Getting Pounded!
By Mike Conlon | March 1, 2010
The British pound has blown threw psychological support levels at 1.50 vs. USD this morning as polls in the UK show the minority party holding a slight lead in the upcoming elections. It is the biggest loser this morning and is at a 10-month low. I identified this potential trade last Tuesday, saying that the Pound could be near 1.50 in “no time flat”.
There is a lot of news out this week, with various readings from the UK contributing to Pound weakness today, as well as Canadian GDP due out later this morning. If Canadian GDP comes in better than expected, then look for the market to bet that rates will be advancing sooner than later this year.
In addition, we are going to get interest rate decisions from Australia, Canada, and the Euro zone, as well as first Friday’s Non-Farm Payrolls report here in the US, which is ALWAYS a market-mover. If overall global risk can be shown to be contained to a few areas, then expect to see some risk-taking this week.
In currencies:
Aussie (AUD): The Aussie is higher this morning as corporate profits came in higher for the first time in 5 months and manufacturing expanded at its fastest pace since 2007, ahead of tomorrow’s interest rate decision. It is widely expected that the RBA will raise rates at the meeting, though the market is trading cautiously this morning. The Aussie is at a 25-year high vs. the British pound, making this pair the largest gainer of the morning.
Kiwi (NZD): The Kiwi is mixed this morning, as the N.Z. economy may have lost some momentum as retail spending and the housing market have slowed in 2010. This may give the Reserve Bank reason to pause on rate hikes until GDP growth is definitive. It is widely expected that rates will higher than the current 2.5% by June.
Loonie (CAD): Congrats to Canada for winning Olympic gold in hockey yesterday over the US and for putting on one of the more memorable Olympic games in recent history. Canada is also going to report GDP figures this morning and a higher reading may suggest higher rates. Tomorrow will be the Bank of Canada interest rate decision, and while they are not expected to raise rates from the .25%, they could issue stronger language foreshadowing a hike to come.
Euro (EUR): The Euro is hovering right around 1.35 vs. the US dollar and is down against all currencies but the Pound, trading at .906 at the moment. The unemployment figures came in showing an official 9.9% unemployment rate which will all but guarantee that the ECB will not be raising rates at Thursday’s policy meeting. However, even with subdued economic growth prospects, benign interest rate policy, and possible defaults, the Euro zone may STILL be in better shape than the UK and we could see Euro-Pound parity soon.
Pound (GBP): In addition to the impact that a change in government might have on the UK economy, mortgage approvals dropped to an 8-month low. The UK may be heading for the dreaded double-dip recession as their housing-market recovery may be losing momentum. On Wednesday the UK will report consumer confidence figures which are expected to be low in light on conditions, and Thursday will bring the decision on interest rates (expected to remain unchanged) and the BOE decision on Asset Purchases which could put further pressure on the Pound if continued and expanded. The Pound is currently at 1.493 vs. USD.
Dollar (USD): The Dollar is mixed this morning as the market digests all of the weekend news and is looking ahead to this week’s action. The US ISM Manufacturing Index is due out this morning, which will show if we are seeing any type of economic expansion. Aside from that, we are seeing mild risk-taking this morning, though problems with the Euro and Pound are causing the dollar to advance.
Yen (JPY): The Yen is lower this morning as the battle between the Bank of Japan and the government over quantitative easing continues. Tonight, Japan will be reporting their unemployment figures, which are expected to show 5.5% unemployment. We could see some yen weakness on the Australian rate decision as carry-traders become emboldened if the RBA raises rates.
Oil is back over $80/barrel and gold is roughly 1118/oz.
The Euro zone must be thrilled with the problems in the UK which hopefully will shift focus away from their problems and on to the Brits. While some are likening the situation in the UK to that of Greece, it should be noted that these two economies couldn’t be more dissimilar. The UK has many more options than the Euro zone regarding how to grow the economy, so while we may see some temporary Pound weakness, the UK economy is still in better shape than the Euro zone.
But always remember; trade what you see, and not what you think you know!
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Weekly Outlook from InnerFX 12/07
By Mike Conlon | December 7, 2009
EURUSD
Despite several attempts to breach higher last week, the euro failed to hold gains as the dollar rallied across the board on Friday, as a result of better than expected unemployment figures. The 270 points decline of Friday has cleared half of euro’s gains accumulated during the previous two months, hence December started by favoring the dollar bulls. Is this the time of a prolonged correction? Could be… but I maintain my positive view on EUR against the buck, for now, treating such declines as potential opportunities to re-initiate EUR long positions. Speaking of current market conditions – short-term sentiment is slightly bearish due to recent rejection into the 1.5150 region along with Friday’s collapse below the 1.49 handle, back into the key support region around 1.4850. A rising trend line support coming from July’s low at 1.3830 has been reached and limited intra-day losses but in case of the decline’s resumption within the coming trading sessions, we should focus towards the next support levels – into the 1.4700/30 and 1.4600 regions. In case of a recovery, which at this moment seem more plausible to me, I expect the 1.5000 mark, along with 1.5050, to provide a minor barrier – a lot weaker than before (during October and November). A sustained breach above the 1.5 handle would also turn momentum positive, signaling that the correction is over. Also keep an eye on the S&P500 as important levels are still intact into the upside – the 1113 barrier which is still intact, despite several attempts to breach higher along with false breaks/spikes to as high as 1119. Another key barrier is the median retracement of the long-term decline from 1576 to 666.75 which is set at 1121. Due to the solid correlation between EURUSD and S&P500: no sustained break above 1113 -> no breach above the 1.5100/50 region, simple as that.
(click all charts to enlarge)
Gold
The superior band of the uptrend channel (seen in the chart below) is, once again, providing support on current pullback. In case of a break lower, next downside barriers into the 1126 and 1100 regions may limit losses. Short-term sentiment shows some bearish signs but it was about time to look for a correction – because it can’t just climb to record highs forever, right? However, if the correction continues – below 1100, bulls should start to worry. On a medium term basis – uptrend is intact and extended dips will favor further buying.
GBPUSD
In my previous article, when cable was trying to recover some ground pushing on the 1.6600 handle from below, I pointed out that more selling towards 1.64 was likely – further weakness emerging, as expected, and cable printed session lows around 1.6420 before closing the week .36% lower. Downside remains favored for now, and a break above 1.6700 is needed to confirm the positive bias. Recent hesitation into the 1.6700 zone confirms the indecision of both bulls and bears and the 1.6270-1.6700 range will probably remain valid for now. However, the said 1.6270/00 support region may limit extended losses and provide a reversal point, as that’s quite an important level.
NZDUSD
Former support provided by the rising trend line coming from .6475 of July has provided a stable resistance on last upside attempts into the .7280/00 region. A break was needed to resume uptrend but selling into rallies favored the current decline which extended to as low as .7130 on Friday. Although NZD’s losses have been relatively smaller comparing to EUR (-0.86% vs. -1.37%), there are no signs of uptrend’s recovery yet. Below current market levels, important support is formed around .7050 by the 61.8% fibonacci retracement of .6685 – .7635. We’ll see how it reacts if current decline continues.
Happy trading!
Tags: analysis, article, blog, buck, charts, decision, dollar, dow, EUR, Euro, forex, forextrading, gbp, gold, Il, lot, market, momentum, nzd, sentiment, ssi, time, trend, unemployment, uptrend, USD
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GBP/AUD Trade Follow-Up!
By Mike Conlon | October 20, 2009
I just wanted to give readers a heads up on this trade that I called out last week. To give you a little background, I don’t typically like to say that I am doing this or that, but rather like to point out “possible trades” with “theoretical results.” Whether I am actually in the trade or not is immaterial for discussion purposes on this blog, as I don’t want to be seen as recommending specific trades, but rather as just trying to point out some tidbits that may be unconventional to some.
The reason I say this (and have disclaimers LOL) is because right after I posted this initial trade idea, I got a call from a good friend of mine who asked me in no uncertain terms, “Are you Nuts?” When I asked what he meant he gave me the usual response of don’t fight the trend, the fundamentals don’t add up, the Aussie is benefiting from the carry trade, BOE trying to keep GBP low through further threats of more QE, etc. And while I was aware of all of these factors before I picked this trade, something told me I should investigate this a little further.
Perhaps it was yesterdays sell-off of this pair that had me second guessing myself, but I realized that when dealing with trend-reversals rarely do they happen and then go strait up. So I decided to do some multi-time frame analysis.
Now you may be asking yourself, why don’t you use technical indicators? Well, I do, but do after the fact as confirmation to see if it matches up with what I’m seeing from the price action on the chart. What I’d rather do is begin looking at shorter time-frames to see if any discernible patterns are emerging.
Voila! I dropped down 1 time-frame (which for me is the 4-hour chart) and noticed what I thought to be a possible cup & handle formation. This is a very bullish pattern if it completes properly. Let’s look at the chart (click to enlarge):
Now you’ll have to forgive my awful chart-drawing skills, but as you can see, there is a very rudimentary c&h formation in progress. Should this pair breakout above the “brim” of the cup at around 1.785, then we could see some momentum to the upside.
To come up with a target price, I added the height of the cup to the breakout price of the handle and came up with roughly 500 pips. But because I am already in this trade (half position- I took some profits), I don’t need to take any action at this point. But if this should breakout above the handle, then one could play the break-out by buying just above that price level.
So while at this point the fundamentals still don’t add up for this trade, stranger things have happened. Its amazing to watch how the technicals sometimes predict fundamental action. Whether or not it will in this case is anyone’s guess. But that is what trading is about, not trying to guess where the market is going, but rather trying to increase your odds that a particular action may take place and having sufficient risk management in place if it doesn’t occur.
So keep an eye on this pair to see if this formation “activates”, and if so, listen to the news to see if anything material has taken place. Or you can just check back here… as I will be sure to update.
Good trading to all!
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Tags: account, AUD, Aussie, blog, course, demo, dow, forex, forex trading, forextrading, fundamental, fx, fxedu, gbp, invest, live, market, Mike Conlon, momentum, news, pair, pip, pips, ssi, technical, time, trade, trades, trend
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The “Risk Seekers” return to the market today!
By Sean Hyman | June 18, 2009
The risk seekers finally re-emerge! Today, the biggest percentage gainers are NZD/JPY (up 2.12% on the day), AUD/JPY (+1.85%), NZD/USD (+1.52%), AUD/USD (+1.14%). So the theme of the day is: commodity dollars vs. the dollar and yen. Now that these pairs have had a significant pull back and consolidation…see if they can breakout into new recent highs. If so, you might consider breakout entries to the upside and see if this thing “has wings”.
Tags: AUD, blog, breakout, commodity, currency, dollar, forex, fxedu, Hyman, jpy, momentum, mywealth, nzd, pair, percentage gainers, Sean, Sean Hyman, USD, Yen
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Why the Canadian dollar is so “Loonie”!
By Sean Hyman | June 9, 2009
They say they call the Canadian currency the “Loonie” because of their bird called the “Common Loon”.
However, while that’s technically correct, I think that it’s called the “Loonie” because it’s kind of “bi-polar”. Ha-ha!
You see there are two major “pulls” on the Canadian economy. One of them is the “pull” that commodities have on their economy. On the other hand, the other “pull” is based off of how their biggest trading partner is doing: the
The tough thing to determine when trading the Canadian dollar is when the focus is on the commodities side and when the focus is on the
As you know, the
You can see this easily on the visual below. Click on the charts to enlarge them.
You can see by the GDP chart above, as the
However, on the other hand, the Loonie can also do well when commodities do well. So how does one figure out this currency?!? I’ll tell you how I do it by the chart below.
If you have to say which side of the equation has more strength, I say it’s the side that assesses how the
In 2006 and most of 2007, commodities (like oil) and U.S. stocks (like the S&P 500) were going up…and the Canadian dollar (FXC) “ate this up”.
Note: As FXC goes up, you would want to be short the USD/CAD pair in the forex market to have the equivalent direction.
However, towards the end of 2007, you know what happened to
That’s why I say, when
HOWEVER, even if commodities continue to head higher… IF
By the way, if the central bankers have it right…and we’re past the worst and “green shoots” are starting to pop up once again, then one should be a buyer of the Loonie once again. And this is exactly why investors have poured back into it. Because BOTH stocks and commodities have stabilized.
As long as that theme continues, then shorting the USD/CAD pair will be just fine. If, for some reason,
Sean Hyman
Tags: blog, cad, canada, charts, commodities, currency, dollar, dow, economy, forex, forex market, forextrading, fx, invest, investor, momentum, oil, pair, recession, Sean Hyman, ssi, stock, stocks, technical, time, trade, U.S., USD
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The Flavor of the day: the New Zealand dollar! What are traders spitting out? Euros!
By Sean Hyman | May 19, 2009
Today the NZD/USD is up 1.20% and NZD/JPY is right behind it, up 1.15%.
NZD/USD is up, even more than anything else is down (percentage wise). So look for momentum there (intraday). You could get some sizable short term pops out of this pair this morning.
Go where the momentum is…..or I could say it this way….go where the fish are biting.
Sean Hyman
www.forextradingblog.com
Tags: AUD, blog, dow, EUR, Euro, forex, forextrading, gbp, jpy, momentum, nzd, pair, Sean Hyman, USD
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One of those days for the Intra-day trader to stand aside. Here’s why…
By Sean Hyman | May 6, 2009
Today, the biggest gainer on the day is AUD/USD up only 0.80%. So the biggest gainer on the day isn’t even up a full percentage point.
The largest loser on the day is EUR/AUD which is down 1%. That’s nothing for that volatile pair. So while there is mild Aussie strength on the day, there is no “big momentum” on the day.
Intra-day traders need “momentum” aka “movement” because they have to be “right” and essentially “right now”!
Therefore, on “dull days”, it’s best to stand aside. You will generally find that you preserve profits gained from previous days when you do this.
Note: Since the U.S. Dollar Index recently broke its uptrend, look for the EUR/USD and AUD/USD to have sizable upside days in the near future, relative to its “down days” overall.
The euro is the biggest component (over 57%) in the U.S. Dollar index, so it stands a huge chance at being a huge beneficiary. Also, the euro is the next most liquid currency outside of the dollar. Therefore, it’s the next logical place to go and why it gets the nickname of “the anti-dollar”.
The Aussie dollar has a huge advantage too because its fundamental data has held up much better than other countries…and it also has the highest interest rate out there…of any industrialized nation. Therefore, that gives it a huge “leg up” going forward too.
So once the momentum does come back (probably after tomorrow’s interest rate decision on the euro and pound), you will want to look to these two currency pairs to see how they are faring.
Also, remember that NFP (Non-Farm Payroll) report, comes out on Friday. Get started with a demo account today: http://www.fxedu.com/practice-forex-account
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Tags: AUD, Aussie, blog, currency, currency pairs, dollar, dow, EUR, Euro, forex, forextrading, fundamental, index, interest, interest rate, momentum, movement, nfp, pair, pound, Sean Hyman, ssi, trade, trader, trend, U.S., uptrend, USD
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Daytrading:Know when to Hold’em…Know when to Fold’em!
By Sean Hyman | April 23, 2009
So far, today is one of those days where the movements are mild so far (except in the exotic currencies: USD/ZAR and EUR/TRY which are the biggest % gainers on the day).
Nothing is either gaining or falling rapidly today. Daytraders typically need momentum and breakouts and days like today (unless it changes all of the sudden) are not conducive to that.
Now, if someone is a range trader and they play ranges, picking something in the “middle of the pack” like AUD/CAD, CHF/JPY, etc.
Sean Hyman
www.forextradingblog.com
Tags: AUD, blog, breakout, cad, CHF, currencies, EUR, forex, forextrading, jpy, momentum, movement, Sean Hyman, trade, trader, USD
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AUD/JPY is down over 5% on the day!
By Sean Hyman | April 20, 2009
AUD/JPY is down 5% today alone! Wow, what a correction….NZD/JPY down over 4%…AUD/USD down over 3.6% on the day now! So the downside momentum on the day is about double the percentage gainers on the day today. The strength of the yen today is amazing….when these yen crosses went up recently, they did so fearlessly. However, the corrections have been rather swift. So the use of stops are very, very important here.
Tags: AUD, dow, jpy, momentum, nzd, USD, Yen
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Theme of the day: Swiss franc Weakness!
By Sean Hyman | April 17, 2009
Currently, the USD/CHF is up 1.68% on the day while CHF/JPY is down 1.78% on the day. So the clear momentum mover on the day is the Swiss franc. It’s dropping like a rock…so the franc short sellers have been the ones to have the movement today thus far.
Those of you that are in the AUD/JPY swing trade are probably up about 50 pips thus far from yesterday’s mention of it in my blog.
Aussie has been the most “fundamentally strong” currency out there for a while now…so its best to buy the “best” fundamentally when markets are trying to work their way out of a global recession.
That’s why traders should keep an eye on AUD/USD, AUD/JPY, AUD/CHF, etc. and value those buy signals that they get higher than the buy signals that they get on other pairs (in my opinion of course).
Sean Hyman
www.forextradingblog.com
Tags: AUD, Aussie, blog, CHF, course, currency, dow, forex, forextrading, franc, fundamental, jpy, market, momentum, movement, pair, pip, pips, recession, Sean Hyman, Swiss, time, trade, trader, USD
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