FXMentorMike: Chart of the day up at #forexnews: http://t.co/jmVk0XBU
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FXMentorMike: Chart of the day up at #forexnews: http://t.co/jmVk0XBU
December 14, 2011
FXMentorMike: Chart of the day up at #forexnews: http://t.co/jmVk0XBU
October 20, 2011
Euro (EUR) Volatile Ahead Of Summit!
The euro has been trading in a somewhat tight range ahead of this weekend’s summit and debt crisis meting. Ness has been trickling out and rumors and conjecture have caused volatility within these ranges. At this point, the markets are much better suited to shorter-term trading, as teh uncertainty and risk are too great now.
You can see from the long wicks on the chart below that price is moving rapidly on momentum, only to be rejected back toward the middle of the range.
October 11, 2011
Euro (EUR)To Rise On Slovakia Vote?
The 2-hour chart below is pointing to a rise in the Euro vs. USD as it is forming a bull pennant pattern which means that you can add the move of the length of the “flagpole” to the bottom of the pennant to get a target price. Based on this chart, price is currently sitting at 1.36 level which is just above 1.36. The move started at 1.33 so adding the 300 pip move to the current price gives us a target of 1.39, which also happens to be the R2 resistance area on the daily pivots.
One of the catalysts for this move could be the vote in Slovakia which is expected to ratify the expansion of the EFSF to combat the debt crisis. While the debt crisis has not been resolved just yet, Merkel and Sarkozy have said that it will be by early November so that has given the market a bit of confidence.
Also to note is the start of US earnings season and if the numbers come in better than expected, then we couold see greater stock market gains. The Euro has been highly correlated to the S&P of late so this could be an additonal tailwind that pushese the Euro higher.
October 6, 2011
Pound (GBP) Tanks As BOE Increases QE!
The British pound has tanked this morning vs. all currencies as teh BOE announced that they were increasing the size of their asset purchases by 75 billion to 275 billion citing potential liquidy strains. This sent the Pound plummeting lower after it failed to breach the R1 daily pivot resistance as seen on the chart below.
This extreme move crashed through both the S1 and S2 daily pivot supports and looks to have settled around 1.53. If risk should increase in the market due to the Euro debt crisis, tehn we could see further US dollar strength which could push the Pound even lower, perhaps to the 1.50 level. Stay tuned!
September 2, 2011
Stocks Tank On Lousy Jobs Data!
Check out the volatility on the chart below of the CFD of the S&P 500 stock index! Wow, when the awful NFP report showed ZERO jobs created, teh market initially spike higher on the hope that Bernanke and the Fed will be lauching QE3 shortly.
However, while that may be the case, no one is expecting that to occur this minute, so selling is in order and that’s what we’ve seen. A 20-handle move in less than 5 minutes is extraordinary, and it is unlikely that this sentiment will change dramatically ahead of the long, holiday weekend.
July 30, 2010
Check out what’s going on in Forex today!
Once again we are fortunate to have Abe’s insight into the Forex market. Enjoy!
This Friday morning we have some important patterns emerging. I like to form a daily outlook using a 4 Hour chart because it provides a good combination of “big picture” perspective as well as enabling our “thumbs on the pulse” of the market. So let’s get started:
USDCHF
Dollar weakness is the focus today and we see the battle lines are right on the key support at 1.04. Its best to get a confirmation of either a bounce off support or a break down before one anticipates what will happen.
EURUSD - Bearish facing test of Inner and Outer Support
Technically, the action is clearly on the side of the bears. But the key is confirmation. We have a fuzzy barrier of Inner support at 1.2980. Its fuzzy because there are a lot of candlestick “tails“ there. This means the market is not drawing a line in the sand on Support. It actually tested the Outer Support at 1.2953. Tactically, the interesting situation will be a break of Inner Support with a target to Outer Support. Also, a failure at 1.2980 could generate a bounce condition.
GBPUSD - BULLISH BUT TIRED
The technical trading conditions for the GBPUSD is more challenging this morning. We have a sloppy sideways channel between support at 1.5545 and resistance at 1.5666. It’s really not clear in either direction. But a breakdown at 1.5545 puts this pair into a sell zone.
AUDUSD - SELL ZONE EMERGING
Notice a descending triangle showing compression on the 4 hour chart. A confirmed breakdown at .8975 will put this pair into a sell zone. This presents us with a 75 pip trading range if the breakdown occurs.
USDJPY - Dollar Weakness May Be Over
The Yen is showing strength against the dollar, but it’s not a decisive line of Support at 86.33. The action outlook is a battle at this line. Bounces above it will confirm a buy opportunity, but an inability to stay above 86.5 gives bears permission to sell the USDJPY pair. Watch this one closely!
USDCAD- INDECISION
On the Loonie we have a clear indecision. It a tight sideways channel and inside it is an equilateral triangle forming. This means we just have no clear direction. Until the USDCAD pair breaks out of this range, trading is difficult.
Tags: aud, cad, eur, forex, gbp, jpy, usd
December 9, 2009
Kiwi Update!
As expected the RBNZ kept rates unchanged at 2.5%, but did mention that they would likely be looking at a raise sometime in mid- 2010. It appears as though the economy is on track and that they will meet their inflation targets.
Here’s a quick look at a 1-minute chart of NZD/USD as it was announced: (click chart to enlarge)
I mentioned earlier that resistance was around was around .7175. Well, it looks like I drew the chart correctly, but mistakenly said resistance was at .7175, when it should have been at .7185. If you look at this chart, you can see how the price went up through that resistance, then traded back down and consolidated before moving higher.
It just goes to show how powerful simple support and resistance can be in your observations of charts and in technical analysis.
To learn more about this, check out our forex courses!
Tags: analysis, blog, charts, course, dow, economy, forex, forextrading, fx, fxedu, Il, Mike Conlon, nzd, rate, simple, technical, time, USD
All Eyes on Kiwi!
The biggest gainer so far this morning is the New Zealand dollar (NZD) aka Kiwi. It is up .76% vs. USD and .51% vs. CAD. Part of the reason for this is that at 3pm EST today, New Zealand will have their interest rate decision. It is expected that they will remain at 2.5%, but don’t rule out a hike.
Australia will be announcing their employment figures this evening, which are expected to be robust. The Aussie has maintained strength as the Australia economy has exited recession (if they actually were in one to begin with, which is debatable) and they have been the only major economy to have raised interest rates this year.
There is a tentative link between the New Zealand and Australian economies, though based more on geography than actual output measures. So while a rate hike is improbable, it is not completely off the table.
Let’s take a look at the 4 hour chart of NZD/USD: (click chart to enlarge)
Just looking at the chart, it looks like the pair could trade up to the .7175 level. In the event of a rate hike, I would expect the pair to move swiftly through that level. If there is no hike, then its possible that the pair will resume the trend down.
As of right now, both the Kiwi and the Aussie are bucking the normal risk trade, trading up vs. the USD dollar even though US stocks are down slightly this morning.
With both gold and oil up, I expect we may see a stock market reversal some today if the US dollar remains week.
So keep an eye out for 3pm EST to see what happens with NZD!
To follow this currency with a free, real-time practice account, click here!
To learn about how government decisions can affect your money, be sure to check out our forex courses!
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November 18, 2009
Pound Yen? Or Yen to Pound?
The minutes from this month’s Bank of England (BOE) policy meeting have caused the British pound (GBP) to fall this morning, most notably vs. the Euro (EUR) and the Swiss franc (CHF), both around -.8% this morning. The reason for this move was that British policy-makers were split 3 ways in deciding how to extend their quantitative easing program and brought up the possibility of lowering deposit rates on reserves.
As I’ve discussed before, the Brits are by nature a fairly conservative bunch, and markets most definitely don’t like uncertainty. However, by agreeing to expand their debt-purchases, it is pretty clear that the majority are concerned about deflation today, at the risk of incurring inflation down the road.
Nevertheless, while the pound is down today, it is not experiencing what I would call a “major” sell-off. This could be because while the fundamentals are saying the one thing, the technicals could be saying another.
Let’s take a look at a 4 hour chart of GBP/JPY (click chart to enlarge) as this is a popular pair that is traded.
What we are seeing on this chart is what’s known as a “triangle” formation. Based on the direction that the move had occurred, I would call this a bullish pattern. So we are basically looking for a break-out to the upside (outside of the triangle) to occur. However, today’s news has actually caused this pair to break to the downside.
Does this mean that the pattern has failed and to expect this to trade down now? Not necessarily. What sometimes occurs with patterns such as these is that we get “false breakouts” or “head-fakes”. This means that the initial move is opposite what you expect to happen, so you give up on the pattern– before the move you expected takes place.
So does this mean that we are going to see movement to the upside? Again not necessarily. Are you confused yet???
At this point the way to trade a pattern that hasn’t done what you have expected is to wait for confirmation. What this means is that you want to wait for a few more candles to see what happens.
I think of a lot of reasons why GBP can trade higher that JPY despite this most recent news. So I’m going to be keeping an eye on this pair. I’m going to place a buy stop to go long just above the top of the triangle, say at 150.4.
So check back later to see if this gets executed.
To learn more about how to use chart patterns to enhance your trading, be sure to check out our currency trading courses!
To follow these trades real-time, get a free practice account here.
Tags: account, blog, CHF, course, currenc, currency, currency trading, dow, EUR, Euro, forex, forextrading, fundamental, fx, fxedu, gbp, Il, jpy, lot, market, Mike Conlon, news, pair, practice, rate, ssi, technical, time, trade, trades
August 6, 2009
Canada’s central bank is “smoking something”!
Well, “intervention talk” is in the air again! This time it’s the Bank of Canada!
Why are they so concerned with their currency? Well the USD/CAD exchange rate has dropped from 1.30 to 1.07 (2,700 pips) in mere months (5 months to be exact).
This can wreak havoc upon a company that is trying to figure out how to hedge their currency exposure so that it doesn’t eat into the profits of their business…and the central bank realizes this too.
That’s why Central Bank Governor Carney, together with Finance Minister Flaherty are coming together to attempt to “jaw bone” the currency lower (in other words bring the USD/CAD exchange rate higher).
Canada’s Fed Governor has stated that the gain in the currency is a major risk to economic growth…adding that “he has the flexibility to deal with it”. The Finance Minister backed him up by saying “steps could be taken to dampen the (Canadian) dollar”.
Governor Carney is attempting to lessen the appeal of the loonie by stating that interest rates are likely to remain unchanged through at least the 2nd quarter of 2010.
You see, when you are a Canadian company and you’re trying to hedge against currency fluctuations of 5-10% in a short amount of time, it’s tough. (They really need my services. Hehe!)
Canada’s factory orders have been hit (down 29% since last July) as a result of the strengthening currency. That couldn’t come at a worse time because at the same time you’ve had General Motors and Chrysler shut down Canadian plants, dealers and parts suppliers. Manufacturers have had to fire 221,500 workers as a result.
Couldn’t they intervene? History says they won’t…and if they did, it will backfire!
So the central bank wants a lower Canadian dollar to make it easier on these crucial companies. Will they get it? NO! Oh sure, they may be able to influence the USD/CAD up 300-500 pips…but what is that when the pair has moved 2,700 pips downward and will continue that downtrend?
You see, traders know that the global economy is “on the mend” and as it is recovering, it will consume more oil and other commodities that Canada exports. They also know that the U.S. dollar has been in a broad downtrend since March (according to the U.S. Dollar Index). This broad U.S. dollar sell off isn’t going to change just because the Canadian central bank wants it to.
Oh yeah, but they could go in and “sell Canadian dollars” right? Sure they could…but, it would not be effective and the foreign exchange market would simply laugh at them with the trend and fundamentals going in the favor of the traders and against that of the bank.
Also, traders know that there’s a good chance that the bank is bluffing too. Why? The central bank has abandoned intervention policies ever since 1998. They didn’t intervene when the currency reached a record high in 2007 and or when it’s had its biggest gain since the Korean War during May.
Therefore, there are a ton of years there that the bank did nothing when the currency moved to extremes. So they have no reason to believe that it will be any different this time.
Most of the time, they just “jaw bone” the currency by talking about what they “could” do. However, when push comes to shove, they usually don’t anymore.
They stopped intervening in 1998 because it simply ended up causing even more volatility and ended up making it even more difficult for their exporters to hedge their risks.
If they “talk the pair up”, short the rallies!
Therefore, here’s how I see this playing out on the chart below. Sure, they may “talk the currency up” a few hundred pips or more in the near term. It could happen. However, smart traders are “selling rallies” in the USD/CAD pair because the trend is down and the fundamentals overall, are on the mend. Therefore any bounce upward, is likely to result in another big push downward.
So “shorting rallies” is the flavor of the day, these days.Click on the chart below to enlarge it.