No Change at BOJ!
By Mike Conlon | December 18, 2009
The Japanese Central voted to keep their interest rate at .1%, attempting to encourage economic recovery. Japan has been battling deflation for MANY years, but it has picked up recently as the most recent CPI (consumer price index) declined 2.2% in October, marking the eighth straight month of declines.
The also issued a statement that they do not “tolerate” deflation, but issued no plans as to what they actually intend to do about it. Mostly hollow words if you ask me.
So this morning we’re seeing some Yen (JPY) weakness, as its down across the board, most notable against the Canadian dollar (CAD) at -1.07%. CAD is strong due to a rebound in oil prices which is trading above 74.
Also, I’m seeing a bit of British pound (GBP) strength this AM as UK mortgage approvals rose. This means the banks are starting to lend more and hopefully that will help stabilize their housing market.
Euro is a mixed bag this AM, trading flat against USD so far. News out of Greece is that they are going to reform their notoriously lax tax policy to try to raise revenue to get their debt under control. In Germany, Business confidence reached its highest levels since July 2008.
The Swiss franc (CHF) has advanced past 1.50 Euro, as the Swiss National Bank (SNB) allowed the currency to appreciate. Back in March, the bank intervened in its currency to keep it from appreciating and undermining economic recovery.
Lastly, today is “quadruple witching“– where both futures and options positions expire. So this could lead to some volatility today… though I suspect it won’t be bad as traders have been paring back positions for the holidays and year end.
Tags: bank, cad, CHF, currenc, currency, dollar, dow, economic, EUR, Euro, franc, gbp, Il, index, interest, interest rate, invest, Japan, jpy, market, Mike Conlon, news, oil, pound, Swiss, trade, trader, trading, USD, Yen
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Pound Yen? Or Yen to Pound?
By Mike Conlon | November 18, 2009
The minutes from this month’s Bank of England (BOE) policy meeting have caused the British pound (GBP) to fall this morning, most notably vs. the Euro (EUR) and the Swiss franc (CHF), both around -.8% this morning. The reason for this move was that British policy-makers were split 3 ways in deciding how to extend their quantitative easing program and brought up the possibility of lowering deposit rates on reserves.
As I’ve discussed before, the Brits are by nature a fairly conservative bunch, and markets most definitely don’t like uncertainty. However, by agreeing to expand their debt-purchases, it is pretty clear that the majority are concerned about deflation today, at the risk of incurring inflation down the road.
Nevertheless, while the pound is down today, it is not experiencing what I would call a “major” sell-off. This could be because while the fundamentals are saying the one thing, the technicals could be saying another.
Let’s take a look at a 4 hour chart of GBP/JPY (click chart to enlarge) as this is a popular pair that is traded.
What we are seeing on this chart is what’s known as a “triangle” formation. Based on the direction that the move had occurred, I would call this a bullish pattern. So we are basically looking for a break-out to the upside (outside of the triangle) to occur. However, today’s news has actually caused this pair to break to the downside.
Does this mean that the pattern has failed and to expect this to trade down now? Not necessarily. What sometimes occurs with patterns such as these is that we get “false breakouts” or “head-fakes”. This means that the initial move is opposite what you expect to happen, so you give up on the pattern– before the move you expected takes place.
So does this mean that we are going to see movement to the upside? Again not necessarily. Are you confused yet???
At this point the way to trade a pattern that hasn’t done what you have expected is to wait for confirmation. What this means is that you want to wait for a few more candles to see what happens.
I think of a lot of reasons why GBP can trade higher that JPY despite this most recent news. So I’m going to be keeping an eye on this pair. I’m going to place a buy stop to go long just above the top of the triangle, say at 150.4.
So check back later to see if this gets executed.
To learn more about how to use chart patterns to enhance your trading, be sure to check out our currency trading courses!
To follow these trades real-time, get a free practice account here.
Tags: account, blog, CHF, course, currenc, currency, currency trading, dow, EUR, Euro, forex, forextrading, fundamental, fx, fxedu, gbp, Il, jpy, lot, market, Mike Conlon, news, pair, practice, rate, ssi, technical, time, trade, trades
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A Sterling Peformance!
By Mike Conlon | October 15, 2009
The British pound is showing its largest gains in 8 months as there is speculation that the Bank of England is going to pause its quantitative easing (QE) as there are signs that the British economy is improving. The GBP is the highest % gainer this morning, showing gains of: +2.73% vs. JPY, +1.61% vs. USD, +1.63% vs. EUR, and +1.66% vs. CHF.
Rising asset prices and an improving unemployment picture in addition to increased confidence are fueling the rally. There is also signs of short-covering, as pound bears take profits.
One chart that looks interesting to play pound strength is the daily chart of GBP/AUD. Normally, I wouldn’t chase a pair that has already had this strong a move, but GBP/AUD hasn’t exploded like the rest of them. One of the reasons for this is because the Aussie has benefited from a rising interest rate environment and the RBA’s Reserve Bank governor Stevens has maintained that they can’t be timid on rate hikes to combat inflation.
As a result, the Aussie has benefited as being the destination for funds in the carry trade. Lets look at the chart. (click to enlarge)
While the trend for this pair is CLEARLY down, the action on the chart represents a low risk entry point for a possible trade. When I speak of trades, I’m talking about the short- to medium term timeframe. This is considered a counter-trend trade, which hopefully turns into a trend reversal (start of a new trend).
If you go long this pair (buy it), you would want to place your stop just below the 3 day low, which would be at around 1.73. While you never want to fight the trend (as it is your friend), there are times when a low risk entry can prove to be profitable. Should this pair continue to move higher, I will move up my trailing stop to just below the low price of the last three day.
Check back to see how this trade works out!
To learn more about how you can spot potential trades such as this one, be sure to check out our currency trading courses.
Want to see how my calls fare in the market real-time? Open up a practice account and follow along.
Let’s make some money!
Tags: account, AUD, Aussie, blog, CHF, course, currency, dow, economy, EUR, forex, forextrading, fx, fxedu, gbp, interest, interest rate, jpy, market, Mike Conlon, money, practice, ssi, time, trade, trades, trend, USD
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Tough Start for GBP!
By Mike Conlon | September 24, 2009
Sometimes in trading you just have to stick with your initial “gut” feeling. Yesterday I wrote in an article below, “Sound As A Pound…. For Now” that I thought the long-term outlook for GBP was negative but that it would probably take a while for the market to catch on before the serious selling would begin.
Apparently not. And I highly doubt its because the market reads this blog, though one never knows! LOL
Anyway, GBP is getting slaughtered this morning, with GBP/JPY (-2.30%), GBP/USD (-1.92%), EUR/GBP (+1.64%), and GBP/CHF (-1.73%).
While I initially thought that GBP would remain positive vs. USD, it appears that they may be playing “catch-up” or “catch down” as it were to USD in the Quantitative easing department.
Any way you slice it, it looks like the GBP selling has begun and it could be a while for it to recover.
Want to see how much money a 2% move is in the currency markets? Get a real-time practice account here.
Tags: account, article, blog, CHF, currenc, currency, currency market, dow, EUR, forex, fx, fxedu, gbp, Il, jpy, Mike Conlon, money, pound, practice, practice account, time, trading, USD
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How to know how much a “pip” is worth for any pair!
By Sean Hyman | August 13, 2009
Many times, newer traders ask me how they can find out how much a “pip” is worth for any pair. Some will refer to these as pip “costs”, others will say pip “values”, etc. but it’s all the same thing.
They all want to know, if my pair moves up one increment or down one increment…how many dollars does that equate to?
Here’s the simple answer. It’s automatically calculated for you on your trading station. You can view this on the “Advanced rates” which is the default setting..OR…you can view it on the Simple rates” tab.
See both of them below.
I’ve circled (in each format) where to find the pip cost/value for a pair. Notice that any pair that ends in USD (ex. EUR/USD, GBP/USD, NZD/USD, etc.) all have pip values of $1.00 per standard mini lot. Had this been a micro account, then the pip value would be 10 times less or .10 (10 cents) per pip of movement (since a micro lot is ten times smaller than a standard mini lot).
Remember, that a standard mini lot = 10,000 units of currency and a micro lot = 1,000 units of currency.
So the pairs that end in something other than USD (ex. EUR/CHF, USD/JPY, EUR/AUD, etc.) will have pip values that change slightly over long periods of time.
However, you can easily see what a “pip” is worth in that pair BEFORE you place your trade since it’s conveniently located on your quote screen.
This is important to note because there’s a big difference in EUR/GBP’s pip value of $1.66 and EUR/AUD’s pip value of .84 (84 cents).
So one pip of movement for or against you in EUR/GBP is +/-$1.66. However, in EUR/AUD this same amount of movement is +/-$0.84 (big difference, dollar wise…yet the same amount of pips moved). Click on the charts to enlarge them.
Sean Hyman
P.S. - 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.php
Also, get a free, real time demo trading station here: http://www.fxedu.com/practice-forex-account
Tags: account, AUD, blog, charts, CHF, currency, dollar, dow, EUR, forex, forextrading, gbp, Hyman, jpy, lot, movement, nzd, pair, pips, rate, Sean, Sean Hyman, simple, time, trade, trader, trading station, USD
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EUR/CHF launches another 60+ pips and counting!
By Sean Hyman | July 30, 2009
Yesterday, I wrote an article and did a YouTube video for our partner, mywealth.com. Since the release of that article, EUR/CHF has launched forward another 60+ pips and counting. It’s literally hitting new highs as of this writing.
To view the full article and video, check it out here: http://www.mywealth.com/blog/post/potentially-safest-forex-play-entire-fx-world
Enjoy!
Sean Hyman
www.forextradingblog.com
Tags: article, blog, CHF, EUR, forex, forextrading, fx, Hyman, mywealth, pip, pips, release, Sean, Sean Hyman
Topics: What To Look At In The Market | 1 Comment »
AUD/USD broke higher as expected!
By Sean Hyman | July 28, 2009
AUD/USD broke higher as expected. It’s superior fundamentals have continued to cause it to head higher, especially when directly compared to the weak fundamentals of the U.S. and its dollar.
See the comments from RBA Governor Stevens below:
Reserve Bank of Australia Governor Glenn Stevens struck a decidedly hawkish tone at a speech in Sydney, driving home the point that going forward the central bank is now actively trying to time a return to higher interest rates. Stevens said Australia is faring better through the global downturn than other developed economies, noting that “confidence has recovered ground” and boasting that “unemployment is rising slower than expected”. He went on to stress that central banks should not relax their commitment to keep inflation anchored through the recession, a clear hint that global tightening of monetary policy should now be on the table. That said, Stevens conceded that some stimulus needs to remain in place for now and conceded that the timing of unwinding expansionary policy presents a challenge. The market greeted the RBA chief’s comments, with the Australian Dollar surging 50 pips in a mere 30 minutes.
EUR/CHF continues its overall ascent, as expected. The SNB continues to hold the pair above 1.52 and its only a matter of time before we see the high 1.53’s. Keep in mind too, that through our broker, you do earn some interest on this on a daily basis too (on their standard mini accounts). Not all have this on this pair right now.
Sean Hyman
www.forextradingblog.com
Tags: account, AUD, blog, central bank, CHF, dollar, dow, EUR, forex, forextrading, fundamental, home, Hyman, interest, lower, market, pair, pip, pips, rate, recession, Sean, Sean Hyman, ssi, time, U.S., unemployment, USD
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AUD/USD prepares to bolt higher!
By Sean Hyman | July 27, 2009
Trend trumps support/resistance! As you can see on the chart below, the trend’s direction is THE most important thing (green moving average line). The uptrend has prevailed through many black resistance lines before and it’s about to do it again, after a resting/consolidation phase.Click on the chart to enlarge it.
Aussie’s inflation is still high…it’s rates are the highest among the industrialized nations and the world needs its commodity exports. The global economy is recovering…China is buying up commodities to fuel its expansion…and Australia is the beneficiary of all of this.
Update on EUR/CHF: It continues to make “higher bottoms” as the Swiss National Bank, their central bank, continues to “sell francs vs. the euro. This continues to gradually push EUR/CHF higher.
Sean Hyman
www.forextradingblog.com
Tags: Aussie, Australia, bank, blog, central bank, CHF, China, commodities, commodity, economy, EUR, Euro, forex, forextrading, franc, Hyman, rate, Sean, Sean Hyman, ssi, Swiss, trend, update, uptrend
Topics: What To Look At In The Market | 1 Comment »
It appears the Swiss keep “raising the floor” on the EUR/CHF trade!
By Sean Hyman | July 24, 2009
Okay, I realize that this isn’t the only pair out there. However, it is likely the ideal candidate right now as it likely has much more upside potential than downside due to the constant intervening of the SNB - Swiss National Bank (Switzerland’s central bank).
Also, keep in mind, the trend is now upward recently…and no longer downward. Being that the EUR/CHF is one of the more widely watched/traded pairs by institutions (which produce such enormous volume for a “cross pair”), it won’t be long before their automated “trend following” programs kick in and aid the central bank’s efforts.
And…it appears that the SNB keeps going into the market and selling francs “sooner and sooner” all the time. See how it continues to “raise the floor” for the EUR/CHF pair. Click on the chart to enlarge it.
Sean Hyman
www.forextradingblog.com
P.S. - 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.php
Also, get a free, real time demo trading station here: http://www.fxedu.com/practice-forex-account
Tags: account, bank, blog, central bank, CHF, course, currency, demo, dow, EUR, forex, forextrading, free, fundamental, fx, fxedu, Hyman, market, mywealth, pair, practice, Sean, Sean Hyman, Swiss, technical, time, trade, trend
Topics: What To Look At In The Market | 1 Comment »
The key level to watch on EUR/CHF!
By Sean Hyman | July 23, 2009
Be sure to watch the 1.5220 region of resistance. Once this is cleared (and it won’t be long), then we’ll likely start the next “up leg” of the uptrend. Click on the chart to enlarge it.
The improvement in the global economy recently will only help this carry trade pair. Recent buying in the EUR/USD is also helping the euro rise overall as the dollar tanks. This has a “spillover effect” onto EUR/CHF as the Swiss sell their francs and the euro generally rises.
Look for more EUR/CHF gains over the coming days/weeks.
If you haven’t gotten in on this trade yet, it’s not too late. Get your account open today so that you can take advantage of the move! See yesterday’s post for the link to the live account application.
Sean Hyman
www.forextradingblog.com
Tags: account, blog, carry trade, CHF, dollar, economy, EUR, Euro, forex, forextrading, franc, Hyman, live, Sean, Sean Hyman, Swiss, trend, uptrend, USD
Topics: What To Look At In The Market | 1 Comment »