Forex Study Hall

$USDCAD: Levels 1.0032 .9980 .9950 .9927//// 1.618 fib.ext. 1.9860

2012-02-24T06:05:00.000-05:00

$EURAUD: Looks poised to go higher, watch 1.2445 level

2012-02-23T07:56:00.000-05:00

As $audusd is struggling to get back above 1.0700, some retracement may be in order for the pair which would give $euraud a boost higher. Also, better than expected German IFO data is making the euro more attractive with $eurgbp leading the way. I'm targeting the 1.2500-1.2550 area as this is an area of high congestion on a daily ichimoku chart (cloud resistance). Keep an eye on the 4-hour close coming up around this 1.2445 resistance level.

$USDJPY held in check by 1.618 fib. ext. 79.64

2012-02-21T07:01:00.000-05:00

So far, this fib level on the daily chart has contained $usdjpy's monstrous ascent into the heavens from its 76.03 low back on Feb. 2, 2012. Keep an eye on the US $ index for clues of possible $ weakness. If resistance continues to hold here around 79.64, next target with a short pause should be expected at 79.40. Should this support break, expect a move to just below 79.00.

$EURGBP: levels .8420, .8370

2012-02-14T09:18:00.000-05:00

Levels to watch during US session

$EURGBP triangle

2012-02-14T09:12:00.002-05:00

$USDCAD: Levels .9980 1.0040

2012-02-13T03:12:00.000-05:00

$EURGBP BEARISH CHANNEL

2011-12-20T15:58:00.000-05:00

Currently, $eurgbp is contained within a bearish channel on a 15min. chart. Concern still lingers for the state of the Eurozone community- France being the latest to possibly be downgraded from its AAA rating. However, toward the end of the year, along with holiday breaks, a selloff of the Euro may be on standby until January. Until price action exits this channel, long opportunities are muted. .8400 poses first resistance; .8450 next.

$USDCAD RANGE TRADES ALL WEEK

2011-11-12T09:23:00.002-05:00

There is a lot of technical data to observe in this chart. Notice the inverse head and shouldersssss :-) (sixth one in progress). In other words, there are multiple tests and rejections of price movement as it approaches the 1.0250 level (neckline). So this obvious resistance is one to watch for a break and sustained move above 1.0250. You also have a parallel channel that price action is respecting in its most recent waves of highs and lows. Price is making higher highs and lower lows which is a good sign of going higher after Friday's close lower. Fib. Retracement target levels: 61.8% @ 1.0364 then 76.4% @ 1.0480 of Oct. 4, 2011 high @ 1.06569. Should we break lower out of the channel, 1.0055 will become the gateway to 168% Fib. Extension target @ 0.9980

$AUDUSD prepares to retest 1.10 highs,Gold Rising

2011-07-10T09:29:00.001-04:00

The aussie has been quite active since its selloff towards the end of June (always keep in mind that volatility and irrational market behavior can be expected towards the end of the months as larger institutions prepare for the new month. Its most recent low of 1.03893 on 6/27 was a retest of previous low 1.0439 on 5/25. Since then, it has rebounded and tested and retested previous high 1.0773 on 6/3. Its current pattern appears to be consolidating in preparation to go higher. A look at the daily and 8hour charts to the right, you can see fib. extension levels within striking distance, fib. ext. 1.272@1.0893 and ultimately fib. ext. 1.618@1.1029. Watch gold closely for the next movement.

Gold has been rebounding and looking to also go higher. It has broken ABOVE its 76.4% retracement of down leg from 6/22 to 7/1 on the daily. Weekly and monthly charts indicate consolidation within a bull flag formation. A breakout to the upside looks imminent, but we'll have to wait and see. And the aussie will surely follow!

How does Blogger Mobile work? - Blogger Help

2011-07-10T07:58:00.000-04:00

How does Blogger Mobile work? - Blogger Help

$AUDUSD at 1.0750 slows the bleeding for now #forex

2011-04-21T13:55:00.000-04:00

The Aussie takes a breather as it currently consolidates. A sustained break below 1.0750 or above 1.0780 will determine if the uptrend will continue. This chart shows a long uptrend from 4-19-11 finally taking a pause. A break in this consolidation pattern will signal next move.

NZDCHF: Buying Tests Below .6900

2011-02-24T17:30:00.000-05:00

Quite a selloff in the New Zealand dollar over the last several days. Whether this is attributed to a recent earthquake or unrest in the Arab world, investors are looking, with great care, for the next turn of events to steer their direction. Though the selling is far from over (particularly against the US dollar), I have observed the NZDCHF pair beginning to taper off in its descent. MACD on a 4H chart is showing divergence in price vs. indicator. This chart shows a nice descending channel where current price appears to be finding a bottom on the lower end of the channel. I am buying here just below .6900, stop loss at .6825 with a .7300 target.

USDCAD Selloff Becoming More Shallow; Using Close Line To Filter Out Noise

2011-02-07T03:36:00.001-05:00

Since having a decent rally capped at 1.0853 on May 25, 2010, usdcad has been in a downward trend which has formed a beautiful falling wedge. This is a chart pattern that indicates a bullish move is imminent. I like to use a close line vs. candles to identify horizontal support and resistance and chart patterns such as a falling wedge, because it helps to filter out the noise of long wicks which signal false breaks. Here, we see usdcad is leveling along the bottom portion of the wedge which acts as support on its way down. A safe entry would be after we see a close above 1.0050 which would be a print above the upper trendline resistance. As equities advance has been limited, a sell off in JPY cross carry trades and repatriation of US dollars could be the catalyst.

Bullish divergence in $GBPUSD on daily chart

2010-12-29T11:12:00.000-05:00

MACD is showing classic bullish divergence as levels indicate $gbpusd is oversold. This type of divergence indicates underlying strength, and warning of a possible short to intermediate term change in trend from down to up. Adding to shorts now is not recommended until we have a return to normal trading conditions after the New Year holiday. Only then will we have a clearer sense of direction from here.

GBPUSD 200 Day MA holds as Pound takes a breather

2010-12-29T10:55:00.000-05:00

The GBPUSD recovers from its lows 1.5350 to reach well above its 200 day moving average. It currently consolidates beneath a .618 retracement of a sharp leg down yesterday from 7am to 11:30am EST. As of late, many retracements have been extending beyond the traditional .618 level to the .764 level. In this case, if 1.5450 poses little resistance, 1.5470 could be our next target.

MATAF.NET- Free Trading Signals

2009-05-15T04:30:00.006-04:00

If you haven't visited any of the links I have posted on here, the following site I must bring to your attention.

Mataf.net
is a good resource for making sound disciplined trade decisions providing readers with free trading signals with solid technical analysis. It's a good way to compare your own analysis to make sure you're reading the market clearly.

The other thing I like about the sight is that for each trade recommendation the writer states

Each trade is dangerous, take care and put your stop loss.

A hint to the wise is sufficient.

http://www.mataf.net

Follow on twitter:

http://www.twitter.com/forex

Flags & Pennants

2009-02-20T08:22:00.008-05:00

If you're a technical trader, then you know how opportunities develop based on chart patterns. One common pattern is the flag or pennant formation.

You'll find these patterns on almost any time frame, but when you discover a flag or pennant on a large time frame (daily or higher), you can expect the development of trading activity to be interesting over the next several days, weeks, or months. Take a look at this chart:

Without much fundamental data, having a good technical eye one can see a pennant forming as outlined by the lines drawn. Notice that price movement can make a false break of any trend line. So, you see that you can also have parallel channels that contain price movement while sustaining the pattern of consolidation until confirmation comes in one direction or the other (On Dec. 5, 2008 we had a high print of 1.3008 which has to be taken into consideration when drawing the upper pennant trend line. Thus, a parallel zone in the upper pennant is created which needs to be broken to give us a good signal of upper movement). In this case, a sustained move and break above 1.2700 or below 1.2200 would determine where we go from here.

Currently, this USDCAD pair is trading without much conviction, so caution is necessary toward the up side, but this will be one to watch over the weeks to come.

For more info. on chart flags & pennants or other chart patterns, visit the following link:

http://www.prosticks.com/education/chart_patterns/

Happy Trading!

Rate Alerts Make Trading Easier

2008-04-23T12:13:00.002-04:00

As I grow in my maturity as a disciplined trader, I continue to come across more tools and material that I had never considered before. Just when I have felt that I've obtained enough knowledge to execute orders with at least some rationale, I learn something new and what becomes an important asset in my course of learning. Something so simple as my new discovery can go a long way in protecting your margin and making you more profitable.

Rate alerts are text messaging signals that you can have scheduled to be sent to your cell phone or email. If you are with a pretty good broker you should have this feature. Basically, you choose the price of a currency pair at which you should receive an alert. The way I use this tool is, instead of placing real time orders to open a new position, I set rate alerts at technically significant levels. In other words, once you've done your homework using technical analysis (pivot points, stochastics, MACD, RSI divergences, candlestick formations, fib. zones, all of that good stuff) and realized the levels which will prove to be good support or resistance, then you place your rate alerts. The good thing about this is you can do an analysis on as many currency pairs you wish and place alerts on all of them you'd like without risking exposure to your margin. Once you receive the alert, you can then pull up a chart on the currency pair and do a further analysis to confirm.

Always remember the trend is your friend- Long time frame for direction, small time frame for entry/exit.

Best Wishes.

NZDUSD Showing Little Life

2008-04-04T08:47:00.004-04:00

Poor liquidity in NZDUSD during jobs report numbers out of the US. JPY crosses followed USDJPY southward from 102.40 to 101.60 only to have USDJPY reverse relentlessly back to where it was. The US reported -80,000 jobs and unemployment up 5.1 for the month of March, and revisions to the February numbers from -63K to -73K. Though this was bad news for the US market, it apparently has been priced in and will not have as much of an impact on riskier assets (JPY crosses) as one might expect. Most JPY crosses are recovering to their breakdown levels. Stay tuned.

Better To Be Flat Than Flat Broke

2008-03-21T04:38:00.002-04:00

Greetings traders. I know its been a while, but I had to make this point as I'm confronted too often with this same problem in my own trading. There is NOTHING wrong with being flat. This means being neither long or short, having no open positions. Consider this. If your money was just sitting in a bank account somewhere, that's ok. Sometimes just let your money sit and look at it. Reaccess what it took to get it to where it is. Read a good book on trading. And get ready for the next big move. Have you ever overtraded to the point when an opportunity does finally arrive you have no money available to seize the moment. Frustrating isn't it? Don't let all of that hard work go down the drain with one bonehead decision to take on an unwarranted trade. Step away. Take a walk, and think about that money just sitting there.

Happy Trading!

Happy New Year!

2008-01-15T20:59:00.000-05:00

Happy New Year to my fellow traders!

I hope this year is more profitable for us all. May your money grow exponentially.

The yen products took a nose dive around 7AM EST today as Dow Jones futures were pointing south with more financial crisis weighing on the markets. As New York traders began making their way in to work around this time, they apparently saw danger going into the stock market opening bell at 9:30AM EST. This forecast proved to be correct as the Dow closed down 277 points. All of the yen pairs sold off hard during the New York session.

The biggest story was Citigroup posting a loss of $18 billion after writing down the value of subprime mortgage investments. This is the greatest loss in the bank's 196 year history. Once again this is just a continuation of the subprime nightmare that many analysts have said is just the tip of the iceberg. You can expect things to get worse over the next couple of years until equilibrium is re-established between price, supply, and demand.

In one of my previous posts sometime last year, I predicted that a continuation of the Dow's fall could be expected around early February. This move came a little early, but nonetheless, I think this is what we were looking for. Right now it sits at a critical support as it dangles just outside of the Andrew's Pitchfork trending channel.

It doesn't look healthy enough to re-enter this trend channel especially with more lurking bad news from the financial sector. Looking at the weekly chart, the next stop looks to be around 12,000.

In my searching for statistical data on the Dow of how poorly it has performed for the year, I came across a site that might be of some use, the Dow Jones Indexes. I haven't had a chance to review it closely, but I thought I'd pass it on to my readers. I can't help it... I love to share information!

Much success to you and yours.

A Lesson In Divergence

2007-12-01T10:25:00.000-05:00

Looking at the Dow daily chart this weekend I observed a major divergence in price and volume. While the Dow has been climbing higher recently, the stochastic RSI is indicating an oversold signal. Keep in mind that this is still developing. We may not see a continuation of the downtrend until early February. Divergence is simply when price movement contradicts the technical indicator of your choice. When you have a higher high in price and a lower high on your indicator, this is divergence and any combination like this where price and indicator are reading opposite of each other. Divergence found across more technical indicators the better. Learn more about divergence at Forex Project.

You can detect exhaustion in the markets with technical indicator divergence along with candlestick analysis. Steve Nison is given recognition as the founding father of candlestick studies in the Western World- a technique used for hundreds of years by the Japanese.

Download Candlestick Charting Basics (PDF File 1MB)

Keep an eye on the Dow into early Febrary as convergence of some significant levels is approaching. While continuing to bump its head against trendline resistance, price action is contained with a downward sloping Andrew's Pitchfork, and finally a retracement possibly into the arms of a 0.618 level. All of these points near convergence in early February.

Have a good weekend.

Essential Data: COT Report, Traders Unite

2007-11-30T08:51:00.000-05:00

The more information you have the more successful you will become as a trader. There are many variables to consider when deciding to execute a trade. Certainly, fundamentals and technical analysis are your cornerstone. Also, statistical data made openly free to the public shouldn't be overlooked. Every week the U.S. Commodity Futures Trading Commission produces data of the number of commercial, speculative, and small traders that are trading a particular security. Whether its soybeans, corn, wheat, natural gas, pork bellies, live cattle, etc., the statistical records of how many people, banks or institutions are trading is recorded here CFTC .

Well, guess what? Currencies are also traded on the futures market, and what you'll learn from reviewing this data every week is where banks are positioned and where speculative and small traders are positioned. Although by the time you get the data (every Friday after 3pm) it is 3 days old, it can still be used in conjunction with technical analysis to determine a reversal. In this post I'm also including posts from a couple of other traders who explain the usage of COT data very nicely. You can download the COT excel spreadsheet here

which you can use to update currency futures data each week.

Enjoy and happy trading!

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"The Commitments of Traders report can signal a significant market correction when it shows that the Commercial traders are accumulating positions that are against the prevailing trend. It is not a trigger, it is a heads up. It stands to reason that even the banks and big institutions have to decide when to take profits, so when the market shows signs of trend exhaustion, the smart money is going to sell off at the highest prices available. The problem is that picking the top of a trending market is a daunting task. If you try to “guess” the top you will drain your account. The trend can be relentless. So first you must look for signs of trend exhaustion and reversal, and receive confirmation “across the board” before you even think about pulling the trigger on a trade.

In the following examples of trend exhaustion and signs of reversal, I am going to use LONG examples only. It is too tedious to continually try to cover both scenarios of long and short, so in these examples the market is trending long and the correction we are looking for will be a short (sell). From here on the projection calculator that attempts to calculate a daily range of prices, will be called “Chin Calculator”

SEVEN SIGNS OF TREND EXHAUSTION AND REVERSAL

1) Above the Chin calculator are calculations “Lower Low, Lower High, Higher Low, Higher High”. When the market is trending long, and making higher lows and higher highs, and the “yesterdays prices” row shows that the market failed to make a Higher High, this is a signal that the market could be setting up for a correction.

2) When the market is creeping up to a significant level of resistance in low volatility, this is a great sign for reversal

3) Divergence between price action and indicators. Pick your favorite, Stochastics, MACD, RSI, etc. When the market makes a higher high, but the indicator refuses to show a higher high, this can be a leading indicator of reversal

4) Reversal Candlestick patterns and familiar patterns of double top and head and shoulders on longer time frames. Also when bullish candles are getting smaller and smaller

5) Commercial accumulation. The market goes in to a tight range, usually 25-30 pip range. Commercials are systematically selling off long positions and gathering short positions, using the trend as it bounces off of the daily pivot to get the best prices. Look at a 5 minute chart and compare the bullish candles to the bearish candles. The bearish candles should be longer and have a higher volatility count

6) A group of small traders try to “pick the top” too early with a tight stop, and an exhaustion move happens when the market hits their stops.

7) Finally, your favorite overbought, oversold indicator. Mine is RSI. When the RSI passes 70, it is overbought, and 30 for oversold. Higher the timeframe the better.

Last week, for example, the commercials were short the GBP, and were long the JPY. That gave a great heads up for a short GBP/JPY trade, but the problem is………
When? I mean it is like believing in the second coming, you know it is going to happen, but the market keeps tarrying.

Interest rate differentials can give a little clue as to when this move could happen. In this case, since the GBP has a better intrest rate than JPY. The reason for this major uptrend is that when one holds a long position overnight, you are paid intrest (or swap). So you get the double benefit of trading with the trend, and intrest accumulation. So if intrest accumulation (carry trade) is the “carrot in front of the nose” for the trend trader, then Wed. which is “triple swap Wed.” is the big payoff. This happens at the NY close on Wed. If you are holding a long position you get paid triple swap (3X intrest) So common sense tells you that if you are looking for a GBP/JPY short, it has a better chance of happening after the run-up for triple swap Wed. Conversely, if the commercials were short GBP and long USD, the swap rate is in favor of short positions, because right now USD pays a higher rate than GBP, common sense tells you that this short trade would have a better chance of happening earlier in the week and reaching its highest momentum on triple swap Wed.

You can also gain insight as to when a move could happen by looking over the news for the upcoming week, and asking yourself, which news announcement could create the volatility needed to make this move happen? Which upcoming news announcement could make the Commercials want to square positions before it happens? Last week it was the GBP rate decision. Forexfactory.com is a great resource for finding out how important individual news announcements are.

OK, now you have a heads up, with COT, and some general vigilance about when the move could happen. You are looking for signs of trend exhaustion and reversal. Now let’s try to get an idea of at which levels this could happen. Follow the instructions on updating the Chin calculator. Update early in the evening (or as often as you like), and this will give you a pretty good idea what high daily prices and low daily prices could be. Set price alarms for the “bargain prices” that you are looking for. . MY ALARMS GOT HIT! CAN I PULL THE TRIGGER NOW?

No, you still have to wait for confirmation across the board. You guessed it. This is where the currency meter comes in. I like to use the “lines” page. When the currency relative strength meter comes into alignment with your trade, you now have confirmation across the board, and permission to pull the trigger. In our GBP/JPY short example, JPY was strong and GBP was weak. When the market is slamming in the direction you were looking for, use any technical setup you like to get in. This setup is usually good for over a hundred pips if you are patient. Sometimes hundreds of pips.
Good trading, Lee"

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Re: [forextraderforum] A New System

Hi Robert.
COT are not remotely unique to my system. In the world of free information, they are well known in the trading community and used as a sentiment indicator.. On another board, Lorena stated it much better than I could
The concepts are the same, only the names of the currency pairs have changed. This past week, if you go back in your posts, I was looking to fade the GBP/JPY.

Lorena's Post
> The COT charts are a seminar in themselves (Google "commitment of
traders"), but I'll try to give the nutshell version, anyone that wants
to add or correct anything, please do so...
>
> They come from info that is reported to the US government about the
trading positions in the futures markets. We are not trading futures,
but there is no such data for the forex. The futures markets for
currencies correlates to what goes on in the forex world, so we can use
futures data as a proxy for the forex.
>
> The COT charts will graph the positions of 3 groups: Commercials,
Large traders, and Small Speculators.
>
> It is when you see the Commercials and Large traders at opposite ends
of the spectrum that you can anticipate a large reversal coming, it is
the Commercials that set-up the reversal, the Large traders are trend
followers and will stay with the trend till convinced it has reversed
(how many are still saying the Euro is going to continue up) and then
forced to close out their positions as price goes against them.
>
> *Caution* it can take weeks for the COT data come to fruition as a
trend reversal, but when it does it is often a fairly decent sized move.
You cant just look at the COT and say "oh look, the commercials are at
the extreme short side of the euro, jump in and sell the EURUSD"--you'll
get burned. You still have to use good technical analysis to find a
good entry, and set your stops appropriately. Just look at the
EURUSD...the COT has been extremely short on the EUR for a few weeks,
but it has made some 200pip swings up and down. I tried to show below
that there are technical and fundamental reasons why it looks like we
topped-out on the EURUSD, but you have to use sound judgment in getting
in, and staying in a position.
> Look at the AUDUSD, back in March, the commercials were Long the
AUD, but price sank about 400 pips before reversing for about a 800 pip
run up. What I think is happening it the trend-followers are keeping
the momentum going, while the commercials are loading-up on their
positions in anticipation of the inevitable reversal.
> Also, look at the Mexican Peso, the Commercials have been Long on
the Peso for several weeks, and price on the USDMXN has risen
considerably after a nice run down in April and May. (UP is
peso-negative, just like the USDJPY, USDCHF, USDCAD...because of the way
they are paired) But, the USDMXN has had several episodes of
topping-out that were just great sell opportunities. It hit a 1 year
high today and Neg divergence on MACD (like the EURUSD did yesterday)
then sank about 900 pips today (at about 9 cents per pip, per lot, which
I caught a good chunk of) . And last week's high turned out to be the
head of a nice Head and Shoulders pattern.
>
> When the commercials are at an extreme, like now with the Euro and
Peso, I tend to avoid entering trades that are counter to what the COT
is telling me, and just wait for another reversal...like the EURUSD's
run up to M3 this morning, then tanking.
>
> I like Barry Lees site. On the page that lists all of the
commodities, at the bottom if you click "ranked by COT index" I just
look at the top and bottom of the list for the currencies that are at
the extremes, and then look further at the graphs. The Peso is at the
bottom of the list now, which means the Commercial are at the extreme in
Buying it, (in the forex you would SELL the USDMXN pair if following the
Commercials), although the USD Index is approaching a Buy as
well....this may be why the USDMXN has vacillated so much.
> On the same page, the Euro is at the top, which means the
commercials are selling it...then look further at the charts to see if
it has hooked over and some are unloading their positions, and the Large
Traders(spec index) are doing likewise at the other extreme, that's time
to start looking for a good entry....like the the one-year high,
negative divergence, doubletop, price projected high of yesterday!
>
> It is not often there is two currencies at opposite ends of the COT
data and one is not the USD. This makes for a unique opportunity to
trade them both following the Commercials...my way of hedging in which
both sided eventually pay-off.
>
> Remember that the COT data is released on Friday, it is already 3 days
old, so consider what price did between Tuesday and Friday.

OK, that is Lorena's post, which I think is a pretty good description, but like she says, do a google search, and it will all become apparent. Lee

>

Lastly, join an email group or chat group that focus on finances- specifically the foreign exchange. FinancialChat.com is a great resource. I use Mozilla Firefox to which you can add Chatzilla (an internet relay chat component). The network is:

irc.financialchat.com. Type /join #forex for the forex chat room. Visit this page if you're new to IRC: http://www.irchelp.org/irchelp/new2irc.html

Dow Jones Rebounding, Looks Short Term

2007-11-29T11:46:00.000-05:00

The Dow is currently trading around 13,278- below its 10 & 30 week moving average and still respecting that trendline dating back to 7-17-06

The yen pairs are enjoying a nice recovery from this bounce. That NZDJPY trade around 80.00 went as low as 80.50 before bouncing to 85.50 a 500 point gain. If you traded this one, congrats! If you were wise enough to trade any of the yen pairs off of this Dow recovery, well done. However, downward pressure still exists so long as we remain below trendline support now turned resistance around 13,500. Take profit over the remainder of the week to reduce too much risk exposure.

Dow Rallies: Recovery or Retracement?

2007-11-14T07:37:00.003-05:00

The Dow closed just above its 200 day MA/ 40 week MA (5 days = 1 trading week, 200 days/5 days= 40 weeks). This also corresponds with a breach in significant trendline support now turned resistance dating back from July 18, 2006. The Dow will have to close above this trendline today and for the remainder of this week for its upward momentum to continue. The Yen pairs strengthened off of this move 350+ point move. For now it looks like the Dow has its head just above water. Look for weakness to continue as the subprime nightmare still looms.

Investopedia.com is your #1 resource for financial terms and an explanation of technical analysis tools like moving averages.

Dow Rallies: Recovery or Retracement?

2007-11-14T07:37:00.002-05:00

Dow Plummets, JPY Crosses Follow The Leader

2007-11-09T12:11:00.000-05:00

The Dow has continued its downward momentum all this week with more concern over undisclosed losses still to come from financial firms in the subprime market. The DJIA is facing pressure further to the downside according to its weekly chart.

Its 10 week SMA (13,662) & 30 week SMA (13,491) are nearing convergence. Money manager great, Victor Sperandeo ('Trader Vic'), points out in his book, Methods of a Wall Street Master , the significance of the weekly 10/30 moving average crossover. I've looked at charts for many securities, stocks and forex markets, and this crossover has served as a critical turning point. This book is an old publication, but he gives you some great technical advice when analyzing charts.

Its previous low of 12517.94 on Thursday August 16, 2007 was sustained only by federal government intervention where $120 billion of liquidity was injected into the banking system. They cut the discount rate from 6.25% to 5.75%. Most analysts agree that this was just a temporary fix. As the chart shows, the Dow's rebound from this level has been very minimal. Currently hovering just above the 13000 level at 13106.63, should this level give way, the Dow could see a further collapse with the 12,500 providing medium term support.

The Yen pair that I'm watching is the NZDJPY. It closed at 84.56. All of the Yen pairs are under siege with the Dow on life support. The first chart I have posted here is of the NZDJPY daily time frame. Using Andrew's Pitchfork (my newest favorite technical tool), it is apparent that support will come in around 80 should a substantial drop occur in the Dow next week.

The next chart zooms out a bit further to the weekly time frame. Always step back and observe the big picture. The weekly time frame usually gives you a good view, but you want to see all of the price movement of a security when making an assessment of the price direction- look at the monthly and quarterly charts too! In this weekly chart you can see what is called a trend channel represented by a blue upper trendline, a black middle trendline, and a red lower trendline. This is a regression trend channel. Basically, it shows you how well the security is trending. On longer time frames, you'll find how well price movement respects these boundaries. Again, on this chart support appears to come in around 80. Always do your own analysis and trust in your own judgement. Happy Trading!

Currency Pair Correlations, EURAUD

2007-11-06T12:37:00.000-05:00

The EURAUD has advanced over 200 points after liftoff from its Nov 1st low @ 1.5512. Typically, the rise of this currency pair means the fall of the AUDUSD, but with the US dollar so weak, and gold rising (the Australian Dollar is a commodity currency that benefits from an increase in gold prices), this correlation is not likely to occur.

Currently, EURAUD, AUDUSD, and NZDUSD are all consolidating. If EURAUD is to continue it's advance, it may be due to its other counterpart, the EURUSD.

Should US Dollar weakness persist, we could see EURUSD gunning for 2.618 retracement @ the 1.4950 level. This would give some lift to the EURAUD cause. In the midst of all of this EUR strengthening, you could see AUDUSD sustaining its gains while making very minimal advances. Alternatively, if EURUSD and AUDUSD move up together, then EURAUD will consolidate until one or the other goes into a correction.

USDCHF Trade Update, Awaiting Fed Rate Announcement

2007-10-31T11:46:00.000-04:00

I stayed with my USDCHF trade too long at 1.1630. It stopped out at 1.1620 after trading above 1.1660 a few times for what would have been a handsome profit. Nonetheless, I shifted my attention over to the JPY crosses. In this business, you should know that there is an amazing correlation between all of the financial markets and their many securities. As stated in my earlier post, the Dow and the JPY crosses have been moving hand in hand. So I took advantage of this movement by shorting NZDJPY short term for a nice gain of about 30 pips. The NZD pairs are the cheapest of all of the currency pair contracts that I trade over at Forex.com. It's good to know this when managing money and keeping your margin healthy. As a newbie in this market, I highly recommend going over to BabyPips. This is an introductory course study to the foreign exchange market. It's inciteful and fun. You advance in grade levels contingent upon successfully passing a test at the end of each lesson.

On the subject of correlation, there is also a correlation between all currency pairs. For more information on this, surf on over to Mataf.net. You'll find other valuable tools there too.

US Dollar Decline Subsides, Fed Rate This Week

2007-10-29T21:03:00.000-04:00

US equities closed in positive territory. Analysts are talking the same language- a rate cut is expected on Wednesday. Whether it will be 25 or 50 basis points is unclear. The US dollar strengthened against the Swiss Franc after closing a gap from Sunday night's open and also made gains against the Yen as traders resumed with the carry trade.

I receive a weekly chart setups from a website mailing list I subscribe to, http://www.dailyfx.com. It's a subsidiary of the brokerage FXCM. Kathy Lien & Boris Schlossberg are analysts of this company and the main contributors to the DailyFX site. You can learn a lot from these two. In your learning, you'll come across content on Investopedia.com provided by either of these two and I've seen Boris on CNBC on more than one occasion.
Even though their not analysts from my brokerage, Forex.com, I still favor referencing their studies.

On the charts below, DailyFx recommended a low-risk long position in USDCHF. As always, I do my own analysis to confirm recommendations. Knowing the nature of this pair, I realize that when it bottoms out, it is a firm support especially when confirmed by previous lows on a large, daily or weekly, timeframe. Currently, I'm long 3 lots at 1.1630. It's been a slow grind up, but it has been limited in surrendering any ground.

USD weakness continues, EUR & AUD New Highs

2007-10-28T10:32:00.000-04:00

The US dollar continued to weaken last week as the Euro and Australian dollar took the lead in its demise. The subprime market continued to weigh on US equities, but greater than expected earnings from the giant Microsoft helped to give the stock market a nudge into positive territory (almost 135 points) as the Dow closed at 13806.70. Lately, the stock market has been dictating the movement of yen crosses as investors begin to scale back on their risks because of uncertainty of the future. The AUDJPY has been weighing on the AUDUSD which looks long overdue for a correction. The AUDUSD, already at all time highs, is nearing completion of a 2.618 fib. extension at .9219 taken from 10-17-07 low, 10-19-07 high, and 10-22-07 low. If any area will offer weakness in this pair, this would be the place. The Aussie has been absolutely relentless over the last week and looks to keep rolling. The EURUSD pair is pressing up against resistance at the 1.4400 level. It too is at all time highs as the US dollar index continues to slump.

Forex Study Hall

$USDCAD: Levels 1.0032 .9980 .9950 .9927//// 1.618 fib.ext. 1.9860

$EURAUD: Looks poised to go higher, watch 1.2445 level

$USDJPY held in check by 1.618 fib. ext. 79.64

$EURGBP: levels .8420, .8370

$EURGBP triangle

$USDCAD: Levels .9980 1.0040

$EURGBP BEARISH CHANNEL

$USDCAD RANGE TRADES ALL WEEK

$AUDUSD prepares to retest 1.10 highs,Gold Rising

How does Blogger Mobile work? - Blogger Help

$AUDUSD at 1.0750 slows the bleeding for now #forex

NZDCHF: Buying Tests Below .6900

USDCAD Selloff Becoming More Shallow; Using Close Line To Filter Out Noise

Bullish divergence in $GBPUSD on daily chart

GBPUSD 200 Day MA holds as Pound takes a breather

MATAF.NET- Free Trading Signals

Flags & Pennants

Rate Alerts Make Trading Easier

NZDUSD Showing Little Life

Better To Be Flat Than Flat Broke

Happy New Year!

A Lesson In Divergence

Essential Data: COT Report, Traders Unite

Dow Jones Rebounding, Looks Short Term

Dow Rallies: Recovery or Retracement?

Dow Rallies: Recovery or Retracement?

Dow Plummets, JPY Crosses Follow The Leader

Suggested Reading for the Forex Beginner

Currency Pair Correlations, EURAUD

USDCHF Trade Update, Awaiting Fed Rate Announcement

US Dollar Decline Subsides, Fed Rate This Week

USD weakness continues, EUR & AUD New Highs