Best Thread FXCM/DailyFX Signals and Strategies

[Jason Rogers]

Trading the Anticipated Turn in AUD/USD

AUD/USD has been under steady pressure for the last month and traded to its lowest level in over a year and a half on Wednesday. This decline has been very impressive in terms of its veracity and scope, but a confluence of factors suggests the current decline may soon be reaching a turning point.

AUD/USD Daily Chart: May 30, 2013

Past performance is not necessarily indicative of future results.​

Extreme sentiment is a particular concern given surveys like the DSI (Daily Sentiment Index) show just 17% bulls in the currency amongst short-term futures traders. Historically, whenever the Aussie has neared such levels of negative sentiment it has been a good contrarian and leading indicator of a turn.

Event Risk Over Coming Sessions

Source: DailyFX.com Calendar​

The exchange rate is nearing critical price levels like the .9570 50% retracement of the 2010 to 2011 advance. As such, I like the risk to reward of positioning on the long side over the next few days.

 

[Jason Rogers]

Crude Oil, Gold Sink as Risk Aversion Returns at Month-End

Cycle-sensitive crude oil and copper prices are following stocks lower while the US Dollar is reclaiming its safe-haven credentials, pushing higher and applying de-facto selling pressure to gold and silver.

Crude Oil Technical Analysis (WTI)

Prices appear to be forming a Head and Shoulders top chart formation. Confirmation requires a close below the pattern’s neckline (now at 92.78), initially exposing the May 1 low at 90.09 and a measured downside objective at 88.58.

Past performance is not necessarily indicative of future results.​

Near-term resistance is at 95.89, the May 28 high, with a push beyond that eyeing a falling trend line at 96.82.

Gold Technical Analysis (Spot)

Prices moved higher as expected after completing a Bullish Engulfing candlestick pattern, taking out the 38.2% Fibonacci expansion at 1401.63.

Past performance is not necessarily indicative of future results.​

Buyers now stand to challenge the 50% mark at 1421.26, with a push above that eyeing the 61.8% Fib at 1440.90. The 1401.63 mark has been recast as near-term support.

 

[Jason Rogers]

Japanese Yen on the Verge of Something Huge

It 'feels' like markets have been volatile, and they have been, but a simple look at volatility prices (chart below) suggests this could be only the beginning for major forex market moves.

Forex Options Market Volatility Prices Across Major Pairs

Past performance is not necessarily indicative of future results.​

There is material risk of a major Japanese Yen reversal. This could make the USD/JPY in particular one of the most attractive trades through the foreseeable future. In terms of our sentiment-based trading signals, we’ll look to the volatility-friendly Breakout2 trading system with focus on the USD/JPY and other JPY pairs.

DailyFX Individual Currency Pair Conditions and Trading Signal Bias

Past performance is not necessarily indicative of future results.​

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

 

[Jason Rogers]

Forex/S&P 500 Correlations Say the Japanese Yen Might Surge

It could be a huge week across financial markets as early signs of a market panic forced the S&P 500 lower, Treasury Bond Yields higher, and the Australian Dollar surging versus the USD. Why are correlations so broken?

Australian Dollar Plotted Against Relative Moves in S&P 500, Gold

Data source: Bloomberg, Chart source: R
Past performance is not necessarily indicative of future results.​

In a recent DailyFX article, we explained why an S&P 500 sell-off might actually make the Dollar weaken as traders exit super-crowded S&P, USD, and Bond market longs. That's because deleveraging would put all three at risk and helps explain the clear breakdown in correlations.

Japanese Yen Positioning Remains Extremely One-Sided, Warning of USD/JPY Declines

Data source: CFTC Commitment of Traders Report, Bloomberg OTC Options
Past performance is not necessarily indicative of future results.​

If our hypothesis is correct and there is a dramatic deleveraging across financial markets, it makes sense to look at currencies/stocks/bonds in which positioning is at its most one-sided. In the forex market, that would be the Japanese Yen.

Retail Forex Speculators Grow Extremely Long USD/JPY

Data source: FXCM Execution Desk, Weekly Speculative Sentiment Index (SSI)
Past performance is not necessarily indicative of future results.​

Retail speculators have grown extremely net-long the US Dollar against the Japanese Yen as it falls sharply off of recent peaks. We most often use our proprietary Speculative Sentiment Index data as a contrarian indicator to price action.

Summary of Positions in DailyFX PLUS Trading Signals

Source: DailyFX PLUS Classic Trading Signals
Past performance is not necessarily indicative of future results.​

If everyone’s buying we want to sell and vice versa. It’s no surprise to note that our sentiment-based trading signsl are short USDJPY and more broadly short the US Dollar. These trading signals are available as automated strategies at FXCMapps.com

 

[Jason Rogers]

EUR/USD Head-and-Shoulders Taking Shape

As the Eurozone faces a prolonged recession, the ECB remains poised to lower its outlook for growth and inflation, and we may see a greater discuss to implement a negative interest rate policy (NIRP) across the region as the governments operating under the fixed-exchange rate system become increasingly reliant on monetary support.

Past performance is not necessarily indicative of future results.​

As the EUR/USD continues to carve a lower top below the 38.2% Fibonacci retracement from the 2009 high to the 2010 low around 1.3120, a dovish ECB may serve as the fundamental catalyst to put the head-and-shoulders formation into motion, and we will continue to look for a move back towards the 23.6% retracement around 1.2640-50 as the dismal developments coming out of the euro-area dampen the appeal of the single currency.

 

[Jason Rogers]

Euro Climbs After ECB Shies Away Negative Rates

The European Central Bank kept its key interest rate on hold at its all-time low of 0.50%, while leaving its main deposit rate on hold at 0.00%, but the big news was that it shied away from implementing negative rates or any other measures that would result in a theoretically expanded ECB balance sheet.

Past performance is not necessarily indicative of future results.​

This set the stage for a Euro rally as EUR/USD surged over 100 pips from a low of 1.3088 up to where it's currently trading around 1.3190. The latest readings from the Speculative Sentiment Index (SSI) at DailyFX.com indicate that the pair could be poised for further gains as retail traders continue to sell rallies.

Past performance is not necessarily indicative of future results.​

The ratio of long to short positions in the EUR/USD stands at -1.75 as 36% of traders are long. The trading crowd has grown further net-short from yesterday and last week. The combination of current sentiment and recent changes gives a further bullish trading bias.

 

[Jason Rogers]

US Dollar Reinvigorated by Slight Beat on May NFPs; USD/JPY Above ¥96

The much-ballyhooed May US labor market report came right in the “Goldilocks” zone for market participants: good enough to reignite modest optimism about the US economy; but not good enough to provoke a major drawdown in the Federal Reserve’s QE3 program.

The important numbers:

• Change in Nonfarm Payrolls: +175K versus +163K expected, from +149K (revised lower from +165K)
• Change in Private Payrolls: +178K versus +175K expected, from +157K (revised lower from +176K)
  [*]Unemployment Rate (U3): 7.6% versus 7.5%, from 7.5%
• Underemployment Rate (U6): 13.8% from 13.9%
• Participation Rate: 63.4% from 63.3%

Yesterday, it seemed that traders were positioning themselves for a poor print: weaker USDJPY, stronger US equities, lower US Treasuries yields. Today, equities are up, the US Dollar is gaining, and US Treasuries yields are higher. This looks like a repositioning for renewed speculation of the QE3 taper – certainly, the data doesn’t lean that heavily in either direction.

USD/JPY 1-minute Chart: June 6, 2013

Past performance is not necessarily indicative of future results.​

Following the release, the USD/JPY gyrated violently, trading from ¥95.75 to as high as 96.38, before plummeting to 94.38. But within 15-minutes, the USD/JPY had surged back to 96.12, at the time this report was written. US Dollar strength was observed across the board, with the EUR/USD falling to $1.3205, and the AUD/USD plunging back to the weekly lows near $0.9440.

It's worth noting that overall, traders are still long US dollar, which means today's boost after NFP could be short lived. The one major pair where the Speculative Sentiment Index (SSI) supports this mornings tendency of US dollar strength is AUD/USD. The trading crowd has grown further net-long the Aussie from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias.

 

[Jason Rogers]

Australian Dollar Record COT Figures Warn of Reversal

The Commitments of Traders (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.

Latest CFTC Release

Past performance is not necessarily indicative of future results.​

Record short positions for speculators and record long positions for commercials indicate a possible reversal for the Australian Dollar. The COT MT4 indicator pulls data directly from the CFTC website and plots it directly below an MT4 chart in an easy to read format and is available at FXCMapps.com

Past performance is not necessarily indicative of future results.​

A light blue colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bullish) with speculators selling and commercials buying. A light red colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bearish) with speculators buying and commercials selling. Crosses above and below 0 are in bold.

 

[Jason Rogers]

USD Continues to Carve Higher Low

The greenback may regain its footing ahead of the next FOMC interest rate decision on June 19 as tapering the asset purchase program becomes a growing discussion at the central bank.

Past performance is not necessarily indicative of future results.​

Indeed, the Dow Jones-FXCM Dollar Index (ticker: USDOLLAR) may continue to build a short-term base in June, and the greenback looks poised to make another run at the 10,900 handle as the FOMC faces limited scope to further embark on its easing cycle.

Past performance is not necessarily indicative of future results.​

With the new currency baskets on the Mirror Trader platform, FXCM clients can now also take a bullish or bearish position on a single currency such as the US Dollar instead of having to choose a specific currency pair to trade.

 

[Jason Rogers]

Video: Trading the Potentially Significant Australian Dollar Reversal

Yesterday, DailyFX analyst David Rodriguez mentioned that the Australian Dollar likely set a substantial low. In his video today, he updates those views with a concrete look at trade setups.

Trading the Potentially Significant Aussie Dollar Bounce - YouTube

He also discusses his latest DailyFX trading signal biases as shown below.

Strategy Preferences Broken Down by Volatility Prices and Currency Trends

Past performance is not necessarily indicative of future results.

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

 

[Jason Rogers]

DailyFX Trading Signal: Possible trend shift in AUD/USD – going long

In the video I posted yesterday DailyFX analyst David Rodriguez shared his view that the Aussie recently set a substantial low. Today the Tidal Shift Strategy on DailyFXplus.com added further confirmation to this idea by generating the following buy signal for AUD/USD.

Past performance is not necessarily indicative of future results.​

The system recommends entering this trade at any price between 0.95322 and 0.96124. The 14-period Average True Range on a daily chart is 0.00321, so the stop loss has been set at 0.94118. This stop loss order is a trailing stop that will move up as the market moves up.

Past performance is not necessarily indicative of future results.​

The signal was issued because our Speculative Sentiment Index (SSI) has hit its most extreme negative level for the past 145 trading hours at 3.001, which suggests that the AUD/USD could be trending upwards. All FXCM Trading Station clients can the Tidal Shift Strategy by using the same account login on the Mirror Trader platform.

 

[Jason Rogers]

EUR/USD About to Pop

EUR/USD About to Break? The forex market is intently focused on the US FOMC rate announcement on Wednesday followed by Fed Chairman Bernanke's press conference. DailyFX Analyst John Kicklighter posted a very interesting EUR/USD chart to his Twitter account a few hours ago which could indicate an impending breakout just in time for the Fed decision.

Which way will it break? The trend has been up which would signal a bullish break if the argument is that a flag is followed by continuation of the trend. Second, SSI positioning remains net short which would indicates a contrarian signal for more gains. EUR/USD positioning is currently giving a reading of -2.03 which tells us there are 2.03 short positions for every position long.

SSI can be found updated twice per day in DailyFX PLUS.

 

[Jason Rogers]

Dollar Traders Eye FOMC Meeting

Despite the mixed batch of data coming out of the world’s largest economy, the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is trading 0.22 percent higher from the open.

Past performance is not necessarily indicative of future results.​

The greenback may appreciate further over the next 24-hours of trading should the Federal Reserve show a greater willingness to taper its asset purchase program in the second half of the year.

Past performance is not necessarily indicative of future results.​

The dollar looks poised to breakout to the upside as it carves out a higher low in June.

Past performance is not necessarily indicative of future results.​

In turn, we should see the dollar resume the upward trend from earlier this year, and the bullish sentiment surrounding the greenback may gather pace over the near to medium-term amid the shift in the policy outlook.

The USD Basket and baskets for other major currencies are available on the Mirror Trader platform. FXCM Trading Station account holders can use the same username and password to log into Mirror Trader.

 

[Jason Rogers]

USDOLLAR to Benefit from Fed Exit Strategy- Higher High on Tap

Although the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is trading 0.19 percent lower from the open, the Federal Open Market Committee (FOMC) interest rate decision could be the game-changer for the greenback should the central bank look to taper its asset-purchase program.

Past performance is not necessarily indicative of future results.​

As the reserve currency carves a higher low in June, a less-dovish Fed may prompt the USDOLLAR to breakout of the downward trend carried over from the previous month, and we may see the index resume the upward trend from earlier this year as the central bank appears to be moving away from its easing cycle.

Past performance is not necessarily indicative of future results.​

In turn, we may see the rebound in the USDOLLAR turn into a more meaningful rally in the coming days, and we will look for a higher high in the index as the bullish trend continues to take shape.

The USD Basket and baskets for other major currencies are available on the Mirror Trader platform. FXCM Trading Station account holders can use the same username and password to log into Mirror Trader.

 

[Jason Rogers]

GBP/JPY bounces off 100-day SMA

This morning the instructors at DailyFX.com tweeted about a recent bullish signal they spotted for GBP/JPY. The pair bounced off the 100-day SMA in the direction of the long term uptrend. Playing this bounce, they are looking to go long at current levels.

Their profit target is set at 162.50 towards the top of the bullish channel that has formed. Their stop is set at 146.50 below the 100-day SMA line. To get their latest trade ideas you can follow the DailyFX instructors on Twitter @DailyFXedu

 

[Jason Rogers]

CHF/JPY price channel developing

DailyFX trading instructor Walker England recently tweeted about a price channel developing in CHF/JPY. The general trend of the price channel is downwards, so with the pair currently trading near the top of this channel, there is an opportunity to go short at current levels.

Past performance is not necessarily indicative of future results.​

As shown in above a profit target can be set near the bottom of the price channel at around 101.80, with a stop above the channel at around 106.30. To keep up to date with his latest trade ideas, you can follow Walker England on Twitter @WEnglandFX

 

[Jason Rogers]

Increased Volatility Means Opportunity for Dollar and Yen Traders

10-year US Government Treasury Notes recently saw their biggest 1-week decline in a decade as yields surged. With the world's supposed foremost safe-haven asset seeing truly historic sell-offs, there's reason to believe there will be an increase in volatility across the board in global stock markets, bond markets and forex.

Forex Options market and S&P 500 Volatility Prices From 2007-2013

Past performance is not necessarily indicative of future results​

Past performance is not necessarily indicative of future results, but our sentiment-based trading strategies have done well in highly-volatile markets. Our major focus remains the Momentum2 strategy—also known as the "Tidal Shift" system. It's thus far caught some fairly substantial turns in the Dollar, Yen, and other pairs.

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

Past performance is not necessarily indicative of future results​

If you have a live FXCM Trading Station account, you can now use those same account login details to access the Mirror Trader platform and automate the Tidal Shift strategy and other DailyFX trading signals.

 

[Jason Rogers]

Technical Setup: Trading the Aussie Downtrend

This morning the instructors at DailyFX.com tweeted about a recent bearish signal they spotted for AUD/USD. RSI has hit resistance again at the 50 level. Since the pair is in a strong downtrend, this can act as an overbought signal.

Past performance is not necessarily indicative of future results.​

They are looking to go short AUD/USD at current levels, with a profit target at 0.9000 and a stop loss at 0.9350. To keep up with their latest trade ideas you can follow the DailyFX instructors on Twitter @DailyFXedu

 

[Jason Rogers]

SSI Signals Further Euro Losses

Today, the DailyFX team tweeted @DailyFXteam that EUR/USD just fell below the 1.3000 for the first time since June 3rd. As you can see in the chart below, SSI (the bar graph) flipped from negative to positive today just as EUR/USD (the green line) broke through this key price level.

Past performance is not necessarily indicative of future results.​

That means retail traders went from being net short to being net long this currency pair and are trying to pick a bottom to this downtrend. You can see in the bar graphs below how retail long positions dramatically increased in the EUR/USD during this period.

Past performance is not necessarily indicative of future results.​

That is actually a contrarian signal that indicates the downtrend could continue. As I've highlighted in the chart below, the Fibonacci levels above the current market price act as resistance, the Fib levels below the current price at as support.

Past performance is not necessarily indicative of future results.​

For a short term trade, you could look to go short at current levels, with a profit target near the 1.29417 Fib level, and a stop loss above the 1.30323 Fib level. For a medium term trade, you could set your profit target near the 1.27953 level, with your stop above 1.31055.

 

[Jason Rogers]

Trading the Downtrend in Gold

The weekly update of our Speculative Sentiment Index (SSI) was just posted on DailyFX.com and it says that crowds are now their most net-long Gold since its virtual meltdown in April as it hits fresh multi-year lows.

Past performance is not necessarily indicative of future results.​

Below is an overlay of a Gold (XAU/USD) chart on a bar graph of SSI for the same time period. Notice that when SSI says that crowds are net short (brown bars) Gold tends to rise, and when crowds are net long (green bars) Gold tends to fall.

Past performance is not necessarily indicative of future results.​

That means SSI is currently giving us a strong bearish signal for Gold. We can use the Technical Analyzer on DailyFXplus.com to get key price levels to enter a short position.

Past performance is not necessarily indicative of future results.​

The chart above shows that we can go short at current levels with a stops above resistance (at 1250, 1271 or 1290) and profit targets near 1202 or 1195.