A-good-idea | Forex Blog

July 28, 2011

Currency In Focus: Japanese Yen

Filed under: Forex News — Tags: a-due-out, a-good-idea, a-more-likely, chart of the day, data, dollar, europe, japanese, jpy, likely-scenario, occurred-on-the — admin @ 3:01 am

The Japanese yen has been strengthening for some time as the US dollar has been weak so it has been receiving safe-haven money flows that otherwise might go to the Dollar, were it not for the US debt-ceiling debate.

While it is no secret that the Japanese would prefer to have a weaker currency to help encourage their exports, the Bank of Japan will be reluctant to do so with the uncertainty of the debt ceiling debate. Should the US resolve the issue, then we could envision a scenario where the BOJ attempts to ride the wave by adding intervention at that time.

But for now, the trend is clearly higher for Yen vs. USD, and under normal circumstances we would be looking at short-term trades to take advantage of any Yen weakness by selling retracements. However, trends do not go on forever, so a more likely scenario is that the US resolves it’s issues and the BOJ adds a helping hand to get the Yen to weaken.

There is some economic data due out on Thursday, July 28^th for Japan, including the jobless rate figures, CPI data, and industrial production figures. These numbers have been so distorted because of the effects of the natural disasters that it is possible that the data could come in better than expected.

The last time the Dollar was this low vs. the Yen occurred on the day the Japanese markets opened after the natural disasters. The super-spike down that occurred was reversed by coordinated G-7 monetary intervention, yet we approaching those lows. While it is never a good idea to fight the trend, this may be an instance where it makes sense.

Bias: Bearish

Trade: Buy USD/JPY on a push down to 77.30, stop at 76.25, just below the all-time high for Yen vs. USD. Profit target: 79.75. Reward/Risk ratio: 2.5:1

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July 27, 2011

Currency In Focus: Australian Dollar

Filed under: Forex News — Tags: a-good-idea, another-reason, aud, chart of the day, data-warrants, dollar, japanese, likely-scenario, major-concern-, market, occurred-on-the, policy-meeting, positive, some-inflation- — admin @ 3:01 am

The Aussie dollar has just recently broken through triple-top resistance, which may now be acting as support. At the time of this writing, the Aussie is trading just above its H4 pivot at 1.085.

Consumer Price Index (CPI) data is due out on Wednesday, July 27^th and is expected to show an increase of 3.4%. However, recent US dollar weakness has induced commodities prices to move higher, despite the risk in the market. However, because the risk in the market is mostly political and less economic, the US dollar as a safe-haven is out of favor.

With gold reaching an all-time nominal high above $1620, the positive correlation of the Aussie to gold is another reason why we may see continued Aussie strength. The RBA would like to be able to raise interest rates if the CPI data warrants it, but global instability is a major concern.

At the last release of the rate policy meeting minutes, the RBA stated that they could deal with some inflation. But the question remains—how much?

Bias: Neutral

Trade: Buy AUD/USD on a pull-back at 1.0805, stop at 1.0770. Take profit at 1.0915. Reward/Risk Ratio: 3:1.

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July 26, 2011

Currency In Focus: British Pound

Filed under: Forex News — Tags: a-good-idea, before-bouncing, chart of the day, deficits, despite-it-safe, dollar, gbp, lower-despite, major-concern-, policy-meeting, pound, with-quarterly — admin @ 8:09 am

The British pound is a currency we are watching closely as it is pulling back to just ahead of pivot point support at 1.6242. This comes ahead of the UK GDP report which is due out on Tuesday, July 26^th.

The GDP report is expected to show a declining economy, with quarterly growth of .2% (down from last quarter’s .5%) and a YoY figure of .8%. While the market is aware of the austerity measures the UK government has pursued in order to reduce their deficits, the economy has been surprisingly strong in the face of stubborn inflation.

We could envision a scenario where the Pound pulls back to below that pivot point support but holds the 1.62 level before bouncing higher and making a run at just below the 1.64 level.

One of the important drivers to consider is the debt-ceiling debate in the US, which has caused investors to lose confidence in the Dollar and has pushed it lower despite it safe-haven status.

In addition, the GBP/USD pair is setting up for a possible bull pennant pattern on the H4 chart, which would also be in line with our target at just below 1.64.

Bias: Bullish. Looking to buy ahead of 1.62 support and sell ahead of 1.64 resistance.

Trade: Buy GBP/USD on a pull-back to 1.6230, stop at 1.6194. Profit target is 1.6375. Reward/Risk ratio: 4:1

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August 2, 2010

Emerging Trends in FX

Filed under: Forex News — Tags: a-currency-pair, a-good-idea, a-lot-about, charts, jpg, outer-support-, pound-sterling, resistance, support-if-bad, support-there, week — admin @ 1:17 pm

I’d like to share Abe Cofnas’ outlook for the week ahead in FX. Abe has been trading FX and teaching other how to trade for years and I think you’ll find his insight valuable.

The Majors are at the start of the week providing some challenges as some are testing key Resistance and Support levels. Let’s scan the market using basic Resistance and Support. Support and Resistance tell us a lot about the battle between buyers and sellers. Keep in mind that a currency pair, when at a key resistance or support line is there for a “reason”. The currency pair reacts to sentiment about the underlying economy and prospects for growth, or inflation. This means that the day chart points to barriers that are quite important. Failure to penetrate Day Resistance or Support are major selling or buying signals. Let’s get started:

USDCHF

This pair is an inverse image of the EURUSD. Recent severe weakness in the US Dollar shows up here. This week the currency pair could test Support if bad economic news continues. The range is wide and there is a lot of intra day trading in between.

USDCAD

The Loonie is looking strong and may test 1.0150 this week. The best strategy is to sell on retracement failures up on the 4 Hour charts.

EURUSD - CHALLENGE TO THE BULL SURGE

We see a clear technical challenge facing the EURUSD as it hit’s a 61.8% FIB LINE. The outlook is very cautious and traders need to see the EURUSD confirm a breakout above or a failure to sustain this level is a good sell point.

AUDUSD - SOARING BUT MAY GET TIRED

The technicals are stunning and very bullish. But joining the upside here requires caution and expect a pull back and then buy on a resumption of the move up - after the pullback.

USDJPY - TEST OF SUPPORT AT 86.00

Trading the USDJPY this week will be quite challenging because in play is test of Support. There is inner support at 86.24 and Outer Support at 85.94 Bulls and Bears are very balanced. Waiting for a breakout is a better strategy.

GBPUSD - NEARLY PARABOLIC

The Pound Sterling is nearly parabolic in its price action. This doesn’t mean that a selling opportunity is ahead. Instead, traders should expect a pullback- but it’s not a good idea to go against the strong sentiment here.

I wish you much success in your trading!

Abe

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October 16, 2009

GBP Still Strong!

Filed under: Forex News — Tags: a-good-idea, based-on-some, check-out-our, currency, follow-through, from-the-carry, from-yesterdays, nothing-as-the, today-as-bank, trade — admin @ 8:04 am

The British pound is still strong today, showing a little bit of follow through from yesterdays gains. Yesterday I called out a trade in GBP/AUD as a low risk opportunity based on some technical factors, despite the fact that the trade was “counter-trend”. Let’s see how its doing:

(click charts to enlarge)

As you can see, this trade is up about 169 pips from yesterdays entry price (1.7828-1.7659=169 pips). While you’re not going to be able to retire just yet LOL, this high probabilty set-up is showing some initial gains and looks promising going forward. To give you an idea of what this means, with just one lot, you would have made $169 if you were in this trade.

And the cost to get into this trade? Just $50 in margin. So in theory, you put up $50 to make $169. That’s pretty good coin! Now imagine what happens when you use the multiplier effect of leverage!

While its never a good idea to over-leverage your account, taking high probability trade set-ups can be extremely profitable if you know what you’re doing!

To learn about how to spot trade set-ups such as these, check out our currency trading courses here.

Want to test my calls in real time with a practice account of your own? Get started here.

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