A Good Friday?
By Mike Conlon | April 2, 2010
All eyes are on this morning’s Non-Farm Payrolls report which is due out at 8:30AM EST. Stockholders anxiously await this figure as their market is closed today so those that didn’t hedge against potential downside risk may be a bit nervous going into this number and subsequently this weekend.
The NFP report is expected to show a gain of 184K jobs; however I read somewhere that some 70K of those jobs were due to hiring by the government for the census, which by all accounts is temporary. So there is a lot of uncertainty about what the market needs to see to form the opinion that the UD economy is recovering. Regardless, of what the number is, expect mucho volatility surrounding it.
In other news, the Swiss Franc made headlines yesterday as a major amount of selling hit the market near the close in Europe. While not confirmed by the Swiss National Bank (SNB), speculation is that the government intervened in the currency to weaken it and keep it from appreciating to further record highs. I don’t talk about the Franc much here, but the Swiss have been known to do this in the past as recent Euro weakness has caused Franc strength. The sell-off was good for roughly 350 pips vs. the Euro, a tidy profit if one were on the right side of the trade.
So this morning we are seeing dollar strength, and without the other markets trading to provide correlations and historical trends, the forex market is on its own today. So expect trading to be dominated by risk themes and little else today.
In the forex market:
Aussie (AUD): The Aussie is slightly lower as the market as traders pare back positions heading into NFP. The AUD/USD will be extremely volatile as it best represents the risk on, risk off trade.
Kiwi (NZD): The same deal for the Kiwi as the Aussie, though slightly more at risk as the Kiwi attempts to shake off the IMF’s claim form yesterday that it is over-valued by 10-25%.
Loonie (CAD): Will today be the day that the Loonie reaches parity with the US dollar? It came within 65 pips of doing so yesterday, and is currently sitting just over a penny away.
Euro (EUR): The Euro is just hanging in there above 1.35 vs. USD and is benefiting from the “no news is good news” mantra today.
Pound (GBP): The Pound has been on a tear as of late as exports have improved causing stocks to move higher. In addition, advance polls show that the Conservatives are leading right now, giving a glimmer of hope that fiscal responsibility may return to the UK.
Dollar (USD): I’ve already mentioned the Dollar above and the expectations, but my feeling is that initially we are going to see dollar strength, followed by dollar weakness brought on by a better than expected number. While I don’t like to guess at these things and I’m not trading this event, I must admit I’m totally confounded by this report. So I’m just gonna sit on my hands and watch the action from the sidelines.
Yen (JPY): The Yen has been weakening as appetite for risk and yield-seeking has been ferocious. This suits the Japanese just fine as a weak yen is good for exports.
So unless you have nerves of steel, I suggest you grab a bag of popcorn and sit back and watch this event unfold. (I realize its 8:30 AM and no one eats popcorn then, but I do have a European following and as they say with regard to other pastimes, “it’s always noon somewhere!”
I’m going to try to do the video live for the release of the number and am hoping that the increased craziness surrounding it doesn’t invoke technical difficulties.
Happy Good Friday and Easter weekend to those that celebrate it!
To learn more about how you can get started in the forex market, be sure to check out our currency trading courses!
To get started with a free, real-time practice account, click here!
Tags: account, AUD, Aussie, bank, cad, closed, course, currenc, currency, currency trading, dollar, dow, easter, economy, EUR, Euro, Europe, forex, forex market, franc, free, fx, fxedu, gbp, good friday, Il, intervene, Japan, jpy, Kiwi, live, loonie, lot, lower, market, mike conlon, news, nfp, nzd, payrolls, pip, pips, pound, practice, practice account, rate, release, ssi, stock, stocks, Swiss, technical, time, trade, trader, trend, USD, video, Yen
Topics: What To Look At In The Market | 1 Comment »
The “Calm” Before the Storm!
By Mike Conlon | April 1, 2010
Today will be an interesting day for the markets as the US stock market is closed tomorrow for Good Friday. Traders may be positioning themselves ahead of the Non Farm Payrolls number due out tomorrow, which is expected to show a gain of 184K jobs vs. a loss of 36K last month. As I have mentioned ad nauseum, this number is of extreme importance as the market will use this figure to determine whether the US is beginning economic expansion, or still in decline.
In other regions, the Pound is higher on better than expected UK manufacturing numbers, and the New Zealand dollar is lower after an IMF report stated that the Kiwi was “over-valued”.
Today we are expecting the US ISM manufacturing number, which will signal how far along we are in economic recovery.
In the forex market:
Aussie (AUD): The Aussie is higher this morning on renewed optimism over global recovery and risk-taking despite the fact that the trade deficit widened more than expected. Also adding to pressure on the Aussie was that manufacturing growth slowed last month, which may further contribute to sentiment that the RBA may hold on rates next week. However with oil above $84 a barrel, there is no doubt that commodity inflation is picking up. Futures and swaps are showing a 65% chance that the RBA will raise rates next week, though that figure is bound to change after NFP tomorrow.
Kiwi (NZD): The Kiwi is lower this morning despite risk appetite after an IMF report that reported that the Kiwi may be overvalued by “10-25%”. They also said that New Zealand should make spending cuts to return to economic surplus sooner. However it should be noted that part of this assessment was based upon an assumption that the US may tighten, which unfortunately may be economic fantasy.
Loonie (CAD): The Loonie is screaming this morning with oil above $84 a barrel and NFP on tap. The Loonie is only 100 pips away from parity with USD, and could get there tomorrow with a good NFP reading. No other news out of Canada. And frankly the Bank of Canada is happy for that.
Euro (EUR): The Euro is mixed this morning as German retail sales figures came in worse than expected in a sign that the Euro zone’s strongest economy may be weakening. In addition, the “rescue plan” for Greece appears to not be working as its primary function was to reduce Greece’s borrowing costs which as of today, is not happening.
Pound (GBP): The Pound keeps trucking along as signs are showing that the UK economy is improving. The UK Factory Index rose to a 15-year high as exports improved dramatically, no doubt in part of recent Pound weakness. In addition, the conservative party is increasing its lead at the election polls which many believe will bring the UK back to fiscal responsibility.
Dollar (USD): The Dollar is lower today as risk appetite is higher going into the 10 AM ISM Manufacturing number and in advance of tomorrow’s NFP. Should the number come in above analyst expectations of 184K, then we could see some major risk-taking (dollar weakness). If the number comes in positive but below analyst expectations, then we could see some mild-risk taking (mixed dollar). Should the number come in negative, we could see some MAJOR risk-aversion (dollar strength). Part of the problem is that the stock market is closed tomorrow and won’t reopen until Monday. A bad reaction could push equity futures lower over the weekend which could in turn cause a lower (much) open on Monday. So that is the basic scenario. However, with oil above $84 and possibly going higher, commodity inflation may force the Fed to move on rates sooner than later which could cause some dollar strength. Regardless of which way the number goes, expect to see some major movement.
Yen (JPY): The Yen is mostly lower today as the Japanese Tankan index sentiment rose to its highest levels since 2008. This index represents manufacturing confidence as exports have been stronger than expected. So the familiar story of Japanese stocks up, yen down as investors seek yield through carry trades is in full effect.
Tomorrow’s NFP is a unique situation for a couple of reasons. With stock markets closed for Good Friday, and the number expected to be positive for the first time in who knows how long (sorry too lazy to look up—but you get the idea) this could be THE pivot point in world markets.
Now I’m not trying to be Debbie Downer here, but my experience in the markets has taught me that sometimes when things look too rosy in the markets, that just might be the case. This situation could set up to be the “perfect storm” if the numbers don’t come in as expected. I feel like there might be not enough pessimism in the marketplace despite all of the inherent risks facing the market.
March can be a tricky month for stocks, and we’ve seen some of the more spectacular moves down occur (2008, 2009 come to mind). In addition, today is April Fool’s Day which brings out my superstitious nature. Now I’m not saying that the NFP number will be bad tomorrow, however I’ll be sitting this one out and content to let the market do what it does.
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!
Tags: account, AUD, Aussie, bank, cad, canada, carr, carry trade, closed, commodity, course, currenc, currency, currency market, currency trading, dollar, dow, economic, economy, EUR, Euro, fed, forex, forex market, free, fx, fxedu, gbp, good friday, idea, Il, index, interest, invest, investor, ISM, Japan, jpy, Kiwi, live, loonie, lower, market, Mike Conlon, movement, new zealand, new zealand dollar, news, nfp, nzd, oil, payrolls, pip, pips, pound, practice, practice account, rate, retail sales, RSI, sentiment, ssi, stock, stocks, time, trade, trader, trades, trick, USD, Yen
Topics: What To Look At In The Market | 1 Comment »
Top Performers!
By Mike Conlon | March 3, 2010
Forex System Selector (FSS) Top Performers!
When considering any automated forex system providers, not only is it important to have good strategies, but also it is equally important to have a good platform. FSS has you covered on both fronts!
When investors select individual EAs to use, market conditions will determine how effective any one EA will be. If market conditions aren’t ideal, even the greatest strategies can have less-than-desired results.
And that’s the problem with the “one size fits all” approach. You wouldn’t take a sports car four-wheeling, would you? Nor would you want a golf cart on the Autobahn!
Not to worry, the FSS has you covered, as there are over 40 different systems that can excel in a variety of different market conditions. Now you have the power!
Well by now you must be thinking to yourself that, “these systems couldn’t possibly be any good”. Am I right?
Well how does earning 9000 pips in one month with a 95% winning rate sound to you? That’s the type of system you will find in the FSS.
Here’s a look at our top 5 performing systems from last month:
Are you skeptical like I am? Don’t take my word for it. Come see for yourself.
Sign up for a free, FSS demo account here and see what all of the excitement is about.
Say “good-bye” to individual EAs and MT4 and “hello” to FSS, the future of automated forex trading!
Tags: account, blog, demo, demo account, forex, forex trading, forextrading, free, fx, idea, Il, invest, investor, market, pip, pips, rate, ssi
Topics: What To Look At In The Market | 1 Comment »
US Jobless Claims Rise!
By Mike Conlon | January 21, 2010
I don’t know why I even bother to express surprise anymore when every economic figure that comes out is “unexpected”. Trying to peg certain figures by using analyst expectations can be a fool’s folly. Let’s take today’s US Jobless claims figures which showed a rise of 36K more claims, as opposed to the analyst expectation of a small decrease.
As a result, the equity markets did an about face and proceeded to sell despite the fact the Goldman Sachs reported “record earnings”. Don’t lose sight of the fact that this comes on the back of the US taxpayer, but what’s a few billion dollars among friends?
So now that the stock market is down considerably, we have switched from mild risk-taking to risk aversion. This means that both the US dollar and Japanese yen are now the favored currencies of the day. Let’s take a look at a chart of the Aussie/Yen (AUD/JPY) to show the extreme volatility of this move. (click chart to enlarge)
As you can see, the market is still VERY skittish regarding any bad economic numbers that will show the recovery is not moving along as may have been previously thought. In markets as volatile as these, it’s important to keep tight stops and to look for reversals. As the new year is just starting, the markets are trying to find some sort of direction in what can only be described as “rudder-less ship trading”. In other words, extreme volatility.
As a quick aside, this AUD/JPY pair is down another 30 pips to 82.35 in just the time its taken me to put up this post. Wow. If you own stocks, today might be an ugly day.
to learn how to protect your stock portfolio through the forex market, be sure to check out our currency trading courses!
To open a free, real-time practice accounts to follow these events live, click here!
Tags: account, AUD, Aussie, blog, course, currenc, currencies, currency, currency trading, dollar, dow, economic, forex, forextrading, free, fx, fxedu, Il, Japan, jpy, market, mike conlon, pair, pips, practice, ssi, stock, stocks, time, Yen
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Non-Farm Payrolls Disappoint!
By Mike Conlon | January 8, 2010
The US Non-Farm Payrolls Report (NFP) is usually one of the biggest market moving numbers in the currency markets. Today’s number is no exception. The report came in for December at -85K, a very disappointing figure. Estimates were expecting this number to be flat, that we neither gained or lost jobs for the month. Although I had seen some pretty wild numbers tossed around, anywhere from +/- 200K. The revisions for the prior two months showed a net loss of 1K jobs, a negligible but encouraging figure.
So what does this all mean? Well in a word: trouble.
The US economy is not adding jobs nearly as quickly as the government had hoped. With all of the enormous amounts of stimulus spending, we have little to show for it. As a result of this figure, the US dollar reversed course and immediately began to weaken. If anyone had any delusions about a US rate hike in the first quarter of the year, they can pretty much forget about it as its now off of the table. Unless the dollar tanks so badly that Bernanke HAS to do something.
My guess is that we’re going to be looking at Japan 2.0 here in the US, our own version of their “lost decade”.
Just to illustrate the volatility that can occur around this figure, take a look at this chart of EUR/USD: (click chart to enlarge)
Close to 100 pips in a few minutes!
This could make an interesting year for the US dollar. There are 2 basic ways that we will see dollar strength this year; either through interest rate hikes or risk aversion plays. So while this logic may be a bit counter-intuitive to some, it’s going to be very important to take our clues from the other markets to see which theme is playing out.
And of course don’t forget that the dollar can continue to weaken well into this year, the question is going to be that if things don’t get better on the employment front, at what point does that filter through to the other markets?
Only time will tell.
To learn more about how these government figures can affect your savings, be sure to check out our forex trading courses!
Tags: Bernanke, blog, cad, course, currenc, currency, currency market, dollar, economy, EUR, eurusd, forex, forex trading, forextrading, fx, fxedu, Il, interest, interest rate, Japan, Mike Conlon, minutes, nfp, payrolls, pip, pips, time, USD
Topics: What To Look At In The Market | 1 Comment »
Support and Resistance!
By Mike Conlon | December 10, 2009
You have probably heard the phrase “support and resistance” thrown around with regard to technical analysis and price charts. This is one of the most basic and fundamental concepts in analyzing charts. Support is the area on the chart where there is buying interest, and resistance is the area where there is selling interest.
Why do I mention this now? Yesterday’s trade on the New Zealand Kiwi (NZD/USD) is a perfect example of how support and resistance works. Let’s take a look at what happened yesterday and why support and resistance is such an important concept.
(Click charts to enlarge)
Looking at the above three charts, you can see how resistance was identified at .7185. In the first chart, once the price of the pair traded up to resistance, it paused and consolidated a bit as all of the sellers were absorbed at that level.
In the second chart, once the pair broke through resistance, it settled back down and now used what was formerly resistance as support. This means that there is now buying interest at that level.
In the third chart, you can see the pair extend for roughly another 100 pips.
What these chart illustrate is a classic case of when resistance becomes support. Savvy traders who can identify where these levels are can take advantage of low risk entry points for profitable trades. And the same thing also works on the other side, when support can become resistance.
Knowing how to identify these areas can be the difference between making and losing money. The professionals know how to find these areas, shouldn’t you?
To become more educated about technical analysis, be sure to enroll in our currency trading courses!
Want to test out you chart reading skills on a free, real-time practice account? Get started here!
Tags: account, blog, charts, course, currenc, currency, currency trading, dow, forex, forextrading, fundamental, fx, fxedu, Il, interest, market, Mike Conlon, money, nzd, pair, pips, practice, rate, ssi, technical, time, trade, trader, trades, USD
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Yen Trade Follow Up!
By Mike Conlon | December 7, 2009
Last week I called out a long trade on USD/JPY, saying:
“Earlier this week the yen reached 15-year highs at 84.80 vs. the US dollar due to the Dubai news on that huge doji candle. Combined with a stochastic crossover near the 20 level could mean a possible trend-reversal, at least in the near-term. If this pair can stay below 89, then I expect strength to continue. Should it breach 89, then the next stop could be the 90.75 level.”
Well Friday was that day for the pair. As USD/JPY rocketed through the 89 level, making a high of– 90.763– before retreating a tad to rest for the next move. As you can see, I pegged that one pretty good– within .013 of the high!
How was I able to get such an accurate prediction?
The answer is Fibonacci Retracement! If you are not familiar with this technical tool, you should become familiar ASAP.
Let’s look at the chart (click here to enlarge):
From the chart above, you can see all of the Fibonacci retracement levels. These numbers are areas of “natural” resistance or support. So when I am looking at a chart, and I believe there is going to be a pullback or in this case, a reversal, I always want to take a look at the Fib retracement levels.
One of the reasons why technical analysis is so compelling is because that at times it becomes a self-fulfilling proposition, so to speak. If a lot of traders are expecting something to happen at a certain level, then chances are something will happen.
In this case, that 90.5 level stands to serve as the “last layer” of support for those who are still short this pair. I can assure you that if I know this, many far more sophisticated traders and investors know this as well. This is why I typically round up or down anywhere from 10-50 pips depending upon how strong of a move I think might occur.
Around these levels you will typically see “stop running”– trades happening above or below the Fib level as traders know that typically other traders in the opposite position will place their stops just above or below that level. That’s why on this daily chart you can see a “wick” on the candle as the pair trades up through the 61.8% level before closing just below it.
This trade made approximately 350 pips in less than a week!
To learn more about how to spot trades such as this one or how to manage your positions once in a trade, be sure to check out our currency trading courses!
To follow these trades real-time, get a free practice account here.
Tags: account, blog, course, currenc, currency, currency trading, dollar, dow, forex, forextrading, fx, fxedu, Il, invest, Japan, jpy, market, news, pair, pips, practice, rate, ssi, time, trade, trader, trades, trend, USD, Yen
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Yen Weakness Persists!
By Mike Conlon | December 3, 2009
Yesterday I wrote here about how Japanese officials are attempting to jaw-bone the yen lower. Today it looks like its working. As of this writing, we’re looking at a move of almost exactly 1 point, or 100 pips in USD/JPY. Yen weakness is the theme of the day so far, with the yen depreciating 1.12% vs. USD, 1.38% vs. AUD, 1.35% vs. EUR.
Let’ take a look at today’s chart vs. yesterday’s on USD/JPY: (click charts to enlarge)
As you can see from the charts, today’s move in this pair is considered a “gap” up, meaning that there was strong demand to own this pair. This is likely the result of some short covering and unwinding of the carry trade, which has occurred due to the reasons I outlined in yesterday’s article.
This will show us if a new trend is emerging if price doesn’t return to “fill the gap”. I identified around the 89 level as the first layer of resistance yesterday so let’s wait to see if we can get to that level and then what occurs if we get there.
To follow this trade real-time in a free, practice trading account, click here.
To learn more about technical analysis in the forex market, be sure to check out our currency trading courses!
Tags: account, AUD, blog, charts, course, currenc, currency, currency trading, EUR, forex, forextrading, free, fx, fxedu, Il, Japan, jpy, lower, market, Mike Conlon, pair, pip, pips, practice, technical, time, trade, trend, USD, Yen
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Adv GDP comes in at 3.5%!
By Mike Conlon | October 29, 2009
08:35 am : S&P futures vs fair value: +7.90. Nasdaq futures vs fair value: +11.50. Stock futures have spiked so that a much stronger start to the session appears to be in order. The improved tone comes in the wake of the latest dose of data. According to the advance third quarter GDP report, economic output increased at an annualized quarter-over-quarter rate of 3.5%, which is better than the 3.2% increase that was expected. That’s a sharp upturn from the 0.7% decline that was registered in the second quarter. Personal consumption during the third quarter was considerably strong. It came in with a 3.4% increase, which is better than the 3.1% increase that was widely expected and up from the 0.9% decline that was posted in the second quarter. Separately, initial jobless claims for the week ending October 24 came in at 530,000, which is a bit more than the 525,000 initial claims that economists had come to expect. The latest tally was essentially in-line with the previous week’s tally of 531,000. Meanwhile, continuing claims fell to 5.797 million from 5.945 million. (from yahoo finance)
So with the “fear” from this number abated, stocks up, US dollar (USD) and Japanese yen (JPY) down as risk-taking is back in play! Top gainers so far are Aussie (AUD) and Kiwi (NZD), as should be expected.
Take a look at the 5-min chart of AUD/USD (click chart to enlarge)
Having fun yet? Now up 60 pips in 20 minutes!
Now that the US economy appears to be recovering, with the first quarter over quarter growth in nearly a year, the carry trade is back on in full force as Australia is the place to be for yield seeking investors.
To learn more about how to do a carry trade, please check out our currency trading courses!
To follow the action live in a free, real-time practice trading account, click here!
Tags: account, AUD, Aussie, blog, course, currenc, currency, currency trading, dollar, dow, economy, forex, forextrading, invest, investor, jpy, market, Mike Conlon, nzd, pips, practice, rate, ssi, stocks, time, trade, USD, Yen
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Trade Update- GBP/AUD!
By Mike Conlon | October 21, 2009
As I’m sure you know by now, GBP had a nice move overnight and is currently up vs. (USD & JPY). Earlier this morning, it was also up a lot vs. AUD (this trade) to 1.8. When I saw this this morning, I placed a protective stop at 1.795 for another piece of my position and got stopped out on that piece.
Since that time, GBP/AUD has traded down and is now at 1.782. Anytime I am in a position that has a significant move, the DAY AFTER, I enter a new or confirm an older position, I will always take some profits. 150 pips looked good to me.
The commodity currencies, particularly NZD and AUD, are having good days as Reserve Bank Governor Bollard stated that the fact that the Kiwi is already strong would not preclude them from raising interest rates. Similar thoughts were made by Australia’s Glenn Stevens as well.
So while that all but kills any further chance of this trade succeeding more than it already has, I’m still going to sit in this last piece and see what happens. So my stop is at 1.766, my entry price on the initial trade.
Let’s see what happens as the all bank-talk seems to be heating up!
Tags: AUD, Australia, bank, commodity, currenc, currencies, gbp, interest, interest rate, interest rates, jpy, Kiwi, lot, Mike Conlon, nzd, pip, pips, time, trade, USD
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