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Low Risk, High Reward Trading Experiment

  • #3,061
  • Edited Mar 15, 2007 12:02pm Mar 14, 2007 8:48pm | Edited Mar 15, 2007 12:02pm
Thursday 3/15
3:30 CHF Interest Rate Statement 2.25% 2.00% (8:00 revised release time )
4:30 GBP Bank of England/GFK quarterly inflation expectations survey 2.7% .......2.7%
5:00 EUR CPI m/m (r) 0.3% 0.3% -0.5%
7:30 USD PPI m/m http://www.forexfactory.com/images/m...mpact_high.gif 1.3% 0.4% -0.6%
7:30 USD Core PPI m/m http://www.forexfactory.com/images/m...act_medium.gif .4% 0.2% 0.2%
7:30 USD Empire State Business Conditions Index http://www.forexfactory.com/images/m...mpact_high.gif 1.9 16.0 24.4
7:30 USD Unemployment Claims 318K 330K 328K
7:30 CAD Manufacturing Shipments m/m -2.1% -0.7% 1.7%
8:00 USD TIC Report http://www.forexfactory.com/images/m...mpact_high.gif 97.4B 46.5B 15.6B
11:00 USD Philadelphia Fed Manufacturing Index http://www.forexfactory.com/images/m...act_medium.gif .2% 4.0 0.6
11:30 USD Ex-Fed Chairman Greenspan Speaks
18:50 JPY Tertiary Industry Activity Index m/m 1.0% -0.4%
19:25 AUD RBA Assistant Governor Edey Speaks

Market focus will shift to a barrage of US economic reports later in the session deemed to be dollar supportive. Estimates for the data, for the most part, call for improvements from the previous releases. The economic calendar kicks off with the February producer price index, seen posting a 0.4% increase versus a 0.6% decline from January. The excluding food & energy reading is forecasted to remain unchanged at 0.2%. Felix the announcement trader says, "If PPI comes out at 1.2% or higher, it would be the highest reading in over 5 years, and probably be good for the dollar, and GBP/USD may possibly decrease by 50 pips or so. If the number comes out at -0.9% or more negative, it would be the lowest reading in over 5 years, and GBP/USD may possibly increase by 50 pips or more." [ Actual: 1.3% ]

Fed watchers though, will wait for Friday's consumer price index for a more accurate gauge of inflation, and consequently FOMC policy direction. Weekly jobless claims are estimated to edge up to 330k, compared with 328k from the previous week.

Improvements in both the January net Treasury international capital flows (TICS) and the March Philadelphia Fed index will likely provide some respite for the greenback's declines against the euro and sterling.

The January TICS report is forecasted to jump to $45.0 billion, up sharply from December's $15.6 billion reading. Meanwhile, the March Philadelphia Fed index, slated for release at 12:00 PM New York time, may quell fears of an imminent recession - with estimates calling for a rise to 4.0, from 0.6 from February. Felix says, "If the reading reads 20 or higher, it would be the highest reading since April of 2005, and GBP/USD may possibly decrease by 30 pips or so. If the reading reads -10 or more negative, it would be the lowest reading since end of 2001, and GBP/USD may possibly increase by 30 pips or so."
__________________________________________________
US inflation at the wholesale level (USD PPI m/m) rose in February at the fastest pace in three months and almost three times as fast as expected, the Labor Department said today.
The department's Producer Price Index, which measures inflation pressures before they reach the consumer, rose 1.3 pct in February, while core inflation, which strips out volatile food and energy prices, rose by 0.4 pct. Economists had expected overall wholesale inflation to rise 0.5 pct while core inflation was expected to increase 0.2 pct in the month.
The 1.3 pct increase is the fastest increase since November, when wholesale inflation jumped 1.5 pct. Wholesale inflation jumped again in December, rising 0.9 pct before falling 0.6 pct in January.
Producer prices have now risen 2.5 pct over the past year, compared with a slight 0.2 pct year-over-year rise in January. Core prices have risen 1.8 pct in the past twelve months, matching the twelve month gain to January.
The rise in wholesale inflation stemmed from a sharp rise in both food and energy prices, which rose 1.9 pct and 3.5 pct, respectively. It's the largest increase in wholesale food prices since October 2003 and the sharpest energy price hike since November.
Within the energy sector, residential natural gas prices rose 4.1 pct, the the sharpest gain since October 2005. Gasoline prices rose 5.0 pct, while home heating oil prices rose 6.0 pct. Each was the sharpest rise since November. Liquified petroleum gas rose at the fastest pace since July, jumping 6.7 pct in February.
Core inflation was led by a 1.7 pct rise in light truck prices in February, the sharpest rise since November. Children's toy and game prices jumped 2.3 pct, the fastest rise in a generation.
Intermediate goods, which are partially processed materials, rose 1.1 pct in February, the sharpest rise since May. Crude goods jumped 8.9 pct, the sharpest increase since November.
_________________________________________________
The Empire State Manufacturing Survey slumped to a 2-year low in March, the New York Fed reported. The business conditions index slumped to 1.85 in March from 24.35 February. The survey measures manufacturing activity in the New York area.
________________________________________________________

Anemic Philly Fed Echoes Empire State Business Conditions The diffusion index of current activity - the broadest measure of manufacturing conditions in the Philadelphia region - decreased from February's 0.6 figure to 0.2, a severe shortfall from the expected 4.0 figure. Philly Fed reports that "Demand for the output of the firms surveyed showed only slight improvement this month: The new orders index increased two points, from -0.5 in February to 1.9 this month. The index had been negative in three of the previous four months. The shipments index increased from 1.7 in February to 6.8 this month. Indexes for delivery times and unfilled orders remained negative, indicating shorter delivery times and a decline in unfilled orders."
Employment in region's manufacturing sector "steady, reflecting continued lack of growth... The current employment index increased three points but is at a relatively low reading of 2.3."
Even more troublesome is that weakness will persist as outlook for manufacturing growth over the next six months "showed a slight moderation," and the future general activity index along with new orders, future shipments and employment are also on a protracted decline.
  • #3,062
  • Edited 9:26am Mar 15, 2007 3:46am | Edited 9:26am
Thursday March 15 at 3:30 ET

If the Swiss banksters don't raise their interest rates by .25% (as it is widely assumed they will), or they hint that they won't raise interest rates in the future, then USD/CHF might jump up about 50 pips to 1.2230 - 1.2250, depending on the severity of the message. Or again, the price might rise up there whatever the SNB does.

If this rise happens, then it may be possible to short USD/CHF at 1.2230 - 1.2250 with a stop at 1.2271 - 1.2291, and place the target at 1.2100. This will be the fifth wave down of a larger Fifth Wave down.

The current price is about 1.2180.

8:00 ET CHF Interest Rate Statement (revised release time) http://www.forexfactory.com/images/m...mpact_high.gif 2.25% 2.25% exp 2.00% previous

Swiss interest rate decision preview

There is a very high probability that the Swiss National Bank will increase interest rates by 0.25% to 2.25% at Thursday’s quarterly meeting. In keeping with the overall region’s central bank, probabilities are running high that Swiss policy makers will not want to stray from the ECB’s outlook, maintaining a hawkish bias.
Assuming rates are increased, the main focus will be on the bank’s policy statement with markets looking closely for future policy hints.
The franc has recovered some ground over the past two weeks while inflation indicators have remained subdued with the annual inflation rate at a zero in February 2007. Given these developments, there will be reduced pressure for the National Bank to take a more aggressive stance in raising rates.
Overall, the bank is likely to maintain the line that interest rates will continue to be normalised and is unlikely at this stage to signal that rates have peaked.
The net currency risks are neutral to a very slightly weaker franc, although moves in global stock prices are liable to remain the dominant currency influence
The franc will weaken sharply if rates are not increased.
  • #3,063
  • Mar 15, 2007 4:06am Mar 15, 2007 4:06am
Quoting Wallboroff
letīs see where the last part, the c-wave of this horrible wave-4 goes. could be standing where it is could also go to 1.9431.
my latest theory is going now to 1.9400. i think weīve seen the wave-4 of this wave-C and are now in wave-5 of wave-C.

possibly a failure of wave-c.
  • #3,064
  • Edited 8:07am Mar 15, 2007 5:59am | Edited 8:07am
The current low for GBP/USD is 1.9309. This could be the bottom of Wave 4. But then again, we could see a further decline to about 1.9295 before the rise to about 1.9400 to 1.9500, which will depend on the outcome of
7:30 USD PPI m/m http://www.forexfactory.com/images/m...mpact_high.gif 1.3% 0.4% -0.6%
and
7:30 USD Empire State Business Conditions Index http://www.forexfactory.com/images/m...mpact_high.gif 1.9 16.0 24.4
and
8:00 USD TIC Report http://www.forexfactory.com/images/m...mpact_high.gif 97.4B 46.5B 15.6B
and.....

As of 7:30 ET it appears that one more small wave 5 down on Wave C is required.
  • #3,065
  • Mar 15, 2007 6:27am Mar 15, 2007 6:27am
To improve the performance (profitability) of an already profitable system, one must do one of the following things:
1) increase the frequency of trades
2) increase the reward / risk ratio
3) improve the percentage of winning trades

To do the above, one can either:
1) "tweak" the system
2) add or subtract elements to or from the system, elements essentially belonging to the same model
3) introduce an entirely different model (or paradigm) into the system, or replace one model with another model

These previous statements are, in my opinion, general, valid statements. Now I will say something about my personal process.

In order to try to achieve something uncommon, it may be necessary to employ uncommon means. My goal has been to achieve a 50% or better win rate with trades of a 5:1 or better RRR. This is an unnecesarily high level of performance, but I thought that if I aimed for it, I might at least hit a lesser target. At best, I would exceed it.

To do this I tried employing an original model - the Q Theory. When that seemed unlikely or unnecesarily difficult to succeed with alone, then I added another unusual model, and looked for agreement or reinforcement. Then I added a third, and then a fourth model. Eventually I got overwhelmed with the volume of information, the time demands, and the complexity. As a result, the quality of my implementation of everything deteriorated significantly.

Now I'm thinking that by one simple adjustment to what I have been doing, namely finding the optimum currency pair to apply my system to, and then specialising on that pair, I can produce a dramatic increase in performance.

Meanwhile, it has also occurred to me that there are several off the shelf trading systems that others have already developed that might perform quite well, and perhaps extremely well, and I have been researching them. So far, I haven't found a place where the performance characteristics of several profitable trading systems available on this forum site have been brought together and discussed. But it seems that there are some good systems that are reasonably objective and non-discretionary that merit research. All this is extremely time consuming and taxing on one's patience.

However, I think I am getting close to finding, or creating, my personal "holy grail".
  • #3,066
  • Mar 15, 2007 6:48am Mar 15, 2007 6:48am
Quoting itme
The current low for GBP/USD is 1.9309. This could be the bottom of Wave 4. But then again, we could see a further decline to about 1.9295 before the rise to about 1.9400 to 1.9500, which will depend on the outcome of
i was thinking about that too, but the major problem could be time.

weīll now in 40 minutes.
  • #3,067
  • Mar 15, 2007 7:10am Mar 15, 2007 7:10am
Meanwhile, it has also occurred to me that there are several off the shelf trading systems that others have already developed that might perform quite well, and perhaps extremely well, and I have been researching them. So far, I haven't found a place where the performance characteristics of several profitable trading systems available on this forum site have been brought together and discussed. But it seems that there are some good systems that are reasonably objective and non-discretionary that merit research.

Some while back you mentioned the new 2007 PLUGIN of Elliotician Software. I have been receiving they're newsletter and downloaded the demo version of the software. Do you include this guys in your considerations?

It is very attractive to go ahead and shuffle the 1500 or so bucks they ask for the Elliot Wave Analysis Software. Some of the videos they have on the site are quite impressive (as foreseeing goes).

In your opinion. Are they using Elliot Wave in the same way YOU would use it? Or is this a different "beast" (other people = other theories = other models).

Right now I'm just hesitant to give it a go.....after ONE years purchasing of ebooks, books, courses, signal services, Forecasting software....I'm tired of spending money and not quite sure if this "next thing" would REALLY help....

Thanks for your words of wisdom. Specially the post at the thread "My jorney to 1 Million". Very, very inspiring!!!!!

Quote
All this is extremely time consuming and taxing on one's patience.
Amen to that one.

Quote
However, I think I am getting close to finding, or creating, my personal "holy grail".

I personally wish you find it. You have been an outstanding person on this forum and extremely helpful. So in my humble opinion deserve it! Go for it!
  • #3,068
  • Mar 15, 2007 8:05am Mar 15, 2007 8:05am
Quoting petercross
Meanwhile, it has also occurred to me that there are several off the shelf trading systems that others have already developed that might perform quite well, and perhaps extremely well, and I have been researching them. So far, I haven't found a place where the performance characteristics of several profitable trading systems available on this forum site have been brought together and discussed. But it seems that there are some good systems that are reasonably objective and non-discretionary that merit research.

Some while back you mentioned the new 2007 PLUGIN of Elliotician Software. I have been receiving they're newsletter and downloaded the demo version of the software. Do you include this guys in your considerations?

It is very attractive to go ahead and shuffle the 1500 or so bucks they ask for the Elliot Wave Analysis Software. Some of the videos they have on the site are quite impressive (as foreseeing goes).

In your opinion. Are they using Elliot Wave in the same way YOU would use it? Or is this a different "beast" (other people = other theories = other models).

They are definitely employing a radically different approach to counting the waves and identifying the targets for wave endings. Theirs is highly empirical, whereas mine is more based on applying general principles to individual cases. Theirs seems more to me like a gargantuan numbercrunching approach. But it may be very good for a computer, or among the best approaches for a computer to take. Allegedly, if you know how to use it, you can do quite well. I wonder if they employ the matching data set for the same pair, or do they use a universal pattern library from the whole forex market for all pairs?

My biggest problem with them was that the reward : risk ratio of their trade recommendations was far outside my desired parameters. Also, it seemed to me that with their old data set they were frequently wrong in their wave count. But that may have changed with the major retrofit. My accessment is from some time ago, and quite subjective, so not conclusive by any means. But my impression is that a skilled human who's read a book or two and practised for a few months can far outperform the software. But some people probably don't have the requisite aptitude, and may benefit more from the software. There are also other EW software systems. Like MT Predictor and EL Wave. Both seem to hold some promise. And there are others too, I think.

Right now I'm just hesitant to give it a go.....after ONE years purchasing of ebooks, books, courses, signal services, Forecasting software....I'm tired of spending money and not quite sure if this "next thing" would REALLY help....

Thanks for your words of wisdom. Specially the post at the thread "My jorney to 1 Million". Very, very inspiring!!!!!

You're very welcome!
Amen to that one.

I personally wish you find it. You have been an outstanding person on this forum and extremely helpful. So in my humble opinion deserve it! Go for it!
Let me know what you come up with on your quest for answers. The best to you!
  • #3,069
  • Mar 15, 2007 8:49am Mar 15, 2007 8:49am
Quoting petercross

Right now I'm just hesitant to give it a go.....after ONE years purchasing of ebooks, books, courses, signal services, Forecasting software....I'm tired of spending money and not quite sure if this "next thing" would REALLY help....


Petercross and itme,
if I may make a suggestion...I believe I mentioned this before, but it's always worth pointing out again
If you have certain price areas(s/r, fib, price projections,wave relations etc) and you feel these will be likely wave ends, why not try to look for a price action setup that signals a reversal (Bearish outside bar/engulfing after a rise, a pin bar, a double high with a lower close and so forth) and if that occured in just such a likely reversal spot, go for it?
You'd get the best of both worlds, a calculated stop above the setup and a rough target from the wave relations for taking profit.
It does of course mean sacrificing pips for a bit more confirmation waiting for these bars/setups to form, but that's the compromise one would have to make I guess.
Just a thought

Wouldn't spend money on the EW software myself. The obvious counts you will see yourself and those markets that are barely readable are most likely not going to conform either way imho.

I can only agree Itme, specializing on pairs you know will most likely make it a lot easier to find spots of s/r you know to "lean against" and spot relations of waves if you're more familiar with them.

Regards,

SeekingLight
Trust price. Know yourself.
  • #3,070
  • Mar 15, 2007 9:36am Mar 15, 2007 9:36am
Quoting SeekingLight
Petercross and itme,
if I may make a suggestion...I believe I mentioned this before, but it's always worth pointing out again
Thanks for the reminder.
If you have certain price areas(s/r, fib, price projections,wave relations etc) and you feel these will be likely wave ends, why not try to look for a price action setup that signals a reversal (Bearish outside bar/engulfing after a rise, a pin bar, a double high with a lower close and so forth) and if that occured in just such a likely reversal spot, go for it?
Excellent suggestion. All I have to do is add one more model to my other four! But this one is relatively easy to learn - double tops and bottoms, and candlestick patterns.
You'd get the best of both worlds, a calculated stop above the setup and a rough target from the wave relations for taking profit.
It does of course mean sacrificing pips for a bit more confirmation waiting for these bars/setups to form, but that's the compromise one would have to make I guess.
Until one has achieved near perfection at predictions and market geometry, some confirmations are prudent.
Just a thought
Wouldn't spend money on the EW software myself. The obvious counts you will see yourself and those markets that are barely readable are most likely not going to conform either way imho.
Agreed.
I can only agree Itme, specializing on pairs you know will most likely make it a lot easier to find spots of s/r you know to "lean against" and spot relations of waves if you're more familiar with them.
Thanks.
Regards,
SeekingLight
Very good thoughts, SeekingLight. We are approaching the end of our research and education phase. But not there quite yet! The road to mastery is long!!
  • #3,071
  • Mar 15, 2007 11:35am Mar 15, 2007 11:35am
Successful trade: Trade Experiment #357 Buy EUR/USD at 1.3181

The high of 1.3251 was met at 12:33 ET March 15.
____________________________________________
____________________________________________

Previous Trade Experiment and Update:

Update on Trade Experiment #357 Buy EUR/USD at 1.3181

Wednesday March 14 at 4:50 ET
Trade Experiment #357 Buy EUR/USD at 1.3181 (limit order)
Stop is 1.3149
Target is 1.3250
Risk is 34 pips
Reward is min. 67 pips
RRR is min. 2.0 to 1
Confidence level: good
Accuracy: good
Reward / Risk Ratio : relatively poor
For research purposes only.
Wave hypothesis: Wave 5 up of Wave C up of Wave B up of Wave 4 down.


The daily low for EUR/USD was 1.3176, just 5 pips lower than our entry price for our long trade, and our exact most probable reversal value according to the Q theory. Also, the Elliott Wave predictions on all time frames, including 1 minute, were clear, accurate, unequivocal, and precise. It seems that our systems excel on this currency pair, as a highly successful parallel systems developer using essentially the same methodology has discovered and confirmed.

The daily high is 1.3244, 6 pips short of our target. We anticipate a further rise to hit our target.
__________________
  • #3,072
  • Edited 8:52pm Mar 15, 2007 8:19pm | Edited 8:52pm
Thursday March 15 at 21:15 ET

Re-Enter Trade Experiment #358A Sell EUR/USD at 1.3297

If we had revised the entry price on this trade when the price approached the previously estimated entry price, we would have avoided being stopped out as we were by TE #358.

Stop is 1.3353

Target is 1.3125

Risk is 57 pips

Target 170 pips

RRR is 3.0 to 1

Confidence level: good
Accuracy: good
Reward / Risk Ratio : fair

For research purposes only.

Wave hypothesis: Large Wave C down of a downwards Wave 4.
______________________________________________
__________________________________________________

Previous Trade Experiment:

Wednesday March 14 at 5:20 ET
Trade Experiment #358 Sell EUR/USD at 1.3255 (limit order)
Stop is 1.3286
Target is 1.3075
Risk is 33 pips
Reward is min. 178 pips
RRR is min. 5.4 to 1

Confidence level: good
Accuracy: good
Reward / Risk Ratio : relatively poor

For research purposes only.

Wave hypothesis: Large Wave C down of a downwards Wave 4.
  • #3,073
  • Mar 15, 2007 10:39pm Mar 15, 2007 10:39pm
Quoting itme
Thursday March 15 at 21:15 ET

Re-Enter Trade Experiment #358A Sell EUR/USD at 1.3297

If we had revised the entry price on this trade when the price approached the previously estimated entry price, we would have avoided being stopped out as we were by TE #358.

Stop is 1.3353

Target is 1.3125

Risk is 57 pips

Target 170 pips

RRR is 3.0 to 1

Confidence level: good
Accuracy: good
Reward / Risk Ratio : fair

For research purposes only.

Wave hypothesis: Large Wave C down of a downwards Wave 4.
______________________________________________
__________________________________________________

Previous Trade Experiment:

Wednesday March 14 at 5:20 ET
Trade Experiment #358 Sell EUR/USD at 1.3255 (limit order)
Stop is 1.3286
Target is 1.3075
Risk is 33 pips
Reward is min. 178 pips
RRR is min. 5.4 to 1

Confidence level: good
Accuracy: good
Reward / Risk Ratio : relatively poor

For research purposes only.

Wave hypothesis: Large Wave C down of a downwards Wave 4.
good luck it may test the highs 1.34 similar to what cable did...euro move slower than cable
  • #3,074
  • Mar 15, 2007 10:56pm Mar 15, 2007 10:56pm
KipprerII,

I hope you don't mind me saying that but that's what trading is all about. One thing I know for sure in this business is that you never gonna make any money staying aside. Untill you put yourself on the line it doesn't matter if you are right or wrong - it's all the same.
And admire Itme for his consistency, he's trading his system and his signals. So to say that euro can go higher or lower , yes it sure can but that's the risk he's willing to take. A great trader once said - if you can sell strength or buy wikness, you can't trade. Of course I don't totally agree with that but some times you just have to take the risk rather then avoid it.

Regards
  • #3,075
  • Mar 15, 2007 11:19pm Mar 15, 2007 11:19pm
Quoting itme
The current low for GBP/USD is 1.9309. This could be the bottom of Wave 4.
Itme, I don't see wave 4, but wave 2 in GBP/USD now, and it's prolly still not finished yet now. If it's really in wave 4, where's the wave 2? Anyway, keep up the good work!
Tra-X
  • #3,076
  • Edited 12:03pm Mar 16, 2007 12:52am | Edited 12:03pm
Quoting Traex
Itme, I don't see wave 4, but wave 2 in GBP/USD now, and it's prolly still not finished yet now. If it's really in wave 4, where's the wave 2? Anyway, keep up the good work!
Traex, I know it's almost impossible for you to know what I'm talking about, or for me to know what you're referring to, without a chart, because there are so many different orders that we could be referring to.

Yes, the alternative hypothesis is that we are near to or have finished Wave 1 up on a larger scale, and are now beginning a large Wave 2 down. But the other view that I am favoring is that we just completed a large Wave B up and are now commencing (or are near to commencing) a large Wave C down.

Looking at this wave pattern on the one day chart, there are several possible wave interpretations. There is a chance that we're in the third wave of the Third Wave up, which is typically very energetic. Every candle is blue for the past five days. So we should bring our stop on our short EUR/USD trade to break even, now that we have cleared our entry price, in case there is another strong upwards wave targeting about 1.3350 to 1.3400. There is definitely not a clear completed five wave pattern on the one hour chart, so the risk of another wave up is high. In the meantime, we should see a fairly strong wave 4 a-b-c downwards move over the coming hours, which will allow us to make some profit from this trade. If the news and market behavior results in a strong downtrend, then we are positioned to take advantage of it.

p.s. - As expected, EUR/USD rose again at 3:00 ET , rising past our short entry price again at 1.3297 from its short term low at 1.3280, triggering our B/E adjusted stop, and pushed up to 1.3338. The appearance is that the upside target is 1.3350 to 1.3375. The price has recently corrected or fallen to 1.3303, with further downside risk based on EW patterns.
_____________________________________________________________________

Thursday March 15 at 21:15 ET
Re-Enter Trade Experiment #358A Sell EUR/USD at 1.3297
If we had revised the entry price on this trade when the price approached the previously estimated entry price, we would have avoided being stopped out as we were by TE #358.
Stop is 1.3353
Target is 1.3125
  • #3,077
  • Mar 16, 2007 1:10am Mar 16, 2007 1:10am
Quoting itme
Yes, the alternative hypothesis is that we are near to or have finished Wave 1 up, and are now beginning Wave 2 down. But the other view that I am favoring is that we just completed a large Wave B up and are now commencing (or are near to commencing) a large Wave C down.
Large wave B up? Err I'm sorry but I'm confused now lol. In my GBP/USD count, from 1.9212 low to 1.9392 high yesterday were wave 1, 1.9392 to 1.9306 was small wave A, 1.9306 to maybe recent 1.9402 high was small wave B. What's left is small wave C down to finish wave 2 before commencing wave 3 up. Which large wave B are you referring to here? Thanks again.

Edit: Ahhh after you editted your post above I realized you were referring to EUR/USD. Sorry, I mean it's for GBP/USD here lol.
Tra-X
  • #3,078
  • Mar 16, 2007 1:14am Mar 16, 2007 1:14am
well, itīs still tricky to determine where cable would go.

iīd say going up again to 1.9415 than down again to 1.9374 and than up again maybe to 1.9443 - 1.9467

as itme said it before, we could also be in a wave-b right now finishing at 1.9415, maybe.

and than heading down before going up again.

i prefer the first theory. letīs see what happens
  • #3,079
  • Mar 16, 2007 2:05am Mar 16, 2007 2:05am
Thanks, gentlemen, for your comments on the wave counts. It makes me feel less alone in the EW dimension. Now that we're clearer about which currency pair we're discussing, I'll give you my opinion on GBP/USD and comment on yours. EUR/USD and GBP/USD have been somewhat more independent lately than usual, so their wave counts could be different. The tilt of their respective channels certainly is very different! I'll study and report back presently.
  • #3,080
  • Edited 1:46pm Mar 16, 2007 2:24am | Edited 1:46pm
Friday 3/16

5:00 EUR Italian Trade Balance -3.7B -2.1B -0.6B

8:30 USD CPI m/m http://www.forexfactory.com/images/m...act_medium.gif 0.4% 0.3% 0.2%
8:30 USD Core CPI m/m http://www.forexfactory.com/images/m...mpact_high.gif 0.2% 0.2% 0.3%
9:15 USD Industrial Production m/m http://www.forexfactory.com/images/m...act_medium.gif 1.0% 0.3% -0.5%
9:15 USD Capacity Utilization Rate http://www.forexfactory.com/images/m...act_medium.gif 82.0% 81.3% 81.2%
10:00 USD Consumer Sentiment (p) http://www.forexfactory.com/images/m...mpact_high.gif 88.8 90.0 91.3

In Thursday's U.S. session, concerns about tomorrow's core CPI pushed the USD lower. A weak Empire Manufacturing confirmed fears of a slowing U.S. economy. Adding fuel to the fire, former Fed chairman Greenspan noted that sub-prime mortgage woes may affect a broader section of the economy.

Volatility should continue through the U.S. session on Friday. Five separate data releases are scheduled within 90 minutes. Of the releases, core CPI is likely to be the primary driver for currencies and other financial markets.

Outcome: like yesterday, news releases that would normally have created reflexive market moves were largely ignored by the automatic trading computers which are programmed by the specialists working for the large capital holders in the world.
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Consumer price inflation in the US rose slightly faster than expected in February. The Labor Department said overall prices rose 0.4 pct, faster than the 0.3 pct increase economists had expected. Meanwhile core prices, which does not include volatile food and energy prices, rose 0.2 pct in January, in line with expectations but slightly slower than January's 0.3 pct gain, which was the largest monthly gain in core prices since June. The Labor Department also said that core inflation rose in the past quarter at the fastest seasonally adjusted annualised pace in five months. Core inflation over the past three months has risen at a 2.6 pct seasonally adjusted annualised rate, the fastest three month gain since September, when core inflation had risen at a three month annualised pace of 2.7 pct. Core inflation rose an annualised 2.0 pct in the three months leading up to January and 1.6 pct in the three months leading up to December. Core inflation has risen an unadjusted 2.7 pct in the past twelve months, matching January's unadjusted twelve month gain. Overall inflation has risen an unadjusted 2.4 pct in the year leading up to February. Energy prices rose 0.9 pct in February after falling 1.5 pct in January. Energy prices have risen at an 14.9 pct annual rate over the past three months. Food prices rose 0.8 pct in February after rising 0.7 pct in January.
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US industrial production rose at its fastest pace in over a year driven by a steep rise in utility output which hit a near 20-year high, the Federal Reserve said today. Capacity utilization is at its highest level in five months. Output in February rose 1.0 pct, the largest increase since November 2005, while factories were using 82.0 pct of their capacity, the highest rate since September. The unexpected rise in total output stemmed from a 6.7 pct jump in utility output, the largest rise since December 1989. Economists had expected output to increase just 0.3 pct in February while predicting 81.3 pct capacity utilization. Output in January was revised to a 0.3 pct decline, compared with a 0.5 pct rise previously estimated. The Federal Reserve keeps a close watch on the operating rate to see if it is approaching levels where bottlenecks could develop and threaten to boost inflationary pressures. Capacity utilization is now at a level 1.0 percentage points above the average of the past 30 years. Manufacturing production rose 0.4 pct in February, while mining output rose 0.1 pct.
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The EUR/USD continued its 472 pip - third major upwards impulsive phase, lasting 6 weeks, of its 4 month uptrend to a high today of 1.3338 with slightly higher than expected US inflation data failing to make an impact, on mounting concerns the stalling US housing market will drag the rest of the economy down.
There was little impact from the afternoon's US inflation data, which came in slightly above predictions. Headline US consumer price inflation beat expectations in February while the core rate, which excludes volatile food and energy prices, rose just as predicted.
Katzive said the dollar had been unable to benefit from higher US bond yields in the wake of yesterday's firm producer price figures -- a fact that highlights the extent to which equity market sentiment is driving currency markets at present. A firm US inflation figure may be negative for the dollar, as equity markets might react badly to the reduced likelihood US rate setters will lower borrowing costs. Markets are worried about a slowdown in the US. These concerns have been stoked in particular by the difficulties facing the sub-prime lenders, who lend money to borrowers who do not qualify for conventional loans. As the economy slows, these will tend to default at a much higher rate than ordinary loans. Talk of trouble in this section of the market is particularly worrying amid ongoing talk of a US housing market slowdown.
Overnight, former US Federal Reserve chairman Alan Greenspan warned there was a risk rising defaults in sub-prime US mortgage lending markets could spill over into other economic sectors.
Even though concerns about the US economy have raised fears that the rest of the world will suffer too, the consequent rise in risk aversion has not helped the dollar, as it has done historically.
'The dollar has had a very strong correlation with risk appetite over recent years, with lower risk appetite sending the dollar higher and vice-versa,' said Mitul Kotecha, head of global foreign exchange research at Calyon. 'However, it's important to note that the current bout of risk aversion is very US-centric, being attributable to fears about the US sub-prime mortgage market and is therefore much less likely to play positively for the dollar,' he said.
Though the problems in the US are unlikely to prompt the Fed from cutting its key Fed funds rate on Wednesday next week from the current 5.25 pct, the accompanying statement may be a little more dovish, analysts said.
'This should contrast well with the latest UK inflation data that's due on Tuesday where any suggestion that the Bank of England's (BoE) recent rate hikes aren't yet proving effective could see divergence of rates across the Atlantic,' said David Jones, chief markets analyst at CMC Markets.
GBP/USD has suffered somewhat this week after a soft housing market survey from the Royal Institution of Chartered Surveyors. Some analysts think the GBP/USD correction has been overdone.
BNP Paribas' Ian Stannard reckons the release of the minutes to the March meeting of the BoE's rate-setting Monetary Policy Committee, in addition to strong inflation news, are likely to show that another rate hike has only been postponed by the current capital market turbulence.
'Now as markets have calmed down the MPC is likely to go ahead suggesting a sterling rally,' said Stannard, who reckons that the pound can target 1.9550 usd.
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