Forex Education Perspective: November 2015

Friday, 27 November 2015

Global FX Weekly 28th Nov 2015. EUR/USD sinks to 1.05

Forex Market Commentary

US Thankgsgiving and Black Friday saves the Euro

A respite in the US markets only saved the EUR/ USD from rapid erosion as the market bounced of the 1.0550 to end session at 1.0580. A strong retail sales on traditional post US Thanksgiving can push the EUR/USD through what was previously thought to be a strong band of support at 1.05. In short commercial banks were a no show at the 1.06 at the bid which augur bad and suggests there could well be another 300 pips down as this first probe to the 105 snapped support with little fight in it. Why? Answer = ECB supremo Mario Draghi talking that Euro down with more expansive suggestions of bond repurchasing and a sluggish global economy looming on the horizon. But Germany is not happy at all to see their 10 yr Bund yields slipping further and further to the 0.3% region with concerns over Euro zone deflation.

Small traders watching the EUR/ USD beware of further erosion from the 1.05 region to the 1.03 region even prior to the critical US December NFP data and FOMC. The current move is not a large spec action in an area that may prove to be highly contentious and volatile. Large bank OTC block trading proved to be non existent at the 1.06 mark as previously thought and the dealer noise is to expect the true support for the EUR/ USD. Consolidation below 1.0480 would be viewed as a significant challenge to the currency pair with a view to a march to parity sooner than later in Q1 Q2 2016. A slowing global economy as reflected in equities however should eventually slow the rise in value of USD and slow the erosion of price in crude oil markets. Meanwhile gold bullion touches the 1050 region as expected and is considered technically weak to hold even that with shorts eying a move to 1000.


Important data:

Equities:
Asia:
Nikkei 225   19,883.94 27 - 60.47 (0.30%)
SSE Composite 3,436.30 27    - 199.25 (5.48%)
Hang Seng 22,068.32 27 N     - 420.62 (1.87%)
Europe:
DAX 11,293.76    - 27.01 (0.24%)
CAC 4,930.14     - 15.88 (0.32%)

USA:
Dow 17,798.49    - 14.90 (0.08%)

Fixed Income Markets:
US Federal Reserve - +0.25%
ECB Base rate 0.050 %
Chinese interest rate PBC     China     4.60 %
Japanese interest rate (BoJ)    0.10 %

Important moving averages:

USDX above the 50 day m.at 97
EUR/ USD below the 50 day m.a at 1.10
Crude Oil WTI below the 50 day m.a. at 47
Gold below 50 day m.a. at 1130
US - 30 DAY FED FUND below 50 day m.a. at 97.55
US - 10 YEAR T-NOTES below 50 day m.a at 127.30


In speaking of moving averages; markets are not rational and daily price action volatile, but in the longer run trader expectation and negative sentiment can be collectively summed up through the 50 day moving average. Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.

USDX

US Dollar
100.090 +0.224 +0.29%
Support 98.848 Resistance 101.998
Forward 1 year - 102.67s.

EUR/ USD

1.059300 -0.001820 -0.17%
Support 1.05107 Resistance 1.06987
Forward 1 year - 1.06290s.

Crude Oil WTI

41.84 -0.67 -1.58%

Support 40.30 Resistance 43.40

Forward 1 year - 45.27s.

Gold

1058.760 -10.625 -0.99%
Support 1,050.1 Resistance 1,055.7
Forward 1 year - 1,060.0s.

Pieter Bergli - DeLoren Trust Holdings

A non-profit commitment to provide education on the properties of currency markets

Forex market commentaries and media reports for free

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

* European Union laws require European Union visitors to this blog to know that cookies are used by Blogger and Google, including use of Google Analytics and AdSense cookies and in reading material from this blog do consent to the use of such cookies

Forex Charts 28th November 2015 Currency markets, news and analysis.

Forex interactive charts

Powered by ForexGoer

Forex charts for technical analysis

Pieter Bergli - DeLoren Trust Holdings

A non-profit service for free education on in the forex markets

Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.

* European Union laws require European Union visitors to this blog to know that cookies are used by Blogger and Google, including use of Google Analytics and AdSense cookies and in reading material from this blog do consent to the use of such cookies

Friday, 20 November 2015

Forex Charts 20th November 2015. Currency markets, news and analysis

Forex interactive charts

Global FX Weekly 20th Nov 2015. EUR/USD closes lower.

Forex Market Commentary

The US market is still mixed in its rate outlook.

In truth the recent slide of the EUR/ USD is more to do with ECB chief Draghi comments in the valiant Euro attempt to inflate a sagging economy tottering on near negative yields in stark contrast to the US markets. Yes, it's the economy stupid! The strength in the US economy and a far better yield expectation is what is driving the USD to increasing heights viz a viz it's counterparts. Currently, 10 yr US government yields are running at 2.26%, Contrast this figure with the soft 10 yr German bond yields currently running at 0.48% or Japanese 10 year at 0.31%, and pretty much one could understand the reason for the rise in USD value as international funds seek to purchase USD to acquire higher bond yields in US government securities. Given this bond market context the EUR/ USD is not going to hold well at the 1,05 mark in spite of a slowing US economy. For the moment though commercial banks are putting up strong bid at the 1.06 mark and this should hold. it would take a dramatic consolidation at 1.0450 before Xmas to convince large specs to make a fresh run at the 1.00 parity mark in Q1 16. Given the slowing down crude oil WTI slips to 41 and may slip further to 35 Q1 and Q2 16 before price advance can become a possibility given stockpiles at record highs. Gold bullion will do well to defend the 1050 and is currently slipping that way on alarming news that Chinese gold lease rates are starting to hurt the Chinese economy with record defaults.

Important data:

Equities:
Asia:
Nikkei 225   19,879.81 +20.00 (0.10%)
SSE Composite 3,630.50 +13.44 (0.37%)
Hang Seng 22,754.72 +254.50(1.13%)

Europe:
DAX 11,119.83 +34.39 (0.31%)
CAC 4,910.97 -4.13 (0.08% )

USA:
Dow 17,823.81 +91.06 (0.51%)

Fixed Income Markets:
US Federal Reserve - +0.25%
ECB Base rate 0.050 %
Chinese interest rate PBC     China     4.60 %
Japanese interest rate (BoJ)    0.10 %

Important moving averages:

USDX above the 50 day m.at 96.5
EUR/ USD below the 50 day m.a at 1.12
Crude Oil WTI below the 50 day m.a. at 46.
Gold low the 50 day m.a. at 1130
US - 30 DAY FED FUND above 50 day m.a. at 99.84
US - 10 YEAR T-NOTES above 50 day m.a at 128.00


In speaking of moving averages; markets are not rational and daily price action volatile, but in the longer run trader expectation and negative sentiment can be collectively summed up through the 50 day moving average. Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.

USDX

US Dollar
99.630 +0.630 +0.81%
Support 98.227 Resistance 101.959
Forward 1 year - 100.735.

EUR/ USD
Euro 1.064800
Support 1.05637 Resistance 1.07695
Forward 1 year - 1.0780s.

Crude Oil WTI

41.55 -0.17 -0.41%

Support 40.68 Resistance 44.58
Forward 1 year - 46.23s.

Gold

Gold 1077.99

Support 1,070.29 Resistance 1082.37
Forward 1 year - 1,0808s.

Friday, 13 November 2015

Forex Charts 14th November 2015. Currency markets, news and analysis

Forex interactive charts

Looking ahead 2016 and how to trade FX with options

Forex Market Commentary

This year 2015, firstly, we have been taking a distant perspective of the currency market form a global macro-economic point of view. We have noted how the value of the US dollar is affected by it's domestic interest rates and how the strength of the Dollar compares to other major currencies by tracking the USDX. We have watched the two major economic zones of USA and how the currency pair the EUR/ USD has fared. Also we have observed how commodity prices affect inflation and the demand for the US Dollar through tracking the value of WTI crude oil cash contract. Furthermore we have watched how gold bullion as a standard of measure against inflation has fared against the rising and falling value of the US Dollar. A firm grasp of this global macro-economic setting is a paramount foundation for understanding the behavior pattern of the US Dollar.

Secondly, we have understood that the world of currency markets belongs to the commercial banks which buy and sell currencies for their customers who engage in international trade through imports and exports across international boundaries. Within this setting we have seen how large currency speculators have applied pressure to prices at key moments during the course of 2015. And of course during the cycle of zig and zag we have noted how the pendulum swings and equilibrium is restored in markets by tracking the 50 day medium term moving average and the 200 day long term average in price.

Thirdly, within such a setting we have learnt the need to place an understanding of fundamentals together with a basic grasp of technical trading.

A conclusion from the study of the currency markets may lead us to the basis that small speculators can become successful in trading currencies given that they apply a disciplining set of rules which can govern their own emotions and expand upon their strengths by way of choice of day trading vs position swing trading to suit the personality.

Small traders are limited in choices; but the lack of choice does not inhibt growth and success. it just means that the small trader has to become very smart in recognizing how to play to his/ her strengths.

Next year, 2016, I shall be focusing more upon the fundamentals of dealer noise and how to filter out the grapevine and develop your own instinct on how to sort out the rumor from the fact. It takes time to develop reflex actions but we shall try. Also we shall take a closer look at technical aspects of trading and how we can just cut out the huge amount of information overload to stick to a few grounding principles like candlestick charts, moving averages and RSI and work with these little studies to achieve a higher probability of success.

For portfolios under $100,000 forget trading currency options on the futures market. Currency futures are more suitable for portfolios over $300,000. Should a small trader devise an elementary risk diversification plan by dividing his/ her basket into 10 separate sections, when currency options can cost as much as $10,000, we can quickly see why their use is better served for larger funds. smaller traders are best served by understanding binary options and i shall be taking you through that world of binary options and how to deal with the rapid factor of time decay in hedging your position for a swing trade.

Overall, traders do not like to trade in December and are more likely inclined to square off their books and so i shall wind down the reporting now since we only really have the November and December FOMC to watch out for.

Given an official 25 basis hike I cannot see a big push on the EUR/USD to the 1,05 unless something dramatic happens in Europe with an expansion of QE to 80 billion or more. Germany is not happy and there is a growing dissension on the current European QE if it would lead to negative bond yields. So we should be range bound 1.06 - 1.08 for the rest of the yearon the EUR/ USD. USDX 98-99, Crude WTI 40 -45 and Gold may pick up with Xmas sales round the corner so we should see strong support at 1050.

Always remember that proper planning prevents poor performance.

Yesterday, when the US retail figures came out in US session and the EUR/ USD spiked in seconds some 40 pips I was just wondering to myself how many small short traders may have panicked and cancelled their shorts. When prices move against you I find that the more interesting part of trading, for the maturity of the mind to allow the trader to take a moment and step out and watch. and lo and behold the pendulum swung again in a matter of minutes as panic gave way to reason and retraced the price. It takes time to develop instincts to filer out the noise, but we shall get these soon enough. of course in the futures makets with a limit down you could always go the options pits and work out the call-put parity. This what I hope i can make small traders understand is: there's actually no need to panic at all; forget the maddening crowd and listen to your instincts building upon years of simple analysis. Cut out the noise and the zillion technical indicators. Keep it simple and march on cut and thrust but keep on marching on.

Yours sincerely,

Global FX Weekly 13th Nov 2015. Weak US Retail Sales.

Forex Market Commentary

The US retail market is clearly in trouble.

The Dow didn't like it at all as investors ran for cover losing some 200 points in the process. In fact from Asia to Europe to US it's been a red day all round. As feared US retail sales in October scratched a mere increment of 0.1% compared to a forecast of 0.3%. Not even cheaper crude oil in October lifted the market. Yes, there is clearly something wrong now. people just don't want to buy a new shirt or go for a big ticket item like a new fridge or automobile. The signs are for a soft economy in 2016 and with all these flags starting to show how could the US Fed initiate a 25 basis official hike now? November FOMC is going to be the decisive pivot point and at the rate information is coming out, considering dynamic time lags, the probability of a US rate hike is receding fast.

EUR/ USD has been falling for 5 weeks in a row now but held it's ground today as short traders became unwilling to place short sales on the pair in the light of this weak retail report. This is more to do with growing weakness in the US economy as a far faster pace than a general slowing down on the US economy.

Over in the US, Nordstrom, the US retailer, saw their shares drop 15% in Friday's session. The message is loud and clear; consumers are not willing to spend their money. US monetary policy-makers now have a problem: 10 years of next to zero interest and still the US consumer doesn't feel good at all. What does it take? Even weak Euro zone growth and the threat of further ECB QE expansion above the current 60 billion Euros expenditure per month, didn't really shake the EUR/ USD down. Germany is not happy its Bund yields have been dropping in recent weeks and is at loggerheads with the ECB with the fear of yields turning negative. That prospect will surely send the EUR/ USD to within touching distance of 1.05 even if the US economy is starting to show signs of a slow down. Commercial banks will show strong buying at 1.05-1.06.

Gold bullion has had a miserable week and is fast sinking towards the 1050 mark in the face of a strong US Dollar. With little chance of commodity inflation gold really has no reason as a holding for safety. Crude oil at 42 may buck the trend since the perceived weakness in the US and global economy may have already been factored into the price together with current logistics to give WTI crude a soft landing at the $40 region.

On an interesting note IMF Managing Director Christine Lagarde says that the Chinese Yuan should become a reserve currency. Currently the PBOc of China
is making strong progress in overhauling and modernizing it's financial market
after a troublesome year which saw a run on it's stock markets. Should the Yuan join the Dollar, Euro and Yen as the elite reserve currency it would be an incredible success story for China and although China has gone through a recent painful moment, the modernization plans of the PBOC are going well
to meet this goal by next year and calming the markets for international investors to return.

Important data:

Equities:
Asia:
Nikkei 225   19,596.91 - 100.86 (0.51%)
SSE Composite 3,580.84 - 52.06 (1.43%)
Hang Seng 22,396.14 - 492.78 (2.15%)

Europe:
DAX 10,708.40 - 74.23 (0.69%)
CAC 40 4,807.95 - 48.70 (1.00%)

USA:
Dow 17,245.24 - 202.83 (1.16%)

Fixed Income Markets:
US Federal Reserve - +0.25%
ECB Base rate 0.050 %
Chinese interest rate PBC     China     4.60 %
Japanese interest rate (BoJ)    0.10 %

Important moving averages:

USDX above the 50 day m.at 96.5
EUR/ USD below the 50 day m.a at 1.12
Crude Oil WTI below the 50 day m.a. at 46.
Gold low the 50 day m.a. at 1130
US - 30 DAY FED FUND above 50 day m.a. at 99.84
US - 10 YEAR T-NOTES above 50 day m.a at 128.00


In speaking of moving averages; markets are not rational and daily price action volatile, but in the longer run trader expectation and negative sentiment can be collectively summed up through the 50 day moving average. Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.

USDX

US Dollar
98.837 +0.277 +0.36%
Support 98.227 Resistance 99.959
Forward 1 year - 99.735.

EUR/ USD
1.076950     -0.002350 -0.22%
Support   1.06637      Resistance 1.08695
Forward 1 year - 1.0880s.

Crude Oil WTI

42.00 -1.03 -2.40%

Support 40.68 Resistance 44.58
Forward 1 year - 48.23s.

Gold

1083.800 +0.655 +0.06%

Support 1,075.29 Resistance 1092.37
Forward 1 year - 1,0858s.

Thursday, 12 November 2015

Global FX Economy 13th Nov 2015. Bullion hits 5 1/2 yr low. Markets, news and analysis.

Forex Market Commentary

Gold slides to 5 1/2 year low at 1082.

Uncertain traders will be looking this Friday for Q3 Euro GDP and US October retail sales figures. EUR/ USD currently hovering around the 1.780 mark. Growing anxiety over a rate helped equity investors swoon as usual and run for the nearest fire exit. In the process the Dow shaved -254.15 or -1.44% to settle at 17448.07. Investors clearly displeased with a sneeze of a mention of a 25 basis official hike. For heaven's sake it's been 10 years has it? When is Wall street going to understand that near zero per cent interest rates is not only an anomaly but clearly unhealthy for the usual forward shape of he interest rate cycle and economic activity? USA 2015 has become the 1990's Japan - the sick old man weaned on next to free credit.

Read on Bloomberg all the fuss corporate America is making about Fed chair Yellen and her proposed interest rate shake up:

http://www.bloomberg.com/news/articles/2015-11-12/s-p-500-futures-are-little-changed-with-central-banks-in-focus

In view of the anticipated Dollar growth gold sunk to it's lowest level in 5 and 1/2 years and crude oil sunk to the 42 mark.

In speaking of moving averages; markets are not rational and daily price action volatile, but in the longer run trader expectation and negative sentiment can be collectively summed up through the 50 day moving average. Always look to support and resistance band lines as the key to understanding in the long and short term where prices are converging. Professional technical traders use 50 day and 200 day medium and slow moving averages as fundamental cornerstones for interpreting the direction of price action.

USDX

US Dollar
98.646 +0.086 +0.11%
Support 97.848 Resistance 101
Forward 1 year - 101.67s.

EUR/ USD
1.080270     +0.003745 +0.35%
Support   1.06107      Resistance 1.09987
Forward 1 year - 1.0990s.

Crude Oil WTI

42.89 -0.14 -0.32%

Support 42.30 Resistance 46.40
Forward 1 year - 47.27s.

Gold

1083.580 -5.240 -0.48%

Support 1,080.5 Resistance 1,100.7
Forward 1 year - 1,101.0s.