InvestMacro FX

By Anton Eljwizat

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, as I demonstrate below, the daily chart signals that a bearish reversal is imminent, and it might have the potential of reaching towards 1.3200 levels in the coming days. This might be a good opportunity for forex traders to enter the trend at a very early stage and a great entry price.

• Below is the 8-hour chart for the GBP/JPY.

• The technical indicators that are used are the Relative Strength Index (RSI), Slow Stochastic and Williams Percent Range.

• Point 1: There is a “doji” candlestick formed in the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates an impending bearish cross, which may signal a downward movement is going to occur in the near future.

• Point 3: The Relative Strength Index (RSI) indicates that the price of this cross currently floats in the overbought territory, signaling downward pressure.

• Point 4: The Williams Percent Range has peaked at the 0 marker and has turned bearish; this means that there may actually be a strong level of downward pressure.

GBP/JPY 8-Hour Chart

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

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

Source: ForexYard

Concerns that the euro zone nations are not doing enough to tackle the debt woes plaguing the region has moved many traders to pull away from European assets and seek out relatively safer investments. The decline in currency value so far appears to be mild, but any additional negative data could drive the common currency to new lows if measures are not taken in the near future to boost consumer confidence.

Economic News

USD – USD Grows as Investors Flee Debt Concerns in Europe

The US dollar underwent a general correction to recent losses yesterday as signs of positive growth gave investors reason to buy into the greenback. Simultaneously, the euro zone witnessed the reemergence of debt concerns pushing traders out of European assets and into safe-havens, like the USD.

As a result, the dollar was trading higher versus its European counterparts. The EUR/USD moved from its daily high of 1.3620 to a recent price near the 1.3590 price level. The USD/JPY experienced somewhat more bullish behavior, climbing from 81.30 to 83.35 over the last ten days. The GBP/USD, likewise, saw the dollar gaining ground, pushing back towards 1.6070 after climbing as high as 1.6136 in late-European trading.

Today’s American trade balance report and consumer sentiment reading from the University of Michigan (UoM) appear to be forecasting mixed results for the dollar. The trade balance may end up showing a widening of the deficit, leading to a mild correction to the USD prior to the day’s close. However, the consumer sentiment reading is expected to show increased optimism which may help the USD sustain its latest bullish move.

EUR – EUR Lumbering Under Emergence of Debt Woes

A recent flare-up of European debt concerns struck the 17-nation common currency yesterday, pushing the EUR lower against most of its currency counterparts in late-day trading. The EUR/USD dropped below the 1.3590 level while the EUR/GBP plummeted towards 0.8435 before paring its losses in today’s early Asian session.

Concerns that the euro zone nations are not doing enough to tackle the debt woes plaguing the region has moved many traders to pull away from European assets and seek out relatively safer investments. The decline in currency value so far appears to be mild, but any additional negative data could drive the common currency to new lows if measures are not taken in the near future to boost consumer confidence.

The euro zone will be largely absent from the economic calendar today. One significant report out of the region concerning French preliminary non-farm payrolls could show muted growth in the French employment sector, adding a modicum of strength to investor confidence. This figure may not carry enough impact to change the EUR’s fortunes significantly, but it may help stall any additional declines.

JPY – Japanese Yen Reaches 1-Month Low vs. US Dollar

The Japanese yen has been declining this week against most of its currency rivals due to a variety of forces. Among these influences is a recent move into riskier assets, as well as an unwinding of JPY long positions. The yen is dropping towards a 1-month low against the US dollar, reaching towards 83.35 in today’s early Asian sessions.

With Japanese banks on holiday Friday, in observance of National Foundation Day, the yen is going to be absent from today’s market moving events. The driving force behind today’s market will likely be the United States as investors appear to be preparing their portfolios in anticipation of the significant release of the UoM consumer sentiment figure. Should the greenback continue climbing, it will likely do so strongly against the yen in light of recent market trends.

Crude Oil – Oil Prices Stable Near $87 a Barrel

The plummeting price of Crude Oil over the past several trading days appears to have leveled off since last Friday. The spiking of oil prices these past several weeks concerned many traders about a suppression of the global economic recovery. Fundamental data appears to support a climb in oil prices, but this does not seem to be the case.

It is likely that positive growth in the US dollar yesterday, as well as general uncertainty about the rate of growth in a number of major oil consuming nations, has helped dampen oil demand, pushing supply higher. Another explanation could be the massive winter storms in North America creating a temporary pause in oil consumption as people are traveling less under the preventative environmental conditions.

Either way, it appears oil prices are on the decline heading into today’s weekly close, but speculation may suggest a fundamental increase in value as demand appears to be on the rise going into next week.

Technical News

EUR/USD

There appears to be a fresh bearish cross on the weekly chart’s Stochastic (slow), suggesting an imminent downward movement heading into this week’s close. A similar bearish cross on the daily chart’s MACD supports this notion. Going short may be a wise decision today.

GBP/USD

The sharp descent of the Stochastic (slow) indicator on this pair’s daily chart suggests an increasing level of bearish momentum. The fresh bearish cross on the weekly Stochastic (slow) and daily MACD support this notion. Going short appears preferable.

USD/JPY

The sharp spike of this pair on the long-term charts appears to have pushed the daily Stochastic (slow) deep into the over-bought region and preparing to form a bearish cross. However, the other long-term indictors show either neutrality or signals of impending bullishness. It appears this pair may breach its resistance line at 83.50 and go higher until additional technical data can cause a corrective retracement to this latest jump in value.

USD/CHF

The MACD on this pair’s daily chart reveals a fresh bullish cross and an ascending price movement, suggesting impending bullishness for the USD against the Swiss franc. The upward price movement on the weekly Stochastic (slow) and RSI support this notion. Going long may turn out to be the better choice today.

The Wild Card

EUR/CHF

This pair’s indicators appear to be revealing solid downward corrective signals. The daily and weekly Stochastic (slow) show impending and fresh bearish crosses, respectively, which highlights the impending downward movement of this pair. The daily MACD also shows a bearish cross high above the 0.0 line, supporting the notion that forex traders may wish to go short on this pair today to catch the impending corrective swing from the bullish spike experienced these past several days.

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.

Recent data out of the United States has helped boost the strength of the dollar in recent trading. The USD climbed against most of its currency rivals in trading yesterday as euro zone debt concerns flared up and US unemployment claims came in lower than expected this week.

A decline in US Crude Oil inventories over the past week also suggests a growth in oil usage, hinting towards industrial expansion in the world’s largest oil consuming country. This week’s close should round off these latest price movements with a few minor publications directly related to the strength of the greenback.

Here is a summary of today’s leading events:

13:30 GMT: USD – US Trade Balance

The trade balance measures the difference in value between imported and exported goods over the previous month. This month’s figure is expected to show a widening in the American trade deficit. Should the actual figure come in line with expectations, the USD could see a minor correction to yesterday’s strength.

14:55 GMT: USD – UoM Consumer Sentiment

The University of Michigan (UoM) releases this monthly report which represents the sentiment of consumers regarding their economic conditions. A higher reading represents a growth in consumer confidence. This month’s release is expected to reveal a growth in consumer sentiment and thus may grant the USD a second boost before the closing of the week’s trading.

GBPUSD had reached the rising trend line on 4-hour chart. However, the fall from 1.6277 is still treated as consolidation of uptrend from 1.5344 (Dec 28, 2010 low), and rebound from the trend line is still possible later today. Support is now at 1.6012, only break below this level could indicate that the rise from 1.5344 is complete, then the following downward movement could bring price to 1.5800 area.

Daily Forex Forecast

Google Inc, (GOOG) is down fractionally on a report that it has held low level talks with Twitter to sound out the social networking site about being acquired for as much as $10 billion. Privately held Facebook, Inc. has also reportedly held similar talks, according to a report in The Wall Street Journal. Twitter was valued at $3.7 billion in December after it raised $200 million in another round of financing. It currently has in excess of 175 million users. Google opened down 75 cents at $615.75 and fell to a low of $612.18 before paring losses to trade at $612.80, down $3.70, or 0.60%

On the call side, Checkpoint Software is seeing more than 16 times the normal call volume after the company announced a share repurchase program. Shares of the company are up 2.5% today. Also topping the list of active call options are consumer retail firms American Eagle Outfitters and GameStop. American Eagle is trading up around 9% today on speculation that the company may be a takeover target. Also of note in call options are Teradata and Whole Foods, both of which recently reported better than expected earnings. Taking a look at the put side of the ledger, Akamai has had about 11 times the average amount of puts traded. Shares of the company are trading down around 15% today after the company posted disappointing Q1 guidance. DR Horton and Cisco are also active with 7.4 and 6.7 times the average amount of put volume today. Rackspace Hosting is seeing high put option activity and is set to report earnings after the market closes today. Finally, entertainment software maker Activision Blizzard rounds out the list with 5.6 times the average amount of puts the day after the company issued disappointing guidance and announced the end of its Guitar Hero franchise.

An 8-day rally for the Dow came to an end today, as US stocks fell amid speculation out of Egypt that President Hosni Mubarek will step down. The S&P 500 and Nasdaq making a bit of a comeback, but ended the day on the downside as well.

View the original post at http://blog.currensee.com/2011/02/dont-hate-the-game-hate-the-player-even-in-forex/

By John Forman

Last week I took on SmartMoney. This week I take on the Prism Money personal finance blog, which is hosted by none other than Reuters, my own employer (it’s a really big company, though, so no, I do not know the author and/or editors responsible). The post in question is Forex folly: Why you shouldn’t be trading currencies.

Scam Everywhere!
The wonderful part of this particular article is how the author basically paints the whole industry as a big scam. I’ve addressed the forex scam subject before, and no doubt it will come up again. Any time you have a situation where the majority of folks are bound to end up disappointed with their performance there are going to be claims of malfeasance.

Now, this is not to say there aren’t those who would seek to take advantage of the popularity of forex. That shouldn’t be a reason to avoid a market, however. If that were the case you’d have to rule out all the other markets too because there most definitely have been all kinds of bucket shops, boiler rooms, and other scams involving stocks, commodities, and everything else.

As with any situation where you’re putting your hard-earned money in someone else’s hands, you definitely want to do your due diligence ahead of time to avoid the predators. The blog post author makes some excellent recommendations where looking for CFTC/NFA registration, complaints, etc. are concerned. That is always a good idea. Be cautious about listening to posters on forum and chat sites, though. Very often the folks complaining about this or that company, group, etc. are looking to shift blame from their own failures.

Not for the average investor
Shifting to the question of whether forex is something folks should avoid or not from a more markets oriented point of view, this blog is another instance where trading and investing are being intermixed. Trading as most of us would define the term is in general terms not something most “investors” should look to do for any number of reasons. It doesn’t matter whether you’re talking about stocks, bonds, commodities, or currencies. Most investors just are not good candidates for trading. Please let’s not conflate the two different approaches to the markets.

Is trading forex any different than trading any other market?
Getting beyond the investing question, the blog author brings up some items which he thinks argue against forex trading. One is that the forex market is dominated by big banks and institutions. This is totally true. The big institutions are responsible for the vast majority of trading volume. As I recently wrote, however, the big players are not able to manipulate the forex market to their liking.

Then there’s the suggestion that the big players are in the game because it’s volatile, turns quickly, and isn’t predictable. If the large shops are in there looking to make money taking positions in currency exchange rates they clearly think there’s at least some predictability to it all. They’re not just flipping a coin.

=========

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

=========

John Forman is a senior foreign exchange Analyst for the IFR Markets group of Thomson Reuters and author of “The Essentials of Trading.” John is a 20+ year veteran of the financial markets. He holds an MBA from the University of Maryland and a BS from the University of Rhode Island, both concentrating in Finance.

Feb. 10 (Bloomberg) — Federal Reserve Governor Kevin Warsh, who was one of Chairman Ben S. Bernanke’s closest financial-crisis advisers before becoming the only governor to question the expansion of record monetary stimulus in November, resigned after five years at the central bank. Warsh, 40, a former investment banker who was the youngest-ever Fed governor when then-President George W. Bush appointed him in 2006, will leave “on or around March 31,” he said in a letter today to President Barack Obama that was released by the Fed in Washington. His term would have run through January 2018. Bloomberg’s Peter Cook reports. (Source: Bloomberg)

Twitter has been in low level negotiations with Google (GOOG) and Facebook about a potential sale of itself to one of those companies. The Wall Street Journal reported that the microblogging website has been in talks for a while, that have gone nowhere to date.