Best Thread FXCM/DailyFX Signals and Strategies
- Thread starter Jason Rogers
- Start date
- Watchers 63
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Australian Dollar Volatility and Sentiment Warns of Major Top – When?
By David Rodriguez, Quantitative Strategist
Australian Dollar/US Dollar options show that 3-month volatility expectations have fallen below the 10% mark for only the third time since 2008, and directional sentiment on those same AUDUSD derivatives warns that traders are at their most relatively bullish since the pair traded towards record-peaks through 2011.
Recent CFTC Commitment of Traders data shows similar dynamics in speculative futures positioning, and finally our proprietary retail trader-based measures show AUDUSD sentiment at levels that have coincided with short-term tops. Timing turnarounds is extremely difficult, but we’ll watch forex volatility and sentiment to confirm a trend change.
View forex correlations to the Dow Jones Industrial Average, Crude Oil Futures prices, US S&P 500 Volatility Index, UK FTSE 100, and Spot Gold prices.
Correlation between Australian Dollar/US Dollar Exchange Rate and 3M Implied Volatility
Australian Dollar/US Dollar Exchange Rate (lhs)
Australian Dollar/US Dollar 3-Month Implied Volatility (rhs)
Correlation between AUDUSD and 3-Month implied Volatility
The correlation between the Australian Dollar and AUDUSD Options 3-month Implied Volatility trades near its most negative levels on record, and extremely low volatility warns of a potential Aussie turnaround. We’ve previously highlighted the very negative correlation between the AUDUSD and the US S&P 500 Volatility Index (VIX).
Implied volatility on 3-month Australian Dollar options now trades below the psychologically significant 10% mark for only the third time since 2008, and previous instances have coincided with important AUDUSD tops. Why that might be the case?
The Australian Dollar continues to benefit from speculative flows as it boasts the highest interest rates of any G10 currency. According to overnight London Interbank Offered Rates (LIBOR), the AUD offers a substantial 3.5% yield advantage over the US Dollar. Such a differential helps explain why the CFTC Commitment of Traders report shows speculative futures traders are their most net-long AUDUSD since early May. FX Options risk reversals also show options traders are near their most relatively bullish since the pair traded towards record peaks through Q2, 2011.
On the face of it, the sharply negative correlation between the AUDUSD and volatility points to further Australian Dollar gains. Yet the risk of reversal is especially high given the clear levels of complacency across FX options markets.
Our proprietary retail forex trader-based Speculative Sentiment Index data likewise warns that the Australian Dollar is likely near a significant top.
If SSI ratio (rhs) is negative, it represents the number of traders short for every one long. If it is positive, it is the number of traders long per every short. For a full explanation of the SSI, see our FXCM Expo presentation.
According to FXCM execution desk data, there are nearly 3 retail traders short AUDUSD for every one that is long. We would most often take a contrarian view of retail trading crowd sentiment; if most traders are short, we prefer going long. Yet an AUDUSD SSI ratio of -3.0 has coincided with several significant tops dating back to mid-2011.
Forex correlations with volatility, one-sided speculative futures and options positioning, and extreme retail crowd trading sentiment warn of a significant Australian Dollar top. Yet timing major turnarounds is extremely difficult, and in fact our own SSI-based trading strategies most recently went long AUDUSD. How then might we attempt to trade the reversal?
If we see substantial capitulation from retail FX traders and a shift towards buying, our SSI-based “Tidal Shift” strategy would likely go short the AUDUSD. As the name implies, said system looks to catch a major shift in the so-called tide (trend). Past performance is not indicative of future results, but we’ll keep a close eye on the SSI and the “Tidal Shift” system as it has historically caught important tops/bottoms across major currency pairs.
Given clear risk of AUDUSD reversal, such a trade in our opinion offers strong risk/reward and we’ll look to trade accordingly.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To contact David, e-mail [email protected]
To be added to David’s e-mail distribution list for this and other reports, e-mail subject line “Distribution List” to [email protected]
By David Rodriguez, Quantitative Strategist
Australian Dollar/US Dollar options show that 3-month volatility expectations have fallen below the 10% mark for only the third time since 2008, and directional sentiment on those same AUDUSD derivatives warns that traders are at their most relatively bullish since the pair traded towards record-peaks through 2011.
Recent CFTC Commitment of Traders data shows similar dynamics in speculative futures positioning, and finally our proprietary retail trader-based measures show AUDUSD sentiment at levels that have coincided with short-term tops. Timing turnarounds is extremely difficult, but we’ll watch forex volatility and sentiment to confirm a trend change.
Forex Correlations Summary
View forex correlations to the Dow Jones Industrial Average, Crude Oil Futures prices, US S&P 500 Volatility Index, UK FTSE 100, and Spot Gold prices.
Correlation between Australian Dollar/US Dollar Exchange Rate and 3M Implied Volatility
Australian Dollar/US Dollar Exchange Rate (lhs)
Australian Dollar/US Dollar 3-Month Implied Volatility (rhs)
Correlation between AUDUSD and 3-Month implied Volatility
The correlation between the Australian Dollar and AUDUSD Options 3-month Implied Volatility trades near its most negative levels on record, and extremely low volatility warns of a potential Aussie turnaround. We’ve previously highlighted the very negative correlation between the AUDUSD and the US S&P 500 Volatility Index (VIX).
Implied volatility on 3-month Australian Dollar options now trades below the psychologically significant 10% mark for only the third time since 2008, and previous instances have coincided with important AUDUSD tops. Why that might be the case?
The Australian Dollar continues to benefit from speculative flows as it boasts the highest interest rates of any G10 currency. According to overnight London Interbank Offered Rates (LIBOR), the AUD offers a substantial 3.5% yield advantage over the US Dollar. Such a differential helps explain why the CFTC Commitment of Traders report shows speculative futures traders are their most net-long AUDUSD since early May. FX Options risk reversals also show options traders are near their most relatively bullish since the pair traded towards record peaks through Q2, 2011.
On the face of it, the sharply negative correlation between the AUDUSD and volatility points to further Australian Dollar gains. Yet the risk of reversal is especially high given the clear levels of complacency across FX options markets.
Our proprietary retail forex trader-based Speculative Sentiment Index data likewise warns that the Australian Dollar is likely near a significant top.
Retail Forex Trading Crowds Most Net-Short AUDUSD Since July Top
If SSI ratio (rhs) is negative, it represents the number of traders short for every one long. If it is positive, it is the number of traders long per every short. For a full explanation of the SSI, see our FXCM Expo presentation.
According to FXCM execution desk data, there are nearly 3 retail traders short AUDUSD for every one that is long. We would most often take a contrarian view of retail trading crowd sentiment; if most traders are short, we prefer going long. Yet an AUDUSD SSI ratio of -3.0 has coincided with several significant tops dating back to mid-2011.
Volatility Levels and Extreme Forex Sentiment Warn of AUDUSD Top – But When?
Forex correlations with volatility, one-sided speculative futures and options positioning, and extreme retail crowd trading sentiment warn of a significant Australian Dollar top. Yet timing major turnarounds is extremely difficult, and in fact our own SSI-based trading strategies most recently went long AUDUSD. How then might we attempt to trade the reversal?
If we see substantial capitulation from retail FX traders and a shift towards buying, our SSI-based “Tidal Shift” strategy would likely go short the AUDUSD. As the name implies, said system looks to catch a major shift in the so-called tide (trend). Past performance is not indicative of future results, but we’ll keep a close eye on the SSI and the “Tidal Shift” system as it has historically caught important tops/bottoms across major currency pairs.
Given clear risk of AUDUSD reversal, such a trade in our opinion offers strong risk/reward and we’ll look to trade accordingly.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To contact David, e-mail [email protected]
To be added to David’s e-mail distribution list for this and other reports, e-mail subject line “Distribution List” to [email protected]
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
EUR Pullback Offers Long Entries- GBP Rebounds on Rate Expectations
By Michael Boutros, Currency Strategist at DailyFX.com
The British pound is the top performer against a weaker greenback at the close of European trade with an advance of 0.31% on the session. Although the Bank of England lowered its forecast for growth and inflation, remarks made by central bank Governor Mervyn King offered some support to the sterling after he cited that further rate cuts would be ‘counter-productive.’ The comments suggest that the Monetary Policy Committee may continue to endorse a wait-and-see approach as European policymakers increase efforts to address the deepening crisis that has gripped the region for nearly three years.
The GBPUSD has remained range-bound since early June with price action continuing to consolidate between the 200-day and 50-day moving averages at 1.5725 and 1.5570 respectively. While the broader bias on the pound remains unclear, a pending break-out in daily RSI is likely to offer further clarity as the oscillator flat-lines into the apex of a wedge formation. Until-then, expect further sideways price action with our short-term bias remaining neutral until such time when a conviction bias can be formulated.
The hourly scalp chart shows the GBPUSD consolidating into the apex of a triangle formation dating back to the July 12th lows with the exchange rate now testing trendline resistance. A topside break eyes immediate resistance at the 61.8% Fibonacci extension taken from the July 25th and August 2nd troughs at 1.5680 backed by the 1.57-handle and the 78.6% extension at 1.5732. Interim support rests with the 50% extension at 1.5645 with subsequent floors seen at the 38.2% extension at 1.5607 and 1.5563. While our broader bias remains neutral here, intra-day scalps are still feasible with proper conviction RSI triggers.
The euro is the weakest performer against the greenback with a decline of 0.25% on the session. The single currency is lower against all its major counterparts today amid reports that the ECB will hold off on the purchase of sovereign debt until the German Constitutional Court rules on the ESM (European Stability Mechanism) scheduled for September 12th. At the same time, rating agency Standard and Poor’s moved to lower Greece’s credit rating outlook to negative from stable, further exacerbating the euro sell-off. Still the pullback remains within the threshold to maintain our short-term bullish bias with topside daily resistance seen at the 100% Fibonacci extension taken from the July 24th and August 2nd troughs at 1.2480 backed by the 38.2% retracement taken from the late-March decline at 1.2550. Daily support remains with the 61.8% extension at 1.2350 backed by former channel resistance, now support, currently around 1.2250. Note that the daily RSI breach above trendline resistance now looks for a rebound off that same trendline to solidify the break and offer further conviction on our directional bias.
The 30min scalp chart shows the EURUSD briefly breaking below the 61.8% extension at 1.2350 before rebounding off soft support at the 1.2325 mark. Subsequent topside targets are eyed at 1.2275, the 78.6% extension at 1.2406, and the monthly high at 1.2440. A breach above this mark puts our initial objective in view at the 100% extension at 1.2480. A break back below interim support eyes subsequent floors at 1.2325, 1.2306, and the 38.2% extension at 1.2265 with a break below 1.2250 invalidating our near-term bias.
---Written by Michael Boutros, Currency Strategist with DailyFX.com
By Michael Boutros, Currency Strategist at DailyFX.com
Daily Winners and Losers
The British pound is the top performer against a weaker greenback at the close of European trade with an advance of 0.31% on the session. Although the Bank of England lowered its forecast for growth and inflation, remarks made by central bank Governor Mervyn King offered some support to the sterling after he cited that further rate cuts would be ‘counter-productive.’ The comments suggest that the Monetary Policy Committee may continue to endorse a wait-and-see approach as European policymakers increase efforts to address the deepening crisis that has gripped the region for nearly three years.
The GBPUSD has remained range-bound since early June with price action continuing to consolidate between the 200-day and 50-day moving averages at 1.5725 and 1.5570 respectively. While the broader bias on the pound remains unclear, a pending break-out in daily RSI is likely to offer further clarity as the oscillator flat-lines into the apex of a wedge formation. Until-then, expect further sideways price action with our short-term bias remaining neutral until such time when a conviction bias can be formulated.
The hourly scalp chart shows the GBPUSD consolidating into the apex of a triangle formation dating back to the July 12th lows with the exchange rate now testing trendline resistance. A topside break eyes immediate resistance at the 61.8% Fibonacci extension taken from the July 25th and August 2nd troughs at 1.5680 backed by the 1.57-handle and the 78.6% extension at 1.5732. Interim support rests with the 50% extension at 1.5645 with subsequent floors seen at the 38.2% extension at 1.5607 and 1.5563. While our broader bias remains neutral here, intra-day scalps are still feasible with proper conviction RSI triggers.
Key Levels/Indicators
The euro is the weakest performer against the greenback with a decline of 0.25% on the session. The single currency is lower against all its major counterparts today amid reports that the ECB will hold off on the purchase of sovereign debt until the German Constitutional Court rules on the ESM (European Stability Mechanism) scheduled for September 12th. At the same time, rating agency Standard and Poor’s moved to lower Greece’s credit rating outlook to negative from stable, further exacerbating the euro sell-off. Still the pullback remains within the threshold to maintain our short-term bullish bias with topside daily resistance seen at the 100% Fibonacci extension taken from the July 24th and August 2nd troughs at 1.2480 backed by the 38.2% retracement taken from the late-March decline at 1.2550. Daily support remains with the 61.8% extension at 1.2350 backed by former channel resistance, now support, currently around 1.2250. Note that the daily RSI breach above trendline resistance now looks for a rebound off that same trendline to solidify the break and offer further conviction on our directional bias.
The 30min scalp chart shows the EURUSD briefly breaking below the 61.8% extension at 1.2350 before rebounding off soft support at the 1.2325 mark. Subsequent topside targets are eyed at 1.2275, the 78.6% extension at 1.2406, and the monthly high at 1.2440. A breach above this mark puts our initial objective in view at the 100% extension at 1.2480. A break back below interim support eyes subsequent floors at 1.2325, 1.2306, and the 38.2% extension at 1.2265 with a break below 1.2250 invalidating our near-term bias.
Key Levels/Indicators
---Written by Michael Boutros, Currency Strategist with DailyFX.com
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
By David Rodriguez, Quantitative Strategist for DailyFX.com
Forex trading crowds have aggressively sold into overnight US Dollar (ticker: USDOLLAR) strength against the Euro and other major currencies, and the shift in sentiment suggests the EURUSD may have topped at $1.2440.
Timing major currency turnarounds is always especially difficult, but a recent shift towards retail crowd EURUSD buying gives us contrarian signal that the Euro may trade towards fresh lows. Retail sentiment likewise points to a potentially significant reversal for the USDJPY as it set a short-term bottom at ¥77.90.
Our retail sentiment-based forex trading strategies are currently flat, but said systems could soon go long US Dollars across the board as they go against the most recent turn in crowd sentiment.
How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to [email protected]; Contact David via Twitter at David Rodriguez (DRodriguezFX) on Twitter
EURUSD – Euro Forecast Points to $1.2440 Top
GBPUSD – British Pound Sets Stage for Breakdown
USDJPY – Japanese Yen May have Topped versus Dollar
USDCHF – Swiss Franc Likely to Fall Further
USDCAD – Canadian Dollar Forecast to Strengthen Further
GBPJPY – British Pound Expected to Fall versus JPY
GBPUSD – British Pound Sets Stage for Breakdown
USDJPY – Japanese Yen May have Topped versus Dollar
USDCHF – Swiss Franc Likely to Fall Further
USDCAD – Canadian Dollar Forecast to Strengthen Further
GBPJPY – British Pound Expected to Fall versus JPY
Forex trading crowds have aggressively sold into overnight US Dollar (ticker: USDOLLAR) strength against the Euro and other major currencies, and the shift in sentiment suggests the EURUSD may have topped at $1.2440.
Timing major currency turnarounds is always especially difficult, but a recent shift towards retail crowd EURUSD buying gives us contrarian signal that the Euro may trade towards fresh lows. Retail sentiment likewise points to a potentially significant reversal for the USDJPY as it set a short-term bottom at ¥77.90.
Our retail sentiment-based forex trading strategies are currently flat, but said systems could soon go long US Dollars across the board as they go against the most recent turn in crowd sentiment.
How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to [email protected]; Contact David via Twitter at David Rodriguez (DRodriguezFX) on Twitter
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
US Dollar Implications as Volatility Registers Multiyear Lows
By Jamie Saettele, CMT, Sr. Technical Strategist at DailyFX.com
You may have heard ‘complacency’ thrown around recently with respect to the current low volatility environment. The next 4 charts highlight this phenomenon. Capital markets underwent a major shift in volatility in 2007 and 2008. Simply, market volatility (uncertainty) increased and registered extreme levels in October 2008. Volatility has reverted to 2007-2008 levels. Is this another shift? Are we in for an extended period of low volatility or does this decline in volatility serve to correct a ‘bull market in volatility (uncertainty)’ before the next wave of high volatility? Viewed in the context of price pattern and other technical considerations such as momentum and sentiment, markets are on the cusp on an explosion in volatility. The implications are USD bullish and ‘risk’ bearish but trades must be structured with risk as the primary consideration. Conviction in an idea might be high but what could happen doesn’t mean it will happen.
How to Read These Charts:
-Black lines are plots of weekly close for the specific currency pair
-Green lines are 1 week volatility
-Blue lines are 1 month volatility
-Dark Red lines are 3 month volatility
-Red lines are 1 year volatility
-Red dots indicate that that week’s volatility was equal to or lower than this week’s volatility AND that this week’s volatility was the lowest so far this year
By Jamie Saettele, CMT, Sr. Technical Strategist at DailyFX.com
You may have heard ‘complacency’ thrown around recently with respect to the current low volatility environment. The next 4 charts highlight this phenomenon. Capital markets underwent a major shift in volatility in 2007 and 2008. Simply, market volatility (uncertainty) increased and registered extreme levels in October 2008. Volatility has reverted to 2007-2008 levels. Is this another shift? Are we in for an extended period of low volatility or does this decline in volatility serve to correct a ‘bull market in volatility (uncertainty)’ before the next wave of high volatility? Viewed in the context of price pattern and other technical considerations such as momentum and sentiment, markets are on the cusp on an explosion in volatility. The implications are USD bullish and ‘risk’ bearish but trades must be structured with risk as the primary consideration. Conviction in an idea might be high but what could happen doesn’t mean it will happen.
How to Read These Charts:
-Black lines are plots of weekly close for the specific currency pair
-Green lines are 1 week volatility
-Blue lines are 1 month volatility
-Dark Red lines are 3 month volatility
-Red lines are 1 year volatility
-Red dots indicate that that week’s volatility was equal to or lower than this week’s volatility AND that this week’s volatility was the lowest so far this year
EURUSD
Prepared by Jamie Saettele, CMT
GBPUSD
Prepared by Jamie Saettele, CMT
AUDUSD
Prepared by Jamie Saettele, CMT
Read the full article at DailyFX.com
Prepared by Jamie Saettele, CMT
GBPUSD
Prepared by Jamie Saettele, CMT
AUDUSD
Prepared by Jamie Saettele, CMT
Read the full article at DailyFX.com
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Low Forex Volatility Favors Dollar Weakness, Range Trading
By David Rodriguez, Quantitative Strategist
DailyFX PLUS System Trading Signals –Forex traders continue to predict the smallest US Dollar (ticker: USDOLLAR) moves since the onset of global financial crises in 2007/2008, and such low expectations point to low-volatility range trading in the week ahead.
As we wrote in last week’s strategy outlook report, FX market complacency sets the stage for US Dollar losses. This week our outlook remains mostly unchanged as the US currency trades towards fresh lows. Yet it is worth noting that the Dollar remains surprisingly resilient versus the similarly-downtrodden Euro.
Given clear expectations of slow currency moves, we favor range trading strategies across the majority of US Dollar pairs in the weeks ahead. As we detail in our Traits of Successful Traders series, it is critical to match trading style to market conditions. In this instance, exceedingly low volatility levels favor range trading systems such as Relative Strength Index (RSI)-based “Congestion Opportunities”/Range2 strategies on DailyFX PLUS.
Else it seems as though low-volatility “Risk On” trades stand to do well. Last week we wrote that the Australian Dollar—a major recipient of “Risk On” money flows—stood to reverse against the US Dollar amidst such complacency. Yet we will have to see signs that volatility will move higher given such exceedingly low levels.
Market Conditions:
As we wrote last week, FX Options point to the smallest market moves since the onset of global financial crises in 2007 and 2008. Volatility tends to be mean-reverting; if vols are extremely low, they will often bounce. Yet timing that bounce remains all but impossible as the same argument could have been made a month ago.
We’ll cautiously favor low-volatility strategies and direction until further notice. Yet it is important to note that volatility could return at a moments’ notice, and these levels are consistent with past instances of financial market complacency.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To contact David, e-mail [email protected]
To be added to David’s e-mail distribution list for this and other reports, e-mail subject line “Distribution List” to [email protected]
By David Rodriguez, Quantitative Strategist
DailyFX Individual Currency Pair Conditions and Trading Strategy Bias
DailyFX PLUS System Trading Signals –Forex traders continue to predict the smallest US Dollar (ticker: USDOLLAR) moves since the onset of global financial crises in 2007/2008, and such low expectations point to low-volatility range trading in the week ahead.
As we wrote in last week’s strategy outlook report, FX market complacency sets the stage for US Dollar losses. This week our outlook remains mostly unchanged as the US currency trades towards fresh lows. Yet it is worth noting that the Dollar remains surprisingly resilient versus the similarly-downtrodden Euro.
Given clear expectations of slow currency moves, we favor range trading strategies across the majority of US Dollar pairs in the weeks ahead. As we detail in our Traits of Successful Traders series, it is critical to match trading style to market conditions. In this instance, exceedingly low volatility levels favor range trading systems such as Relative Strength Index (RSI)-based “Congestion Opportunities”/Range2 strategies on DailyFX PLUS.
Else it seems as though low-volatility “Risk On” trades stand to do well. Last week we wrote that the Australian Dollar—a major recipient of “Risk On” money flows—stood to reverse against the US Dollar amidst such complacency. Yet we will have to see signs that volatility will move higher given such exceedingly low levels.
Market Conditions:
As we wrote last week, FX Options point to the smallest market moves since the onset of global financial crises in 2007 and 2008. Volatility tends to be mean-reverting; if vols are extremely low, they will often bounce. Yet timing that bounce remains all but impossible as the same argument could have been made a month ago.
We’ll cautiously favor low-volatility strategies and direction until further notice. Yet it is important to note that volatility could return at a moments’ notice, and these levels are consistent with past instances of financial market complacency.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To contact David, e-mail [email protected]
To be added to David’s e-mail distribution list for this and other reports, e-mail subject line “Distribution List” to [email protected]
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
USDJPY Opportunity after False Break through 7900
Hi Everyone,
After covering the Australian dollar extensively this past week, I thought it would be good to share some news with you about the Japanese yen. Since testing the 79.000 level, the USD/JPY has fallen off. Jamie Saettele, Senior Technical Strategist at DailyFX.com, believes this could present an opportunity to go short. Here is an excerpt from his latest article:
The USDJPY is in play today. After trading to its highest level since 7/18, the pair reversed sharply following the US CPI print. The pop above 7900 comes following the lowest 5 day range since mid-January (and lowest 20 day range since late December). Similar 5 day ranges were registered in December and October. Each time, the initial move was wrong and completely retraced. This is a function of the false breaks that accompany markets undergoing a shift in volatility expectations. Combined with former support turned resistance above 7900 and the 3 wave (corrective) advances from 7556 (record low) and 7765, the USDJPY is vulnerable...
Hi Everyone,
After covering the Australian dollar extensively this past week, I thought it would be good to share some news with you about the Japanese yen. Since testing the 79.000 level, the USD/JPY has fallen off. Jamie Saettele, Senior Technical Strategist at DailyFX.com, believes this could present an opportunity to go short. Here is an excerpt from his latest article:
USDJPY – Daily Bars
The USDJPY is in play today. After trading to its highest level since 7/18, the pair reversed sharply following the US CPI print. The pop above 7900 comes following the lowest 5 day range since mid-January (and lowest 20 day range since late December). Similar 5 day ranges were registered in December and October. Each time, the initial move was wrong and completely retraced. This is a function of the false breaks that accompany markets undergoing a shift in volatility expectations. Combined with former support turned resistance above 7900 and the 3 wave (corrective) advances from 7556 (record low) and 7765, the USDJPY is vulnerable...
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Euro Forecast Grows Bearish as Crowds Buy
Hi Everyone,
It's Thursday which means DailyFX.com has released its latest readings from the Speculative Sentiment Index (SSI). Quantitative Strategist David Rodriguez provides his analysis on what this means for the Euro:
Forex trading crowds have bought into recent Euro weakness against US Dollar (ticker: USDOLLAR), and a contrarian view of crowd sentiment points to further EURUSD declines. Last week we saw signs that the Euro may have set an important short-term top at $1.2440, and indeed a series of lower highs gives conviction in calls for a short-term reversal...
The SSI is reported Every Thursday at DailyFX.com and twice every trading day inside DailyFX PLUS.
Jason
Hi Everyone,
It's Thursday which means DailyFX.com has released its latest readings from the Speculative Sentiment Index (SSI). Quantitative Strategist David Rodriguez provides his analysis on what this means for the Euro:
Forex trading crowds have bought into recent Euro weakness against US Dollar (ticker: USDOLLAR), and a contrarian view of crowd sentiment points to further EURUSD declines. Last week we saw signs that the Euro may have set an important short-term top at $1.2440, and indeed a series of lower highs gives conviction in calls for a short-term reversal...
The SSI is reported Every Thursday at DailyFX.com and twice every trading day inside DailyFX PLUS.
Jason
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Second Quarter GDP will Highlight Fragility of British Economy, Hurt GBP
Hi Everyone,
We've come to the end of a relatively quiet week in the global markets. Volatility readings hit record lows, and US stocks continued to inch up towards the previous highs set back in May. I wanted to end by sharing some analysis on the British Pound for the coming week, since there is some key data coming out of the UK culminating with the GDP on Friday at 08:30 GMT. Below is an excerpt from a preview by Christopher Vecchio, Currency Analyst at DailyFX.com:
Fundamental Forecast for British Pound: Bearish
Although the revisions are expected to show that the British economy isn’t contracting as sharply as previously thought, the Bank of England still cut the economy’s forecasts this past week, with Governor King saying that growth would remain “subdued” in the near-term. This is despite the “erratic factors” that influenced weaker growth in the second quarter, as the Bank of England noted. But we must consider, as always, the bigger picture. Inflationary pressures have fallen in the United Kingdom, with the year-over-year Consumer Price Index holding below +3.0% for three consecutive months for the first time since October through December 2009. In light of these facts, alongside the continued streak of depressed growth in the United Kingdom, we believe that British Pound’s fundamental bull run may be stymied in the coming days and weeks, as speculation and chatter about more easing from the Bank of England will arise again...
Hi Everyone,
We've come to the end of a relatively quiet week in the global markets. Volatility readings hit record lows, and US stocks continued to inch up towards the previous highs set back in May. I wanted to end by sharing some analysis on the British Pound for the coming week, since there is some key data coming out of the UK culminating with the GDP on Friday at 08:30 GMT. Below is an excerpt from a preview by Christopher Vecchio, Currency Analyst at DailyFX.com:
Fundamental Forecast for British Pound: Bearish
Although the revisions are expected to show that the British economy isn’t contracting as sharply as previously thought, the Bank of England still cut the economy’s forecasts this past week, with Governor King saying that growth would remain “subdued” in the near-term. This is despite the “erratic factors” that influenced weaker growth in the second quarter, as the Bank of England noted. But we must consider, as always, the bigger picture. Inflationary pressures have fallen in the United Kingdom, with the year-over-year Consumer Price Index holding below +3.0% for three consecutive months for the first time since October through December 2009. In light of these facts, alongside the continued streak of depressed growth in the United Kingdom, we believe that British Pound’s fundamental bull run may be stymied in the coming days and weeks, as speculation and chatter about more easing from the Bank of England will arise again...
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Forex Trading Weekly Forecast-08.20.2012
Hi Everyone,
I thought I'd start the week by providing a compilation of various articles from the DailyFX.com research team to give you a preview for all the major currencies.
Hi Everyone,
I thought I'd start the week by providing a compilation of various articles from the DailyFX.com research team to give you a preview for all the major currencies.
- Dollar: Return of Volatility Inevitable and With it a Dollar Rally?
- Euro Poised for Breakdown, but Timing Eludes Us – Time for Plan B
- Japanese Yen at Risk for Further Weakness on Slowing Recovery
- Second Quarter GDP will Highlight Fragility of British Economy, Hurt GBP
- Gold to Threaten Range as Fed Talks Down QE3- FOMC Minutes on Tap
- Australian Dollar: Risk Trends, Nascent Intervention Threat in Focus
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
US Dollar Likely Set Bottom vs Yen on Sentiment
Hi Everyone,
Those of you familiar with the Speculative Sentiment Index (SSI) know that it's traditionally used as a contrarian indicator. That means when SSI indicates that the majority of traders are long a given currency pair, it's usually taken as a sign that prices could fall going forward. That's because those long positions have to be sold eventually and if the majority of traders are already long, it's unlikely there is as much demand left for the price to get bid up much further. That's the traditional thinking anyway, and while it has been useful for many of the major currencies, it has not been of much use with the Japanese yen.
Since before the start of this year, the SSI reading for USD/JPY has remained positive whether the price of USD/JPY has risen or fallen. The article I want to share with you today is by David Rodriguez, Quantitative Strategist at DailyFX.com. In this piece, he explains how SSI can still be used to get meaningful signals for USD/JPY, and what the recent changes in sentiment readings could mean for the yen going forward.
Retail crowd sentiment hit its most bullish USDJPY since the pair traded to record-lows in February, and such one-sided positioning has often coincided with lasting bottoms. According to FXCM Execution Desk data, there were as many as 15 retail traders long the US Dollar against the Japanese Yen for every one that was short. As of time of writing, that ratio has fallen to 3.6:1—its least net-long since the USDJPY set a noteworthy top in June. The sharp turnaround in retail sentiment warns of a lasting bottom, and indeed professional options traders are positioned for similar moves in the USDJPY...
Hi Everyone,
Those of you familiar with the Speculative Sentiment Index (SSI) know that it's traditionally used as a contrarian indicator. That means when SSI indicates that the majority of traders are long a given currency pair, it's usually taken as a sign that prices could fall going forward. That's because those long positions have to be sold eventually and if the majority of traders are already long, it's unlikely there is as much demand left for the price to get bid up much further. That's the traditional thinking anyway, and while it has been useful for many of the major currencies, it has not been of much use with the Japanese yen.
Since before the start of this year, the SSI reading for USD/JPY has remained positive whether the price of USD/JPY has risen or fallen. The article I want to share with you today is by David Rodriguez, Quantitative Strategist at DailyFX.com. In this piece, he explains how SSI can still be used to get meaningful signals for USD/JPY, and what the recent changes in sentiment readings could mean for the yen going forward.
Retail Forex Trading Crowd Sentiment Pulls Back from Extremes
Retail crowd sentiment hit its most bullish USDJPY since the pair traded to record-lows in February, and such one-sided positioning has often coincided with lasting bottoms. According to FXCM Execution Desk data, there were as many as 15 retail traders long the US Dollar against the Japanese Yen for every one that was short. As of time of writing, that ratio has fallen to 3.6:1—its least net-long since the USDJPY set a noteworthy top in June. The sharp turnaround in retail sentiment warns of a lasting bottom, and indeed professional options traders are positioned for similar moves in the USDJPY...
Read the full article at DailyFX.com
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
VIDEO: What does more easing mean for the US dollar?
Hi Everyone,
What does more easing mean for the US dollar? Today, I wanted to share with you another edition of Scalping with Michael Boutros. In this video, our DailyFX Currency Strategist offers current setups on the majors in the aftermath of the FOMC minutes.
Jason
Hi Everyone,
What does more easing mean for the US dollar? Today, I wanted to share with you another edition of Scalping with Michael Boutros. In this video, our DailyFX Currency Strategist offers current setups on the majors in the aftermath of the FOMC minutes.
Jason
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
VIDEO: Forex, Commodities and Equities Outlook - 08.27.2012
Hi Everyone,
In today's video Ilya Spivak, Currency Strategist at DailyFX.com gives us a preview of what to expect this week in global markets including forex, commodities and equities.
--- Created by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail [email protected]. Follow Ilya on Twitter at @IlyaSpivak
To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to [email protected]
Hi Everyone,
In today's video Ilya Spivak, Currency Strategist at DailyFX.com gives us a preview of what to expect this week in global markets including forex, commodities and equities.
--- Created by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail [email protected]. Follow Ilya on Twitter at @IlyaSpivak
To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to [email protected]
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
VIDEO: Forex Trade Setups ahead of Jackson Hole meeting
Hi Everyone,
The dollar remains under pressure ahead of the annual Federal Reserve symposium where central bankers from around the world will meet in Jackson Hole, Wyoming this week. In today's edition of his weekly scalping webinar on DailyFX.com, Currency Strategist Michael Boutros offers current setups on the majors.
Hi Everyone,
The dollar remains under pressure ahead of the annual Federal Reserve symposium where central bankers from around the world will meet in Jackson Hole, Wyoming this week. In today's edition of his weekly scalping webinar on DailyFX.com, Currency Strategist Michael Boutros offers current setups on the majors.
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
EURUSD: Trading the German Unemployment Report
Hi Everyone,
Thursday morning, we have the German Unemployment Report. The markets will be taking note, because a weak number could lead the European Central Bank to take further stimulus action. For traders interested in trading the Euro based on this news, here's an excerpt from an article by David Song, Currency Analyst at DailyFX.com:
Greater demand from home and abroad paired with easing input prices may encourage businesses to increase hiring, and a downtick in unemployment may spark a bullish reaction in the EURUSD as it instills an improved outlook for growth. However, as business sentiment wanes, firms may keep a lid on their labor force, and a marked rise in unemployment may trigger a selloff in the exchange rate as it fuels speculation for additional monetary support.
Indeed, the EURUSD stands at a critical juncture as it threatens the downward trend carried over from 2011, but the lack of momentum to push above the 100-Day SMA (1.2592) may ultimately produce a lower top in the exchange rate as the fundamental outlook for the euro-area deteriorates. In turn, we will maintain our bearish forecast for the EURUSD, but the pair may hold a narrow range ahead of the Jackson Hole Economic Symposium as the central bank conference takes center stage.
Expectations for a fifth consecutive rise in unemployment, but a positive development...
Hi Everyone,
Thursday morning, we have the German Unemployment Report. The markets will be taking note, because a weak number could lead the European Central Bank to take further stimulus action. For traders interested in trading the Euro based on this news, here's an excerpt from an article by David Song, Currency Analyst at DailyFX.com:
Greater demand from home and abroad paired with easing input prices may encourage businesses to increase hiring, and a downtick in unemployment may spark a bullish reaction in the EURUSD as it instills an improved outlook for growth. However, as business sentiment wanes, firms may keep a lid on their labor force, and a marked rise in unemployment may trigger a selloff in the exchange rate as it fuels speculation for additional monetary support.
Potential Price Targets For The Release
Indeed, the EURUSD stands at a critical juncture as it threatens the downward trend carried over from 2011, but the lack of momentum to push above the 100-Day SMA (1.2592) may ultimately produce a lower top in the exchange rate as the fundamental outlook for the euro-area deteriorates. In turn, we will maintain our bearish forecast for the EURUSD, but the pair may hold a narrow range ahead of the Jackson Hole Economic Symposium as the central bank conference takes center stage.
How To Trade This Event Risk
Expectations for a fifth consecutive rise in unemployment, but a positive development...
Read the full article at DailyFX.com
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Retail Crowds Remain Long US Dollar - Time to Sell?
Hi Everyone,
In his weekly update of the Speculative Sentiment Index (SSI) on DailyFX.com, Quantitative Strategist David Rodriguez explains why now might be the time to go against the crowd by "buying into EUR/USD strength". Below is an excerpt from his report today:
Retail FX crowds remain long the US Dollar (ticker: USDOLLAR) against the Euro, and going against the crowd means buying into EURUSD strength. Yet exceedingly quiet conditions ahead of a highly-anticipated Fed address in Jackson Hole warns against taking aggressive trades.
Crowds continue buying the US Dollar against the Euro, British Pound, Japanese Yen, Swiss Franc, and Canadian Dollar—normally a crystal-clear signal for us to favor further USD weakness. Yet it’s critical to note...
Hi Everyone,
In his weekly update of the Speculative Sentiment Index (SSI) on DailyFX.com, Quantitative Strategist David Rodriguez explains why now might be the time to go against the crowd by "buying into EUR/USD strength". Below is an excerpt from his report today:
Retail FX crowds remain long the US Dollar (ticker: USDOLLAR) against the Euro, and going against the crowd means buying into EURUSD strength. Yet exceedingly quiet conditions ahead of a highly-anticipated Fed address in Jackson Hole warns against taking aggressive trades.
Crowds continue buying the US Dollar against the Euro, British Pound, Japanese Yen, Swiss Franc, and Canadian Dollar—normally a crystal-clear signal for us to favor further USD weakness. Yet it’s critical to note...
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
LIVE Coverage: Bernanke in Jackson Hole, Friday @ 14:00 GMT
Hi Everyone,
This Friday, DailyFX.com Currency Analyst Christopher Vecchio will provide live coverage of Ben Bernanke's address an the Fed's annual symposium in Jackson Hole, Wyoming where central bankers from around the world have been meeting this week.
Click on the image above at 10am New York time (14:00 GMT) to join in on the live coverage and get your questions answered in real-time in DailyFX's Live Trading Room.
Jason
Hi Everyone,
This Friday, DailyFX.com Currency Analyst Christopher Vecchio will provide live coverage of Ben Bernanke's address an the Fed's annual symposium in Jackson Hole, Wyoming where central bankers from around the world have been meeting this week.
Click on the image above at 10am New York time (14:00 GMT) to join in on the live coverage and get your questions answered in real-time in DailyFX's Live Trading Room.
Jason
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Will the Euro Survive? What to Watch for in September and Beyond
Hi Everyone,
With US markets closed today because of the Labor Day holiday, I thought I'd start the week with an outlook on the Euro for September and beyond. Below is an excerpt of an article by Christopher Vecchio, Currency Analyst at DailyFX.com:
The Euro’s exchange rate versus the US Dollar continues to languish given the real danger it will cease to exist as we know it, and the potential fallout for broader financial markets of a Euro breakdown could be significant. Viewed as such, the EURUSD offers important insight into recent developments in the Euro-zone and represents an important bellwether for not only European equity and bond markets, but broader global assets.
After falling to fresh multi-year lows through the first half of the year, however, the EURUSD remains surprisingly resilient. A recovery in Italian and Spanish bond prices showed investor confidence improved as European Central Bank President Mario Draghi pledged to do “whatever it takes” to keep the Euro-zone together. The decreased funding costs for these countries comes against a worrisome backdrop of Spain on the verge of a sovereign bailout after receiving aid north of €100 billion for its banks in mid-June. As the Euro-zone’s fourth-largest economy, Spain’s funding needs would be substantial.
Add the increased possibility that Greece could be pushed out of the Euro-zone within the coming weeks, and it is easy to understand the wild ranges in the Euro/US Dollar over the past few weeks, trading as low as 1.2041 in July before rebounding to near 1.2600 this past week. Needless to say, the past few months have been quite the rollercoaster.
We have detailed the two most important story lines to follow to understand the ebbs and flows of the crisis and the future of the Euro, at least through the rest of 2012...
Hi Everyone,
With US markets closed today because of the Labor Day holiday, I thought I'd start the week with an outlook on the Euro for September and beyond. Below is an excerpt of an article by Christopher Vecchio, Currency Analyst at DailyFX.com:
The Euro’s exchange rate versus the US Dollar continues to languish given the real danger it will cease to exist as we know it, and the potential fallout for broader financial markets of a Euro breakdown could be significant. Viewed as such, the EURUSD offers important insight into recent developments in the Euro-zone and represents an important bellwether for not only European equity and bond markets, but broader global assets.
After falling to fresh multi-year lows through the first half of the year, however, the EURUSD remains surprisingly resilient. A recovery in Italian and Spanish bond prices showed investor confidence improved as European Central Bank President Mario Draghi pledged to do “whatever it takes” to keep the Euro-zone together. The decreased funding costs for these countries comes against a worrisome backdrop of Spain on the verge of a sovereign bailout after receiving aid north of €100 billion for its banks in mid-June. As the Euro-zone’s fourth-largest economy, Spain’s funding needs would be substantial.
Add the increased possibility that Greece could be pushed out of the Euro-zone within the coming weeks, and it is easy to understand the wild ranges in the Euro/US Dollar over the past few weeks, trading as low as 1.2041 in July before rebounding to near 1.2600 this past week. Needless to say, the past few months have been quite the rollercoaster.
We have detailed the two most important story lines to follow to understand the ebbs and flows of the crisis and the future of the Euro, at least through the rest of 2012...
Read the full article at DailyFX.com
Jason Rogers
Senior member
- Messages
- 2,772
- Likes
- 93
Goldman Recommends S&P 500 Puts - We like AUDUSD Shorts
Hi Everyone,
Today, I wanted to share an article by DailyFX Quantitative Strategist David Rodriguez that draws correlations between the Aussie dollar and the S&P 500 Volatility Index to signal a trading opportunity. Below is an excerpt:
A group of equity market strategists at Goldman Sachs recently issued a report recommending that readers go long Puts on the S&P 500 that expire on September 14—options that give the buyer the option to sell the S&P at a predetermined price. Why? The S&P 500 Volatility Index looks especially low given critical European and US economic event risk through the end of this week warns and a pivotal German vote on September 12.
The recommended trade would do well if the S&P VIX surges and/or the S&P 500 falls before September 14.
How do we trade such big event risk?
Given the strong correlation between stocks, the VIX, and the AUDUSD, we believe that an Australian Dollar-short position would likewise do well in such conditions.
Is now the time to buy Australian Dollar weakness?
Hi Everyone,
Today, I wanted to share an article by DailyFX Quantitative Strategist David Rodriguez that draws correlations between the Aussie dollar and the S&P 500 Volatility Index to signal a trading opportunity. Below is an excerpt:
A group of equity market strategists at Goldman Sachs recently issued a report recommending that readers go long Puts on the S&P 500 that expire on September 14—options that give the buyer the option to sell the S&P at a predetermined price. Why? The S&P 500 Volatility Index looks especially low given critical European and US economic event risk through the end of this week warns and a pivotal German vote on September 12.
The recommended trade would do well if the S&P VIX surges and/or the S&P 500 falls before September 14.
How do we trade such big event risk?
Given the strong correlation between stocks, the VIX, and the AUDUSD, we believe that an Australian Dollar-short position would likewise do well in such conditions.
Is now the time to buy Australian Dollar weakness?
