Going On Vacation

Posted on June 28, 2009
Filed Under General | Leave a Comment

I’ll be on vacation for the next two weeks. I’m taking my time off the forex market. I’ll be enjoying the Rock Werchter festival in Belgium and then do some more travelling in Europe.

So, there won’t be any posts till July 15th. In the meantime, here are 10 of my favorite posts from recent months:

  1. Top 10 Forex Blogs
  2. 5 Most Predictable Currency Pairs
  3. Central Banks Intervention - Great Trade Opportunity
  4. Dollar Yen Correlation
  5. Forex Trading isn’t Easy Money
  6. 1:100 Is The Preferred Leverage
  7. Forex Trading Hours - When to Avoid Trading
  8. There is a currency that always goes up
  9. Forex Trading Surging In 2009
  10. And last but not least, a page that concentrates everything about a forex demo account.

See you later!

British Pound Outlook - June 29 - July 3 2009

Posted on June 28, 2009
Filed Under Opinions | 2 Comments

The British Pound stuck to its range for another week, failing to breach the magical 1.6660 line. This week’s key British events: Nationwide HPI, Current Account, Manufacturing PMI, Services PMI and American Non-Farm Payrolls could well shake the Pound. Here’s an outlook for this week’s 5 key events in the British Pound + a technical analysis for GBP/USD.

  1. Nationwide HPI: It’s published on Tuesday at 6:00 GMT, after being delayed from last week. Although not the first house price index, this is an accurate one. The British real estate sector has skyrocketed during the good years, and plunged in this crisis, accelerating the recession. After rising by 1.2% last month, it’s expected to turn negative again, and fall by 0.4%.
  2. Current Account: Britain’s current account usually shows a deficit, and the first quarter of 2009 isn’t different. At least it’s expected to squeeze down, and this might help the Pound. The deficit is predicted to fall from 7.6 to 6.5 billion. It’s published on Tuesday at 8:30 GMT.
  3. Manufacturing PMI: Purchasing Manager’s Index shows future expectations for the manufacturing sector. A figure below 50 means contraction. The figure has been below 50 for over a year, but has advanced in the last three months. Also now, it’s predicted to rise from 45.4 to 46.3. This will surely shake the Pound. Published on Wednesday at 11:30 GMT.
  4. Non-Farm Payrolls: On the first week of the month, the king of forex cannot be avoided…This super-major American figure shakes the whole world. After a surprise last time, when “only” 345K jobs were lost, NFP is predicted to take one step backwords and show a fall of 375K jobs. Strong movements are expected also in the British Pound. It’s published this week on Thursday at 12:30 GMT.
  5. Services PMI: The complementary figure for Manufacturing PMI is in the services PMI. Here, the purchasing managers show a more positive attitude in the survey. Services PMI surprised last month by jumping above the 50 line, hitting 51.7. This good momentum is expected to continue, by staying at the same score. Published on Friday at 8:30 GMT.

GBP/USD Technical Analysis

The British Pound continued its range trading last week, and it certainly marked the borders: it fell as low as 1.62, and went as high as 1.66, alittle lower than the major resistance line of 1.6660. This can be seen in the graph below:

GBP/USD Technical Analysis

This range trading has been going on for three weeks. The Pound fails to cross the major resistance line of 1.6660 which was a peak at the end of October. Looking down, 1.62 isn’t that strong - it was formed in the last weeks, but seems serious.

Non-Farm Payrolls could temporarily move GBP/USD below or above this range during the release. Naturally, surprising British releases or another huge surprise in NFP could make the pair break this range for the long term.

After closing the week at 1.6517, the Pound is close to the high end of the range, but anything can happen…

Have a great week!

For further reading:

Canadian Dollar Outlook - June 29 - July 3 2009

Posted on June 28, 2009
Filed Under Opinions | 1 Comment

USD/CAD went up this week and broke a significant resistance line, before erasing most of its gains. The Canadian dollar will move this week on Canadian GDP, American Non-Farm Payrolls and more Canadian figures. Here’s an outlook for the Canadian dollar, on the turn of the third quarter.

Here are the main events for USD/CAD:

  • Canadian GDP: Recession appears to be long lasting in Canada. Canada is unique in publishing GBP on a monthly basis. On Tuesday at 12:30 GMT, the monthly Gross Domestic Product for April will be released. Also this time, it’s predicted to fall, by 0.1%. This figure could surprise since the second quarter was better than the first.
  • RMPI: The Raw Materials Price Index is a very important figure in Canada’s commodity oriented economy. So the price index gives a good idea of where the economy is going. After falling last month, prices are on the rise - RMPI is predicted to rise by 2% this time.
  • Non-Farm Payrolls: The king of forex impacts all the currencies, and USD/CAD is no exception. After a surprise last time, NFP is predicted to make a small retreat, and fall back to a loss of 375K jobs from -345K). In previous months, the figure showed a loss of above 500K. After last week’s surprise, anything can happen. So, technical barriers might be erased after the release and then respected again. Due to the American Independence Day, NFP is published on Thursday this time. The hour didn’t change: 12:30 GMT.

There are other important American releases this week. I singled out the NFP for its great importance. The loonie will shake also on CB Consumer Confidence on Tuesday, ADP Non-Farm Employment Change,  ISM Manufacturing PMI and Pending Home Sales on Wednesday.

Another note: Canadian banks will be closed on July 1st, Canadian independence day.

Canadian Dollar Technical Outlook

It took USD/CAD a very long time to break the 1.1470 resistance line that I’ve mentioned over and over again. It happened last Monday as the pair went from 1.13 to 1.1550. This was the end of the resistance line. This critical point was a resistance line and a support line in the past.

After breaking the line, it was shattered on Tuesday and Wednesday. The loonie went through it all the time. USD/CAD reached the highs of 1.1637 and fell as low as 1.1420.

Technical analysis for USD/CAD now moves to an uptrend channel. It can be seen in the graph below:

canadian dollar usd cad uptrend channel

This shows that the direction of the Canadian dollar is down. At the closing price of 1.1426, USD/CAD is in the middle of the uptrend channel. The upcoming week’s events will move the pair within the range.

Around the Non-Farm Payrolls publication, the loonie will escape the channel, but this will probably be only temporary. If NFP or the Canadian GDP are very far from expectations, this channel can be really escaped, not falsely.

The Canadian dollar is an interesting pair, though not too easy…

Another technical outlook for the loonie is available on James Chen’s blog.

For a broad look on the week’s events, check out the Forex Weekly Outlook.

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Forex Weekly Outlook - June 29 - July 3 2009

Posted on June 28, 2009
Filed Under Forex Weekly Outlook | 2 Comments

The  king of forex - Non-Farm Payrolls, is published early - on Thursday. There are lots of other major figures in the start of the third quarter: ISM Manufacturing PMI,  interest rate decision in Europe, Tankan Manufacturing Index in Japan and a big bulk of data from Britain. Let’s see what’s on the menu this week:

Read more

Forex Broker Reviews - Top 5 Sites

Posted on June 27, 2009
Filed Under Forex Basics | 2 Comments

With many forex brokers out there, reviews about them become important to forex traders. I also intend to write reviews about forex brokers. Till then, I hereby bring a list of top 5  sites that review forex brokers:

  1. Daily Forex: Has a long list of forex brokers. It includes nice screenshots, ratings, advantages and disadvantages of every broker. The full reviews are also nicely organized, and allow user comments.
  2. ForexPros: They have an extensive direerctory of forex brokers, arranged by country, platform and more. Searching is also very useful. Their reviews are short and concise.
  3. Forex Trading Zone: Breaks down ratings for different features of the broker, such as charting, education, spreads, etc. Lots of details on each broker, but not enough brokers.
  4. Forex Peace Army: They have a user-generated list of brokers, including those that are out of business…the user rate the brokers and comment on them.
  5. Forex Realm: Another user generated list of reviews and ratings. It includes ratings from 1-5 stars, plus a scam rating. Seems very authentic.

There are many more broker review sites and pages. I figured that a longer list would just be too much information, so I’ve chosen my top 5.

The first thing I check with a broker, is if he offers a forex demo account. This is very basic. Read my post: Forex Demo Account - A Must for Every Broker

I would love to hear your recommendations for reviews on forex brokers.

Forex Links for the Weekend

Posted on June 27, 2009
Filed Under General | 2 Comments

Here are interesting forex-related reads for this weekend. All the linked articles have a scope larger than one day’s trade.

  • Adam Kritzer dives into one of the strongest factors in the forex market: risk, and asks if risk aversion is back.
  • Macro Man talks about ECB issues and also about the SNB intervention. Interesting and amusing as usual.
  • Kathy Lien writes about the effect of the SNB intervention to weaken the Swiss Franc. I believe it’s short lived.
  • Eric deCarbonnel is amazed by the correlation between US Secretaries of Treasury and gold prices. He concludes that the US Treasury is manipulating gold prices.
  • James Chen, writes about throwbacks and pullbacks when currencies make breaks, in technical analysis.
  • James W (from Forex Articles) explains the Triple Exponential Moving Average, or TEMA. He gives an example using the EUR/USD.
  • Casey Stubbs reviews the most common forex price patterns.

That’s is. I hope you like the mix of macro-economic and technical articles. Have a great weekend!

SNB Intervention - Shortlived Indeed

Posted on June 27, 2009
Filed Under Opinions | Leave a Comment

The SNB intervened in the forex market to weaken the Swiss Franc. Though still above the levels before the intervention, USD/CHF has lost its hot air, and is now trading lower. A lesson about central bank interventions.

On Wednesday, the Swiss National Bank intervened in the forex market in order to weaken the Swissy. Switzerland’s export based economy suffers from a strong Franc, and the SNB wanted to help the economy.

The intervention came at a low point - when USD/CHF was trading at 1.0630. The SNB pushed the pair up to 1.1080, 350 pips higher. I wrote a post about how an intervention from a central bank is only temporary, and provides a great trading opportunity.

USD/CHF closed the week at 1.0834, significantly lower than the peaks reached after the intervention. In fact, almost 250 pips lower. The Swissy didn’t fall to the lows at the time of he intervention, but fell to the levels it traded during the week.

Note that also against the Euro, the Swiss Franc had a renewed strengthening: EUR/CHF rose from 1.50 to almost 1.54 due the central bank’s work, at finished the week at 1.5229.

So, a central bank intervention is an excellent trading opportunity - the currency pair will get back to normal very soon. It won’t necessarily get back to the price at the time of intervention, but a serious retracement to previous trading levels is bound to happen.

Remember this lesson towards the next intervention!

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Forex Demo Account - A Must for Every Broker

Posted on June 26, 2009
Filed Under Forex Basics | 1 Comment

Not every forex broker out there offers a forex demo account. A demo account is a must for every broker. Checking out a broker via a forex demo account is a must for every trader.

The forex market is growing rapidly in the last few years. More people are trading currencies. This is especially felt in the current global crisis, when many people were disappointed and disillusioned from the stock market.

Together with the popularity of forex trading, there is growing number of forex brokers. Some have commissions, and some don’t. Some have tighter spreads and some have larger spreads. Some have a better platform and some don’t. Some have a high entry rate and some don’t.

All are acceptable.

But no demo account? That’s too much.

For people that are new to forex trading, this is of course useful for learning about the entire market. It takes time and practice to get technical analysis, money management and even the in-trade psychology.

But a demo account isn’t only for newbies. Any trader needs to test and to feel a forex software system, understand how it works and get familiar with its features.

A forex demo account enables you to get to know the broker’s software before putting real money in. Who would want to lose money just because he missed an important button? Who would want to throw cash stupidly?

Naturally, there are some things about the broker’s behavior that you’ll learn only in real trading. A forex demo account will minimize the risk to a minimum.

So, don’t put your money at a broker that offers no demo account!

For more on these issues, check out my special page about a Forex Demo Account.

Forex Daily Outlook - June 26th 2009

Posted on June 26, 2009
Filed Under Daily Analysis | Leave a Comment

A rather calm Friday is expected today, after the wild week. German CPI and American Personal Spending are the highlights today. Let’s see what’s up.

German Prelim CPI is collected from all the German states and is expected to rise by 0.1%. Also note the German Import Prices, which are expected to rise by 0.1%.

In Switzerland, the KOF Economic Barometer is predicted to show some easing, and rising from 1.86 to 1.77 points. Will the Swiss Franc remain weak? I think that the SNB’s intervention is temporary and provides an opportunity.

For more about it, read: Central Bank Intervention - Great Trade Oppurtunity.

In Britian, the Nationwide HPI is published, and it’s expected to show a drop of 0.4%. American housing hopes were hurt this week, with disappointing new and existing home sales. Will British HPI disappoint as well. For more the Pound’s week, read the British Pound Outlook.

In the US, Core PCE Price Index is predicted to rise by 0.1% after rising by 0.3% last month. Personal Spending is predicted to rise by 0.3%, after dropping by 0.1% last time.

Good data is expected from the University of Michigan: Revised UoM Consumer Sentiment is expected to improve from 69  in the initial reading to 69.2 this time.

It’ll be interesting to see how the loonie ends this week. During the week, USD/CAD broke the critical 1.1470 resistance line. After the break, it stopped to rest, but continues upwards. For more on the loonie, check out the Canadian dollar outlook.

Central Banks Intervention - Great Trade Opportunity

Posted on June 25, 2009
Filed Under Opinions | 4 Comments

In the forex market, huge volume makes even big interventions very hard. The SNB’s intervention had a short lived effect last time, and this time is no different - the correction will come. Such cases are great trade opportunities.

The Swiss National Bank intervened in the forex market on March 12th in order to weaken the Swiss Franc. A weaker currency makes Switzerland’s export driven economy stronger. At first it worked: the Swissy plunged against the US dollar and against the Euro quite fast. Technical barriers were breached.

But this effect was short lived. A few days later, the Swissy became strong again. The market corrected itself. In a $4.5 trillion daily market, such interventions, even from very strong and influential institutions as the SNB, can’t last for a long time. This is one of the basic characteristics of the forex market. Influence and foul play - not in forex. The high volume in forex makes it impossible.

On Wednesday, June 24th at about 10:40 AM GMT, the SNB did it again. They intervened in the forex market, and sent USD/CHF from 1.0630 to 1.0980 at 11:40 GMT. Yes, it leaped 350 pips in one hour.

Since then, the pair strengthened a little and then weakened. At the time of writing, USD/CHF trades at 1.0940. Still high, and there’s enough room to go down.

I’m not saying it’ll dive back to 1.0630, but it sure does have lots of room to fall. A great trade opportunity indeed.

Such interventions will happen in the future. Remember that they are short lived, and that a correction is imminent.

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