FXCM/DailyFX Signals and Strategies

Yen Risks Following Aussie Into Break

The HSBC’s Manufacturing Purchasing Manager Index is scheduled to come out Thursday, May 22nd at 01:45 GMT.

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A dismal print may pave the way for a larger decline in the AUD/USD as it dampens the outlook for the Australian economy.

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A break below 0.9200 could target Fib levels at 0.9155, 0.9060 and 0.8966.

Carry Trading the Russian Ruble

Traders who are short USD/RUB collect rollover interest daily at 5pm New York time. Triple rollover for Wednesday is $3.15 per 10k.

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Those looking for a possible entry point to go short can consider the 38.2% retracement level at 35.10.

Chinese Yuan – Are 90% of Traders Wrong?

In his article on DailyFX.com, trading instructor Rob Pasche pointed out that "91% of retail traders are short" the USD/CNH currency pair which means they are long the Chinese yuan relative to the US dollar.

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SSI is a contrarian indicator to price action. The fact that the majority of traders are short gives signal that the USD/CNH may continue higher. The trading crowd has grown further net-short from yesterday and last week. The combination of current sentiment and recent changes gives a further bullish trading bias.

Buy Setup for USD/CNH (US dollar vs. Chinese yuan)

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Rob Pasche sets his "entry order to buy around 6.2340. A stop loss below these levels at 6.2250 could be appropriate to cut losses quickly if the trade moves against us. Targets could be set as high as 6.2750 if USD/CNH were to reach the top of the primary price channel in the next couple of weeks."

EUR/JPY - Euro Likely to Fall further versus Yen

Retail forex traders are extremely long the Euro versus the Japanese yen and the EUR/JPY exchange rate is trading near important price support levels.

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A contrarian view of crowd sentiment leaves DailyFX quantitative strategist David Rodriguez in favor of continued Euro losses versus the Yen.

Is a USD/JPY Breakout Signaling a Yen Cross Rally?

SSI: Traders once Again Selling EUR/USD

The Speculative Sentiment Index (SSI) for EUR/USD stands at -1.23 indicating that there are 1.23 retail traders who are short the pair for each one that's long.

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Yesterday the ratio was 1.06; 52% of open positions were long. Long positions are 10.7% lower than yesterday and 6.7% below levels seen last week. Short positions are 17.0% higher than yesterday and 14.0% above levels seen last week.

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SSI is a contrarian indicator to price action, so the fact that the majority of traders are short gives signal that the EUR/USD may continue higher. The combination of current sentiment and recent changes gives a further bullish trading bias.

Strategy Video: How to Trade the ECB Rate Decision

Are traders overly bearish after ECB rate cut?

The ECB took the unprecedented step today of imposing a negative interest rate on banks for their deposits—in effect charging lenders to park money with it.

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While the Euro dropped to 1.35023 on the announcement, it but is now trading above the pre announcement levels at around 1.36374.

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In fact the 24-Hour Trend Locator* shows strong signs across most indicators and time frames that EUR/USD could continue even higher.

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Furthermore, SSI confirms that retail traders flipped from being net long the pair to being net short. Since SSI is a contrarian indicator, this is another sign EUR/USD could rise.

* The 24-Hour Trend Locator is available at FXCMapps.com and this promo code will give you 50% off: spring24hour (expires June 7th)

US Dollar Suffers as June NFPs Fail to Stir Fed Rate Hike Speculation

A recap of today's NFP:
- Change in Nonfarm Payrolls (MAY): +217K versus +215K expected, from +282K (revised lower from +288K).
- Change in Private Payrolls (MAY): +216K versus +210K expected, from +270K (revised lower from +273K).
- Unemployment rate (MAY): 6.3% unch versus 6.4 % expected.
- Participation Rate (MAY): 62.8% unch.

Currency analyst Christopher Vecchio commented on DailyFX.com: "Even though the better than expected headline figures provoked a quick rally in the US Dollar across the board, price quickly reversed trend and the EURUSD jumped from $1.3826 post-release to as hiugh as 1.3676 shortly after. Within thirty minutes of the report release, the EURUSD was trading near 1.3671."

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The latest SSI confirm that retail traders have increased their net short positioning in EUR/USD since my post yesterday, which could suggest that EUR/USD might be continue with further gains.

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Euro Looks Like a Buy, US Dollar at Risk at Key Resistance

Quantitative strategist David Rodriguez says the Euro looks like a buy here versus the US dollar as it trades near support.

"In concrete terms, we’re looking to buy major currency pairs as they test support and sell if they approach resistance. The Euro in particular looks like an attractive buy at these levels; a break of the post-ECB low looks unlikely until we see a material shift in market conditions."

AUD/USD Risks New 2014 High

Trading instructor Tyler Yell says, "There are two patterns unfolding that are pointing to the potential for significantly higher prices should AUDUSD close above 0.9410...

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"Both of these patterns could see AUDUSD targeting between 0.9695-1.000... The trigger to enter is 0.9410 & the stop at 0.9200 is the same for both patterns."

Russia Diversifying into Yuan, other Asian Currencies

RT reports that "Diversifying trade accounts from dollars to the Chinese yuan and other Asian currencies such as the Hong Kong dollar and Singapore dollar has been a part of Russia’s pivot towards Asian as tension with Europe and the US remain strained over Russia’s action in Ukraine."

If Russia continues the trend of gradually switching from the US dollar to Asian currencies and other countries follow suit, this could lead to a long term decline in USD/CNH, USD/HKD and USD/SGD.

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JR what did they say about making the SSI updated every 30 mins/ hourly?

This is not something that will be available at this time. I'll post an update here should that change.

The US Dollar and Japanese Yen likely to fall versus the Euro, Sterling, and Aussie Dollar on a key shift in FX sentiment. These are the setups we’re watching.

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

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Also, the crowd has only increased its net short positioning in GBP/USD to -2.55 on our Speculative Sentiment Index (SSI) which means there are 2.55 short positions for every single long position.

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As a contrarian indicator, SSI is giving strong bullish signals for cable. A break above $1.6845 would further confirm that further gains are likely.

Top Event Risk This Week: FOMC, RBA and BOE Minutes, Canada CPI


David Maycotte gives a preview of the key events for the week on DailyFX.com. Times below are in GMT:

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"After last week's recovery against the US Dollar, the Australian Dollar may be positioned for a test of Aprils swing high. The spotlight turns to minutes from June's RBA Policy Meeting to see if it may just provide the catalyst needed to test resistance."

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"...traders are sure to dissect the text for a broader directional outlook regarding the British Pound. Last week, the BOE Governor Mark Carney prompted a sharp rally in the single currency saying, 'the BOE could raise rates sooner than the markets expect'. This is a 180 degree turn from previous policy comments."

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"DailyFX Strategist Jamie Saettele, CMT says the focus is lower for the US Dollar, following Thursday’s reversal, from below the 200 DMA. He says the cleanest levels of possible support are 10435 (former low and 61.8% retracement) and 10406."

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"One of the figures of interest will be to see if a trend materializes and unsold new inventory grows. This would prompt contracts to reduce starts, and may spill over into the existing home market."

Spike in Real Volume versus Transactions Favors USD/JPY Rallies Higher

If Real Volume is very high while Transactions are relatively low, it suggests that larger traders are the most active participants in a big move. This matters because trader profitability data show that those with larger account balances tend to be more successful at trading forex.

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In plain terms: large Volume spikes relative to Transactions can often represent what "Smart Money" is doing. Therefore, the current discrepancy favors USD/JPY Rallies Higher.

Now that Real Volume and Transactions indicators are available for Trading Station, we can use the data they provide to get new insights into what larger traders (AKA "Smart Money") is doing.

Notice in the chart below that Real Volume spiked up higher than Transactions on June 17th, compared to June 16th. That means the selling was made up of larger orders, which is a bearish signal for the Aussie.

http://i.imgur.com/DV2izxL.png

We get further bearish signals by seeing that the Speculative Sentiment Index shows that retail traders overall have actually increased their net long positions. SSI stands at 1.32 as 57% of traders are long. Yesterday the ratio was 1.23; 55% of open positions were long.

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Long positions are 12.9% higher than yesterday and 26.3% above levels seen last week. Short positions are 5.4% higher than yesterday and 31.8% below levels seen last week. SSI is a contrarian indicator, which means the signal is to sell when the retail crowd buys.

Real Forex Volume is Now Available

A common frustration for forex traders is that real volume information for currency trades is hard to come by for the market. FXCM now offers a solution! The first real forex volume and transactions indicators are here.

Until now, other forex volume indicators have only shown tick volume, only part of the story with nothing about actual order flow. Now, FXCM's Real Volume and Transactions Indicators bring a pair of critical indicators to your charts, giving you the complete picture.

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In the 1-minute chart above you can see how much volume surged during the FOMC announcement yesterday. The groundbreaking Real Volume/Transactions indicators display real trade volume and number of transactions from FXCM's clients around the world, giving you the advantage of a deeper look into the market.

The Real Volume Indicator shows the total volume of live trades during a specified period. Total volume is calculated from the sum of individual transactions. For example:

1. Client A buys 10K EUR/USD, sells 10K EUR/USD = 20,000 in volume
2. Client B buys 10K EUR/USD, buys 20K EUR/USD = 30,000 in volume
3. Total Real Volume = 50,000

The Transactions Indicator shows the sum of individual tickets executed during a specified period. For example:

1. Client A opens 10K EUR/USD, closes 10K EUR/USD = two transactions
2. Client B opens 10K EUR/USD, closes 5K EUR/USD, closes 5K EUR/USD = three transactions
3. Total Transactions: Five

The Real Volume/Transactions indicators work on multiple timeframes: m1, m5, m15, m30, H1, H2, H3, H4, H6, H8, D1, W1 and M1. You can use these indicators with 14 currency pairs: EUR/USD, USD/JPY, GBP/USD, EUR/JPY, AUD/USD, GBP/JPY, USD/CAD, AUD/JPY, USD/CHF, EUR/CHF, NZD/USD, EUR/AUD, EUR/GBP and EUR/CAD.

You can now download the beta release of FXCM's Real Volume and Transactions Indicators at FXCMapps.com