An RSI trick to get you more signals when the traditional settings just won’t do it!
By Sean Hyman | July 3, 2009
Many times, in stronger trends…the traditional RSI setting just won’t cut it (14 periods). It won’t even come close to the overbought/oversold levels of 30/70.
[B]However, if you tweak your RSI settings to where they are set to 9 periods…then you will find that the RSI gets wider swings which will trigger more RSI signals at or very close to the 30/70 levels when the 14 period didn’t even come close.[/B]
See my chart and you’ll see what I mean. Copy/Paste this link into a new browser and you’ll be able to see the chart. http://www.forextradingblog.com/wp-content/uploads/2009/07/rsi-14-9.JPG
[B]Note:[/B] In downtrends, it’s best to ONLY take sell signals for your entries. In an uptrend, it’s best to ONLY take buy signals for your entry signals.
I’ve circled many of the signals below that triggered on the 9 period RSI that didn’t trigger on the 14 period RSI setting. This would allow for a lot more potential trading opportunities on this chart with that one small “tweak”.
Try it out, mainly when your 14 period RSI isn’t generating enough signals often enough. See if you like it.
Sean Hyman
Tags: currency, dow, downtrend, forex, Hyman, lot, RSI, Sean, Sean Hyman, setting, time, tip, trading, trick, uptrend
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Markets become “weighed down” after today’s Employment report!
By Sean Hyman | July 2, 2009
Unemployment in the U.S. now stands at 9.5%. Job losses came in at -467,000 vs. -360k expected. Oil slumped to $67 down recently from $70-$73. The Dow is down 160 points. Most all foreign currencies that I see are down on the day as the defensive plays of the dollar and yen both thrive upon the dour NFP report. So any bright spots out there? Yes, the revision on last month’s NFP came in better than expected by a small margin. Also, the ECB kept rates unchanged rather than lowering rates in the Euro Zone. So those are basically the only two “rays of light” out there this morning so far.
Tags: currenc, currencies, dollar, dow, ECB, EUR, Euro, forex, FXEDU, Hyman, job losses, lower, mywealth, nfp, oil, rate, Sean, Sean Hyman, spot, U.S., unemployment, Yen
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ECB keeps rates at 1% (as expected). NFP & ECB Press Conference @ 8:30 am EST
By Sean Hyman | July 2, 2009
The ECB kept interest rates unchanged at 1% as expected. Now let’s see if Trichet provides anything revolutionary in his press conference at 8:30am EST. Also, the U.S. Non-Farm Payrolls will be coming out at the same time and the U.S. Unemployment rate. So lots to keep track of around 8:30 am EST today!
Tags: ECB, Hyman, interest, interest rate, interest rates, lot, NFP, payrolls, Sean, Sean Hyman, time, Trichet, U.S., unemployment
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Yen Weakness and Canadian dollar Strength Abounds this Morning!
By Sean Hyman | July 1, 2009
The theme for today so far is “yen weakness” particularly vs. the Canadian dollar (CAD). This has pushed CAD/JPY up about 1.53% so far this morning. However, many other yen crosses are trailing behind it: CHF/JPY, EUR/JPY, AUD/JPY, etc.
The worst performers this morning? USD/CAD and AUD/CAD. So since CAD/JPY is the strongest and these others are the weakest…it shows that there is CAD strength across the board this morning, dominating many currencies out there.
The unusual thing about this? Canadian banks are closed today for a holiday. Normally that makes a currency very “dull” more times than not. So in this case, there must be enough speculative volume out there to push this currency around in the absence of the big bank volume. Interesting!
U.S. ISM Manufacturing will be out shortly this morning. So be on the look out for that and what it comes out at. You can get that info at www.dailyfx.com .
Sean Hyman
www.forextradingblog.com
Tags: AUD, bank, blog, cad, CHF, closed, currencies, currency, dailyfx, dollar, EUR, forex, forextrading, holiday, Hyman, interest, ISM, jpy, Sean, Sean Hyman, short, time, U.S., USD, volume, Yen
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How to Spot a Longer-Term Trend!
By Sean Hyman | June 30, 2009
When I’m teaching my courses each day, I get this question quite often. So I thought I’d share it here with you too! How in the world do you know how to spot the long term trend? Well it’s really simple.
First, you should pull up a daily chart that goes back in time at least a year (even more time is even better). Then place a 200 Simple Moving Average (SMA) on the chart. That’s the line that I’ve got the arrows pointing to on the chart below. The SMA can be found under the “Studies” or Indicators” section of most any charting package.
Let the 200 Day SMA be Your Guide
One of the most widely used indicators in the world is the 200 SMA. I even catch purely fundamental traders putting it on their charts. Why? Because everyone needs to be able to tell which way the long term trend is headed, even pure fundamentalists.
I’ve charted the EUR/USD pair on the daily chart going back several years in time.
The 200 SMA Smoothes out the Trend and Points the Way to Trade
Towards the left of the chart we can see that the “average” price moves upward over time. So while the price may be jagged and spiky at times, they moving average smoothes all of this out so that we can tell if the price is headed up overall or downward overall. To the left of the chart, the price continues to climb higher, so it’s in an uptrend at that point. However, on the latter part of the chart (right side), then trend turns downward and the longer term trend is then downward. You want to define the trend’s direction and trade with it because that’s where the higher probability trades lie. Low probability trades would be shorting an uptrend or buying a pair in a downtrend. You will notice that the price tends to trade at or above the 200 SMA in an uptrend and in a downtrend the price dips below the 200 SMA and holds at or below it.
How to know when a New Longer-Term Trend is likely Beginning!
Therefore, we’re alerted to a “new long term trend” emerging when the price makes this shift. We can see that in August of 2008 when the price fell below the 200 SMA. At that point, the long term uptrend ceased and the “new” downtrend emerged. Then in May of 2009, the uptrend re-emerged for the EUR/USD. As long as the pair can hold above this 200 SMA, then it’s still in its longer term uptrend. Once the pair drops back below the SMA and holds below it, we know that the uptrend has likely ended. So let the 200 Daily SMA on the daily chart be your guide as to whether you should be looking for “long” (buying) entry opportunities or whether you should be looking for “shorting” (selling) opportunities for your entries into a trend. Using this as your guide will enhance your trading performance. No matter how much you get tempted…don’t trade against this trend, but stick with it. Oh sure, you can take profits if you wish, once it trades way away from the 200 SMA…just don’t counter trend trade against it. Be patient and wait for a re-entry back into the trend once the pair retraces back towards its 200 SMA once again!
Click on the chart to enlarge it. 
Tags: alert, blog, charts, course, dow, downtrend, EUR, forex, forextrading, fundamental, Hyman, pair, Sean, Sean Hyman, short, simple, spot, teach, time, trade, trader, trades, uptrend, USD
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Dollar & Yen continue to fall as Volatility (VIX) does the same!
By Sean Hyman | June 29, 2009
As the VIX (Volatility Index) continues to drop in the stock market…it shows that the fears are subsiding and that traders believe that the worst is over. This sentiment is helping money to pour out of the dollar and yen today and into foreign currencies like the Aussie and pound today. As a side note…EUR/CHF just sold off rather quickly over the past few mintes…YET it remains above its downtrend line. The traders really want to push it back into a downtrend and the Swiss central bank keeps intervening to push the franc down, especially vs. the euro.
Tags: Aussie, bank, central bank, CHF, currencies, dollar, dow, downtrend, EUR, Euro, fear, franc, Hyman, index, market, money, pound, Sean, Sean Hyman, sentiment, ssi, Swiss, time, trade, trader, Yen
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Summer Trading Technique!
By Sean Hyman | June 29, 2009
In the summer, all financial markets havea tendency to die down and become more calm. Why? Because the very biggest of traders tend to take long summer vacations. In fact, many of the biggest traders may be out the entire summer (in stocks, forex, etc.). They will leave only “junior traders” on their trading desks which don’t have the authority to throw around the big bucks.Therefore, the markets in the summer (FX included) tends to be somewhat range bound. Therefore, I’d suggest taking this approach. Buy fundamentally strong currencies on pull backs and earn their higher yields daily while playing only the “long” side of the range. That way, if you get a breakout in the direction of the major uptrend, you’re still in the game and never counter to it. So being a buyer of AUD/USD or AUD/JPY for instance, on its pull backs could be a way to play this.
Tags: AUD, breakout, buck, currencies, dow, financial, forex, fundamental, fx, jpy, market, stock, stocks, trade, trader, trading, trend, uptrend, USD
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China “dogs” the Dollar by once again calling for a “Super-Sovereign” World Reserve Currency!
By Sean Hyman | June 26, 2009
Well, China is at it again. They’re calling for a “super-sovereign” world reserve currency. Lately, they’ve invested more in IMF bonds, IMF SDRs (Special Drawing Rights), etc. They’ve even been diversifying into commodities and commodity companies too. All of these things are bad news for the greenback! Therefore, it’s taking it on the chin once again this morning. The Aussie dollar has been one of the biggest beneficiaries (since they produce/mine so many commodities that China uses). So those that are long AUD/USD this morning have been helped this morning as the buck gets slammed!
Tags: AUD, Aussie, blog, buck, China, commodities, commodity, currency, dollar, forex, greenback, Hyman, invest, news, Sean, Sean Hyman, ssi, USD
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The Swiss Flex their Muscles and put Short Sellers in the “House of Pain”!
By Sean Hyman | June 25, 2009
The Swiss just intervened in their currency!
Glad I had my entry order in, waiting on it. I woke up the next morning and I was filled on the order and was up over 260 pips! That’s huge for a pair that typically moves about 80 pips in any given 24 hour period!
Check out what intervention looks like on the 5 minute chart below. Click on the chart to enlarge it.
You can see why it’s important even for technical traders to pay attention to the comments of central bankers. When they speak, they’re usually not bluffing. They will send out some warning signals to the markets ahead of time generally, as they express their disgust for where the currency is…however, if that’s not heeded by traders, they will soon put them in the “House of Pain”.
Of course, since I was long the pair as I anticipated the intervention, I’m loving it. But imagine the guys on the other side of my trade that had 260 pips of loss in about an hour! Whoa! That’s huge!
It appears that the Swiss have successfully reversed the downtrend in the EUR/CHF pair. This will cause them to gain the support of “trend following” systems that the big hedge funds run. That’s one reason why the Swiss sold francs furiously yesterday, to ensure they got above the “downtrend line” on the daily, 1 year chart.
This is a monumental moment for the Swiss! Now, if this trend reversal sticks…it will bode much better for their economy going forward.
Want to learn more about fundamentals and technicals? Sign up for an inexpensive, only forex course today and we’ll show you how: http://www.mywealth.com/currency-trading.html
Also, get a free, real time demo trading station here: http://www.fxedu.com/practice-forex-account
Sean Hyman
Tags: account, blog, CHF, currency, demo, dow, downtrend, economy, EUR, forex, forextrading, fundamental, fx, fxedu, Hyman, market, mywealth, pair, pip, pips, practice, Sean, Sean Hyman, technical, time, trade, trader
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Text from the FOMC Meeting!
By Sean Hyman | June 24, 2009
Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.
In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
Tags: Bernanke, blog, commodities, currency, economic, fed, Federal Reserve, financial, forex, housing market, Hyman, invest, job losses, lower, rate, sales, Sean, Sean Hyman, stock, stocks, time, Treasury, wealth
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