Best Thread FXCM/DailyFX Signals and Strategies

[Jason Rogers]

EUR/JPY Classical 03.30

Written by Joel Kruger of DailyFX.com

EUR/JPY: The market has finally taken out some critical multi-week range resistance in the 116.00 area and we believe this to be a significant medium-term development. The break above 116.00 now suggests that a major base is in place with fresh upside now projected back towards the 125.00 area over the coming weeks. In the interim, look for any inter-day pullbacks to be well supported ahead of 110.00.

 

[Jason Rogers]

Crude Oil Focus Back on Libya, Gold and Silver Rise on Risk Aversion

Written by Ilya Spivak of DailyFX.com

Technical Outlook: Prices are bouncing from support at a rising trend line set from mid-February’s swing low, with the bulls poised to challenge the $106/barrel figure. A break above this barrier clears the way for a run to the 3/7 high at $106.93. Alternatively, a move back below the trend line exposes $102.70.

 

[Jason Rogers]

AUD/USD: Trading the Australia Employment Report

Written by David Song of DailyFX.com

What’s Expected:

Time of release: 04/07/2011 1:30 GMT, 21:30 EST

Primary Pair Impact: AUDUSD

Expected: 24.0K

Previous: -10.1K

DailyFX Forecast: -10.0K to 5.0K


Why is this event important:

Australia is expected to add 24.0K jobs in March following 10.1K contraction in the previous month, and the rebound in employment could spur a bullish reaction in the aussie as investors speculate the central bank to tighten monetary policy further this year. According to Credit Suisse overnight index swaps, investors still see scope for higher borrowing costs in the next 12-months, but the Reserve Bank of Australia may look to retain its-wait approach for most of 2011 as the slew of natural disasters in the Asia/Pacific dampens the outlook for global trade. After holding the benchmark interest rate at 4.75% earlier this week, RBA Governor Glenn Stevens said that the “mildly restrictive” policy stance remains appropriate as the central bank aims to curb the risk for inflation, but went onto say that employment growth “has moderated” as the devastating earthquake in Queensland disrupts the economic recovery.

Recent Economic Developments


As private sector consumption gathers pace, with credit conditions improving, businesses in the isle-nation may increase their willingness to expand their force, and a rebound in employment could spur expectations for higher borrowing costs as private sector activity accelerates. However, as the expansion in global trade cools, businesses may continue to scale back on production, and the labor market may weaken further over the coming months as the central bank maintains a cautious outlook for the real economy. Another drop in employment could lead the RBA to retain its wait-and-see approach going into the second-half of the year, and demands for the Australian dollar may deteriorate over the near-term as interest rate expectations falter.


Potential Price Targets For The Release

 

[Jason Rogers]

USD/JPY Classical Technical Report 04.07

Written by Joel Kruger of DailyFX.com

USD/JPY: It has been quite a ride in this pair, with the market initially collapsing to fresh record lows by 76.30, before reversing sharply back above 80.00, and then ultimately racing higher to break a multi-week range on the topside and potentially opening the door for a meaningful longer-term reversal. The latest break back above 84.50 is significant and could pave the way for additional gains ahead, although daily studies have reached overbought levels and buying on dips back towards the daily Ichimoku cloud top (83.00 area) would be the preferred strategy. Next key resistance comes in by the September 2010 highs at 85.90.

Source: Bloomberg​

 

[Jason Rogers]

British Pound Outlook Bullish as Rate Expectations Rise

Written by Christopher Vecchio of DailyFX.com

The British Pound ended the week at its strongest level against the Greenback since January 2010, as data showed today that producer prices were rising faster than anticipated, further strengthening the argument for a rate hike by the Bank of England, despite the Monetary Policy Committee’s decision to maintain the key benchmark interest rate at 0.50 percent for the coming month.

As the Bank of England has sustained its interest rate at a record low, it appears that, despite increasing prices pressures on the British economy, the Monetary Policy Committee has prioritized the recovery over taming the fastest inflation rate in more than two years. As the government acts austerity measures, policymakers seem to be waiting to gauge whether or not the British economy can handle a draw down in fiscal policy, before withdrawing monetary policy. However, given some key events in the week ahead, Bank of England policymakers may not be able to hold onto historically low rates for much longer. Key housing data is released on Monday, and it has been well-documented how poorly the U.K.’s housing market has fared in the wake of the recession. House prices continue to remain depressed, and there is little reason to suggest that prices could have rebounded by a significant margin in the prior period. Jumping ahead to Wednesday, unemployment data is due; while the unemployment rate is expected to remain on hold at 8.0 percent, a drop in the underlying jobless claims figure could help provide support to the notion that the British economy is stable enough to raise rates. Backtracking to Tuesday, however, will yield the most important event for the week. With consumer price index data due, that is forecasted to another 4.4 percent increase year-over-year, coupled with producer price data from March that showed a 14.6 percent jump in prices on a year-over-year basis, the British economy is creeping closer to falling into a state of stagflation – high unemployment, high inflation, and low growth rates.

Accordingly, it appears the markets are actively pricing in a rate hike in the near-future as price pressures continue to build. The Credit Suisse Overnight Index Swaps shows a 42.0 percent chance of a 25-bps rate hike at the next meeting, with 75.4-bps priced in over the next 12-months. With the differential between interest rates between the Pound and the US Dollar widening, and furthermore, with the markets expecting the Bank of England to raise rates before the Federal Reserve begins to wind-down its $600 billion stimulus plan, the GBP/USD pair is set up to be an exceptionally sensitive pair over the coming week, with even the slightest miss on data potentially sending traders into a flurry amid boosted interest rate expectations. -CV

 

[Jason Rogers]

Euro Short Trade Amazingly Averts 1.4525 Stop

Written by Joel Kruger of DailyFX.com

People often say it is better to be lucky than smart, and this saying especially resonates heading into the North American open. On Tuesday we had attempted a Euro short at 1.4405, and the market had basically been trading out of the money since the onset of the trade, with the price rallying to come within a fraction of our 1.4525 stop-loss a number of times over the past 48 hours. While the stop-loss was strategically placed above 1.4500, the fact that we had some serious company keeping the market well capped by 1.4520 was indeed a fortuitous development. While we are sure that the market will continue to be quite jittery for the remainder of the day, the successful defense of our stop after being narrowly averted so many times will unquestionably stand out as a trade to remember for the years to come whatever the result from this point.

EUR/USD: Daily studies had been trading in overbought territory and already warning of a potential bearish reversal, and the latest topside failure above 1.4525 has now opened said reversal which could ultimately open the door for a more significant decline and trend shift going forward. Critical rising trend-line support off of the 2011 lows comes in just over 1.4300, and we would expect to see a good battle ensue near the 1.4300 figure over the coming sessions. A daily close below 1.4300 would signal the first close below this trend-line, and would trigger a fresh downside extension, while inability to break below 1.4300 will keep the current uptrend intact and shift the focus back on the 2010 highs by 1.4580.

 

[Jason Rogers]

Euro Focus on Channel Support

Written by Jamie Saettele of DailyFX.com

The first selling climax (after the 4/8 buying climax) since the November low occurred yesterday in the EURUSD. A selling climax from a top usually signals the beginning of a larger drop. Price has dropped through the support line that defines the uptrend from the January low and additional weakness is favored towards former resistance at 14036 and 13860. A drop into these levels would present an opportunity to get bullish for a move upwards of 15000 by June (see monthly forecast below). Channel support is at 14050 today.

Daily Bars

 

[Jason Rogers]

Euro Focus on 1.5000

Written by Jamie Saettele of DailyFX.com

After breaking above trendline resistance that connected the 2008 and 2009 highs, the EURUSD dipped this week to test the topside of that line before resuming its bull trend. Close to taking out the 2010 high at 14579, structure on the weekly favors a move above 15000. An objective is 15279 (100% extension), which intersects with channel resistance in June. Near term support is 14450 and 14400.

Weekly Bars

 

[Jason Rogers]

USD Graphic Rewind: Dollar Bashing Gathers Momentum; No End In Sight

Written by Jonathan Granby of DailyFX.com

The dollar index got hammered lower on Wednesday as risk appetite raced back and lifted higher yielding, riskier FX, equities, commodities and just about everything else at the expense of the buck. Dollar bashing became the theme of the day, has continued apace over-night, and at this point there appears to be no end in sight. Risk appetite was already high early in the day but a solid Spanish auction gave the euro an unexpected boost which unleashed the bulls who ran riot all day. Continued strength in US corporate earning helped to keep global equities well bid and drilled the buck ever lower.

Over-night the dollar bashing theme gathered pace and drove the dollar index to finally take out the 2009 lows at 74.15 before finding a morsel of support around the 74.00 level. We do not think things are over. Even as currencies race into over-bought levels against the greenback the buying continues thick and fast and it boggles the mind to think what it would take to halt this trend. As such, we see little hope on the horizon, at least today, for the buck and favour continued USD weakness throughout the day. At some point markets will have to pause for a breather, but this shouldn’t be misconstrued for a reversal, it may only be consolidation before extending their moves higher.

USD Index

 

[Jason Rogers]

British Pound Likely to Rally Further

Written by David Rodriguez of DailyFX.com

GBPUSD – Forex trading crowds remain fairly heavily net-short the British Pound against the US Dollar, giving consistent signal to watch for further gains. In fact, traders have remained net-short the GBPUSD since the pair traded near the 1.61 mark. The ratio of long to short positions in the GBPUSD stands at -3.05 as nearly 75% of traders are short. Yesterday, the ratio was at -1.89 as 65% of open positions were short. In detail, long positions are 22.1% lower than yesterday and 23.9% weaker since last week. Short positions are 25.5% higher than yesterday and 21.9% stronger since last week. Open interest is 9.1% stronger than yesterday and 8.1% below its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.

 

[Jason Rogers]

Japanese Yen Consolidates

Written by Jamie Saettele of DailyFX.com

The USDJPY has entered a former congestion zone that should now serve as support. The zone, 8070-8200, is defined by the sideways trade that took place following the rally off of the panic low in mid march. I expect that this drop will result in formation of a wave ii low ahead of 7637 before a much larger advance in a 3rd or C wave.

Daily Bars

 

[Jason Rogers]

Written by David Song of DailyFX.com

Trading the News: U.K. GDP

What’s Expected:

Time of release: 04/27/2011 8:30 GMT, 4:30 EST

Primary Pair Impact:GBPUSD

Expected: 0.5%

Previous: -0.5%

DailyFX Forecast: 0.3% to 0.5%

Why Is This Event Important:
Economic activity in the U.K. is projected to increase 0.5% in the first-quarter following the unexpected contraction during the last three-months of 2010, and the rebound in growth should spark a bullish reaction in the British Pound as the region skirts a double-dip recession. As the recovery regains its footing, the Bank of England may see scope to gradually normalize monetary policy in the coming months, and the sterling may continue to retrace the decline from back in 2009 as interest rate expectations gather pace. However, as the central bank continues to highlight the downside risks for the region, we may see another 6-3 split in May, and the MPC may retain its wait-and-see approach going into the second-half of the year as the committee expects the slack within the private sector to bear down on inflation.

As service-based activity, which accounts for more than two-thirds of the economy, gathers pace, with construction expanding throughout the first three-months of 2011, the rise in private sector demands is likely to strengthen the recovery as it remains one of the leading drivers of growth. However, as Britons cope with a slower pace of wage growth paired with the tepid recovery in the labor market, households may rein in on spending, and a dismal GDP report could lead the BoE to retain its current policy for most of the year as it aims to balance the risks for the region. As central bank Governor Mervyn King maintains a neutral tone for future policy, interest rate expectations may wane going forward, and the near-term correction in the British Pound could ultimately turn into a broad reversal should the GDP report disappoint.

Potential Price Targets For The Release​

How To Trade This Event Risk
Projections for a rebound in GDP certainly reinforces a bullish outlook for the sterling, and the market reaction to the growth report could set the stage for a long British Pound trade as investors speculate the central bank to normalize monetary policy in 2011. Therefore, economic activity expands 0.5% or greater during the first-three months of the year, we will need to see a green, five-minute candle subsequent to the release to establish a buy entry on two-lots of GBP/USD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will generate our first target. The second target will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade reaches its mark in order to preserve our profits.

In contrast, higher inflation paired with the substantial margin of slack within the private sector could dampen economic activity throughout the U.K., and a dismal growth report could spark a selloff in the exchange rate as interest rate expectations falter. As a result, if GDP expands less than 0.3% or unexpected contracts from the fourth-quarter, we will implement the strategy for a short pound-dollar trade as the long position laid out above, just in reverse.

 

[Jason Rogers]

US Federal Open Market Committee Leaves Rates Unchanged, Sinks US Dollar

Written by David Rodriguez of DailyFX.com

The US Federal Open Market Committee forced small US Dollar losses as it disappointed many looking for the FOMC to take a more hawkish stance on inflation. An effectively unchanged monetary policy statement pushed the US Dollar lower against the Euro immediately following its release.

US Dollar bulls, those few and far between, had hoped that the FOMC would take a more aggressive stance on inflation given recent improvements in employment figures and rising commodity prices. Yet the line on rising food and energy prices remained virtually unchanged from the Fed’s March statement: “Increases in the prices of energy and other commodities have pushed up inflation in recent months. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations."

The net result was to push the US Dollar immediately lower following the statement, and market attention now turns to the first-ever post-decision press conference at 16:15 GMT.

Euro/US Dollar Currency Pair Rallies on US FOMC Statement

The Fed likewise left plans unchanged for controversial Quantitative Easing (QE2) measures, due to end in the second quarter of the year. It said “The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.” In other words, it reserves the right to change the size and scheduled end date of QE2 at its next meeting—the last before its termination date.

The US Dollar will likely remain under pressure with interest rates at record-lows, and indeed it remains a speculator’s favorite amidst record-strong correlations to high-flying commodity prices and broader financial market risk sentiment.

 

[Jason Rogers]

Japanese Yen Forecast to Strengthen

Written by David Rodriguez of DailyFX.com

USDJPY – Forex trading crowd positioning has remained heavily net-long since the pair traded above 90, and a recent build in long interest gives consistent contrarian signal to stay short the USDJPY. The ratio of long to short positions in the USDJPY stands at 4.64 as nearly 82% of traders are long. Yesterday, the ratio was at 4.38 as 81% of open positions were long. In detail, long positions are 10.9% higher than yesterday and 8.4% stronger since last week. Short positions are 4.8% higher than yesterday and 14.7% weaker since last week. Open interest is 9.8% stronger than yesterday and 12.9% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

 

[Jason Rogers]

Fed Sets Expiration Date on US Dollar Downtrend

Written by John Kicklighter of DailyFX.com

Fed Sets Expiration Date on US Dollar Downtrend

Last week’s Federal Reserve monetary policy meeting offered little to beleaguered US Dollar bulls, with the most notable announcement being policymakers’ firm intention to complete QE2 in full and let the program expire as scheduled in June. While this is hardly unexpected, the conviction behind the timeline does carry implications for the greenback, effectively putting a loose expiration date on the current downtrend.

There is a compelling argument to be made for an increase in US bond yields after the Fed removes the external force bearing down upon them. Funding the gargantuan US budget deficit will require plenty of new bond issuance, which will increase the supply of Treasury debt available in the markets and pressure prices lower; because the price and yield for a bond are inversely related, this implies the rates attached to US debt will increase. The recent downgrade of the US’ credit outlook by Standard and Poor’s will reinforce this trajectory.

With this in mind, the Fed’s apparent commitment to end QE2 in June allows traders to size up their window of opportunity to borrow cheaply in Dollars for the purchase of higher-yielding assets before yields increase. While this points to continued selling of the greenback over the near term, fueling gains in risky assets and correlated currencies, it also suggests that the US unit may be on the cusp of a material reversal against the spectrum of its top counterparts over the weeks ahead. Notably, investors will surely wait to see how yields respond once QE2 ends for positive proof that the trajectory going forward favors the upside; how long this process plays out is unclear, and so putting a firm date on the US Dollar reversal is unfortunately impossible at present.

EUR/USD: Euro Poised to Follow Risky Assets Higher, 1.50 in Sight

Sentiment trends remain in focus, hinting the Euro is likely to extend its advance against the greenback as traders rush to capitalize on funding bets on risky assets in USD ahead of the QE2 expiry in June. The monetary policy announcement from the European Central Bank headlines the economic calendar, with consensus forecasts calling for Jean-Claude Trichet and company to hold the benchmark lending rate at 1.25 percent this time around after adding 25bps to borrowing costs in the previous month. This puts the spotlight on the ECB President’s post-announcement press conference as markets scour for clues on the timing of the next increase. As it stands, a traders are pricing in 75bps in tightening over the next 12 months.

Source: Bloomberg​

 

[Jason Rogers]

Written by Jamie Saettele of DailyFX.com

The EURUSD has traded sideways since 4/28 and the recent doji candle patterns on the daily indicate indecision. Near term however, there is no sign of a top. In fact, it looks like the recent sideways trading is a small 4th wave. The implications are for one more high and perhaps a test of 15000 before a larger 4th wave correction gets underway towards 14500. 15016 is the 161.8% extension of the rally from the January low (common relationship between 1st and 3rd waves). In summary, one more high this week may produce the high for most if not all of May.

240 Minute Bars

 

[Jason Rogers]

Crude Oil, Gold Decline as Traders Begin to Position for the Expiry of QE2

Written by Ilya Spivak of DailyFX.com

Prices have taken out support at the bottom of a rising channel set from late January, pausing at the 38.2% Fibonacci retracement of the 1/28-4/25 rally at $40.83. A break below this barrier exposes the 50% Fib at $38.07, while a bounce sees initial resistance at $44.25.

A strong correlation between silver and the one-year break-even rate suggests that as with its more expensive counterpart, the metal is likely to decline as traders reposition for an increase in yields after QE2 runs its course in June. Selling pressure has been compounded by the CME’s 12 percent increase in margins on silver futures contracts. The gold/silver ratio has jumped to the highest in a month, breaking the downtrend in place from late January and hinting the cheaper metal will underperform over the days ahead.

 

[Jason Rogers]

British Pound Likely to fall versus Japanese Yen

Written by David Rodriguez of DailyFX.com

GBPJPY – Trading crowds have recently flipped to net-long the British Pound against the Japanese Yen, giving contrarian signal to sell into recent weakness. The ratio of long to short positions in the GBPJPY stands at 1.21 as nearly 55% of traders are long. Yesterday, the ratio was at -1.40 as 58% of open positions were short. In detail, long positions are 7.5% higher than yesterday and 22.1% stronger since last week. Short positions are 36.3% lower than yesterday and 52.3% weaker since last week. Open interest is 18.0% weaker than yesterday and 37.7% below its monthly average. The SSI is a contrarian indicator and signals more GBPJPY losses.

 

[Jason Rogers]

Jamie's Market Thoughts: 05/05/11

Written by Jamie Saettele of DailyFX.com

Volatility clarifies market structure, making it easier to ‘see’ the oscillations between optimism and pessimism. In these days of fed induced liquidity, optimism refers to ‘risk-on’ and pessimism ‘risk-off’ (also USD down / USD up). That’s all. The 30 yr bond has been my guide of late (a bond rally is viewed as a flight to safety). The next possible inflection point is next week above 126 (see chart).

The intersection of channel resistance and the 100% extension occurs in the middle of next week, suggesting risk aversion until that point. If the bond explodes through 126, then markets will be in full on crises mode. Considering the tendency for risk aversion moves to accelerate into their terminus, there are short Yen crosses speculative opportunities from here (allowing for a correction). Understanding the inherent risk on being short Yen crosses (BoJ intervention), ideas are as follows;

• Limit order to short AUDJPY at 8560 and 8600, stop 8685, targets 8200 and 8050
• Limit order to short NZDJPY at 6340 and 6400, stop 6450, targets 6100 and 6000
• Limit order to short AUDUSD at 10640 and 10690, stop 10775, target 10200
• Limit order to short NZDUSD at 7965, stop 8060, target 7550

The EURUSD has fallen in a straight line from 14900 and reached what I think is support at the former peak of 14519. Initial resistance is 14600/20 and I’d be a seller there against 14700, looking for additional weakness towards channel support, which is at 14380 Friday.

 

[Depth Trade]

Re: Jamie's Market Thoughts: 05/05/11

Written by Jamie Saettele of DailyFX.com

• Limit order to short AUDJPY at 8560 and 8600, stop 8685, targets 8200 and 8050
• Limit order to short NZDJPY at 6340 and 6400, stop 6450, targets 6100 and 6000
• Limit order to short AUDUSD at 10640 and 10690, stop 10775, target 10200
• Limit order to short NZDUSD at 7965, stop 8060, target 7550

Your boldest call in a long, long time. I'll be watching these like a hawk.

If/when these go in the hole, you're not going to erase this post again are you?