’s all about the right buy and the right sell at the right time. Watching the rise and fall of world currencies, anyone can see emerging trends. Smart investors can use those trends to see incredible profit. Even as the world trudges through an economic crisis, the Canadian Loonie is a great example of a smart investment with a great track record.
It wasn’t long ago when the United States backed every dollar of its wealth with gold. Money was a tangible item when the gold standard ruled the day. When it dissolved, the most powerful economies in the world began to value their currencies against each other. Without a palpable item like gold or silver to back up wealth, currency confidence dropped but the greatest stride forward was a renewed world economic system that could operate more efficiently than eve .
Most of us remember when the U.S. and Canada were right on par, dollar for dollar. We had parity in 1975 and as Canada began to emerge as a power-player in the world economy parity came back in 2007, capping a five year run on the back of a burgeoning demand for Canadian exports. Forex trading experts jumped on the opportunity to profit from the rising value of the Loonie.
This is a great example of why the Forex Trading business is a lucrative market to invest in. Speculators who paid attention to international trade saw a growing demand for the energy, grains and metal coming out of Canada. This is the key to investing smart in the currency market. Smart investors watch the trends. Canada was on a steep incline of efficiency and trade surplus in its export of copper, gold, wheat oil and its chief export, uranium. Those who kept a careful eye on the foreign trade could see the demand for such products by powerful economies like the United States, India and a rapidly developing China.
The investors who could see these trends knew that Canada’s currency was on the rise. Having the word’s eighth largest economy, Canada had comparative advantage in the uranium market, allowing them to produce uranium more cost-effectively than the world average. All the pieces fit together. Demand for Canadian exports was high, a streak of improved production created a large supply and as a result, Canada’s economy became stronger and the Looney grew dramatically in value. Anyone watching these trends could have investing in these floating exchange rates, and some of them made a fortune. The Forex Trading business is full of stories as profitable and easy to track as this one.
About the Author
Accumulating currency news trading info is a must for every trader.
Acquiring forex broker review opinions is one good example to this.
