FXCM/DailyFX Signals and Strategies

Here's a list of the CFD products currently available for trading:

US 30 (Dow Jones Index Mini Future)
SPX 500 (S&P 500 Index Mini Future)
NAS 100 (Nasdaq 100 Index Mini Future)
UK 100 (LIFFE FTSE 100 Index)
GER 30 (EUREX DAX 30)
ITA 40 (S&P/MIB Index)
ESP 35 (IBEX35 Mini Index Future)
FRA 40 (CAC40 Index Future)
HKG 33 (Hang Seng Index Future)
JPN 225 (Osaka Mini Nikkei futures)
AUS 200 (S&P/ASX 200 Index Future)
US Oil (NYMEX Mini WTI Crude)
Gold - XAU/USD
Silver - XAG/USD

The parenthesis information indicates the futures contract the CFD tracks.

Here's where you can see a list of the products on the website with details about margin requirements, spread, etc:
http://www.fxcm.co.uk/cfd-product-details.jsp

For review, SSI is a contrarian indicator. It works well in trending markets. Remember last week I discussed USD/CHF and how traders were trying to pick bottoms in USD/CHF. Well, it's been working. USD/CHF has been in a 125 pip range since last week.

After Labor Day, volumes should be back to their normal levels as traders will be back from their summer vacations.

Have a great Labor Day to all of the US traders out there, and I will see you on Tuesday.

https://plus.dailyfx.com/fxcmideas/i...SSI1_09.04.jpg

USD/CHF CHART IS BELOW

I guess my post about USD/CHF on Friday was the kiss of death for the range traders. The pattern became a little too obvious as traders piled into this one.

http://farm4.static.flickr.com/3436/...4fa169c0eb.jpg
The two other 3+ positioning currencies, USD/JPY and USD/CAD haven't broken their major support levels yet, so those are two more to keep on the radar for a possible break as positioning becomes more extreme.

Here's a chart of the USD/CHF break on the hourly chart.

Here's another article I was reading this morning on China and their diversification of reserves towards gold. http://www.telegraph.co.uk/finance/e...-printing.html . My favorite part: "Gold is definitely an alternative, but when we buy, the price goes up." Buy the dips in gold?

I don't follow Elliott Wave Analysis very devoutly myself, but Jamie Saettele is our resident expert at DailyFX. His analysis shows an eventual drop to 1.0037 as long as the channel line holds. SSI positioning in USD/CHF has increased to 4.80


http://www.dailyfx.com/export/sites/...0909techs8.jpg

Full Report Found Here

In regards to my previous posts about gold, if you want to receive our gold, oil, and equity reports by email, here is where you can sign up. Click the box below:

http://farm3.static.flickr.com/2513/...bda41f9e3e.jpg

Here's an article that was posted earlier this morning by Ilya Spivak from DailyFX. His tech analysis is calling for a retrace of stocks which could lead to a strengthening of the USD.

The US Dollar may gain in the days ahead as equity markets reverse lower, boosting demand for the safety-linked currency. The MSCI World Stock Index is showing a Rising Wedge bearish reversal formation, with confirmation offered by negative divergence on the RSI oscillator. The US Dollar Index is now -91.3% inversely correlated with the MSCI metric.

http://www.dailyfx.com/export/sites/...90909_msci.png
Created Using Bloomberg - Prepared by Ilya Spivak

Read Full Report Here

The slide in USD/CHF continues. Another one to watch out for is the USD/JPY. Positioning is currently at 3.04 as of the last update on DailyFX which is considered an extreme level. Signalling a further drop in USD/JPY which would be interesting since we're right at a support level. You could argue we've broken the support level already.

http://img200.imageshack.us/img200/8039/usdjpyi.jpg

Good to see your crystal balls are working Jason!
Have a good weekend ...

Knock on wood

The USD/CHF breakout strategy in the trading signals section gave a new signal for a short position, and USD/CHF positioning is still a hefty 5.30.

Things to watch for: If USD/CHF SSI positioning starts scaling back then that would be indicative of a bottoming in USD/CHF.

A good visual of the USD weakness. This was taken from recent article by DailyFX posted on CFDTrading.com

http://www.cfdtrading.com/wp-content...DXY9-11-09.gif

Full article found here

Here's a trade setup written by John Kicklighter of DailyFX I find interesting. http://www.dailyfx.com/story/trading...701720919.html

John wrote:

An immediate risk disclaimer, attempting to spot a range in any dollar-based pair is very speculative and risky. As such, this is a setup only for those that are comfortable taking the risk. That being said, our strategy for EURUSD still tries to line up the fundamentals, technicals, positioning and risk/reward in such a way that the potential is still attractive.

Suggested Strategy

• Short: An entry of 1.4590 is just below the channel top to allow for a good risk/reward.
• Stop: A stop of 1.4690 is set well enough above the channel top to allow for a reversal. To secure profit, move the stop on the second lot to breakeven when the first target hits.
• Target: The first objective is greater initial risk (150) at 1.4440. The second target is 1.4320.

http://www.dailyfx.com/export/sites/...USD9-11-09.gif

My own comments:

SSI on EUR/USD is currently at -2.12 so you would be going with the majority of retail traders, but it's not an extreme level. And we haven't seen any substantial retrace off of the fibo level as of yet.

EUR/USD bouncing off of 1.4650 putting to test this high risk trade. I personally wouldn't be comfortable with this if there was a close above 1.4650 on the hourly chart.

The latest EUR/USD SSI reading leads me to believe that DailyFX's high risk trade is too risky. EUR/USD has managed to close above the 1.4650 level for 3 separately hourly candles and EUR/USD SSI positioning has crossed the 3 level. Watch for further continuation in the EUR/USD uptrend.

http://img143.imageshack.us/img143/8443/eurusdssi.jpg

Just watching the volatility this morning one gets the feeling that there are pivotal moments occuring in the battle between dollar bulls and dollar bears at these key levels.

EUR/JPY has failed to make new highs as equities continue to push higher. Is this the end of EUR/JPY's correlation with risk appetite?

Below is a screenshot of the EUR/JPY (candlesticks) vs. stock indices. The HKG22 on the left (tracks the Hang Seng), the US30 in the middle (tracks the Dow), and the UK100 on the right (tracks the FTSE). You can view the stock indices charts on an FXCM UK CFD demo account found here http://www.fxcm.co.uk/demo-cfd-usd.jsp

http://img29.imageshack.us/img29/6525/eurjpyrisk.jpg

A couple of posts ago I pointed out the extreme level SSI had reached and the indication it gave for a push to the upside. Now that we're pushed through, EUR/USD SSI positioning has increased to -2.58 (from -3.24) . Traders are scaling back their short positions which gives less conviction to a resumption in the trend. Does it mean the trend won't continue? Not really, but to me it means we could see a retracement or consolidation at this point. I'm looking for trade setups in which I see the highest probability for a good trade. Why rush things.

Here's an article from DailyFX on the technical side of the EUR/USD trade. One thing I take issue with in the article is the idea of looking to sell rallies. I'm not a fan of trying to pick tops in what I believe to be a clear uptrend, just as I won't try to catch a falling piano.
http://www.dailyfx.com/story/bio2/Eu...168650521.html

This is the uptrend I'm waching on the hourly chart with this mornings SSI further below:
http://img190.imageshack.us/img190/1...usduptrend.jpg

And SSI released at 9:15:55 GMT on 9/17

http://img38.imageshack.us/img38/7401/eurusdssia.jpg

Here's an article written by Jamie Saettele for CFDTrading.com. He's making a case that equities has potentially reached a top. Compare this against my post on Sept 16th regarding the EUR/JPY and the stock indices. So if his article is on the right track and there's a divergence in EUR/JPY and GBP/JPY acting as a leading indicator to a drop in stocks, or the EUR/JPY has still lost it's connection to risk taking .

Equities in a Precarious Position

Thursday, 17 Sep 2009 6:00 EDT at 18:00 by Jamie Saettele

The DJIA made a key reversal (new high but the close is below the prior day’s close) today. The implications are extremely bearish when considering not just where the bar pattern occurred – but also how it occurred.


Where – today’s high reversed at a line that is extended from highs in May, June and August. The reversal also occurs at the wave iv of 3 extreme (labels not shown but this is the circled area). 4th waves of one or two lesser degrees often mark the level at which the correction (in this case, the correction is a bear market rally) will end. 9708-9852 (today’s high was 9854) also mark lows that occurred in May, August, and October of 2004. Former support is now probably resistance.

How – momentum has slowed considerably as evidenced by divergence with RSI. Volume (not shown) today was the fourth highest since June 22. Rallying to an 11 month high but closing the day lower on relatively high volume signals distribution. The implications for US equities are bearish.

http://www.cfdtrading.com/wp-content...009/09/dji.png

You can read the full article here

Here's where you can find the latest SSI weekly analysis
http://www.dailyfx.com/story/tophead...283043151.html

Have a good weekend,

Jason

Here's an interesting report David Rodriguez of DailyFX releases every week on strategy outlook based upon volatilities. David also gives an overview of which strategies in the DailyFX Plus Trading Signals the analysts are most confident about. http://www.dailyfx.com/story/special...542916688.html .


http://www.dailyfx.com/export/sites/...09-09-21_3.gif

What does all this mean? There's a definitions guide on the website that explains volatility percentile, etc...