Predicting the height of the S&P, how high will it go?

By Adam Hewison – With the S&P 500 making new highs and as world equity markets following suit, the question becomes how high can we go?

In this short video on the S&P 500, I outline some mathematical upside target zones that I am looking at for this market.

Watch the New Video Here…

You can watch this video with my compliments and there is no registration requirements. We would love to get your feedback about this video on our blog.

All the best,

Adam Hewison
President, INO.com
Co-Creator, MarketClub

UK GDP declines more than forecast in 2nd Quarter. Pound Sterling falls in Forex Trading.

By CountingPips.com

The United Kingdom Gross Domestic Product fell by more than expected in the second quarter and marked the fifth straight quarterly decline according to a report by the Office of National Statistics. The U.K. GDP data showed that quarterly GDP fell by 0.8 percent in the April through June quarter following a decline of 2.4 percent in 250140twentypndsfreethe first quarter of 2009. The first quarter decline had marked the largest decrease since the 2.6 percent fall in the second quarter of 1958. The second quarter GDP decline surpassed economic forecasts that were expecting a 0.3 percent contraction.

On an annual basis, the second quarter GDP fell by 5.6 percent from the level of the second quarter of 2008 and marked the largest annual decline since 1955 when records were first kept. The 2009 first quarter had registered an annual decline of 4.9 percent.

Contributing to the decline in GDP was a decrease in total production output by 0.7 percent. Despite this decrease, the production output was significantly better than the 5.1 percent decrease of the first quarter. Also contributing to the second quarter’s GDP fall was a construction output decrease by 2.2 percent while services output fell by 0.6 percent and manufacturing declined by 0.3 percent.

The Pound Sterling falls in Forex Trade.

The pound sterling has been losing ground to the other major currencies today in the forex market after the GDP numbers. The British currency has fallen to the euro, US dollar, Swiss franc and Canadian dollar while trading virtually unchanged against the Japanese yen.

The euro has increased against the pound as the EUR/GBP currency pair has advanced from 0.8589 at the open of today’s trading to 0.8652 in the afternoon of the U.S. trading session at 1:49pm according to currency data from Oanda.

The pound has fallen verses the dollar as the GBP/USD pair has gone from opening at 1.6486 to trading at 1.6452 and reached an intraday low at 1.6391.

The pound is trading about unchanged versus the Japanese yen as the GBP/JPY trades at 156.00 yen per pound. Elsewhere, the pound has also fallen against the Swiss franc as the GBP/CHF has fallen from 1.7708 to trading at 1.7589 francs per pound this afternoon.

EUR/GBP Chart
– The euro has jumped against the pound sterling today in forex trading after the UK 2nd quarter GDP growth came in lower than expectations. The EUR/GBP traded back above the 100-hour moving average in red (1Hour Chart).

Forex Chart
Forex Chart

The Three Phases of a Trader’s Education: Psychology, Money Management, Method

By Jeffrey Kennedy

The following is an excerpt from Jeffrey Kennedy’s Trader’s Classroom Collection. Now through August 10, Elliott Wave International is offering a special 45-page Best Of Trader’s Classroom eBook, free.

———–

Aspiring traders typically go through three phases in this order:

Methodology. The first phase is that all-too-familiar quest for the Holy Grail – a trading system that never fails. After spending thousands of dollars on books, seminars and trading systems, the aspiring trader eventually realizes that no such system exists.

Money Management. So, after getting frustrated with wasting time and money, the up-and-coming trader begins to understand the need for money management, risking only a small percentage of a portfolio on a given trade versus too large a bet.

Psychology. The third phase is realizing how important psychology is – not only personal psychology but also the psychology of crowds.

But it would be better to go through these phases in the opposite direction. I actually read of this idea in a magazine a few months ago but, for the life of me, can’t find the article. Even so, with a measly 15 years of experience under my belt and an expensive Ph.D. from S.H.K. University (i.e., School of Hard Knocks), I wholeheartedly agree. Aspiring traders should begin their journey at phase three and work backward.

I believe the first step in becoming a consistently successful trader is to understand how psychology plays out in your own make-up and in the way the crowd reacts to changes in the markets. The reason for this is that a trader must realize that once he or she makes a trade, logic no longer applies. This is because the emotions of fear and greed take precedence – fear of losing money and greed for more money.

Once the aspiring trader understands this psychology, it’s easier to understand why it’s important to have a defined investment methodology and, more importantly, the discipline to follow it. New traders must realize that once they join a crowd, they lose their individuality. Worse yet, crowd psychology impairs their judgment, because crowds are wrong more often than not, typically selling at market bottoms and buying at market tops.

Moving onto phase two, after the aspiring trader understands a bit of psychology, he or she can focus on money management. Money management is an important subject and deserves much more than just a few sentences. Even so, there are two issues that I believe are critical to grasp: (1) risk in terms of individual trades and (2) risk as a percentage of account size.

When sizing up a trading opportunity, the rule-of-thumb I go by is 3:1. That is, if my risk on a given trading opportunity is $500, then the profit objective for that trade should equal $1,500, or more. With regard to risk as a percentage of account size, I’m more than comfortable utilizing the same guidelines that many professional money managers use – 1%-3% of the account per position. If your trading account is $100,000, then you should risk no more than $3,000 on a single position. Following this guideline not only helps to contain losses if one’s trade decision is incorrect, but it also insures longevity. It’s one thing to have a winning quarter; the real trick is to have a winning quarter next year and the year after.

When aspiring traders grasp the importance of psychology and money management, they should then move to phase three – determining their methodology, a defined and unwavering way of examining price action. I principally use the Wave Principle as my methodology. However, wave analysis certainly isn’t the only way to view price action. One can choose candlestick charts, Dow Theory, cycles, etc. My best advice in this realm is that whatever you choose to use, it should be simple. In fact, it should be simple enough to put on the back of a business card, because, like an appliance, the fewer parts it has, the less likely it is to break down.

For more trading lessons from Jeffrey Kennedy, visit Elliott Wave International to download the Best of Trader’s Classroom eBook. It’s free until August 10.


Jeffrey Kennedy is the Chief Commodity Analyst at Elliott Wave International (EWI). With more than 15 years of experience as a technical analyst, he writes and edits Futures Junctures, EWI’s premier commodity forecasting service.

Dollar Trading To Be Dominated By Bernanke and Geithner Testimony

Source: ForexYard

The USD is set for another volatile action-packed trading day as this weeks’ trading comes to a close. The Dollar saw sharp moves against the EUR, GBP and JPY yesterday. This type of behavior is set to continue today as vital economic news is set to come out of the U.S. The economic events that are set to lead the forex market are the publication of U.S. Revised UoM Consumer Sentiment at 13:55 GMT, Federal Reserve Chairman Ben Bernanke’s Testimony and Treasury Secretary Timothy Geithner’s speech on U.S. economic recovery both at 14:30 GMT.

Economic News

USD – Dollar Rallies vs. Yen on Economic Recovery Hopes

The U.S. Existing Home sales notched a 3rd monthly rise in June, and prices hit their highest since October. This fueled hopes the housing sector is finally on the mend, and many analysts hope this will help propel a broader economic recovery. According to analysts, the data suggests that the U.S housing sector is beginning to stabilize. This is a necessary component for a more meaningful U.S. recovery, and hence a stronger USD in the long term.

The U.S. Dollar soared against the Japanese Yen yesterday, due to the U.S. housing data. The USD rose 1.2% to as high as 95.30 vs. the JPY on Thursday. However, the pair finished trading at the 94.63 level. Against the EUR, the Dollar traded near a 7 week low at $1.4292, the weakest level since June 3. The pair finished trading much lower at the 1.4162 level. This was despite the greenback falling in early trading as the U.S. stock-index futures advanced on speculation that the worst of the recession may be over, prompting investors to purchase higher-yielding assets.

A number of analysts cautioned that the rally in risk sentiment on Thursday could be short-lived, as sentiment remains fragile and markets are probably quite near to seeing risk aversion returning to the forefront. This will be clearer to forex traders today, as 3 vital economic events are set to take pace in the U.S. These include the Revised UoM Consumer Sentiment at 13:55 GMT, Federal Reserve Chairman Ben Bernanke’s testimony at 14:30 GMT and Treasury Secretary Timothy Geithner’s speech on the economy also at 14:30 GMT.

EUR – EUR Hits 7 Week High Against the U.S Dollar

The European currency made gains against the U.S Dollar in early trading after data on U.S. jobless claims in the latest week came broadly in line with expectations. However, this was short lived, as the U.S. housing data was very optimistic, resulting in the pair closing far lower at the 1.4162 level. The EUR also fell against the GBP to the 0.8589 level as confidence returned to the British currency. However, the EUR/JPY pair was unchanged as demand for the safe-haven JPY fell yesterday.

The British Pound traded near the highest level this month against the USD, as advances in retail sales and mortgage approvals prompted speculation the recession in Britain is abating. In turn, this leads economists to the conclusion leading to speculation that the Bank of England (BOE) will increase its Interest Rate. The Bank of England reduced the main Interest Rate to a record low 0.5% in March. The Sterling also gained for a 2nd day against the EUR and the Yen as a government report showed Retail Sales increased last month at 4 times the pace forecast by economists.

There is much data coming out of Britain and the Euro-Zone today that is expected to determine the GBP and EUR crosses, as this week’s trading comes to a close. From Britain, the Prelim GDP and Index of services figures are set to be published at 08:30 GMT. From the Euro-Zone, the German Ifo Business Climate and Flash Manufacturing PMI are set to be released at 08:00 GMT. Forex traders are also advised to follow U.S. economic news too, as the market is set to be very volatile throughout the day.

JPY – Yen Loses Ground Amid Economic Recovery Hopes

The Japanese currency fell against the U.S Dollar and the GBP on Thursday, paring losses made the previous day. The JPY hit its lowest level in more than 2 weeks against the Dollar on Thursday, and a 3 week low against the EUR as traders in Asia sold Yen in anticipation of outflows from Japanese investors. The Yen also dropped versus the Swedish Krona and Norwegian Krone yesterday as Japanese financial companies prepared to raise at least 700 billion Yen ($7.42 billion) for funds that will be invested globally.

Much of The Japanese currency’s decline came about after the Finance Ministry said the contraction in the nation’s exports slowed to 35.7% in June from a year earlier. Japan’s trade data however provided hard evidence that the global economy is now on the mend, analysts stated. As the risk sentiment improves on the back of receding wariness about the prospects of the global economy, the Yen may weaken further against higher-yielding currencies.

Crude Oil – Crude Oil Eyes $67 a Barrel

The Crude Oil prices rose above $66 a barrel Thursday, ending at the highest level in 3 weeks at the $66.88 level. This came about as U.S. home sales data lifted stock markets and raised hopes for an economic recovery. Oil advanced 2.7% after the National Association of Realtors said home resales increased in June for a 3rd consecutive month.

Crude has risen in 6 of the recent 7 trading sessions. The rally came even after U.S petroleum data continued to show weak demand and rising inventories. Crude Oil and other commodities have tracked equity markets in recent months as analysts seek signs of a better economic outlook after the downturn cut world energy demand for the first time in a quarter of a century.

Technical News

EUR/USD

The pair plummeted in yesterday’s trading to as low as the 1.4121 level. However, the chart’s oscillators support a possible upward correction today. This is supported by the hourly chart’s RSI and Stochastic Slow. The Stochastic Slow of the weekly chart also supports this notion. Entering the trend at an early stage may pay off, as end of week trading comes to a close.

GBP/USD

The GBP/USD cross has been range trading between the 1.6310 and 1.6590 levels in the past few days. The technical data seems to be misleading, as the MACD of the weekly chart and the RSI of the hourly chart supports a bullish trend for today. However, the hourly chart’s MACD and the chart’s 4-hour Stochastic Slow support a bearish trend for today. Entering the pair when the signals are clearer may be a wise choice today.

USD/JPY

The pair has been bullish for the past 2 days now, and there is much technical support for this trend to continue. The chart’s hourly RSI and the chart’s weekly MACD support this upward trend to continue for the USD/JPY cross today. This is also backed by the hourly chart’s Stochastic Slow. Going long with tight stops may turn out to pay off today.

USD/CHF

The cross experienced notable bullish behavior yesterday, after almost a week of a bearish slide. The daily chart’s oscillators seem to be showing misleading data. However, the hourly chart’s oscillators and the weekly chart’s RSI signal that yesterday’s trend has run out of steam, and a bearish movement may be set for today. Going short with tight stops may be a wise choice today.

The Wild Card – Crude Oil

Crude Oil has been experiencing a bullish trend for the past week, and the black gold now stands at the $67 level. The daily chart’s Stochastic Slow and RSI signal that the pair may be overbought. However, the chart’s weekly MACD and hourly RSI support a bullish move for the commodity today. Going long with tight stops may turn out to pay off for forex traders today.

Forex Market Analysis provided by Forex Yard.

© 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 NFA Shakes the Foundations of Forex Trading

By Hillel Fuld – If you are even remotely involved in the Forex market, you have most likely heard of the new NFA First in First Out (FIFO) rule. It is the most talked about topic in the online and offline Forex worlds.

First let’s give a little background as to what exactly this ruling is, then we can discuss how it will affect the Forex market. The NFA ruled that as of August 2nd, 2009, when a trader opens more than one position in the same currency (for hedging purposes for example, but we will talk about that later), the trader must then close the positions in the order they were opened. If he/she opened a trade for $100,000 in the EUR/USD currency for example, then continued to open other positions in the EUR/USD currency, that first position needs to be closed before any subsequent positions he/she opened are closed.

There are many differing opinions circulating as to whether this is a positive or negative ruling when it comes to Forex brokers and traders, but one thing is for sure, it will drastically change the Forex game.

How so? For starters, as you know, all of Forex trading is implemented using Forex trading platforms. Each broker has a trading platform that they customize to meet their traders’ needs. With this new ruling in effect, the trading platforms have to make numerous changes in terms of what is allowed and prohibited. Take for example the Close button that now appears adjacent to each open trade. After August 2nd, that button will only appear next to the first open trade, and will not be available next to trades that were open later.

All those “cosmetic” changes is not what has the Forex world on their feet. What people are really trying to digest is the effect this new FIFO ruling will have on the existing practices of trading used by traders all around the world. Take Forex hedging as an example. Many traders see hedging as an insurance policy for their Forex trading.

What is hedging?
To understand this concept, it is easiest to use a concrete example. Let’s say I decide I want to buy $100,000 of USD/JPY. Naturally, that is accompanied by a huge amount of risk. So how do I minimize my risk? How do I insure myself for the worst case scenario? Quite simple, I open another position in which I am selling the same $100,000 of the same currency. Then what I go ahead and do is place a stop loss of 10 pips on each and a take profit of 50 on each. If the market moves one way, the stop loss will close off the position that triggers it, whichever it may be, and the other will continue to make me some nice profits.

This is a very accepted practice and some people will claim that both the trader, who insures him/herself, and the broker who makes profit on every open position can benefit from hedging. However, with the new FIFO ruling, this scenario would not work. The position I opened first, no matter the direction which the market turned, will need to be closed before my second position is closed. Hedging will no longer work.

I have spent countless hours researching this topic and I would say that the opinions on this ruling are split down the middle. Some people think it is a wonderful thing, since hedging, in reality, is a fictional move. Think about it. Imagine going to a money changer and asking him to sell $100,000, then once he does that, asking him to buy $100,000. I am pretty sure he would think you are nuts. This would obviously leave you at level ground and cancel each other out. The fact that this is an accepted practice in Forex trading does not say good things about the Forex market and its standards.

Some people will claim that hedging is not a legitimate way of trading Forex. Not only that but they will also claim that another benefit of this new ruling is that the Forex market is now at level ground with other markets such as equities, futures and options.

On the other side of the debate are traders who will tell you that with the volatility of the Forex market, they depend on hedging to guarantee minimal losses and use stop losses and take profits as their primary management tools in their day to day Forex trading. These traders are of course highly dissatisfied with this new ruling.

This is an extremely heated topic in the Forex world and some experts claim that the NFA have made a tremendous mistake with this ruling that will affect the whole of the Forex market as well as the credibility of the NFA as a Forex regulator.

Now that we established that FIFO will have a tremendous effect on Forex traders, the first question that comes to mind is, how will it affect Forex brokers? The answer is Forex brokers are now presented with two possible options. They can either work around the clock to adapt their trading platforms, practices, and rules to meet the new trading standards or they can work around them.

If they choose the first path, they will need to remove the Close button from all trades opened in a currency after one initial open position. They will need to disable any hedging options among their traders, and make other cosmetic and significant adjustments to their website, terms of service, and trading platforms.

The other option is of course to send their customers to trade with brokers that are not regulated by the NFA, and are thereby not bound by the new FIFO ruling. This means of course brokers that are outside of the United States. This is of course not the ideal solution, nor is it what the NFA had in mind when issuing this new rule. As of now, as far as we know, it is a legal move, but it would not surprise me if the NFA would work on preventing such a phenomenon.

The bottom line is the NFA made a revolutionary and some will say scandalous decision with their new FIFO ruling. There is now a big question mark surrounding the future decisions of Forex traders and brokers in the United States. Are traders going to now search for new brokers abroad or are they going to stick with their current brokers? Are the brokers going to spend the time and money tweaking their existing trading infrastructure or are they going to take the easy way out and redirect their traders to other brokers abroad?

The answers to these questions will only be determined months and even years after the FIFO launch date of August 2nd, 2009.

About the Author

Hillel Fuld writes for the Online Forex Trading Portal DailyForex.com.

US Existing Home Sales increase third month in a row. Jobless Claims rise. USD mixed in Forex Trading.

By CountingPips.com

U.S. Existing Homes sales increased for the third month in a row in June according to the monthly report produced by the National Association of Realtors. The NAR report showed that existing-home sales including single family homes, co-ops and townhouses increased 3.6 percent in June to a seasonally adjusted annual rate of 4.89 million units. The June data put existing home sales at three straight monthly gains for the first time since 2004. May’s sales data was revised lower to show a 1.3 percent increase after an initial report of a 2.4 percent increase.

The June sales pace surpassed economic forecasts that were predicting an approximate increase of 1.5 percent to a 4.84 million unit sales pace for the month. On an annual basis, June’s existing-homes sales are 0.2 percent lower than the June 2008 sales pace of 4.90 million units. The median sales price for existing homes increased from May to $181,800 in June while the total housing inventory showed a decrease of 0.7 percent in the month to a total of 3.82 million homes available.

NAR chief economist Lawrence Yun commented on June’s increase saying, “The increase in existing-home sales occurred in all major regions of the country,” and that, “We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions.”

Weekly Jobless Claims rise.

A government release by the U.S. Labor Department showed that weekly U.S. jobless claims increased in the week that ended on July 18th. New jobless claims grew to a total of 554,000 unemployed workers, an increase over the prior week by 30,000 workers. A 4-week moving average of unemployed workers fell by 19,000 from the prior week to a total of 566,000.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending July 11th declined by 88,000 workers to a total of 6,225,000 unemployed workers. A four week moving average of continuing claims saw a decrease by 132,500 to 6,541,500.

US Dollar mixed in Forex Trading today.

The U.S. dollar has been mixed today in forex trading against the other major currencies since the start of the day at 00:00GMT. The American currency has been trading higher versus most of the major currencies but lower versus the Canadian dollar and British pound sterling.

The euro has fallen versus the dollar today as the EUR/USD has dipped from its 1.4232 opening at 00:00 GMT to trading at 1.4195 in the U.S. trading session at 2:37pm EST according to currency data from Oanda.

The British pound has advanced against the USD as the GBP/USD has gone from its 1.6478 opening exchange rate to trading at 1.6501 usd per gbp. The dollar has advanced versus the Japanese yen and trades at 95.13 after opening at the day at the 94.18 exchange rate.

The dollar has continued to fall versus the Canadian loonie as the USD/CAD trades at the exchange rate of 1.0866 after opening the day at 1.0993.

The dollar has gained against the Swiss franc as the USD/CHF trades at 1.0726 after opening at 1.0656 today while the dollar has also been stronger against the Australian dollar and New Zealand dollar. The AUD/USD trades at 0.8161 after a 0.8183 opening while the NZD/USD trades at 0.6566 today after opening at the exchange rate of 0.6599.

USD/JPY Chart – The US Dollar advancing today versus the Japanese Yen in forex trading and reaching above the 95.00 exchange rate after falling to a low of 93.09 yesterday.

Today's Forex Chart
Today's Forex Chart

Global Stock Rally Dominates USD Trading

Source: ForexYard

Witnessing a steady decline during yesterday’s trading sessions, the USD became weakened as traders unwound their Dollar buy positions in exchange for riskier assets, such as stocks. The global stock market rally seen yesterday may have been one of the leading causes of the Dollar’s depreciation. With recent market optimism, traders may continue to see a small downward trend in the U.S. Dollar, as its positions are unwound in exchange for higher yielding assets.

Economic News

USD – Dollar Outlook Remains Weak

The USD continued its decline against the EUR, as well as other risk sensitive currencies on Wednesday. However, the overall direction of the market was subdued due to unsteady equity markets. While the Dollar sentiment is bearish, the EUR seems unable to really take off. On Wednesday, the Dollar index was at 78.745, down from 78.920 on Tuesday

Strong performances from the stock markets continue to put downward pressure on the Dollar, as investors move to riskier higher yielding assets. Furthermore, the Dollar outlook suffers from concerns over U.S monetary policy. With growing uncertainty about the framework of the monetary and fiscal policies, particularly in light of the proposed health care reform, the outlook on the Dollar looks very weak despite the Fed’s and Treasury’s assurances.

Looking ahead to today, several important news releases are expected from the U.S, including the Unemployment Claims at 12:30 GMT and the Existing Home Sales at 14:00 GMT. These indicators are very important since they are leading indicators of economic health and tend to create great market volatility.

EUR – EUR Rises on Weaker Dollar

The EUR experienced a moderate rise against the Dollar and Yen yesterday. Late Wednesday, the EUR was at $1.4211 from $1.4197 late Tuesday and at ¥132.96 from ¥133.01. The Pound depreciated 0.3% to 153.92 Yen, and traded at 86.41 pence versus the EUR. The British Pound also appreciated slightly versus the Dollar, trading at $1.6463 from $1.6436.

The Pound’s drop against the EUR came after the National Institute of Economic and Social Research stated that home values will resume their decline. The institute also predicted Gross Domestic Product (GDP) will shrink by 0.4% in the second quarter, slightly worse the 0.3% expected by economists. Also putting downward pressure on the Pound were losses in equities throughout the trading day.

While no major news releases are expected from the Euro-Zone today, traders should follow the release of British Retail Sales that is due at 8:30 GMT. As this is a leading indicator of economic activity, it is likely to cause great volatility for the GBP pairs.

Yen – Yen Benefits from Stock Market Losses

The Yen gained for a fourth day against the Dollar, and for a second day against the EUR yesterday following a larger than expected second-quarter loss by Morgan Stanley, as well as a statement by Wells Fargo & Co. stating that bad loans jumped. The Yen traded at 132.87 per EUR from 133.18 and at 93.56 versus the Dollar from 93.68 yesterday.

With reports from CIT Group Inc. and American Express Co., risk aversion today will likely stay prominent as the expectation is for weak earnings announcements. As the Yen is highly sensitive to moves in the equity markets, any negative earnings reports will revive risk aversion among investors and push them toward the safety of the Japanese currency. The Yen may also rise today ahead of the U.S Unemployment Claims report which is expected to show an increase in claims.

Crude Oil – Oil Prices Slide on Disappointing Inventories Report

Crude Oil for September delivery settled down 21 cents, or 0.3%, at $65.40 a barrel Wednesday, snapping a five-day rally following the release of slightly worse than expected U.S Oil inventories. However, losses were limited due to a weak Dollar and equity gains.

With inventories remaining high and OPEC members not sticking to quotas, there is still too much supply and not enough demand. While rising equity markets and a weak Dollar continue to push Oil prices up, the fundamentals are still weak and do not supports another rally to the $70 price level. Furthermore, any negative news from the stock market, or signs of a faltering economic recovery might send Oil back to the $60 level.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-bought territory on the daily chart’s RSI, indicating a downward correction may be imminent. The downward direction on the hourly chart’s Momentum oscillator also supports this notion. Going short might be a wise choice today.

GBP/USD

The typical range trading on the hourly chart continues. The 4-hour chart RSI is floating in neutral territory. However, the pair currently sits near the top border of the daily chart’s RSI, suggesting a downward correction may be imminent. When the downwards breach occurs, going short with tight stops appears to be the preferable strategy.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The daily chart’s Slow Stochastic provides us with mixed signals. The 4-hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

USD/CHF

The 4-hour chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the daily chart’s RSI is already floating in the over-sold territory, suggesting an upward correction may be imminent.When the upwards breach occurs, going long with tight stops appears to be the preferable strategy.

The Wild Card – Crude Oil

Oil prices rose significantly in the last week and peaked at $65.55 per barrel. However, the daily charts’ RSI is floating in an overbought territory suggesting that the recent upward trend is loosing 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 Forex Yard.

© 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.

EUR Forecast

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eurThe European currency is set to go extremely volatile on the release of both the Flash Manufacturing PMI and the Flash Services PMI at 08:00 GMT this coming Friday. Both of these are major indicators of economic health in the Euro-Zone.

The Manufacturing PMI measures the level of a dispersion index that is based on surveyed purchasing managers in the manufacturing industry. The Flash Service PMI measures the level of a dispersion index that is based on surveyed purchasing managers in the services industry.

Better-than-forecasted results are expected to push-up the value of the EUR. This could up the value of the European currency substantially as the European currency is already benefiting from a weak U.S. Dollar. Thus this is an important opportunity to buy the EUR as end-of-week trading kicks in. However, worse-than-forecast results may lead to a bearish EUR. If we look at the EUR so far today, it is trading slightly higher vs. the USD at 1.4250. However, the EUR is trading 15 pips lower against the GBP at the 0.8620 level.

It would be a wise move for forex traders to start opening their EUR positions now, prior to Friday’s release, as this will enable you to make maximum profits. Moreover, if current trends continue, we may see the EUR/USD cross hit 1.4300 anytime soon, as the U.S. economy continues to recover. If you want to start trading forex now, why not open a live account with ForexYard. Furthermore, to learn more about the exciting world of forex please visit our blog in order to start making big money now!

EUR/USD Hits a Wall after Disappointing EZ INO Data

By Fast Brokers – The EUR/USD has hit a wall and is consolidating with a downward slope after the Euro Zone’s industrial new orders data showed slight contraction while analysts were expecting a swing to growth (-0.2% vs. 1.9%).  The Euro is also digesting the fact that French consumer spending came in higher than expected.  However, we believe the EZ INO number is more prevalent since we’ve seen French CS flutter between growth and contraction.  Hence, the EU continues to display a theme of disappointing data.  Over the past week and a half investors have received discouraging data concerning EU economic sentiment, pricing, and now manufacturing.  The economic data shows that although the peak of the crisis may be behind us, the economic return to growth could be a long, steep road.

Despite the recent negative data points the bulls continue to hold the line, preventing a protracted pullback.  Near-term investor sentiment is still on the upswing with the confidence that the economic recovery will keep on trucking.  The EUR/USD confirms investor confidence by trading comfortably above weighted medium-term downtrend lines and the psychological 1.40 level.  Furthermore, there’s a dense trading range wielding an upward slope between June lows and highs.  However, the immediate-term tells a different story.  Investors are exercising caution after today’s disappointing data coupled with mixed earnings from the U.S.  Though the majority of U.S. 2nd quarter earnings have been positive thus far, investors are digesting some questionable results from Morgan Stanley and Wells Fargo.  Additionally, corporations beating analyst bottom-line estimates come on declining revenue and strategic cost-cutting.  As a result, there remains an uncertainty concerning the prospect of future growth.

We’ve tweaked our trend lines, and see a new immediate-term wedge between our 3rd tier uptrend and downtrend lines.  If the EUR/USD should break below our 3rd tier uptrend line we could witness a pullback towards our 2nd tier uptrend and the 1.41 area.  Meanwhile, the EUR/USD is trading well above the psychological 1.40 level, and has quite a few cushions between 1.40 and present price.  As for the upside, the EUR/USD now has to deal with fresh July highs and then June highs.  Therefore, there are a few speed bumps on the road ahead.  An immediate-term fluctuation between our 3rd tier trend lines would not be surprising.  As usual, the EUR/USD’s path is highly reliant on the S&P futures.  Should the S&P break out of its own obstacles the EUR/USD would likely follow suit due to their positive correlation.
Present Price: 1.4190

Resistances: 1.4197, 1.4214, 1.4230, 1.4247, 1.4269

Supports: 1.4138, 1.4157, 1.4142, 1.4124, 1.4101

Psychological: 1.40, 1.45

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

GBP/USD Stabilizes Despite Disappointing CBI Data

By Fast Brokers – The Cable is climbing back above our 2nd tier uptrend line despite disappointing CBI industrial new orders data.  Today’s CBI data is a bit disconcerting because it counters the gradual improvement since March.  In fact, today’s reading of -59 is worse than March’s -58.  Present stabilization counters a pullback resulting from a bleak report from the IMF concerning the state of Britain’s budget balance amid spiraling injections of liquidity.  Investors are also reacting positively to the BOE minutes released earlier showing the central bank currently has no intention of adding onto its $125 Billion QE program.  Hence, the BOE could be thinking about the future by reigning in spending.  On the other hand, the BOE also revealed it plans on increasing the reserve requirements of financials, denting future revenue.  Taking all of this into account, the Cable is proving resilient to the downside, and investors are still encouraged about the concept of an economic recovery.  Although the medium-term is filled with question marks, the immediate-term momentum remains in the bulls corner for now.

The GBP/USD is in the thick of June’s trading range, which we predicted could be a tough zone to break free of.  The 1.65 psychological area proved to be a worthy adversary to the upside, though the uptrend lines are holding firm.  The topside obstacles are clear:  1.65, July 20th highs, and our 3rd tier downtrend line.  If the Cable can dart past these barriers a retest of July highs is likely.  Britain will release retail and BBS mortgage approvals data tomorrow.  We believe the mortgage approvals number could have a larger impact on the Cable than retail sales.  Mortgage approvals are at an important technical juncture.  Investors are expecting a slight increase from the last release, while a much higher/lower than expected number could result in a sizable appreciation/depreciation of the Pound.  In addition to tomorrow data, the interaction of the S&P futures with 950 and yearly highs should have a strong influence on the path of the Dollar.  Should the S&P breakout to the upside the GBP/USD would likely follow suit to its 3rd tier downtrend line.

As with the EUR/USD, the GBP/USD has an upward sloping near-term trend with hefty support to the downside.  Therefore, near-term momentum is tilted towards the bulls’ corner for the time being.  Looking at the downside, the Cable has our 2nd and 3rd tier uptrend lines and July 17th lows should sentiment turn sour.  Hence, there are quite a few cushions on the bottom-end to weather a storm should it strike.

Present Price: 1.6402

Resistances: 1.6405, 1.6441, 1.6467, 1.6500, 1.6542

Supports: 1.6372, 1.6347, 1.6324, 1.6301, 1.6265

Psychological: 1.65

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.