Best Thread FXCM/DailyFX Signals and Strategies

[Jason Rogers]

USD Correction in Play Ahead of FOMC- Going Short USD/JPY

The FOMC interest rate decision highlights the biggest event risk for the following week, and an improved outlook for the world’s largest economy may see a growing number of Fed officials scale back their willingness to expand the balance sheet further as the recovery gradually gathers pace.

Past performance is not necessarily indicative of future results.​

Nevertheless, the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) remains 0.30 percent lower from the open after tagging a low of 10,462, and the pullback from the March high (10,576) should turn into a larger correction as the greenback fails to maintain the upward trending channel carried over from earlier this year. In turn, we may see the reserve currency fall back towards the 10,400 figure to test for psychological support.

Past performance is not necessarily indicative of future results.​

The Tidal Shift Strategy has just recommends selling USD/JPY between 94.85 and 95.328. The 14-period Average True Range on a daily chart is 0.191, so the stop loss has been set at 96.044. This stop loss order is a trailing stop that will move down as the market moves down. There is no profit target for this strategy. We expect to be closed by the stop loss.

• Entry: 94.85 - 95.328
  [*]Limit: N/A
  [*]Stop Loss: 96.044

Tidal Shift is a DailyFX trend trading signal on that aims to catch shifts in trend using trader sentiment as an indicator. DailyFX trading signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

Euro Sinks, Japanese Yen Soars on Cyprus Bank Levy Proposal

The Euro is down against all of its major counterparts as financial markets digest the terms of a bailout deal for Cyprus emerged over the weekend, but the biggest drop was versus the Japanese yen as fears of bank in Europe have sparked risk aversion.

EUR/JPY 1 Minute Chart

Past performance is not necessarily indicative of future results.​

While Cyprus is a relatively small economy – comprising just 0.2 percent of overall Eurozone GDP – the level of worry evident across the markets likely reflects fears of the precedent that EU officials are setting. The worst-case scenario is a bank a run across the Eurozone as depositors scramble to move their capital out the region to avoid being caught in a Cyprus-like scenario.

Past performance is not necessarily indicative of future results.

The Range1 system from the trading signals on DailyFX PLUS has just shorted EUR/JPY at 123.21 with a trailing stop at 124.73. DailyFX trading signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

Cyrus Parliament Debating Bank Levy; Euro Hits 200-Day SMA

As the Cypriot parliament continues to postpone their vote on the unprecedented measure, former Cyprus central bank governor Athanasios Orphanides warned that the bank deposit levy ‘only makes the economic climate worse,’ and argued that the EU should consider alternative measures as the tax on savings would have ‘catastrophic’ consequences for the euro-area.

Past performance is not necessarily indicative of future results.​

EUR/USD is trading at its 200-day SMA which also coincides with the 50% retracement level back to the low of 1.2042 set last July. SSI remains fairly neutral for the pair. If support holds here, the pair may test the range-bound price action seen during the previous week as it has yet to completely fill-in the gap from the Sunday open. A break of support here could see the Euro targeting the 61.8% fib level at 1.2679.

For the latest developments out of Cyprus, you can get updates from the real time news feed at DailyFX.com

 

[Jason Rogers]

Cyprus Simmers; Gold to Follow Crude Oil Higher on Dovish FOMC Outcome

So Cyprus rejected an EU bailout deal that included a controversial levy on bank deposits which – if approved – threatened to spark bank runs around the Eurozone periphery. Crude oil is on the upswing as risk sentiment firmed.

USOil (WTI Crude) Daily Chart

Past performance is not necessarily indicative of future results.​

Prices reversed lower to test support at the 92.00 figure, marked by the 23.6% Fibonacci expansion. A break beneath that exposes the 38.2% level at 90.73. Near-term resistance is at 94.07, the March 19 swing high.

The spotlight shifts to the US and
the FOMC policy announcement.

Even a familiarly dovish FOMC outing seems to have scope to jolt traders back to the realization that the Federal Reserve is in no hurry to taper asset purchases. That is likely to be supportive for gold prices.

XAU/USD (Spot Gold) Daily Chart

Past performance is not necessarily indicative of future results.​

Prices continued higher as expected after edging above resistance at 1604.87, the 38.2% Fibonacci retracement, will buyers eyeing the 50% level at 1620.28. A further push above that aims for the 61.8% Fib at 1635.68. The 1604.87 mark has been recast support, with a turn back beneath that eyeing the 23.6% retracement at 1585.81.

 

[Jason Rogers]

Euro Falls on Deepening Recession, Renewed Risk for Contagion from Cyprus

The Euro weakened to 1.2878 as manufacturing and service-based activity in Europe contracted at a faster pace in March, while the European Central Bank (ECB) warned it would ‘maintain the current level of Emergency Liquidity Assistance, ELA, until Monday, 25 March 2013’ for Cyprus as the region struggles to secure a bailout.

Past performance is not necessarily indicative of future results.​

The single currency has since rebounded to trade just above the 1.2900 level currently, but the negative headlines coming out the euro-area continue to cast a bearish outlook for the EUR/USD. If we see a close below to the 200-Day SMA (1.2867), there could be a more meaningful move towards the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50.

 

[Jason Rogers]

Cyprus - this is it!

This is it – the proverbial moment when the fate of global sentiment for the coming weeks and months will be decided. Cypriot parliament members are reconvening today. Tensions are running high. The fate of the country’s inclusion in the Euro-zone could be decided over the course of the next few hours.

Past performance is not necessarily indicative of future results.​

Essentially, there are only two choices: accept the Troika’s demands for the deposit tax in order to unlock the necessary bailout funds required to keep the nation from defaulting; or leave the Euro-zone and face imminent default.

Past performance is not necessarily indicative of future results.​

As is to be expected, there are multiple ways to approach trading this. Of the strategies on DailyFX PLUS, Breakout1 is giving a countertrend signal to buy EUR/USD, while the Range2 strategy is giving a signal to short EUR/JPY. The signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

How to Measure Pip Distance on Trading Station Charts

Having the ability to quickly measure the distance between two points on the chart is a great way to speed up analysis. The Ruler tool on Trading Station charts will allow you to measure in pips or time. One useful way to use this tool is to track how far a currency pair has moved within a certain time frame. As an example, we’'ll measure how far the EUR/USD has dropped since its last high on the chart below.


Step 1: Setup your chart and click on the Ruler tool icon on at the top of the MarketScope 2.0 charts.

Step 2: Left click on where you would like to begin the measurement and, holding your mouse button, drag the pointer to where you would like to end your measurement.

TIP: The three numbers on the Tool Tip represent the Price where your pointer is (1.25638), the number of Periods between the beginning and ending points (12) and the number of pips between the two points (773.5)


Please let me know if you have questions about this or any other features of the Trading Station charts.

 

[Jason Rogers]

Euro Unimpressed with Cypriot Bailout - Cause for Concern

The German electorate, ahead of the September election, will be pleased that Chancellor Merkel held firm despite blustering from Cyprus this week, with €10 billion being contributed from the core, and the rest coming from Cyprus itself. DailyFX analyst Christopher Vecchio is not as impressed:

"If Cypriot savers had to contribute to the bailout of its banks, then why wouldn't the same measures be forced upon Italian and Spanish savers? Investors in weak financial institutions in peripheral Euro-zone countries are on high alert – so should Euro traders."

The headlines of Cyprus' bailout pushed the EURUSD through the descending TL off of the February 1 and March 15 highs, at 1.2990/300, to its 21-EMA at 1.3042, before failure ensued today.

Past performance is not necessarily indicative of future results.​

Since the bailout terms do not seem favorable to long-lasting Euro strength, the "top" after the bailout could now be in place. As long as price holds below 1.3085 this week – the trendline off of the highs from late-February/early-March – price action could be consolidating for another drive lower towards 1.2660.

 

[Jason Rogers]

SSI: Outlook Remains Bearish for the Euro

According to the Speculative Sentiment Index (SSI), the trading crowd has flipped from net-short the Euro to net-long from yesterday but unchanged since last week. The combination of current sentiment and recent changes gives a further bearish trading bias to the single currency. The ratio of long to short positions in the EURUSD stands at 1.44 as 59% of traders are long. Yesterday the ratio was -1.04; 49% of open positions were long.

Past performance is not necessarily indicative of future results.​

Long positions are 25.7% higher than yesterday and 22.6% above levels seen last week. Short positions are 16.2% lower than yesterday and 11.8% below levels seen last week. Open interest is 4.3% higher than yesterday and 2.8% above its monthly average. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the EURUSD may continue lower.

Past performance is not necessarily indicative of future results.​

The SSI-based DailyFX trading signals are currently shorting the Euro against other major currencies. These signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

SSI: Next EUR/USD Downleg Begins as Retail Traders Fade Sell-off

Yesterday I mentioned that the Speculative Sentiment Index (SSI) at DailyFXplus.com was signalling further declines in the Euro. This morning EUR/USD fell to new 2013 lows below 1.2800 after a weak Italian bond auction. The trading crowd has grown further net-long from yesterday and last week.

Past performance is not necessarily indicative of future results.​

The ratio of long to short positions in the EURUSD stands at 1.62 as 62% of traders are long. Yesterday the ratio was 1.41; 58% of open positions were long. Long positions are 11.2% higher than yesterday and 27.1% above levels seen last week. Short positions are 3.3% lower than yesterday and 15.1% below levels seen last week. Open interest is 5.1% higher than yesterday and 7.1% above its monthly average.

Past performance is not necessarily indicative of future results.​

The combination of current sentiment and recent changes gives a further bearish trading bias. Fresh yearly lows were set below 1.2800 at the time of writing, with a clear test of 1.2660/80 (61.8% Fibonacci retracement on July 2012 to February 2013 rally, mid-November swing lows) in focus. A bearish bias holds so long as 1.3085 holds this week.

 

[Jason Rogers]

Crowds Massively Net-Short SPX500 as US Stocks Hit New Highs

As the S&P 500 broke its previous all time high of 1,565.15 hit back in 2007, the latest readings from the Speculative Sentiment Index (SSI) show that retail CFD speculators are near their most short the SPX500 contract on record. Since SSI is a contrarian indicator, this favors further strength.

Past performance is not necessarily indicative of future results.​

"Our retail sentiment data shows that the number of orders short SPX500 outnumber those long by a massive 8.8 to 1 as the contract trades near record-highs. In fact, short interest has gained a further 24 percent since last week, while total longs have fallen 8 percent. There’s obvious risk of a significant correction given impressive advances, but we would warn against joining the crowd as stocks continue pressing to fresh gains."

 

[Jason Rogers]

SSI: Crowds Head into Critical Week Short US Dollar vs Most Currencies

As was to be suspected, it was a slow day in forex with many other markets closed for Good Friday. The Speculative Sentiment Index (SSI) shows that going into the Easter holiday weekend, crowds are shorting the US Dollar against other major currencies. SSI is a contrarian indicator so this could indicate gains for the greenback to start April.

Past performance is not necessarily indicative of future results.​

Focusing on EUR/USD, the ratio of long to short positions stands at 1.31 as 57% of traders are long. Yesterday the ratio was 1.28; 56% of open positions were long.

Past performance is not necessarily indicative of future results.​

Long positions are 1.0% higher than yesterday and 34.1% above levels seen last week. Short positions are 1.0% lower than yesterday and 12.6% below levels seen last week. Open interest is 0.1% higher than yesterday and 3.1% above its monthly average.

Past performance is not necessarily indicative of future results.​

The trading crowd has grown further net-long from yesterday but unchanged since last week. The combination of current sentiment and recent changes gives a further bearish trading bias. SSI-based trading signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

Critical Week Favors Volatility

It's shaping up to be a big week for the US Dollar (ticker: USDOLLAR) with critical event risk from the Bank of Japan and the infamous US Nonfarm Payrolls likely to deliver important USD volatility. Our DailyFX Volatility indices have fallen from recent peaks, but 1-week expectations have jumped considerably on a key week of event risk for the US Dollar and Japanese Yen in particular.

Past performance is not necessarily indicative of future results​

Past performance is not necessarily indicative of future results, but conditions seem to favor our volatility-friendly breakout trading strategy for certain JPY pairs, while our trend-following systems seem poised to do well on the US Dollar against major counterparts.

Past performance is not necessarily indicative of future results​

These trading strategies from DailyFX PLUS are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

Trade Update: Breakout & Trend Systems Sell British Pound - Now What?

The DailyFX PLUS Trading Strategies have sold aggressively into the day’s British Pound breakdown. The key question is simple: is the start of a much larger sell-off? Our high-volatility Breakout2 trading system has had a fair deal of success trading the British Pound in recent months—particularly against the Japanese Yen.

Past performance is not necessarily indicative of future results.​

Past performance is not necessarily indicative of future results, but the fact that Breakout trading has been successful in the GBP does give us reason to believe that the current trades have a fair chance at success. The purely sentiment-based Momentum2 strategy can claim similar outperformance in British Pound pairs through recent trading, and said system has likewise sold into the GBPUSD and GBPJPY turn lower.

Past performance is not necessarily indicative of future results.​

The aggressive build in retail long positions in the British Pound warns against buying this dip. It's certainly possible that the trading crowd might indeed catch the falling knife on this sell-off, but the severity with which the pair has fallen warns against it.

These trading signals from DailyFX PLUS are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

SSI: GBP/USD Turnaround Confirmed by Sentiment

Last week DailyFX analyst Christopher Vecchio said: "The failed run up to the 1.5285/375 region suggests that the rally in the GBP/USD seen the past few weeks may be nothing more than short covering and asset reallocation, rather than traders taking up new positions amid an improved interest rate outlook for the UK.

Past performance is not necessarily indicative of future results.​

"Price has fallen back below the 8- and 21-EMAs after a rejection at a critical RSI level of 55…A potential Bearish Rising Wedge has developed (clearer on the 4H timeframe, which would suggest a retest of the lows near 1.4830. The pattern is valid so long as 1.5260/65 holds to the upside."

The GBP/USD price has since moved lower, initiating both the Double Top and Bearish Rising Wedge patterns. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the GBPUSD may continue lower.

Past performance is not necessarily indicative of future results.​

The trading crowd has grown further net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias. The ratio of long to short positions in the GBPUSD stands at 1.79 as 64% of traders are long.

Past performance is not necessarily indicative of future results.​

Yesterday the ratio was 1.42; 59% of open positions were long. Long positions are 15.5% higher than yesterday and 11.4% above levels seen last week. Short positions are 8.1% lower than yesterday and 10.6% below levels seen last week. Open interest is 5.8% higher than yesterday and 1.1% above its monthly average.

SSI-based trading signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

US Dollar Surges After BoJ Easing, Bullish Going into NFP

The Bank of Japan, under the watchful eye of Haruhiko Kuroda, has already made big waves at its first policy meeting. The central bank announced that it would step up its asset purchase pace to ¥7 trillion/month, while simultaneously removing a cap on some bond holdings and a limit on debt maturities.

Past performance is not necessarily indicative of future results.​

Three of the four components weakened against the greenback, led by a 3.02 percent decline in the Japanese Yen, and the selloff in the low-yielding currency may gather pace over the near-term as the Bank of Japan (BoJ) increases its effort to achieve the 2 percent target for inflation.

Past performance is not necessarily indicative of future results.​

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is trading 0.70 percent higher from the open after moving a whopping 223 percent of its average true range, and the greenback may continue to retrace the decline from the previous month and it carves out a higher low around the 10,400 region.

Past performance is not necessarily indicative of future results.​

Although we’re looking for a short-term pullback given the overbought signal on the 30-minute relative strength index, we may see the dollar hold steady going into the highly anticipated Non-Farm Payrolls report as the world’s largest economy is expected to add another 190K jobs in March.

 

[Jason Rogers]

March NFPs Implode - Euro and Aussie Switch Direction

No one expected to see a March labor market report of such a poor quality. Literally, not one economist, according to a Bloomberg News survey, forecasted that the US economy would only add +88K jobs last month; the low estimate was +100K.

EURUSD 5-minute Chart: April 5, 2013

Past performance is not necessarily indicative of future results.​

The EUR/USD had the strongest reaction to the data, rallying from near 1.2950 after the release towards 1.3030 in the minutes after. The EUR/USD had the strongest reaction to the data, rallying from near 1.2950 after the release towards 1.3030 in the minutes after.

Past performance is not necessarily indicative of future results.​

The trading signals on DailyFX PLUS based on our Speculative Sentiment Index (SSI) are buying Euros and selling Australian Dollars. These signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

SSI: Crowds Steadily long USD, Short EURUSD to Start Week

After the abysmal employment number out the US last Friday, traders are more risk averse to start the new week. The latest readings from the Speculative Sentiment Index (SSI) show that the crowd is mostly long USD and short risk-on currencies. With the EUR/USD in particular, the ratio of long to short positions stands at -1.90 as 35% of traders are long.

Past performance is not necessarily indicative of future results.​

Yesterday the ratio was -1.35; 42% of open positions were long. Long positions are 9.2% lower than yesterday and 26.2% below levels seen last week. Short positions are 27.3% higher than yesterday and 72.3% above levels seen last week.

Past performance is not necessarily indicative of future results.​

Open interest is 11.8% higher than yesterday and 25.1% above its monthly average. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the EUR/USD may continue higher.

Past performance is not necessarily indicative of future results.​

The trading crowd has grown further net-short from yesterday but unchanged since last week. The combination of current sentiment and recent changes gives a further bullish trading bias. The SSI-based trading signals on DailyFX PLUS are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

Speculators Remain Extremely Long US Dollars

Yesterday, I mentioned how the Speculative Sentiment Index (SSI) showed that traders were long US dollar to start the week. Today, we can see this sentiment confirmed in the Commitments of Traders (COT) data from futures markets. Every Tuesday, DailyFX strategist Jamie Saettele provides an analysis of this data at DailyFX.com

Past performance is not necessarily indicative of future results.​

The COT Index is the difference between net speculative positioning and net commercial positioning measured. Non commercials tend to be on the wrong side at the turn and commercials the correct side.

US Dollar

Past performance is not necessarily indicative of future results.

• Non Commercials (speculators) – Red
• Commercials – Blue
• Small Speculators – White
• COTDiff (COT Index) – White

It's possible to view COT data on the MT4 platform using the Commitments of Traders indicator available at FXCMapps.com

 

[Jason Rogers]

Yen Bears Are Happy, But What About Your Broker?

We have seen some incredible moves in the JPY pairs over the past 4 days, some of which rival the market movements from 2008. EUR/JPY is one such example which we saw rise by over 1,000 pips in 4 days!

Past performance is not necessarily indicative of future results.​

This dramatic bull run was sparked by the Bank of Japan meeting last Thursday, but how were FXCM clients positioned in the Yen pairs going into the announcement? Below is a screenshot of the SSI report from Wednesday April 3 where you can see client positioning as of 16:45 GMT, and I have highlighted USD/JPY and GBP/JPY positioning:

Past performance is not necessarily indicative of future results.​

SSI shows you that the majority of positions in USD/JPY were long, about 72%, and the majority of positions in GBP/JPY were long, about 54%. This leads me to my main question: How could Yen positioning by traders impact your brokers finances? It could be very important depending whether your broker uses dealing desk or no dealing desk execution. A broker that operates a dealing desk and doesn't offset that risk would have been caught on the wrong side of the trade subjecting them to possible losses.

This is a very important consideration to keep in mind, especially for those brokers which do not make their financials transparent. You don't know the financial health of your broker to get an idea of how well they would be weather a shock to their finances. As a publicly traded company on the NYSE, FXCM's financials are transparent.