The Problem with Predictions

By Markus Heitkoetter – Investors often look to experts and experienced traders for their predictions on how the market will trend. For example, I am often asked to predict where the Down Jones Index will be at any given time. The truth is, I have no idea how to answer these questions. Predictions on the market are like throwing a dart. Most traders would be thrilled if they could predict where the Dow will be just minutes from now, and, as the recent extreme fluctuations prove, no one knows when huge movements will occur.

What many day traders need to remember, however, is that successful trading does not require predictions. It requires a system to deal with the markets no matter what direction they are trending. I always tell traders the same thing: keep it simple! There are three simple rules to remember when trading that are better than any expert’s prediction.

First, buy when the market is going up, and sell when it is going down. I know this sounds overly simple, but too many investors forget to follow this very obvious advice. They may fall for concepts like “Dollar Cost Averaging” where you actually buy a stock even though it is falling. Although they may have read some persuasive defense of such a strategy, it goes against what should be obvious to everyone: you only make money if you own a stock and it is going up. When it is going sideways, or even going down, invest in a different stock or a different market altogether. Every day, you can find stocks that are going up, and profit depends on being able to find the ones that are rising now, not to predict which will go up in the future.

Second, know when to exit. Most traders stay too long in the market. Either they fail to take profits or they let their losses run too far. Both mistakes can be disastrous. You should know when to exit a trade even before you enter it. If you haven’t determined your acceptable loss and your target profit from the outset, then you aren’t yet prepared to trade. As soon as you are in a trade, place a stop loss order and a profit taking order. Good traders use a stop loss, but great traders use a profit target in order to maintain a profitable edge.

Third and finally, trade the right stock. The right stock, remember, is the one that is going up. This is where people usually want predictions. How else, they think, can you figure out which stock is going to improve? The fact is that there are a number of very easy tools you can use, not to guess the future, but to identify promising stocks. Use simple filters, and determine stocks that bounced back from an absolute or relative bottom. Do not try to pick bottoms or tops because it’s next to impossible. However, if you look for stocks that had been going down or sideways but are now moving up, you have a chance to catch a small move. The important thing is not to be greedy. You can make 25% per year by making just 5% on five different stocks. And it is of course much easier to make 5% on a stock than 25%.

With these three rules, you won’t need to depend on or even waste time looking for predictions. You simply apply each rule one at a time in a very careful and deliberate manner. First, learn to identify the direction of a stock. Then learn when to exit a stock. And then try to find or come up with a good filter to locate the right stock. Don’t try to do everything at once. Trading is not easy, but it can be simple. Don’t make it more complicated than it is. Plan your education, and take one step at a time. Learn something new every day, and you will be amazed how much you can learn in as little as a month.

About the Author

Markus Heitkoetter is the author of the international bestseller “The Complete Guide To Day Trading” and a professional day trading coach. For more free information on day trading visit his website

Can We Trust The Trading Signals

By Daniel Shaw

Forex trading signals are the signals for buying and selling of a foreign currency. They show the time and the price level when opening and/or closing a trading position has the biggest potential for making profit. Signals can be a great help for the newbie traders who know the basics of trading but don’t have their own trading strategy yet. Companies that provide trading signals usually have a professionally developed trading system which according to these companies is effective and must be profitable. The cost of such trading signals is usually not very high and returns to the trader who uses these signals.

How can we check if the trading signals are worth their money? The best indicator is the opinion of people who you trust. It might be your friends, colleagues, relatives who have already used those trading signals and can share you their results. If you personally don’t know people who have already used the signals, you can look around and make your own research before subscribing to the certain signal services. As a rule the authors of the trading signals usually let their customers to get familiar with the history of trading transaction made according to their signals on their own trading accounts. With the help of these statistics you can judge the effectiveness of the trading signals provided. If the signals provider doesn’t offer the statistics of trading with its signals, it is better if you look for another signals provider. There are hundreds of signal services on the web today.

Usually the Forex trading signals providers do not guarantee the effectiveness of their product. The same as the money management servicers don’t offer the return of the capital in case of the losses. In both cases the risk lies on yourself as an investor. The best way to test the effectiveness of Forex signals is to make a short term subscription to them and evaluate their effectiveness on your own. Of course, you can waste some money if the performance is not good. More than that some signals providers require the minimum subscription for more than a month, which is embarrassing if your goal is just to try them out. In any case you will have to find the way to solve it and test the signals before you use them for trading with your capital.

Subscribing to Forex trading signals is very similar to the money management. In both cases you rely on the professionals, rather than analyze the market and execute positions on your own. In the first case you pay a fixed amount for the subscription and independently make the transactions through the platform of your online broker based on the received signal. In the second case, you trust to someone else to do the transactions for you and manage your capital, but you share with them a part of the profits made in your trading account. In both cases you take all risk of loss if the situation in the Forex market will unfavorable to you.

About the Author

Daniel Shaw is a proud author of many popular materials about Forex trading. Visit his portal Singapore Trader to find more information about Forex Trading in Singapore and Mustafa Forex.

The Fed and “Plunge Protection Team”: Are They Manipulating Stocks?

Rumors are, the U.S. government “is propping up the stock market.”

By Elliott Wave International

Out of thousands of questions recently submitted to us at Elliott Wave International, the most frequent one received is: “Can the Fed manipulate the stock market?” Read our expert’s answer on this and other misleading “investment wisdom.” Read more.

You will find many intriguing Q&As at EWI’s Message Board. We offer it as a free way for our Club EWI members and subscribers to interact with EWI and the Socionomics Institute’s experts. We strive to answer every Message Board reader, and publicly post the best Q&As.
By far, the most frequent question we’ve been asked recently is:

“What is your take on the persistent internet chatter that the Federal Reserve is holding up the stock market via QE2, POMO, etc.? How can stocks ever decline again if the Fed is in control?”

We have several active Message Board posts that touch on “market manipulation.” But here is an eye-opening chart that will help shed more light on this issue.

EWI President Robert Prechter published this chart in his October 2008 Elliott Wave Theorist. Review this chart carefully. For too many investors, the crash of 2007-2009 is becoming a hazy memory. And almost no one in the mainstream financial media talks about the utter panic in the markets in September-October 2008, the worst part of the crash.

If you think back to that time, you may remember that the Federal Reserve and U.S. government took many aggressive steps to help stop the collapse. Every time they would announce a new intervention, the market would cheer. Result? Prechter’s chart gives an unequivocal answer:

Buying on Bullish News in a Bear Market


As you can see, announcements of bailouts, unlimited credit, bans on short sales, etc., were powerless against the biggest stock market collapse in 76 years. The DJIA kept sliding. It didn’t stop until March 6, 2009 — after it had slipped below 6,500.

So: Is the Fed and the “Plunge Protection Team” engaged in market manipulation? You can browse EWI’s Message Board for some answers, but one thing is clear: When stocks were crashing two years ago, few dared to suggest that the Fed was in the saddle. Bob Prechter puts it best:

“When markets go up, the Fed seems to be in control; when they go down, it seems out of control. But the control aspect is an illusion.”

Get the 33-page Market Myths Exposed eBook for FREE
Learn why you should think independently rather than relying on misleading investment commentary and advice that passes as common wisdom. Just like the myth that government intervention can stop a stock market crash, Market Myths Exposed uncovers other important myths about diversifying your portfolio, the safety of your bank deposits, earnings reports, inflation and deflation, and more! Protect your financial future and change the way you view your investments forever! Learn more, and get your free eBook here.

This article was syndicated by Elliott Wave International and was originally published under the headline The Fed and “Plunge Protection Team”: Are They Manipulating Stocks?. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

The Next “Precious” Metal

By Sara Nunnally, Editor, Smart Investing Daily,

We’ve been spot-on about the price of gold over the past three weeks. Take a look at this chart showing the top, and the subsequent drop back into the uptrend.

6 Month Gold Chart
View larger chart

We’re getting closer and closer to that Fed meeting in early November, so we can expect a lot more fluctuation in gold prices at this level. I told you a while ago about two bearish chart patterns to be wary of: the Bump and Run Reversal, and the Head and Shoulders Top.

Gold’s run-up could be exhibiting signs of both, but would need to see prices break down below that bottom green line… which it nearly did a couple days ago.

Whether this movement is a consolidation of gains before the Fed meeting, or something more bearish that could take gold prices down into the $1,260 an ounce range, any predictions about the price of gold now would be pure speculation. So let’s take a look at another commodity. One that I’m calling the next “precious” metal.

Back in late September, the Taipan Publishing Group invited subscribers to our Annual Summit. This time, we met in Las Vegas.

During a panel discussion on the last day of the conference, there was a lot of talk about metals. Of course, folks asked about gold, but we also fielded questions about rare earth metals and lithium.

In my opinion, lithium is the next “precious” metal.

Gold Went Up 76%… But This Made 975%

In every gold bull market of the past century, this investment class has outperformed physical gold. Over the past two years, one member of this class made 12 times more than physical gold.

Learn about this gold investment.

Here’s some background. Lithium is the lightest metal known, and is never found on its own. It’s always paired in some kind of compound. That’s because lithium is not a strong, stable metal in and of itself. It can, however, be used in alloys to make lightweight, stronger metals, such as those used for aircrafts.

It also has the highest specific heat of any solid element on the periodic table… That means that lithium can withstand a high amount of heat without breaking down.

Sorry for the science lesson, but all these characteristics I’ve listed are reasons why lithium is the next precious metal.

Right now, lithium is used in about 60% of all cell phones, and lithium ion batteries are expected to take the market by storm, with lithium ion batteries for the transportation industry jumping from $878 million this year to $8 billion in 2015.

Lithium only represents about 0.0007% of the Earth’s crust, and current production weighs in at just under 19,000 tons, or about 100,000 tons of lithium carbonate.

(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Jared Levy simplify the market for you with our easy-to-understand articles.)

In the meantime, according to Roskill Information Services’ “The Economics of Lithium,” demand between 2010 and 2020 is expected to grow at an annual rate of 6.4% just from existing applications alone… Throw in a huge bump from the transportation sector and lithium demand could see annual growth rates as high as 9.5%!

That means prices could increase drastically, too. Most pricing for lithium is done in long-term contracts for specific lithium compound — of which a multitude abounds. Earlier this year, lithium carbonate (one of the most popular compounds) imports to the U.S. averaged $4,500 per metric ton.

That’s up from $1,500 in 1999.

Currently, lithium represents about 3% of a hybrid or electric car battery’s cost. According to Roskill, hybrid batteries use between 0.5 kg and 2 kg of lithium. Plug-in hybrid batteries use between 1.8 kg and 4.2 kg, and fully electric vehicles use between 10 kg and 20 kg of lithium.

With interest in hybrid and electric vehicles growing so sharply, a 10% market penetration would mean demand for lithium would more than double current production. Just look at this chart:

Lithium Chart
View larger chart

Of course, that won’t happen all at once. Rather, lithium demand is expected to grow 11% this year and 13.4% in 2011. Then demand from hybrid and electric vehicles will start to kick in.

Now, there are a number of ways to take advantage of this trend, both in lithium demand and in hybrid vehicle growth.

U.S. Mint Halts Production of Silver Coins – “Silver Shots” Soar 900% in 1 Day!

Now you can use $1 government-regulated “silver shots” to turn $10,000 into a potential $1.3 million.

Learn how in this financial investment report.

Last Friday, we launched our latest free webinar titled “Green Power Metals: How to Cash In on the Clean Energy Future,” and in that video I outline three different investment solutions — battery makers, auto-efficiency management, and “Green Power Metals” mining companies… including this next “precious” metal, lithium.

You can sign up for this free video now, and get my free special report about Green Power Metals detailing one of the biggest lithium producers in the world.

The next “precious” metal is the start of a massive trend that will sweep through a number of industries, like personal electronics, auto-manufacturing, and mineral mining. We’re just seeing the tip of this trend with new electric vehicles coming to market. More are coming down the pipe…

And profits with them.

P.S. We’re also providing a chance to “retro-tend” our conference in Las Vegas in September. If you weren’t able to make it out to see us, we have a way for you to still “attend.” We’ve compiled a CD of every editor’s presentation and the two exclusive panel discussions from our three-day Global Opportunities Summit.

In all, you get more than 10 hours of investment insight, including my comments on lithium during the second panel discussion.

Find out how to get your copy of our Las Vegas investment conference.

Don’t forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

About the Author

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

AUD/USD – Trading on News Events

By Greg Holden – For traders interested in a “news trading” strategy, here is your guide. Looking at the AUD/USD over the past month, I noticed something interesting: this pair has actually been fluctuating sharply, and almost exclusively due to news events.

Look at the chart below. I’ve noted the dates of each sharp movement to help make this a bit easier. Here is the timeline:

Oct. 5: Australia’s retail sales figures came out worse than forecasts; ANZ posted smaller growth in job advertisements; and the RBA held rates steady at 4.50% due to market pessimism.

Result: AUD/USD dropped a whopping 104 pips over the span of a few hours, but rebounded once the US market opened following built-in short positions for the USD from an Oct. 4th announcement by Bernanke that the economy was in need of more easing.

Oct. 7: At 00:30 GMT, Australia posted better-than-forecast employment change data. At 12:30 GMT, US posted better-than-forecast Unemployment Claims.

Result: AUD/USD uptrend strengthened rapidly, peaking at 0.9916, followed (at 12:30 GMT) by a sharp correction due to American data.

Oct. 8: At 12:30 GMT, US published worse-than-forecast Non-Farm Payroll data.

Result: AUD/USD spiked upward 148 pips.

Oct. 14: The entire week was filled with practically no relevant data for either currency. But on Oct. 14th, the US published worse-than-expected Trade Balance and Unemployment Claims figures.

Result: AUD/USD almost reached parity, with a high price of 0.9996 on Oct. 15th.

Oct. 18-19: By now the prospects of a quantitative easing move by the Fed had grown stronger, but traders were going long on the dollar due to a higher than expected TIC Long-Term Purchases report. The pair’s downward move came to a halt, however, when the US published a negative Building Permits report on the 19th.

Oct. 25: At 00:30 GMT, Australia published stronger PPI figures than were expected. However, at 14:00 GMT, the US published much stronger housing data.

Result: The AUD/USD spiked towards 0.9975 in early trading hours, but collapsed back downward after the US housing data was published. Positive US data published on Oct. 26th continued to strengthen this downward momentum all the way through to the 27th.

Oct. 27: Aussie data came out worse than expected, driving the pair to its lowest point since Oct. 5, with a price of 0.9651.

Oct. 28: Australia’s RBA announces that more data established another decision to maintain rates where they are. Pessimism grew.

Result: The minor upward correction seen prior then turned bearish.

Oct. 29 (today): Anticipation of a positive reading from the US Advance GDP today is driving the pair lower as traders price-in a bullish USD. If the data disappoints, this pair will likely turn upward sharply like it has in the recent past.

AUD/USD – 4-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.

Currensee Makes Foreign Currency Trading Accessible to Every Investor

Launches Industry’s First Forex Trade Automation Service Enabling Investors to Follow and Execute Trades of Top Currensee Traders

BOSTON, Oct. 29, 2010 – Currensee Inc., (, the new way to
invest in world currency markets, today globally debuted The Currensee Trade
Leaders™ Investment Program, the first Forex trade automation service that
enables investors to follow and automatically execute the trades of some of the
most successful traders from the Currensee social network. This new service
enables investors of all kinds, in any asset class and on every continent, to
take advantage of the dynamic foreign currency market.

The growth of the foreign exchange (Forex) market is explosive with an average
daily turnover estimated at $3.98 trillion and 20 percent growth from 2007 to
2010. The Trade Leaders Investment Program gives investors the ability to build
an automated portfolio of top performing traders called Trade Leaders. These
Trade Leaders are carefully selected from the more than 7,000-member Currensee
Forex trading social network, which trades approximately $50 billion in volume
per year. Trade Leaders are carefully screened for historical performance, risk
management and returns versus the S&P500. Investors select and follow the Trade
Leaders they want to invest in, add them to their portfolio and Currensee
automatically executes the Trade Leaders’ trades in the investor’s account.
Investors access robust trade and performance metrics in real time and always
maintain full control over their account.

“The Trade Leaders Investment Program is a win-win for traders and investors.
Trade Leaders have a way to create a business doing what they do best –
trading – without having to worry about administration, paperwork and finding
new clients,” said Dave Lemont, CEO of Currensee. “For investors of every
kind all over the world, the Trade Leaders program offers the opportunity to
invest in the foreign exchange market. Investors in the program are typically
looking for investments that are not correlated with the stock market and that
give them the opportunity to take advantage of the dynamic growth in foreign
exchange. We combine that opportunity with the trust, transparency and control
of real performance, real-time metrics and full security and account control.
The success of our investors is our top priority.”

Trade Leaders are ranked by their Currensee Trader Authority Index™ (TAI)
score, a proprietary algorithm that combines performance, risk and experience
into a single index. TAI is displayed on the Currensee Trader Leaderboard and on
every Trade Leader’s profile. Currensee assesses each Trade Leader’s risk
management strategy, background and ability to perform for investors prior to
accepting a Trade Leader into the program. Once in the program, every Trade
Leader’s performance and trading is reviewed on a daily basis to ensure the
leader continues to achieve performance and risk targets. Trade Leaders are
compensated only on successful trading for investors and are able to create a
revenue stream from trading without changing their existing businesses.
“The program has helped me broaden my overall investing strategy,” said Alex
Neihaus, an early investor in the program. “In today’s markets, individual
investors like me have to expand our investment strategies to have any hope of
increasing gains. Before Trade Leaders, foreign exchange was out of my reach due
to my lack of knowledge, experience and time. But with Trade Leaders, I don’t
have to be a Forex expert and can still benefit by investing in top traders from
the Currensee social network.”

For more information about the Trade Leaders Investment Program and to start
investing, please visit

About Currensee puts the power of investing in world currency markets in the hands
of every investor. With the Currensee Trade Leaders™ Investment Program,
investors follow and automatically execute the trades of top Currensee traders
called Trade Leaders. Currensee Trade Leaders are handpicked from the thousands
of members of the Currensee Forex trading social network and carefully screened
for historical performance, risk management and returns versus the S&P500. By
investing in Trade Leaders, investors build their own personal automated Trade
Leaders portfolios and have complete control over their investments at all
times. Currensee strives to deliver profitability, transparency and control to
investors around the world. Currensee is funded by North Bridge Venture
Partners, Egan-Managed Capital and Vernon & Park Capital and is a member of the
National Futures Association (NFA) and registered by the Financial Services
Authority (FSA). For more information, visit us at Find us on
Facebook, follow us on Twitter, and watch us on YouTube. It’s time to invest
in the success of top currency traders.
Media Contact:
Beth Monaghan
[email protected]
(781) 791-4552

Forex Daily Market Commentary

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)


In the run-up to the FOMC meeting next week the jungle drums are beating. Why does the NY Fed poll market participants on their expectations regarding the QE volume? The USD positive explanation is: It is uncertain how large the volume should be. As a fine balance has to be struck between a sufficiently large effect on the bond markets (to ensure that yields fall or remain low) and inflation effects that are manageable (so that yields do not rise). The USD negative “conspiracy” theory is: The Fed wants to maximise the effect with a surprisingly large QE 2.0 volume. For that to be possible it will have to know what sort of volume would surprise. We do not believe in conspiracy theories.
Today’s US GDP data is unlikely to have much of an effect – unless it surprises notably. Regardless of whether the GDP will be slightly higher or lower: QE is a fait accompli.


European Council President Van Rompuy said EU leaders agreed to changes in the EU treaty focused on creating a mechanism for crisis resolution. However, he also said that the “no-bailout” principle will be kept. ECB Governing Council Weber said a mechanism needs to be developed for any acute Eurozone crisis, and that the problem of internal Eurozone imbalances must be dealt with.

Portuguese Prime Minister Socrates said the government wants to reach an agreement on the 2011 budget proposal to ensure that it is passed on November 2. Eurozone spreads had widened when discussions between the government and the main opposition ended but reports that the ECB bought Irish bonds in the market helped curb the spread widening. That said, investors are still pricing in a good deal of uncertainty in peripheral economies, which is likely restraining significant euro upside.

SNB officials Danthine and Hildebrand were on the wires but did not offer much new regarding monetary policy. Danthine was largely non-committal on the Swiss outlook, which indicated the SNB’s comfort with current policy. Hildebrand spoke on “Monetary Policy and the Real Estate Market”. His comments indicated he considers inflation to be a non-issue and sees some risks in the Swiss housing market. All in all there were no signs of any imminent monetary tightening.


Manufacturing PMI in October was 47.2, down from 49.5 in September. Similarly industrial production in September was -1.9% m/m (cons. -0.6%, prev. -0.3%). The slowdown in manufacturing activity is mainly due to slowing export growth on the back of a stronger yen. Core inflation came in at -1.1% y/y (cons. -1.0%, prev. -1.0%), falling for the 19th consecutive month. Labour data was also released, with the unemployment rate slipping to 5.0% versus consensus for a flat 5.1% reading.

USDJPY remained capped for much of the session as investors recalibrated Fed expectations, though the BoJ’s decision to bring forward the Nov 15-16 meeting to Nov 4-5, suggesting scope for more immediate action based on what the Fed does, could lend some support to USDJPY.


EURUSD BULLISH While support holds at 1.3637, expect recovery towards 1.4159 and 1.4373 next

USDJPY BEARISH Outlook is bearish with initial support defined at 80.41 ahead of 79.75 and 77.91. Resistance at 81.99

GBPUSD BULLISH Upside potential has scope for 1.6107. Support holds at 1.5606

USDCHF BEARISH Rise above 0.9918 breakout low exposes 1.0183. Support holds at 0.9703 ahead of 0.9463

AUDUSD BULLISH Break of 0.9662 support but holds well above 0.9542 reaction low. Resistance at 1.0004

USDCAD BEARISH As long as 1.0380 continues to cap the upside, expect decline towards 1.0154 ahead of 0.9981

EURCHF BULLISH Momentum is positive; expect acceleration of gains towards 1.3924. Near-term support at 1.3456 ahead of 1.3265

EURGBP BULLISH Pullback from 0.8942 eyes 0.8689 with scope for 0.8636 next. Resistance at 0.8885

EURJPY BULLISH Remains constructive above 111.56, keeping our focus on the upside. Upside capped at 115.68 ahead of 116.68

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

USD/CHF Reversal Signal

By Russell Glaser – Heading into the monthly close, the USD/CHF is showing a bullish reversal signal in the long term downtrend.

Following last month’s breach below the bearish pennant pattern on the monthly chart, the dollar has rallied creating a bullish hammer. This candlestick pattern is identified by a long lower shadow with a small real body at the top. The candlestick is found at the bottom of a downtrend and the appearance of the hammer signals a potential bullish reversal in the downtrend trend. The candlestick pattern is similar to its bearish counterpart the hanging man.

Traders will need to wait for a close of the month to confirm the reversal signal.

Initial resistance is found at this week’s high at 0.9930. A potential target for any further appreciation in the pair may be found at the lower boundary of the pennant pattern at 1.0080. Traders should be aware that just as a support level turns into a resistance level; previously broken trend lines can serve as new resistance levels.

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.

Dollar Anticipates Release of US Advance GDP

Source: ForexYard

The US Advance GDP is the primary publication today that is set to determine the level of the dollar when the report is released at 12:30 GMT. The other main releases that are set to dominate forex trading, especially for currencies such as the dollar and euro, is the publication of the European Unemployment Rate and Revised University of Michigan (UoM) Consumer Sentiment report at 9:00 and 13:55 GMT, respectively. Traders may find good opportunities to enter the market following these vital announcements.

Economic News

USD – US Dollar Extends Losses

The US dollar extended losses against most of its major currency pairs on Thursday as speculation grew on a government stimulus plan to inject cash into the financial markets. By yesterday’s close, the dollar had fallen around 1% against the EUR to 1.3930. The dollar experienced similar behavior against the GBP and closed at 1.5940.

The greenback has trended lower in recent weeks amid expectations the Federal Reserve will soon renew large-scale asset purchases to boost the economy, in what is known as quantitative easing. Speculation on easing steps grew after the New York Fed on Wednesday released a survey which asked market participants about their expectations for the size of any further debt purchases by the Fed. This survey is having some impact on market sentiment.

Another leading indicator released yesterday was US Unemployment Claims. This number handily beat last week’s results, but failed to provide strength to the dollar as investors may be waiting for key data due to be released today to implement their trading strategies.

Today’s Advance GDP and Revised UoM Consumer Sentiment data are expected to have a strong impact on the US currency. These figures could be a surprise, and the dollar could go either way as a result of highly positive or negative data. In any case, traders are unsure about how the market will react to today’s news. A weak report could feed risk aversion, boost Treasuries and actually aid the US dollar. Then again, a better than expected result might be seen as a sign of relative US economic strength, and lift the dollar. Or it could also encourage risk-taking and aid commodities and higher-yielding currencies at the dollar’s expense. Today will be exciting for intra-day, retail traders, that is certain.

EUR – EUR Gains on Stock Market Rallies and Bearish Dollar

The euro strengthened against most of its major counterparts yesterday, continuing to prove that, for the time being, this is one of the more solid currencies that traders can rely on to provide them with steady profits. The 16-nation single currency extended gains versus the USD on Thursday, to close around 1.3930 amid a broad sell-off in the US currency. The EUR experienced similar behavior against the CHF and closed at 1.3690.

The EUR was affected by the global stock market rally and the bearish dollar. The US stock market rally led investors to buy-back into the EUR, as they looked for returns on buying commodity-linked and higher-yielding currencies in Thursday’s trading.

Looking ahead to today, the most important economic indicator scheduled to be released from the euro zone is the Unemployment Rate at 9:00 GMT. Analysts are forecasting this figure to increase from its previous reading. Traders will be paying close attention to today’s announcement as a better than expected result may continue to boost the EUR in today’s trading.

JPY – Expect Another Volatile Session as No Japanese News is Expected

The Japanese yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the EUR yesterday and closed its trading session around the 112.80 level. The JPY also saw bullishness against the USD as it jumped around 80 points and closed at 80.90.

Investors are showing concern over a recent rise in the JPY as it makes Japanese products less competitive abroad and hurts the value of overseas sales when translated back into the Japanese currency. With steady gains primarily against the dollar, much of the yen’s bullish movement could be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. This has had a positive effect on major JPY currency pairings, as the rising turmoil in the market is leading to more investment in the Japanese currency.

Crude Oil – Crude Oil Rises on Weaker Dollar

Oil prices rose yesterday in seesaw trading as traders eyed the weak dollar and a surprise drop in weekly job claims which bolstered confidence in the US economic recovery.

Oil and other commodities denominated in dollars for global trading tend to rise when the US currency falls since they become cheaper for holders of other currencies. A move away from dollar-based pricing of the world’s leading commodity could further weaken the greenback.

As for today, traders should pay attention to the US Advance GDP report, as it has tended to have a large impact on Crude Oil’s prices recently, especially in the short-term.

Technical News


The EUR/USD experienced a bullish trend yesterday. However, it seems that this trend may be coming to an end. For example, the 4-hour chart’s Stochastic (slow) signals that a bearish reversal is imminent. A downward trend today is also supported by the weekly chart’s Stochastic (slow). Going short with tight stops may turn out to pay off today.


The daily chart is showing mixed signals with its RSI fluctuating in the neutral territory. However, there is a fresh bearish cross forming on the 4-hour chart’s Stochastic (slow) indicating a bearish correction might take place in the nearest future. When the downwards breach occurs, going short with tight stops appears to be a preferable strategy.


There is a fresh bullish cross forming on the 4-hour chart’s Stochastic (slow) indicating a bullish correction might take place in the nearest future. The upward direction on the weekly chart’s Momentum oscillator also supports this notion. Going long with tight stops might be the right strategy today.


The bullish trend is losing steam and the pair seems to be consolidating around the 0.9850 level. The daily chart’s RSI is already floating in the over-bought territory suggesting that the recent upward trend is losing strength and a bearish correction may be impending. Going short with tight stops might be the right strategy today.

The Wild Card


Gold prices rose significantly in the last week and peaked at $1345.50 an ounce. However, the 4-hour chart’s Stochastic (slow) is now giving bearish signals, indicating that gold prices might go down today. This could give forex traders a great opportunity to enter a correction period, and at a nice entry point.

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.

Forex daily analysis 29-10-2010


Daily graph:

AUD/USD daily

The bearish trend started in the beginning of the week has been corrected by exactly 50% during the 28-10-2010 session. Such a correction let us anticipate the renewal of the original trend. The future downtrend, once identified, should create an opportunity to go “Short”.

Suggestion: Looking for a decreasing configuration on one-hour graph in order to detect the new trend ASAP.

Potential trade

Hourly graph:


The required configuration should appear once the support (1H-graph support) of 0.9762 will be crossed downward. When crossed, we suggest ordering those commands:

  • “Limit” order on “Short” position 10 pips below the 1H support mentioned above, meaning: 0.9752.
  • “Stop Loss” order on the last high appeared: 0.9814.
  • “Take Profit” on the following support, which is: 0.9722


Daily graph:

NZD/USD daily

During this trading week, the pair didn’t stop to navigate between the resistance 0.7564 and the support 0.7428. Actually, the pair is very close to the resistance mentioned. The way it will behave once the level will be reached will determine the trend as well as the position to adopt toward the movement:

–        A vain breach of the resistance (test) may indicate a reversal, suggesting a position “Short” until the closest support (0.7428).

–        The resistance is crossed and broken, suggesting a longer uptrend. To go “long” would be very profitable.

Have a nice week-end!

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