Best Thread FXCM/DailyFX Signals and Strategies

[Jason Rogers]

11 Fed Speeches Next Week

Next week, there are 11 speeches by Fed policymakers and in light of the fact that general commentary is that the Fed lost credibility by not tapering, it will be particularly interesting to gauge market reactions around these commentaries.

 

[Jason Rogers]

SSI: Crowds Reducing Short Positions in SPX500 as Stocks Trade Near Peaks

While the Speculative Sentiment Index (SSI) shows that retail traders are still heavily short SPX 500 (the CFD that tracks the S&P), the recent reduction in short positions and increase in long positions suggests a potential pullback from recent peaks.

Past performance is not necessarily indicative of future results.​

The latest SSI reading of -3.41 means that there are 3.41 short positions for every long position. Long positions are 14.7% higher than yesterday and 18.2% above levels seen last week. Short positions are 6.6% lower than yesterday and 8.5% below levels seen last week.

Past performance is not necessarily indicative of future results.​

SSI is used as a contrarian indicator to price action. While the the fact that the majority of traders are are still short SPX 500 could be taken as a sign that US stocks could continue higher in the long term, the dramatic reduction in short positions recently suggests a possible pullback in the near term.

Past performance is not necessarily indicative of future results.​

If a short position was entered on a break below 1700, then a stop could be set above last week's high of 1734.1 with a profit target set around the low of 1626.6 that was made towards the end of August.

 

[Jason Rogers]

Massive Event Risk Ahead

Volatility has been relatively light over the past week, but there is massive event risk ahead with 3 central bank announcements and Non-Farm Payrolls next week.

Furthermore, the delay by Congress to raise the debt ceiling may test the current complacency of the market with the S&P 500 and DJIA at all-time highs. This upcoming event risk surrounding the U.S. debt ceiling may have the potential to move markets as it did in 2011 if pushed to the last minute.

 

[Jason Rogers]

Tidal Shift Going Long Euros

The Tidal Shift Strategy on DailyFXplus.com just gave a signal to buy EUR/USD between 1.35266 and 1.35575 (blue dotted lines in chart below) with a trailing stop at 1.34802 (red dotted line).

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 -3.0792, which suggests that the EUR/USD could be trending upwards.

 

[Jason Rogers]

Countdown to Shutdown; NFP Delay Possible

US Congress has until midnight tonight in Washington to come up with an agreement to avert a government shutdown.

Past performance is not necessarily indicative of future results.

In the event of a shutdown, all "nonessential" government work including the reporting of Friday's scheduled Non Farm Payrolls report by the Bureau of Labor Statistics would be put on hold.

Past performance is not necessarily indicative of future results.

Forex volatility prices continue trading be near year-to-date lows as the markets keep an eye on Washington, but we can expect volatility to pick up based on tonight's developments.

 

[Jason Rogers]

US Govt Shutdown, Trading for a Dollar Bounce

The Dow Jones FXCM Dollar Index (ticker: USDOLLAR) has taken a significant step downwards towards today, falling within points of its September and post-FOMC meeting lows as political turmoil in the United States reached a new low with the federal government shutdown.

USDOLLAR Daily Chart

Past performance is not necessarily indicative of future results.​

For those looking to trade a potential US Dollar bounce, it's interesting to note that unlike most major currencies which are up against the greenback, the New Zealand Dollar is actually slightly down.

In fact, the Momentum2 strategy on DailyFX PLUS is currently giving a signal to short NZD/USD at current levels with a trailing stop at 0.8391.

Past performance is not necessarily indicative of future results.

If you have an FXCM account, you can now automate this strategy by logging into the Mirror Trader platform with your Trading Station username and password.

 

[Jason Rogers]

Gold triggers multi-month Head & Shoulders pattern

This morning the DailyFX team tweeted about how Gold (XAU/USD) briefly broke below $1300 to flirt with the neckline of a multi-month head and shoulders pattern. If an entry order to sell XAU/USD was placed for a break below the August low of 1272.81, the profit target could be set around the June low at 1180.15.

Past performance is not necessarily indicative of future results.​

The stop loss could be set above the 100-day simple moving average at 1338.27. To keep up to date with all their latest trade ideas, you can follow the DailyFX team on Twitter @DailyFXTeam

 

[Jason Rogers]

Two Indicators to Watch for Euro Bears

Below is an excerpt from quantitative strategist David Rodriguez's analysis of the Euro based on the latest weekly update of the Speculative Sentiment Index (SSI) published today on DailyFX.com:

"Retail FX traders are near their most short the Euro versus the US Dollar on record, warning of a potential sentiment extreme and major top.

Past performance is not necessarily indicative of future results.

"It’s always tempting to join the crowd in selling the Euro at major extremes, but the data itself shows the dangers of trying to time a reversal: retail traders have been net-short Euro since it crossed above $1.29 in July.

Past performance is not necessarily indicative of future results.

"Instead we’ll wait for concrete signs of a turn in price and sentiment. For the SSI that means watching the Momentum2 trading system, which is designed to catch big turns in trend. From a price perspective, our Senior Markets Strategist favors the topside as long as EUR/USD remains above $1.3475."

 

[Jason Rogers]

Emerging Markets Trade: Mexican Peso

Since today's scheduled release of Non Farm Payrolls has been postponed due to the US government shutdown, I thought it might be a good opportunity to take a look at an emerging markets trade. DailyFX technical strategist Jamie Saettele tweeted this morning about the following setup for the Mexican Peso.

Past performance is not necessarily indicative of future results.​

USD/MXN has broken trendline support. If a short position is entered at current levels, then the profit target could be set around the September low of 12.58180. The stop could be set above yesterday's high of 13.34430. To keep up with all his latest trade ideas, you can follow Jamie Saettele on Twitter @JamieSaettele

 

[Jason Rogers]

AUD/JPY: Pair to Watch for Debt Ceiling Showdown

DailyFX trading instructor Tyler Yell tweeted (@ForexYell) this morning about how AUD/JPY is a currency pair to watch during the debt ceiling showdown. The idea being that a "risk-on" currency AUD will suffer, while JPY will gain as a "risk-off" currency, if there is no government resolution over the US debt ceiling.

Past performance is not necessarily indicative of future results.​

A trade placed in anticipation of no government resolution could have an entry order to go short around 91.000 with profit targets around the 61.8% and 100% Fibonacci retracement levels at 89.522 and 86.460 respectively. A stop could be placed above the October 1st high at 92.388.

 

[Jason Rogers]

USD/JPY and the Importance of the 200-day Moving Average

USD/JPY touched its 200-day moving average on Tuesday. It is the first time the exchange rate has tested this widely watched support level since November of last year. More importantly it is the first time the rate has tested the 200-day at all since it began its meteoric rise last year.

USD/JPY Daily Chart

Past performance is not necessarily indicative of future results.​

Kristian Kerr, senior currency strategist at DailyFX.com believes the odds greatly favor some sort of recovery in the next few days as first time tests of the widely watched moving average after prolonged periods above are usually successful in generating some sort of bounce:

"...a prolonged period above the 200-day moving average suggests a very strong uptrend while the 200-day MA is a finite level that even non-technical traders can sympathize with. Orders thus tend to congregate around it... Be on the lookout for a USD/JPY snapback."

Past performance is not necessarily indicative of future results.​

Zooming in to take a closer look at the daily chart above, an entry order to buy USD/JPY could be placed at 96.75 with a trailing stop set at 95.75.

 

[Jason Rogers]

Momentum2 is long USD heading into FOMC

The Momentum2 strategy on DailyFXplus.com is long the US dollar against the Euro, British Pound and Swiss Franc. (It's flat against Yen and the Aussie.)

Past performance is not necessarily indicative of future results.​

Momentum2 can be automated on FXCM accounts via the Mirror Trader platform. The same username and password you use to log into Trading Station will allow you to access Mirror Trader.

 

[Jason Rogers]

Trade update: USD/JPY up 125 pips

On Tuesday, DailyFX senior currency strategist Kristian Kerr said to "be on the lookout for a USD/JPY snapback", and that's exactly what has happened.

"...a prolonged period above the 200-day moving average suggests a very strong uptrend while the 200-day MA is a finite level that even non-technical traders can sympathize with. Orders thus tend to congregate around it... Be on the lookout for a USD/JPY snapback."

Past performance is not necessarily indicative of future results.​

Zooming in to take a closer look at the daily chart above, an entry order to buy USD/JPY could be placed at 96.75 with a trailing stop set at 95.75.

A long USD/JPY position opened at 96.75 on Tuesday would currently be floating profit of over 125 pips. The catalyst for these gains was commentary emanating from both US and Japanese policy officials that was simultaneously dollar bullish and yen bearish.

USDJPY 1-minute Chart: October 10, 2013

Past performance is not necessarily indicative of future results.​

On the US side, Treasury Secretary Jack Lew was testifying to Congress about the dangers of passing the debt ceiling. Meanwhile, BoJ Governor Haruhiko Kuroda was on newswires trumpeting the success of "Abenomics". Some profits could be taken on USD/JPY at current levels leaving the rest of the long position open with the same 100-pip trailing stop.

 

[Jason Rogers]

Gold Trading Halted on CME for "Stop Logic Event"

Gold trading was temporarily halted on the CME for 10 seconds this morning at 8:42 AM ET for a "stop logic event," according to Bloomberg. A big trade knocked $25 off the price of gold in a short, two-minute span, triggering the event. Below is a chart of XAU/USD on Trading Station showing the move.

Past performance is not necessarily indicative of future results.​

What does this mean for those of us looking to trade gold at current levels?

While we may have bled off much of the premium behind a "debt crisis" bid on gold, there may still be enough insurance exposure that can send it the next leg lower on confirmation that the US government will offer a viable resolution. It is worthwhile to wait for further confirmation.

Past performance is not necessarily indicative of future results.​

A break below the 76.4% retracement level at 1239.97 could target a further drop to the June 28th low of 1180.15. A stop level for a short position entered on such a break could be set above the 61.8% retracement level at 1,276.97.

 

[spinola]

On Tuesday, DailyFX senior currency strategist Kristian Kerr said to "be on the lookout for a USD/JPY snapback", and that's exactly what has happened.



A long USD/JPY position opened at 96.75 on Tuesday would currently be floating profit of over 125 pips. The catalyst for these gains was commentary emanating from both US and Japanese policy officials that was simultaneously dollar bullish and yen bearish.

USDJPY 1-minute Chart: October 10, 2013

Past performance is not necessarily indicative of future results.​

On the US side, Treasury Secretary Jack Lew was testifying to Congress about the dangers of passing the debt ceiling. Meanwhile, BoJ Governor Haruhiko Kuroda was on newswires trumpeting the success of "Abenomics". Some profits could be taken on USD/JPY at current levels leaving the rest of the long position open with the same 100-pip trailing stop.

Well, I'm not one to rely on hope in the markets, but I do hope your politicians can sort their debt woes out over the weekend and dollar yen is marked up higher when the Asian session kicks off !

Closing out into daily highs here, so they are holding it up for anticipated higher prices.

 

[Jason Rogers]

US Budget Impasse Sinks USD

Well, I'm not one to rely on hope in the markets, but I do hope your politicians can sort their debt woes out over the weekend and dollar yen is marked up higher when the Asian session kicks off !

Closing out into daily highs here, so they are holding it up for anticipated higher prices.

Hi Spinola,

It hasn't panned out that way so far. US budget talks stalled over the weekend and risk assets around the world took a hit at the weekly open as the seemingly once-dismissed threat of a US default is very much alive – and seen fast approaching this Thursday.

Past performance is not necessarily indicative of future results.​

The Dow Jones FXCM Dollar Index (ticker: USDOLLAR) is down 0.24% to start the week as all major currencies are currently up versus the US dollar.

Past performance is not necessarily indicative of future results.​

The currency baskets on Mirror Trader can be used to take a position for or against a particular currency. If the US government doesn't reach an agreement to raise the debt ceiling in time, that could be extremely bearish for the US dollar.

Past performance is not necessarily indicative of future results.​

The "USD Basket - Sell" would be one to consider for such a scenario, since it places USD short positions against a basket of major currencies. If you have an FXCM account, then your Trading Station username and password can also be used to log into Mirror Trader for access to these currency baskets.

 

[Jason Rogers]

SSI: Retail FX Add to AUD/USD Shorts amid Rally on US Fiscal Headlines

Retail FX traders are maintaining their AUDUSD shorts and are doing so with greater confidence, data compiled today reveals. The latest Speculative Sentiment Index (SSI) reading for AUD/USD stands at -1.29 meaning 1.29 traders are short for each trader who is long.

Past performance is not necessarily indicative of future results.​

Yesterday the ratio was -1.06; 48% of open positions were long. Long positions are 8.2% lower than yesterday and 11.0% below levels seen last week. Short positions are 11.7% higher than yesterday and 33.7% above levels seen last week.

Past performance is not necessarily indicative of future results.
​

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 AUD/USD may continue higher. The trading crowd has grown further net-short from yesterday giving a further bullish trading bias.

Past performance is not necessarily indicative of future results.​

AUD/USD looks well-positioned for the coming days as retail traders seek to fade any rallies resulting from a US debt deal. A daily close above of 0.9510/30 (38.2% Fib April-August HL, mid-September/post-FOMC swing high) would suggest a greater recovery into 0.9715/20 (50% Fib) over the coming sessions.

 

[Jason Rogers]

Implications for US Dollar from Senate Debt Deal

Leadership in the US Senate announced early Wednesday afternoon a deal that would raise the US debt limit and reopen the US Federal Government – closed since October 1.

Avoiding default on the US government's debt seems like a plus for the US dollar, but the currency's safe haven status could still lead to a sell off in favor of higher yielding currencies which tend to rise due to the carry trade as risk appetite increases.

Past performance is not necessarily indicative of future results.​

One way to reduce the complications of the conflicting fundamental implications is to trade a basket of carry trade exposure. Using the long Dollar-based Carry Trade Basket on the Mirror Trader Platform, we can diversify individual pair risk and look to employ a trade on the benchmark as well.

If you have an FXCM account, then your Trading Station username and password can also be used to log into Mirror Trader for access to currency baskets.

 

[Jason Rogers]

US Dollar Breakdown Looks Like the Real Deal

The US Dollar has broken substantial lows versus the Euro and is near major price support versus the Japanese Yen and other major currencies.

USD/JPY 5-Minute Chart

Past performance is not necessarily indicative of future results.​

DailyFX quantitative strategist David Rodriguez believes the greenback will break lower:

"Our Retail FX sentiment-based strategies have sold into USD weakness as crowds buy into the breakdown, and indeed broad outlook leaves us in favor of continued weakness.

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

Past performance is not necessarily indicative of future results.​

"Given the breakdown and a sharp shift in crowd sentiment, we see little choice but to remain in favor of continued USD weakness."

The sentiment-based Breakout2 strategy on DailyFX PLUS is currency giving a signal to short USD/JPY at current levels.

Past performance is not necessarily indicative of future results.​

Breakout2 and other DailyFX PLUS Trading Signals are available as automated strategies on the Mirror Trader platform.

 

[Jason Rogers]

US Dollar Downtrend Likely to Continue

Extremely one-sided crowd sentiment, strong rallies in the US S&P 500 and other global equities, and very low FX market volatility all favor weakness in the safe-haven US currency.

Forex Volatility Prices Continue to Tumble, Favoring Slow-Moving Markets

Source: OTC FX Options Prices from Bloomberg; DailyFX Calculations​

Quantitative Strategist David Rodriguez's preference is to use the sentiment-based trading strategies available on DailyFX PLUS to trade the US Dollar lower until further notice.

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

Past performance is not necessarily indicative of future results.​

For example, the Momentum 2 strategy is currently giving a signal to buy EUR/USD with a trailing stop at 1.3532.

Past performance is not necessarily indicative of future results.​

DailyFX PLUS Trading Signals are available as automated strategies on the Mirror Trader platform.