Month: October 2010

By CountingPips.com

Important News Releases – October 29, 2010

00:00 Australia HIA new home sales
00:30 Australia private-sector credit
04:00 Australia NAB business confidence
05:00 Japan housing starts
08:30 United Kingdom British mortgage approvals
08:30 United Kingdom British net lending
09:00 Eurozone unemployment rate
09:30 Switzerland KOF leading indicator
12:30 Canada GDP – August
12:30 Canada from materials index/industrial price
12:30 United States GDP – 3rd quarter
12:30 United States personal consumption
12:30 United States Chicago purchasing manager
12:30 United States UMichigan consumer confidence

See full Calendar here

Being contained by 1.3698 support, EURUSD rebounded from 1.3734, suggesting that sideways movement in a range between 1.3698 and 1.4152 is underway. Lengthier consolidation in the trading range is expected in a couple of days, and further rise to 1.4000 area to reach next cycle top would more likely be seen later today.

Forex Forecast

By Markus Heitkoetter

Day traders often seek out stories of people who have had amazing success in the markets for guidance. They flock to biographies of financial celebrities hoping to gain insight and tips to get an edge on their own careers. One such celebrity, Warren Buffet, is often seen as a role model, and a recently released book on him, The Snowball: Warren Buffet and the Business of Life, will no doubt increase his influence. But while Buffet has plenty to teach us about investing, his lessons are less applicable to day traders because of the kind of investing strategies that he uses. I’m not at all discounting Buffet’s success, but I do want to stress that traders need to understand the difference between the strategies that will work for them and Buffet’s kind of investing.

Warren Buffet is, of course, a legend. Before he gave almost his entire fortune to charity, he was the richest man in the entire world. In 1962, when he began buying stock in Berkshire Hathaway, a single share cost $7.50. Today, Buffet is Berkshire’ chairman and CEO, and one “Class A” stock is worth more than $118,000.

Buffet is doubtless a financial genius, and many try to follow his advice to become rich. But you need to understand that he is not a stock trader. His investments are not in stocks. Instead he invests in companies.

Buffet has tried to make this clear himself. As he once said, “If, when making a stock investment, you’re not considering holding it at least ten years, don’t waste more than ten minutes considering it.” He has also said, “[s]hares are not mere pieces of paper. They represent part ownership of a business. So, when contemplating an investment, think like a prospective owner.” Based on these principles, he developed what he calls the Inner Scorecard, according to which he invests in “wonderful businesses” that fulfill, amongst others, the following criteria:

• They have a good return on capital without a lot of debt. • They are understandable. • They see their profits in cash flow. • They have strong franchises and, therefore, freedom to price. • They don’t take a genius to run. • Their earnings are predictable. • The management is owner-oriented.

But Buffet goes even further, looking for “subjective” clues to a company’s long term profitability. For example, it is said that once he purchased a company whose owner counted the sheets on the rolls of 500-sheet toilet paper to see if he was being cheated. (It turns out that he was.) Or, in another case, Buffet considered investing in a company whose owner painted only the side of the building facing the street in order to save money. And, in 1983, Buffet acquired the Nebraska Furniture Mart because he liked the way its founder, Rose Blumkin, did business: as a Russian immigrant, her strategy was to undersell the big shots, and she was a merciless negotiator.

There’s a clear pattern here. Before Buffet invests in a company, his team analyzes everything: the financial data, the management (including their biographies and sometimes even their personal spending habits), the company’s vision, mission and principles, the human resource policy, and much more. Then he buys enough shares to actively influence and change the company’s strategies and policies. As he said “Shares represent part ownership of a business,” and he acts on that idea once he is invested in a business.

Warren Buffet may well be the world’s greatest investor. He buys and sells businesses, and he uses the company’s shares to buy himself part ownership of a business. But Buffet is not a trader, and his strategies for success are completely different from those that make money for day traders. He does not analyze market trends, looking for movements. Instead, he looks at a company’s fundamentals and decides whether he thinks that company can grow over the long term. It’s important to keep this distinction in mind if you want to make money in the market. A day trader may well admire Warren Buffet, but he will have to look elsewhere for a model.

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 http://www.rockwelltrading.com

By ForexPros – The Australian Dollar was higher against the U.S. Dollar on Thursday after the release of U.S. data on Initial Jobless Claims.

AUD/USD was trading at 0.9786, up 0.67% at time of writing.

The pair was likely to find support at 0.9652, Wednesday’s low, and resistance at 0.9974, Monday’s high.

Earlier in the day, official data showed that U.S. Initial Jobless Claims fell unexpectedly to a seasonally adjusted 434.00K last week from 455.00K in the preceding week whose figure was revised up from 452.00K.

Analysts had expected Initial Jobless Claims to rise to 455.00K last week.

Meanwhile, the Australian Dollar was down against the Euro and the Japanese Yen, with EUR/AUD gaining 0.48% to hit 1.4234 and AUD/JPY falling 0.23% to hit 79.29.

About the Author

ForexPros.com
Forex Pros offers a diverse set of professional tools for trading in forex, futures and CFDs. These include real-time data streams, technical and fundamental analysis by in-house experts, and a widely used economic calendar.

Good day Forex peeps! Here’s a technical update on the US Dollar index or USDX. For those who do not know, the USDX is an index that measures the value of the greenback against a basket of currencies. This basket is composed of the following currencies: euro (57.6% weight), British pound (11.9% weight), Canadian dollar (9.1% weight), Swiss franc (3.6% weight), Swedish krona (4.2% weight), and Japanese yen (13.6% weight). Simply put, the valuation of the USDX and the dollar itself increases when its rival currencies losses value. The opposite, however, occurs when the euro’s price, for example jumps.

So based on the given chart, it looks like the index and the USD is about to weaken again. As you can see, the index has been forming a rising wedge pattern after it broke down from a head and shoulders formation. While a rising wedge pattern appears to be bullish at first, it is in fact bearish since it only reflects a rally in prices due perhaps to short covers that are done by the short sellers or by profit taking. A breakdown from the wedge, therefore, is likely. When it does, the index would almost certainly revisit its recent low at 76.144. A breach of this level could even send it much lower towards the 74.00 area. Notice also that there is a potential hidden bearish divergence (prices make lower lows while the stochastics indicator register higher highs) in the works. But since the stochastics are still far from the overbought territory, the index may still a bit before it finally falls down.

More on LaidTrades.com …

Tomorrow the advanced version of the US 3rd quarter GDP is expected to be released at 12:30 GMT. The GDP is the annualized change in the inflation-adjusted value of all goods and services produced by the economy. The GDP estimate is the first of three for the quarter, with the other releases scheduled in November and December when more information becomes available. Being the earliest, the Advance release tends to provide the most market volatility for the USD and its crosses.

The GDP data will be the most watched economic report of the week. The expectation is for a slight recovery from the previous quarter, with an expectation of 2.1% growth, an improvement from the 1.7% of the previous quarter. The rise in growth for this quarter is largely attributed to higher consumer spending. The GDP data will likely join the slew of various economic indicators released this past week that showed improvement in the U.S economy. However, the release is still unlikely to brighten the gloomy long term outlook for the economy, marred by the persistently high unemployment rate.

Economists continue to anticipate Nov. 2nd-3rd FOMC meeting will likely yield expansion of quantitative easing measures as the economic recovery, though showing signs of improvement, continues to be slower than expected. This outlook continues to weigh on the USD. While the greenback recovered this week from its record lows, particularly versus the ERU and JPY, aided by the slew of better than expected economic data released throughout the week, it is unable to maintain its gains and ultimately recedes most of them.

With tomorrow’s release the USD is expected to follow this week’s trend. If the result of the GDP is as expected or higher the greenback will likely appreciate versus its rivals, possibly moving 50-100 pips. However, traders should be cautious of a possible downward correction as investors will likely be uneasy with a strong Dollar heading to next week’s FOMC meeting minutes.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar was steady overnight amid a general lack of fresh news. The Bank of Japan detailed its easing measures but intervention seems off the cards around these levels as most partiers are probably waiting for the Fed’s upcoming steps before deciding on further action. UK housing data was also softer than expected. Meanwhile, investors continue to recalibrate expectations for the Fed’s next move following a Wall Street Journal article and signs of pressure in the Eurozone kept the dollar relatively well-supported. Wires also reported that the Fed is asking for projections of upcoming purchases to evaluate their upcoming steps. Equities closed modestly flat and Treasury yields remained elevated as some inflation expectations continue to creep in. The WSJ article suggests a relatively small QE program will be unveiled at the upcoming FOMC meeting: “a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months”. This is a contrast to the shock and awe (large, long-term) approach that some in the market have expected. And again, with US data not terribly disappointing, investors likely took note and adjusted positioning. Among the data releases, durable goods orders rose more than consensus estimates at 3.3% in September though underlying elements of the report were a good deal weaker. Orders excluding transportation fell 0.6% versus expectations for a gain. Meanwhile, new home sales rose 6.6% in Sept. That is still a very slow sales pace, but the rise is consistent with a range of other data that suggest home sales have bottomed. Jobless claims is the only data due in the US. Ahead today, jobless claims data will be out in the US and Germany unemployment is expected to show a further decline. Overnight EURUSD traded 1.3764-1.3829 and USDJPY 81.51-81.79.

EUR

Eurozone worries persist despite the focus on potential QE2 in the US. The Portugese government and the opposition Social Democrats could not reach a consensus for a 2011 budget proposal, which is expected to contain cuts, the amount of which have not been seen since the 1970s. Parliament will discuss the 2011 budget November 2 with votes scheduled for the following day. The Social Democrats need to either vote for the budget or abstain for Prime Minister Socrates to get the budget through. Irish Finance Minister Lenihan said their fiscal position remains serious and that Ireland cannot “unilaterally devalue.” And the ECB’s latest liquidity operation showed larger-than-expected demand from banks for cheap funding.

Meanwhile, the Eurogroup’s Juncker said the dollar is undervalued against the euro and “Europe is the victim” of global currency policies. German Chancellor Merkel also said FX rates must reflect fundamentals and excess currency distortions hurt all economies.

We expect EURUSD to stay capped, and remain of the view that the past few weeks’ range will ultimately unravel to the downside.

JPY

The Bank of Japan announced it would purchase lower-rated corporate debt to further ease conditions in the domestic economy, as a part of its comprehensive package put forward last month. The BoJ also announced more meetings next week to consider purchases of other assets.

Purchases amounts of other assets were detailed at this meeting, but overall sizes were unchanged as the asset purchase program and credit-loan program will remain unchanged at ¥5tln and ¥30tln respectively. Intervention remains a difficult subject but we believe USDJPY will need to make another material move to the downside to force the authorities back in.
On the data side, retail trade was lower than expected at -3%m/m (cons. -0.5%m/m).

TECHNICAL OUTLOOK

EURUSD BULLISH Move above 1.4159 required for resumption of the bull trend. Support at 1.3637/1.3559 zone

GBPUSD BULLISH Recovery 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 has exposed 0.9542 reaction low next. 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.

EURGBP BEARISH Focus is on the downside; expect loses to target 0.8167 with scope for 0.8068 next. Short-term resistance is defined at 0.8363

EURJPY BEARISH Decline through 107.32 would open up the way to 104.72. Near-term resistance is defined at 111.11 ahead if 114.74

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.

By Dan Eduard – Over the course of the last week, the Canadian dollar has been making significant gains against the Swiss franc. Analysts attribute the gains to a combination of poor Swiss economic news and positive indicators out of the US and euro-zone that has increased risk taking. As we will demonstrate through a number of technical indicators, the franc may be turning a corner and the CAD/CHF pair could see a downward correction in the near future.

We will be analyzing the daily chart for CAD/CHF provided by Forexyard. The technical indicators being used are the Bollinger Bands, Williams Percent Range and Stochastic Slow.

1. As seen in the chart, the cross is currently trading along the upper Bollinger Band, suggesting that a bearish correction may occur. In addition, the bands appear to be widening, which typically means a shift in direction is likely.

2. The Williams Percent Range is currently around the -15 level. Anything above -20 on this indicator typically means the pair is in overbought territory and a bearish correction is likely to occur.

3. Finally, a bearish cross has formed on the Stochastic Slow, meaning that downward pressure exists for the pair. Traders will want to pay close attention to this pair. Significant profits will likely be made by anyone who takes advantage of the impending correction.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

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

Source: ForexYard

The U.S dollar weakened for the first time in three days against the euro in overnight trading, as Asian stocks gained amid optimism the global economic recovery remains intact, damping demand for the greenback as a refuge.

Economic News

USD – Dollar Rebounds Ahead of Fed’s Meeting

The U.S currency rose against the euro and yen on Wednesday, leaving the dollar index little changed year to date, as investors eased short bets against the currency ahead of a Federal Reserve meeting. The greenback extended its advance after stocks steepened their decline and a report showed new-home sales in the U.S. accelerated last month.
Analysts noted the improvement came off of historically low levels.

Earlier in the U.S. session, the dollar briefly pared its gains after a report on orders placed for durable goods during September indicated manufacturing and business spending may be slowing. However the dollar may strengthen further in the next days before next week’s interest-rate decision by the Federal Reserve, should economic data show better than forecasted outcomes.

EUR – Euro Falls To Session Low vs. Dollar

The euro fell to a session low against the dollar on Wednesday amid broad dollar strength as investors reduced short bets against the U.S. currency ahead of a Federal Reserve meeting next week.

The euro weakened after the results for the European Central Bank’s latest liquidity operation showed a larger than expected take up from European banks for cheap funding. The single currency fell as low as $1.3758 and was last down 0.6 percent at $1.3770.

Analysts believe the gap between euro-zone and U.S. short term rates, reflecting QE expectations from the Fed while the ECB gradually withdraws liquidity, will mean the euro is unlikely to fall below $1.36 in the next week or two particularly while investors wait to see the impact of the Fed measures.

JPY – The Yen Falls to 2 Week Low vs. Dollar

Japans’ currency fell as low as 81.98 against the U.S dollar, pulling further away from a 15-year high of 80.41 struck earlier this week. The Bank of Japan needs to do more to curb the yen’s advance by increasing its purchases of government bonds with longer maturities, according to Merrill Lynch Japan Securities Co.

The Japanese currency is approaching a post-war record of 79.75 against the dollar, threatening the nation’s export-led recovery. Should the yen rise to between 70 and 75 against the dollar and increase deflationary pressure, that could force companies to shift production abroad and cut jobs and business investment, economist said. According to analysts, it is very important for Japanese authorities to take measures to stabilize the yen between 85 and 90 against the USD.

Crude Oil – Oil Declines below $82 on Stronger Dollar

Oil prices slid nearly 1% on Wednesday, pressured by a rally in the dollar as doubts increased among investors about the size of a much talked about U.S. economic stimulus move by the Federal Reserve. The U.S government data that showed a surprise drawdown of 4.4 million barrels in gasoline stocks last week, against forecasts that motor fuel supplies rose, helped limit losses.

Overall, the latest data that showed that domestic crude inventories fell 5 million barrels, much more than forecast, though less than Tuesday’s industry report of a 6.4-million-barrel increase, disappointed investors. The negative correlation between the dollar and the price of oil was near its strongest level in 14 months in the run-up to the Fed meeting on November 2-3, when it is expected to detail how much money will be pumped into the U.S. economy.

A stronger dollar can pressure oil prices by making dollar-denominated oil dearer to users of other currencies and by pulling investment into other markets from commodities, which are viewed as riskier bets.

Technical News

EUR/USD

The pair’s recent upward correction may have been over extended as the pair’s RSI is seen floating in the overbought territory on the daily and 4 hour charts. Going short with tight stops might be advised for today.

GBP/USD

The daily chart is showing mixed signals with its RSI fluctuating in neutral territory. However, there is a fresh bearish cross forming on the 4-hour chart’s Slow Stochastic indicating a bearish correction might take place in the near future. Going short might be a wise choice.

USD/JPY

The hourly chart displays the Bollinger Bands tightening, indicating a breakout may occur in the near term. It can be inferred from the chart that the breakout will be to the upside as a bullish cross has formed on the Slow Stochastic Oscillator. The RSI-14 is also positive sloping, indicating that the momentum is to the upside. Traders should wait for the breakout and go long.

USD/CHF

The cross has recently recorded a 2-day losing streak, and there are signs for further volatility for the pair today. The RSI on the daily chart shows the pair sitting in oversold territory. On the other hand, the RSI on the weekly chart shows that the pair is overbought. It may be a good idea to enter the pair when the signals are clearer.

The Wild Card

AUD/USD

The AUD/USD sustained upward movement and has finally pushed its price into overbought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

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.

By James Woolley

A lot of people who start to trade the currency markets for the first time will soon discover that forex trading can be a very emotional business. You will experience a range of different emotions at different times, and if you’re not careful this can start to have a negative impact on your trading.

Let me demonstrate this point by giving you three different scenarios.

First of all there is the amazing feeling you get when you close a really profitable position. This elation is magnified when you have a few winning trades in a row and are really starting to make some decent money.

Now the trouble you have here is that this happiness can lead to overconfidence and a feeling of invincibility, and you can very easily find yourself upping the stakes and trying to make even more money. Sadly this will often end in disaster and you may find yourself back where you started.

Another common feeling you will experience at some point is that losing feeling when you have to take a loss. Again this feeling is magnified when you have a few successive losing trades. This can also have a devastating impact on your trading because this horrible emotion will often lead to you taking greater risks and possibly upping your stakes in order to recoup your losses.

Finally another emotion that you will inevitably experience at some point is boredom. There will always be times when you stare at your price charts for hours on end, but cannot see any decent trading opportunities. In these instances you have to be careful because this feeling of being bored can often lead to you taking silly trades that are based on nothing more than gut instinct. I’ve been there myself so I know this to be true. The best thing to do is to switch off your computer when this happens.

So the point I want to get across is that you have to be careful not to let your emotions get the better of you. If you are using a proven trading system, then you should stick to this system at all times, and not start upping the stakes if it has a few winning (or losing) trades in a row. You have to remember that the most successful forex traders are also the most disciplined as well. A lack of discipline will nearly always result in losses in the long run, which is why you need to be in control of your emotions.

About the Author

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