InvestMacro FX

Source: ForexYard

As violence in Libya continues, crude oil reached its highest level since September 2008 today, at $106.30 a barrel. Crude prices are also being supported by the positive U.S. employment data which was released on Friday.

Economic News

USD – Dollar Falls vs. Majors after Positive Employment Data

The U.S. dollar dropped against most of its major currency rivals during last week’s trading session. The greenback fell about 250 pips vs. the euro and the EUR/USD pair reached as high as the 1.4000 level, marking a 4-month high. The dollar fell about 250 pips against the British pound we well.

Last week’s employment data from the U.S. provided several positive indications which have increased demand for higher-yielding assets. The U.S Unemployment Rate fell to 8.9 percent last month, the lowest since April 2009. In addition, the U.S. Non-Farm Employment Change showed that the economy added a net 192,000 jobs last month. The weekly Unemployment Claims report provided positive data as well. Applications for unemployment benefits decreased by 20,000 to 368,000 – the lowest level since May 2008.

The dollar’s depreciation against the euro also took place due to expectations that the European Central Bank will hike interest rates in April. The Fed, on the other hand, isn’t likely to hike rates in the near-future.

Looking ahead to this week, many significant economic releases are expected from the U.S. economy. The most noteworthy reports look to be the Trade Balance, the weekly Unemployment Claims, the Retails Sales and the Consumer Sentiment. Traders are advised to follow these reports as they are likely to have a large impact on the dollar.

EUR – Euro Soars on Expectations ECB Will Hike Rates

The euro rallied against most of its major currency counterparts during last week’s trading session. The euro climbed about 250 vs. the U.S. dollar and the EUR/USD pair reached a 4-month high. The 17-nation currency also saw a 300 pips rise against the Japanese yen.

The euro strengthened last week after the European Central Bank President (ECB) said the ECB may raise interest rates next month to counter accelerating inflation. Rising food and commodity prices have the ECB concerned that if it does not get ahead of inflation concerns, then rising prices could have a negative impact on the euro zone economy.

Investors also understand that unlike the ECB, the Federal Reserve isn’t expected to hike rates anytime soon, and this naturally makes the euro a much more appealing asset.

As for the week ahead, traders are advised to follow any hint regarding a potential rates change from the euro-zone, as this issue looks to dominate this week’s economic news as well. Special attention should also be given to German economic releases, as they usually have a large impact on the euro.

JPY – Increased Risk-Appetite Weakens the Yen

The Japanese yen fell against most of its major currency rivals last week. The yen dropped about 300 pips vs. the euro, and the EUR/JPY pair reached as high as the 115.95 level. The yen also saw a 250 pip fall against the British pound.

The yen fell after U.S. employment data provided positive results, signaling that labor market conditions in the U.S. are recovering. U.S. employers added 192,000 workers in February and the unemployment rate unexpectedly declined to 8.9 percent, the lowest since April 2009. In addition, applications for unemployment benefits decreased by 20,000 to 368,000 – the lowest level since May 2008.

The yen’s downfall against the euro was also the result of expectations that the European Central Bank will hike interest rates in April.

As for this week, traders are advised to follow the Japanese equity market, as the yen is highly affected by its movements. Special attention should also be given to the Final Gross Domestic Product, which is scheduled for Wednesday, as its release is likely to have a significant impact on yen trading.

Crude Oil – Crude Oil Climbs To $106.30 a Barrel for the First Time since September 2008

Crude oil’s rally continued last week, and by Friday peaked at $104.90 a barrel. Moreover, due to weekend developments in the Middle East, oil opened this week with rising prices as well. At the moment, crude is trading close to the 106.10 level, marking a 29-month high.

Crude prices continue to rise as fighting between Libyan rebels and troops loyal to Muammar Qaddafi intensifies. Violence in Libya has cut output in the North African country by as much as 1 million barrels a day, according to the International Energy Agency.

In addition, positive U.S. employment data which was released on Friday has also pushed crude oil prices upwards on speculation that demand for crude oil in the U.S. will increase.

Looking ahead to the following week, traders are advised to closely follow the developments in the Middle East. In case the unrest spreads to other oil-producing nations, oil prices could soar further. Traders should also pay attention to the U.S. Crude Oil Inventories report scheduled for Wednesday, as its release usually has an instant impact on the market.

Technical News

EUR/USD

After several failed attempts to breach through the 1.4000 level, the pair has consolidated near the 1.3980 level. Currently, as a bearish cross is taking place on the 4-hour chart’s Slow Stochastic, it seems that a downward correction might take place today. Going short with tight stops might be the right strategy today.

GBP/USD

There is a very distinct bullish channel formed on the daily chart, and the cable is now floating in the middle of it. However, as both the RSI and Slow Stochastic are providing bearish signals, it seems that a downward move could be imminent, with potential to reach the 1.6150 level.

USD/JPY

The USD/JPY continues with range-trading between the 81.00 and the 84.50 levels, and is currently trading near the 82.15 level. At the moment, both the 4-hour and the 1-day charts are providing mixed signals. Traders are advised to take a wait and see approach today.

USD/CHF

The pair has seen several failed attempts to fall below the 0.9200 level for the past couple of weeks. That being said, as the 4-hour chart’s Slow Stochastic and MACD have recently completed a bearish cross, it seems that the pair has potential to drop below the 0.9200 level today.

The Wild Card

Gold

There is a very strong bullish channel forming on the daily chart, and gold is currently floating in the middle of it. In addition, both the MACD and the RSI on the chart are providing bullish indications, suggesting that the upward movement may have more steam in it. This might be a great opportunity for forex traders to join a very popular trend.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The greenback declined to its lowest in four months versus the single currency on Friday on uncertainty among investor grew about the future economic growth in reaction to rising oil prices. The crude oil prices rose to $104 per barrel on Friday.

Moreover disappointing US jobs claims report further added to weakening of the US dollar. According to the report of US Labor Department jobless claims reduced by 192,000 in the month of February which failed to meet the wide expectations. Unemployment rate declined to 8.9 percent from 9 percent which was also lower what the economists expected.

Global head of currency strategy from Brown Brothers Harriman Marc Chandler commented, “This is disappointing in that it suggests that there has been no acceleration of private-sector job growth from the fourth quarter of 2010.”

The dollar index DXY which measures the greenback’s performance versus is major six counterpart currencies declined to 76.385 on Friday as compared to 76.473 on Thursday’s North American trading session.

The euro advanced to 1.3991 versus the US dollar on Friday as compared to 1.3963 on late Thursday. The single currency reached its highest since November when it touched 1.40 against the greenback.

The British Pound declined to 1.6266 against the US dollar on Friday as compared to 1.6277 on late Thursday. Against Swiss franc the US dollar declined 1 percent over the escalating tensions in Middle East and Libya.

The greenback also remained under pressure versus the Japanese currency as it declined to 82.31 against the Yen as compared to 82.38 on Thursday North American trading session.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

Most Filipino kids love the food, especially the Chicken Joy, at Jollibee. While the children in general love it, its owners, the shareholders, might not feel the same in the near future. Let me tell you why.

Well, from a technical point of view, the shares of Jollibee Foods Corporation or JFC in the Philippine Stock Exchange could face some more downside. As you can see from its daily chart above, JFC had broken down from a head and shoulders pattern and its 200-day moving average when it made a bearish breakaway gap last January 28. In a couple of occasions, the psychological PHP 70.00 level acted as a support to push it back to PHP 80.00. However, the neckline of the head and shoulders and the former support at its 200-day moving average prevented it from going higher. From then on, JFC weakened again and is now trading just below PHP 72.00.

By the looks of it, JFC’s outlook will even be bleaker. If you measure the height of the head and shoulders pattern and project it downwards from the point of breakdown, you will get a downside target of somewhere below PHP 60.00. JFC, though, would like see the PHP 60.00 level as a support since it already acted as a resistance previously and was an area of interest as well. So since its downside target has not been reached yet, you could expect it to approach that level unless it is able to rally past PHP 80.00.

More on LaidTrades.com …

By James McKee

The Euro has seen significant shifts due to an outspoken central bank who is asserting that the EUR will be on the rise. The EU continues to experience fallout from Italy’s dependence upon Libyan oil. Other continuing challenges for the continent include a populace that is frustrated about austerity measures. These measures have hindered education and ripped down labor laws that were established to protect employees of companies both public and private. The resulting outcry in the public has manifested in demonstrations that have become violent and hindered day-to-day living of all citizens.

The continued evolution of trading between China and Japan could very well provide that stability that the JPY and Japanese economy at large has needed for decades. A lack of American appetite for goods coming out of Japan has meant staggering losses for the island nation. Now that China has completely emerged from its industrial era Japan can enjoy a customer that will pay its bills on time and buy far more goods than any other country has before at any other point in history. China has the world’s largest population and it enjoys the largest surplus of any government in the world.

Australia and the AUD are enjoying a rising economy due to an outstanding gold market, the value of the USD and other major currencies has been going down steadily for the last several years driving the value of gold up 5 to 6 times what it was before. All currencies have experienced a series of fluctuations on the forex exchange due to a variety of problems with the global economy, this has caused the value of gold to rise all over the world. As the world’s fifth largest gold producer Australia enjoys a place of relative security supplying one of the world’s most valuable commoditie.

About the Author

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

By Warren Seah

Rob Booker mentioned in his book The Currency Trader’s Handbook, that he aimed to achieve a 10 pip profits every day. He never try to make a ton of money on each trade, and never will he let himself lose a lot of money in any single trade. He talked about defensive fx trading. A method that made him very successful today.

Defensive FX Trading includes using break even stop after a predetermined take profit level is achieved. The action of shifted initial stop loss to entry price is called break even stop. This means which ever the direction the market decides to move, the risk after implementing a break even stop is zero loss.

While using a break even stop, a forex trader can also execute partial close when the first take profit level is achieved. This means that he can close 50% of his contract and can extract a small profit out of the market.

The advantage of using partial close together with break even stop is that you will extract a profit regardless of where the market will be headed for. It is a way to minimise risk and grab a small profit while at the same time allowing the trader to participate in longer term market actions.

Rob Booker’s Forex Defensive Trading Plan

It is a powerful plan where a trader can turn from $10,000 into $130,000 in one year (trading 17 days a month) earning 10 pips a day. A trader will no longer need to be greedy because he need not require to capture 100 pip market movements. Advanced traders are conservative with their trading capital because they know that the market can take BIG swings against them when they’re waiting for 100+ pips.

Out of 10 trades, would you accept 5 break even trades, 2 losers of 20 pips, and 2 winners of 50 each? I would. That’s trading defensively, and it’s what made him a successful forex trader.

For example, I find a great opportunity to go for 10 pips trade. I entered a market order, to buy the EUR/USD at 1.2900 and set a stop at 1.2880 (20 pips). I am now long the EUR/USD at 1.2900 which means i make money money when EUR/USD go up. When the market price reaches 1.2910, I made a 10 pips profit. I can either exit the trade with my profit, or stay in the trade longer.

Here is how I stay in the trade:

First, stop loss will be moved to the entry price. This step is called break even stop. If my initial stop was 20 pips (or, on this trade, at 1.2880), then I move my stop to 1.2900. That means that if the price falls back to 1.2900 my trade automatically closes and I have lost nothing. I have gained nothing. I have traded defensively.

But if the trade goes to 1.2920, and 1.2930, and beyond, I am prepared to get more money. I can lose nothing – I am in a 100% risk free trade. Now I can let my profit run and I don’t have to worry about where the market will be headed for.

Defensive trading is about how a forex trader manages a trade. Most professional traders will use one or a combination of partial close, break even stop and trailing stops to manage and exit trades.

This is a strategy where risk can be reduced to minimal but with profits potential maintained. It allows the common saying ‘higher profits with higher risk’ does not applies anymore if you employ break even stops and trailing stops.

About the Author

Warren Seah

“Introducing 11 Exit Strategies, What Every Disciplined Traders Need… Go Without It You Could End Up Being A PIP VICTIM Just Like Thousands Of Traders Out There.”

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USD/JPY

The pair continues to be in the range of symmetric triangular pattern, the next time the price will get closer to the trend line of the triangle it will be possible to see its breakout.

Potential trade

As of now, after the creation Friday of the small body and long tail of the candlestick from its upper position there is a short trade from its break down of 81.50 with a stop above the tail at 83.10, first target 80.10, and second target 79.10.

As can be seen by the graph bellow:

EUR/GBP

The pair broke out on Friday as a long diamond pattern, one can search for long position after a correction of at least 38.2 Fibonacci from the last long movement on the hourly time frame, targets in the area of 0.8750. (Blue area).

As can be seen by the graph bellow:

Important News:

12:00 (GMT) – ECB President Trichet Speaks

13.30 (GMT) – Building Permits m/m

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 

Trade like the pro’s with a true ECN Forex broker.

By David Adams

As a long-time trader I receive more than my share of advertisements touting new trading programs and “secrets” to making a fortune in trading. While some systems are legitimate, the majority of these e-mini trading schemes misrepresent both the profit potential and prerequisite skills required to trade successfully. That bothers me.

E-mini trading is not a get rich quick scheme. It can be very lucrative for accomplished practitioners of trading, but few traders are able to profit consistently from the first day of their trading career. Yet misleading advertising, while expressly prohibited by various government regulatory organizations, is rampant on many trading sites. Overstating potential rates of return is a quick and easy way for program promoters to garner potential traitors quickly. The public is naturally lured to the potential to make money the easy way. Let me be clear on this point; trading is not a quick and easy way to make big money or become a millionaire.

There is little argument that our current economy is going through some tough times, and that makes the lure of fast money very popular. Unscrupulous trading educators can easily take advantage of our current recession by overstating both the potential profit and easy technique trading professionals employ. Prior to writing this article, I performed a search on Google centered on “learning to trade futures contracts.” It was an eye-opening experience, as the claims of easy money and simple trading technique were rampant. Some of the claims were absolutely ludicrous and I find it difficult to believe that anyone would fall under the spell of these gimmicky and poorly constructed websites. Then again, I have been trading my entire life. For someone who is completely new to futures trading, how would they be able to differentiate between reputable trading sites and websites making audacious claims? For that matter, the uninitiated might well be attracted to the website that claims the highest returns. Lacking experience, they would be unaware of what is fact and what is fiction in terms of potential trading rates of return and the training required to be successful.

Let’s set some facts straight:

1. In 25 years of trading I can only think of one month that my rate of return was higher than 200%. That month was a fluke, and I have never repeated that feat.
2. The rate of failure for first time, or new investors is approximately 90%.
3. For new traders who take the time and money to learn a quality trading system, practice that system, and retain a professional mentor, the failure rate is still more than 50%.
4. Trading psychology and money management are essential in trading, and these two trading aspects alone can take a considerable amount of time to master.

These four primary trading considerations alone illustrate the difficulties in earning higher rates of return from the first day you begin to trade. There are many training variables to consider and master before most new traders can become consistently profitable.

So what is the point of this article?

The notion I want to emphasize to individuals considering a trading career is simple; the trading business takes time, effort, and experience before you become consistently profitable. I want to warn potential traders about websites and advertisements that promise fast money and high rates of return. Generally speaking, trading is not a get rich quick proposition and should only be considered by individuals who are willing to spend the time and effort required to become consistently profitable. In short, don’t fall prey to the hucksters who promise high rates of return with little or no effort. Trading is a career, and like most careers it takes several years to become competent.

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

It is now safe to say that the past month’s most lucrative investment has been crude oil. Traders that opened a long position for oil on February 16th bought it at around $85 a barrel. If they kept the position open, they can now sell it at over $106 a barrel, marking a 24% profit in merely three weeks.

The reasons for the massive bullish trend are widely known; first there is the unrest in the Middle East. The protest which was initiated in Tunisia continued to Egypt and eventually reached the oil producing nation of Libya. The fighting between the Libyan rebels and troops loyal to Muammar Qaddafi continues, and for now Libya has cut output by as much as 1 million barrels a day.

If this were not enough, U.S. employment reports released on Friday have shown that the labor market in the U.S. is finally recovering. The economy added 192,000 jobs last month, with 222,000 in job gains from private employers. In addition, the unemployment rate declined to 8.9 percent, the lowest since April 2009. The positive data has boosted speculation that demand for energy in the U.S. will increase as well, and thus providing another excuse for oil prices to soar.

Another “winner” of the recent events is gold. In times of uncertainty, gold is traditionally boosted as an alternative investment. Since January 28th gold climbed from $1,320 an ounce to its current price of around $1,435.

Here are today’s leading news events:

• 12:00 GMT, European Central Bank President Trichet Speaks – Trichet has already hinted last week that the ECB will hike interest rates in April. If Trichet once again refers to a rate hike, the market is likely to respond with higher demand for the euro.

• 13:30 GMT, Canadian Building Permits – This report measures the change in the total value of new building permits issued during January. If the end result will beat projections for a 1.8% increase, the CAD is likely to strengthen against its major currency rivals.

By Owen Trimball

Ratio backspreads are considered to be one of the safest longer term option trading strategies available today. So much so, that they have sometimes been called “vacation spreads” because you can literally take a holiday and come back later to find they’ve made a profit for you.

The word “ratio” in this strategy gives us a clue to how you would structure this trade. There is a relationship, or ratio, between a combination of bought and sold positions which open the trade. Usually, it would be something like 2 to 3 – i.e. buy 3 and sell 2 – hence, the ratio.

In order to understand what we are about to say, it is assumed you are familiar with the meaning of the expressions “in the money” or “at the money” as it applies to options.

The idea is that you BUY a larger amount (e.g. 3) of “at the money” or slightly “in the money” options and simultaneously SELL a slightly smaller amount (e.g. 2) of “deeper in the money” options. The beauty of these trade setups, is that even if your view of the stock price direction is wrong, you can still make a profit. This is due to the fact that the “delta” component of all positions increases, the deeper the underlying stock price goes “into the money” until it reaches a point where all positions have equal delta. The delta is the relationship between the movement in the price of the underlying stock and its associated option.

So if you have taken out a put ratio backspread and the stock price declines, the 3 “bought” option positions will eventually increase in value at the same rate as the stock price movement – and because you have more “bought” than “sold” positions, you’re making a profit. However, if the price action of the stock goes north instead of south, the “bought” positions will lose money, but so will your “sold” positions. Because, when you opened the trade, your 2 “sold” positions were “deeper in the money” than your 3 “bought” positions, you should’ve entered the trade with a net credit. You will get to keep this initial credit to your account and so, still make a profit, even if a smaller one than you hoped.

The other factor contributing to the above is the “implied volatility” (IV) of option prices. If we have taken out a put ratio backspread and the stock price takes a dive, this generally leads to an increased implied volatility for our 3 “bought” put option positions and consequently, will enhance the profitability of the trade, since we bought them “at the money” while the 2 “sold” positions were already “deep in the money”. The best time to enter this type of trade is when the “at the money” options have a low implied volatility, while the “in the money” (sold) options have a higher IV.

Knowing the above, you can sometimes combine both call and put ratio backspreads for one simultaneous position. You should get a credit for each of the setups. If the stock moves north, your call ratio backspread makes a profit while your put ratio backspread realizes a small credit… and vice versa if the price of the underlying stock moves south. In order to profitably enter such an an arrangement however, you need to take into account broker commissions, due to the large number of positions involved – and also ensure there are no volatility spikes for any of your option strike prices.

The ratio backspread is one of the more advanced option trading strategies, in that it allows a trader to have limited risk while realizing a nice profit if the underlying price moves in the anticipated direction. The bigger the move, the more profit you make, so you should look for stocks where you think the price will move significantly, such as the support or resistance of a channel pattern. As a general rule, the shorter time to expiry, the closer you would want your strike prices to be. Be sure to construct a risk graph before entering the trade so that you understand your risk vs reward.

About the Author

Owen has traded options for many years and writes for “Options Trading Mastery” – a popular site about Option Trading Strategies. Discover a wealth of information on many option trading strategies, including ratio backspreads

By David Adams

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