Best Thread FXCM/DailyFX Signals and Strategies

[Jason Rogers]

Are traders overly bearish after ECB rate cut?

The ECB took the unprecedented step today of imposing a negative interest rate on banks for their deposits—in effect charging lenders to park money with it.

Past performance is not necessarily indicative of future results.​

While the Euro dropped to 1.35023 on the announcement, it but is now trading above the pre announcement levels at around 1.36374.

Past performance is not necessarily indicative of future results.​

In fact the 24-Hour Trend Locator* shows strong signs across most indicators and time frames that EUR/USD could continue even higher.

Past performance is not necessarily indicative of future results.​

Furthermore, SSI confirms that retail traders flipped from being net long the pair to being net short. Since SSI is a contrarian indicator, this is another sign EUR/USD could rise.

* The 24-Hour Trend Locator is available at FXCMapps.com and this promo code will give you 50% off: spring24hour (expires June 7th)

 

[Jason Rogers]

US Dollar Suffers as June NFPs Fail to Stir Fed Rate Hike Speculation

A recap of today's NFP:

- Change in Nonfarm Payrolls (MAY): +217K versus +215K expected, from +282K (revised lower from +288K).
- Change in Private Payrolls (MAY): +216K versus +210K expected, from +270K (revised lower from +273K).
- Unemployment rate (MAY): 6.3% unch versus 6.4 % expected.
- Participation Rate (MAY): 62.8% unch.

Currency analyst Christopher Vecchio commented on DailyFX.com: "Even though the better than expected headline figures provoked a quick rally in the US Dollar across the board, price quickly reversed trend and the EURUSD jumped from $1.3826 post-release to as hiugh as 1.3676 shortly after. Within thirty minutes of the report release, the EURUSD was trading near 1.3671."

Past performance is not necessarily indicative of future results.​

The latest SSI confirm that retail traders have increased their net short positioning in EUR/USD since my post yesterday, which could suggest that EUR/USD might be continue with further gains.

Past performance is not necessarily indicative of future results.​

 

[Jason Rogers]

Euro Looks Like a Buy, US Dollar at Risk at Key Resistance

Quantitative strategist David Rodriguez says the Euro looks like a buy here versus the US dollar as it trades near support.

"In concrete terms, we’re looking to buy major currency pairs as they test support and sell if they approach resistance. The Euro in particular looks like an attractive buy at these levels; a break of the post-ECB low looks unlikely until we see a material shift in market conditions."

Past performance is not necessarily indicative of future results.

 

[Jason Rogers]

AUD/USD Risks New 2014 High

Trading instructor Tyler Yell says, "There are two patterns unfolding that are pointing to the potential for significantly higher prices should AUDUSD close above 0.9410...

Past performance is not necessarily indicative of future results.​

"Both of these patterns could see AUDUSD targeting between 0.9695-1.000... The trigger to enter is 0.9410 & the stop at 0.9200 is the same for both patterns."

 

[Jason Rogers]

Russia Diversifying into Yuan, other Asian Currencies

RT reports that "Diversifying trade accounts from dollars to the Chinese yuan and other Asian currencies such as the Hong Kong dollar and Singapore dollar has been a part of Russia’s pivot towards Asian as tension with Europe and the US remain strained over Russia’s action in Ukraine."

If Russia continues the trend of gradually switching from the US dollar to Asian currencies and other countries follow suit, this could lead to a long term decline in USD/CNH, USD/HKD and USD/SGD.

 

[Jason Rogers]

US Dollar and Yen Strength Offer Selling Opportunities

The US Dollar and Japanese Yen likely to fall versus the Euro, Sterling, and Aussie Dollar on a key shift in FX sentiment. These are the setups we’re watching.

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

Past performance is not necessarily indicative of future results.​

Also, the crowd has only increased its net short positioning in GBP/USD to -2.55 on the Speculative Sentiment Index (SSI) on DailyFX.com which means there are 2.55 short positions for every single long position.

Past performance is not necessarily indicative of future results.​

As a contrarian indicator, SSI is giving strong bullish signals for cable. A break above $1.6845 would further confirm that further gains are likely.

 

[Jason Rogers]

Top Event Risk This Week: FOMC, RBA and BOE Minutes, Canada CPI

David Maycotte gives a preview of the key events for the week on DailyFX.com. Times below are in GMT:

"After last week's recovery against the US Dollar, the Australian Dollar may be positioned for a test of Aprils swing high. The spotlight turns to minutes from June's RBA Policy Meeting to see if it may just provide the catalyst needed to test resistance."

"...traders are sure to dissect the text for a broader directional outlook regarding the British Pound. Last week, the BOE Governor Mark Carney prompted a sharp rally in the single currency saying, 'the BOE could raise rates sooner than the markets expect'. This is a 180 degree turn from previous policy comments."

"DailyFX Strategist Jamie Saettele, CMT says the focus is lower for the US Dollar, following Thursday’s reversal, from below the 200 DMA. He says the cleanest levels of possible support are 10435 (former low and 61.8% retracement) and 10406."

"One of the figures of interest will be to see if a trend materializes and unsold new inventory grows. This would prompt contracts to reduce starts, and may spill over into the existing home market."

 

[Jason Rogers]

Spike in Real Volume versus Transactions Favors USD/JPY Rallies Higher

If Real Volume is very high while Transactions are relatively low, it suggests that larger traders are the most active participants in a big move. This matters because trader profitability data show that those with larger account balances tend to be more successful at trading forex.

Past performance is not necessarily indicative of future results.​

In plain terms: large Volume spikes relative to Transactions can often represent what "Smart Money" is doing. Therefore, the current discrepancy favors USD/JPY Rallies Higher.

Real Volume and Transactions indicators are available at FXCMapps.com

 

[Jason Rogers]

Real Volume and SSI bearish for Aussie

Now that Real Volume and Transactions indicators are available for Trading Station (free download at FXCMapps.com), we can use the data they provide to get new insights into what larger traders (AKA "Smart Money") is doing.

Notice in the chart below that Real Volume spiked up higher than Transactions on June 17th, compared to June 16th. That means the selling was made up of larger orders, which is a bearish signal for the Aussie.

Past performance is not necessarily indicative of future results.​

We get further bearish signals by seeing that the Speculative Sentiment Index shows that retail traders overall have actually increased their net long positions. SSI stands at 1.32 as 57% of traders are long. Yesterday the ratio was 1.23; 55% of open positions were long.

Past performance is not necessarily indicative of future results.​

Long positions are 12.9% higher than yesterday and 26.3% above levels seen last week. Short positions are 5.4% higher than yesterday and 31.8% below levels seen last week. SSI is a contrarian indicator, which means the signal is to sell when the retail crowd buys.

 

[Jason Rogers]

Check this out. Next Thursday we have ECB and NFP being released, on the same day!

This should lead to an exciting day of trading. NFP is being released a day early on the Thursday due to the US Independence Day holiday on July 4.

 

[Jason Rogers]

Weekly Changes in SSI and Real Volume

Weekly Change in the Speculative Sentiment Index (SSI)

Past performance is not necessarily indicative of future results.​

In his weekly SSI report, DailyFX quantitative strategist David Rodriguez says the US Dollar is "likely to bounce off of key lows versus Euro, GBP, Yen".

Weekly Change in Real Volume

Past performance is not necessarily indicative of future results.​

 

[WklyOptions]

Now that Real Volume and Transactions indicators are available for Trading Station (free download at FXCMapps.com), we can use the data they provide to get new insights into what larger traders (AKA "Smart Money") is doing.

Notice in the chart below that Real Volume spiked up higher than Transactions on June 17th, compared to June 16th. That means the selling was made up of larger orders, which is a bearish signal for the Aussie.

...

We get further bearish signals by seeing that the Speculative Sentiment Index shows that retail traders overall have actually increased their net long positions. SSI stands at 1.32 as 57% of traders are long. Yesterday the ratio was 1.23; 55% of open positions were long.

...

SSI is a contrarian indicator, which means the signal is to sell when the retail crowd buys.

Hi, Jason,

With regards to posts that match up indicators, signals, etc., it may be more educational and beneficial for T2W readers to receive follow-up on your original SELL bias.

If fact, looking at the Daily AUDUSD chart, and the Weekly and Monthly charts, the AUDUSD is bullish.

The SELL bias off the various indicators you listed in this past post did not unfold favorably.

What is important for traders and readers is the follow-up to any Buy or Sell bias signals. It does not matter if it worked out - or failed.

But not providing follow-up at either Profit-taking points, or Proven-wrong points on the charts - is poor practice.

Traders and readers must be trained to follow Buy/Sell signals, etc., to its conclusions.

Thanks for your time - and for your ongoing input and commentary!

Best regards,

WklyOptions

 

[Jason Rogers]

Thanks for your time - and for your ongoing input and commentary!

Thanks for your feedback. As you mentioned, my last trade idea to sell AUD/USD did not pan out.

The latest readings from the Speculative Sentiment Index (SSI) are neutral as exactly 50% of traders are long, while 50% are short. Yesterday the ratio was -1.10; 48% of open positions were long. Long positions are 1.4% lower than yesterday and 4.1% below levels seen last week.

Short positions are 9.9% lower than yesterday and 12.6% below levels seen last week. The trading crowd has grown less net-short from yesterday and last week. The combination of current sentiment and recent changes gives a further mixed trading bias.

 

[Jason Rogers]

NFP and ECB decision on the same day!

It's rare that NFP would be released on a Thursday, but this week's July 4 holiday has pushed the release ahead a day. And the ECB rate decision also happens to be coming out on Thursday as well. Should make for an exciting day of trading!

Do you think Real Volume and Transactions will be even higher than last NFP as a result?

Past performance is not necessarily indicative of future results.​

 

[Jason Rogers]

GBP/JPY trading close to January high heading into ECB/NFP Thursday

Here's an interesting chart heading into tomorrow's ECB/NFP doubleheader:

Past performance is not necessarily indicative of future results.​

GBP/JPY is trading close to the 174.833 high from January 2nd with the Speculative Sentiment Index (SSI) at -4.53. That means there are 4.53 traders who are short for every single trader who's long.

Past performance is not necessarily indicative of future results.​

Since SSI is a contrarian indicator to price action, the fact that 72% of traders are short gives signal that GBP/JPY may continue higher.

 

[Jason Rogers]

It's rare that NFP would be released on a Thursday, but this week's July 4 holiday has pushed the release ahead a day. And the ECB rate decision also happens to be coming out on Thursday as well. Should make for an exciting day of trading!

Do you think Real Volume and Transactions will be even higher than last NFP as a result?

As it turns out, Real Volume reached 135 million, and Transactions reached 5,500 for EUR/USD during the minute NFP was released today which is less than last month's NFP on both counts.

Past performance is not necessarily indicative of future results.​

 

[Jason Rogers]

Fundamental Forecast: A Change in Tack for USD and SPX in Second Half 2014?

Talking Points:

• Having passed a seasonal lull in volatility, will July serve as a reversal for a historical VIX trend?
• Activity levels present opportunities beyond just a dollar rally and yen cross reversal
• Volatility levels will determine the optimal strategy approach and other critical elements of our plan

.

You can use the Real Volume and Transactions indicators from FXCMapps.com to see volume behind the majors during the NFPs and ECB rate decision to gauge your trading approach.

 

[Jason Rogers]

SSI and Real Volume indicators for EUR/JPY

The latest reading from the Speculative Sentiment Index (SSI) for EUR/JPY stands at 1.29 as 56% of traders are long (1.29 long positions for every short position). Yesterday the ratio was 1.17; 54% of open positions were long.

Long positions are 8.7% higher than yesterday and 0.0% below levels seen last week. Short positions are 1.8% lower than yesterday and 7.2% below levels seen last week.

Since SSI is a contrarian indicator to price action, the fact that the majority of traders are long gives signal that EUR/JPY may continue lower.

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.

Notice in the EUR/JPY chart above how Real Volume (top) spiked to over 2.4 billion on April 22nd while Transactions (middle) and Tick Volume (bottom) did not have a corresponding spikes.

What could this indicate?

 

[Jason Rogers]

FOMC Minutes See Growth, End of QE and Financial Risk

Below are a few of the noteworthy highlights in the transcript released today of the Fed's last meeting:

• Staff anticipates a "brisk" rebound in 2Q GDP
• Growth in second half of 2014 and through next two years expected to outpace 2013 and rise more quickly than potential
• Generally agree that a $15 Bln Taper in October would end QE program so long as outlook holds
• Supervisory measures should be applied to address excessive risk-taking and associated financial imbalances
• Some Fed Officials considered investors are growing too complacent on financial risks – a factor in market performance

Daily Chart of Dow Jones FXCM Dollar Index (ticker: USDOLLAR)

Past performance is not necessarily indicative of future results.


Real Volume, Transactions and Tick Volume for EUR/USD

Past performance is not necessarily indicative of future results.​

 

[peeterwoolf]

Useful video from John Kicklighter. Thanks!