FXCM/DailyFX Signals and Strategies

If you have any questions about the Real Volume/Transactions indicator such as how to install it, where to find it, how to use it in trading, etc. you can attend a special webinar tomorrow at 9am ET (13:00) in the DailyFX trading room. David Rodriguez will be answering frequently asked questions as well as any questions submitted by users. The webinar will take place here.

Check this out. Next Thursday we have ECB and NFP being released, on the same day!



This should lead to an exciting day of trading. NFP is being released a day early on the Thursday due to the US Independence Day holiday on July 4.

Weekly Changes in SSI and Real Volume

Weekly Change in the Speculative Sentiment Index (SSI)

https://media.dailyfx.com/illustrati...Picture_18.png

In his weekly SSI report, DailyFX quantitative strategist David Rodriguez says the US Dollar is "likely to bounce off of key lows versus Euro, GBP, Yen".

Weekly Change in Real Volume

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

Here's a recording of yesterday's webinar on the new Real Volume and Transactions indicators.

Just a heads up...

Forex rollover charges in Euro pairs have surged since yesterday.

A look at interbank forward markets shows that holding Euro short positions versus the US dollar and Japanese yen has become exceedingly expensive since yesterday.

Those forward rates showed that traders could earn interest rate credits in holding EUR/USD-short positions just yesterday. Yet a sharp shift now means that being short EURUSD is now at its most expensive since a similar spike in borrowing costs at the end of last month.

https://media.dailyfx.com/illustrati...dy_Chart_1.png
Source: Bloomberg Generic Price - “Consensus” Pricing

http://i.imgur.com/Xqjw3ag.png

GBP/JPY trading close to January high heading into ECB/NFP Thursday

Here's an interesting chart heading into tomorrow's ECB/NFP doubleheader:

http://i.imgur.com/C0me1Na.png

GBP/JPY is trading close to the 174.833 high from January 2nd with the Speculative Sentiment Index (SSI) at -4.53. That means there are 4.53 traders who are short for every single trader who's long.

https://media.dailyfx.com/illustrati..._Picture_9.png

Since SSI is a contrarian indicator to price action, the fact that 72% of traders are short gives signal that GBP/JPY may continue higher.

Talking Points:

1. Having passed a seasonal lull in volatility, will July serve as a reversal for a historical VIX trend?
2. Activity levels present opportunities beyond just a dollar rally and yen cross reversal
3. Volatility levels will determine the optimal strategy approach and other critical elements of our plan

Use the Real Volume and Transactions indicators to see volume behind the majors during the NFPs and ECB rate decision to gauge your trading approach.

FOMC Minutes See Growth, End of QE and Financial Risk

Below are a few of the noteworthy highlights in the transcript released today of the Fed's last meeting:

1. Staff anticipates a "brisk" rebound in 2Q GDP
2. Growth in second half of 2014 and through next two years expected to outpace 2013 and rise more quickly than potential
3. Generally agree that a $15 Bln Taper in October would end QE program so long as outlook holds
4. Supervisory measures should be applied to address excessive risk-taking and associated financial imbalances
5. Some Fed Officials considered investors are growing too complacent on financial risks – a factor in market performance

Daily Chart of Dow Jones FXCM Dollar Index (ticker: USDOLLAR)
https://media.dailyfx.com/illustrati..._Picture_5.png


Real Volume, Transactions and Tick Volume for EUR/USD
http://i.imgur.com/8crwGzz.png

The Yen pairs are selling off, and USD/JPY in particular is nearing a critical support level. Do you think we will see a bearish break?

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

Janet Yellen is on the wires causing some movement in the market. Here's a look at a 2 year EUR/USD trend line Jeremy Wagner of DailyFX has pointed out as a potential target level. It would also roughly line up with the post-ECB exhaustion low learn 1.35.

http://i.imgur.com/Ua4gesA.png

We've seen a surge in GBP/USD volume today, reaching the highest level in 5 months.

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

Looking at trader positioning according to SSI, we can see that short interest is surging as traders think we may have reached a top.

http://i.imgur.com/9AQ4fB4.png

We're working on a directional volume indicator which will show you separate buy volume and sell volume to get a better sense of whether the surge in volume is on the buy or sell side. I'll let everyone know as soon as it is released. For now here is where you can find the Real Volume indicator displayed in my chart: Real Volume

EUR/USD is coming up to a major resistance level at 1.3500 which also represents the post-ECB low. That area had huge volume, in fact it was the highest volume day for EUR/USD of 2014. Here's the chart from David Rodriguez.

http://i.imgur.com/f92DtF1.png

The Real Volume and Transactions indicator is now available for FXCM's Trading Station platform charts, and you can download it and install it from the app store. Real Volume Indicator

Risk assessment: Yen crosses are down on the day, S&P 500 is off over 1%, volatility readings have jumped and Treasury demand swelled

Considering the risk we're seeing in the market, a chart you should have on your radar is NZD/JPY. This chart from DailyFX Chief Strategist John Kicklighter shows NZD/JPY sitting heavy on a multi-year trendline / 100-day SMA. NZD/JPY also happens to have the highest carry of the Yen crosses.

http://i.imgur.com/3fSzsvW.jpg

Watch today's strategy video from John Kicklighter for a more in-depth look at the Yen crosses, and market volatility today in light of the situation in Ukraine.

GBPJPY Update

DailyFX Analyst Michael Boutros is watching GBP/JPY and sees the 172.60/70 as a major inflection point between bullish and bearish sentiment. Here's an excerpt from the full analysis:

Bottom line: looking to buy dips while above 172.70 near-term with a breach above the weekly opening range high offering further conviction on long scalps into subsequent topside resistance objectives. A break sub-172.70 puts us neutral with only a move/close below 172.44 invalidating our directional bias.

http://i.imgur.com/ZwqhjdE.jpg

Watch today's strategy video from Michael for full details on his GBP/JPY analysis:

EUR/USD set a new yearly low just now after the US CPI inflation data release, but the pair has quickly bounced back to significant multi-year trendline support outlined in this chart from DailyFX trading instructor Jeremy Wagner:

http://i.imgur.com/PLMba19.jpg

The real volume indicator found on Jeremy's chart can be downloaded for free from the FXCM App Store here: Real Volume Indicator.

DailyFX Analyst David Rodriguez is hosting a special webinar tomorrow discussing the new real volume and transactions indicator. Here are topics that will be discussed:

 

1. FXCM Trading Volume: How it represents the broader market.
2. REAL vs Tick Volume: Why there really is a difference.
3. Momentum Trading: What Real Volume says about the trends.
4. Strategy Development: How to enhance your market analysis.

The webinar takes place tomorrow at 12:00pm ET (16:00 GMT), located here.

EUR/JPY has been one of the weaker Yen crosses recently, and DailyFX trading instructor Rob Pasche wrote an interesting article which I have excerpted below:

EURJPY Approaching 8-Month Lows, Sentiment Favors Shorts

Since the March high of 143.78, the EURJPY has fallen to a low of 136.58. A 5-percent decline in as many months, which is a substantial move with respect to currencies. As a trend trader, I am naturally drawn towards large moves like this, so the EURJPY has caught my eye.

The next major level that the EURJPY needs to breach to reinforce this downtrend is 136.23, the February low. If we see a daily closing price below 136.23, it could be an opportunity to short this pair. The chart below shows the EURJPY hovering precariously above this potential support level. 136.23 could act as major support like it did in the past, but a break would be significant.

http://i.imgur.com/EdcUddW.jpg

Read the full article including target levels: http://www.dailyfx.com/forex/education/trading_tips/trend_of_the_day/2014/07/22/EURJPY-Approaching-8-Month-Lows-Sentiment-Favors-Shorts.html

The RBNZ rate decision is being released today at 5pm ET (21:00 GMT), same time as daily rollover, so watch out for potentially exceptional volatility in the NZD pairs.

DailyFX Analyst Michael Boutros has a short term technical outlook for AUD/NZD you keep an eye on as we head into the rate decision.

GBP/USD is selling off with the pair crossing below the psychologically important 1.7000 level, and it is quickly approaching yearly trend line support levels.

Do you think this is a correction in the uptrend or the beginning of a bigger bearish move?

http://i.imgur.com/AeN9XZS.jpg

EUR/USD is trading near lows of the week and year!

http://i.imgur.com/2VZg9xD.jpg

And next week's economic calendar is filled with major events that could spark volatility including FOMC.

Here's the latest EUR/USD outlook from DailyFX Analyst David Song: