FXCM/DailyFX Signals and Strategies

In today's DailyFX highlight, I will go over the Analyst Picks section. We have devoted an entire section to highlighting trade setups the DailyFX analysts are watching. Love them, hate them...use them how you want. You can find the analyst pick section here.


1. Analyst Picks

In the analyst picks section, the matrix at the top will display the most recently updated analyst picks. if you click on the picture of the analyst, his or her trade idea will appear below. Here's an example using Jamie Saettele.

http://img260.imageshack.us/img260/842/todayspicks.jpg

2. Analyst Sentiment

The analyst sentiment box takes the currencies our analysts are trading, and then creates a sentiment indicator on which currencies have the most positive/negative sentiment. In this case, USD is most positive, and NZD is most negative. If you're trying to identify the strongest and weakest currencies to trade, then this gives you an indication to review NZD/USD.

http://img260.imageshack.us/img260/7...tsentiment.jpg

Here's a run down of the top 10 most watched areas on DailyFX and where to find them:


Top 10 Favorites on DailyFX.com

1) Economic Calendar: An in-depth look on major events for major economies and currencies, which one can sort by Currency, Date, and Importance. Furthermore, the most important individual events all have detailed write-ups, complete with an indicator on typical market influence. After the event, the DailyFX team updates the numbers and often writes detailed insight on the report and comments on implications for affected currencies and broader trends. Traders can print this calendar out in PDF, XLS, and CSV format—making it convenient for many traders. http://www.dailyfx.com/calendar/

2) Analyst Picks: Daily, published throughout the trading day, DailyFX analysts share their favorite trades. On Mondays, its "Pick of the Week" – Tuesday, they cover the EUR, Wednesday is the JPY, Thursday is GBP, and CHF, and Friday is AUD, CAD, and NZD pairs. http://www.dailyfx.com/analyst_picks

3) Free Charts: Traders can access several different free charting packages and learn about more advanced options. The most popular are the Powercharts, Netdania, and FXTrek, while FXCM traders can also download our Marketscope platform to be used natively with the FX Trading Station. Each charting package offers its own unique advantages and features. http://www.dailyfx.com/charts/

4) DailyFX Forum: DailyFX analysts and course instructors are actively involved in moderating and posting in the forum to ensure high quality and dynamic dialogue. The Forum offers open membership to anyone interested in the forex markets, including clients of other forex brokers.

5) FXCM Speculative Sentiment Index: Weekly, published on Thursday
Given that FXCM is one of the largest non-bank forex dealers, we believe that our SSI gives access to what is likely one of the biggest and most representative samples of the broad small-investor Forex market. In our weekly SSI report, we give DailyFX readers a look at historical movements in the SSI and commensurate movements in price—providing a sentiment-based Forex forecast. http://www.dailyfx.com/technical_analysis/sentiment/

6) Market Brief: Daily, published at the start of each session, covering major Euro session occurrences and most importantly—the overlap between European and US trading sessions. The early US session and late European session is historically the most volatile time of day for major currency pairs, and knowing what to expect out of US open events is critical to everyday trading. http://www.dailyfx.com/forex_market_...aily_briefings

7) Daily Technicals: Daily, published at 12 noon (EST)
Discussing individual technical outlook for the seven major US dollar crosses. Senior Strategist Jamie Saettele uses Elliott Wave analysis to give forecasts on major currencies. For the non-Elliotticians, DailyFX also offer an early morning Daily Classical report by Technical Strategist Joel Kruger, which uses more traditional technical methods to given relevant forecasts on those same currency pairs.
http://www.dailyfx.com/technical_analysis/elliott_wave/ and http://www.dailyfx.com/technical_analysis

8) Daily Fundamentals: Daily, published at 6 pm (EST)
The wrap-up of all major happenings through the preceding 24 hours of price action. The most-thorough summary and fundamental outlook of the day, it has detailed economic calendars with individual write-ups of the day’s occurrences. DailyFX recommends no trader go without reading the end-of-day fundamentals report. http://www.dailyfx.com/forex_market_...ily_briefings/

9) Weekly Forecast: Weekly, published Friday at 6 pm (EST)
Released after market close Friday afternoon, this weekly forecast covers the major fundamental events of the preceding week and the outlook for the subsequent one. This is a detailed rundown of what to expect out of all 8 major currencies. http://www.dailyfx.com/forex_market_news/forecasts/

10) Monthly Forecast: Monthly
Both technical and fundamental forecasts available for the Month’s trading outlook. http://www.dailyfx.com/forex_market_news/forecasts/

Interesting article from Bloomberg today where Goldman is calling for the GBP/USD to rise to $1.85 by year-end. That's 2200 pips from current levels. While I can see currencies such as the AUD, NZD, CAD, and even EUR gaining against the dollar, I'm more doubtful about the GBP after Friday's poor GDP number. Their argument is that UK rates are likely to rise causing the GBP to gain in strength.

Here's what DailyFX had to see in the weekly GBP forecast:

Going forward, it’s worthwhile to note that GDP is a lagging indicator and the release’s impact on interest rate expectations is the most important part. Indeed, the British pound fell sharply because Credit Suisse overnight index swaps shifted to price in a 10 percent chance of a 25 basis point cut by the BOE during their next meeting. Furthermore, expectations for rate increases over the next 12 months fell to 88.1 basis points from 93.4 basis points. While the BOE hasn’t really given any indication of their collective stand on quantitative easing (QE) at this juncture, we do know that the Monetary Policy Committee (MPC) is looking for reasons to justify either winding down or expanding their target level of asset purchases. The minutes from their October policy meeting showed that the "forecast round ahead of the November Inflation Report would provide an opportunity to assess more fully how the medium-term outlook for activity and inflation had evolved since August," and if the latest economic data has any bearing on the MPC’s bias, it looks there is still some bearish potential for the British pound.

Link to the full forecast http://www.dailyfx.com/forex/fundame..._Continue.html

Here's the current analyst sentiment from the DailyFX analysts. Overall pro-dollar.

http://img229.imageshack.us/img229/7...tsentiment.jpg

Two central bank events to keep an eye on. The RBNZ rate decision is Wednesday at 20:00 GMT and BOC Governor John Carney is speaking today at 11:00am EST. The analyst picks section is found on DailyFX here.

After nearly 3 weeks consolidating between $1,045 and $1,070, gold has broken below $1,045. Not much support found on the chart until $1,015 area if this keeps dropping.
http://img33.imageshack.us/img33/3343/goldchart.jpg

Chart was taken from FX Trading Station II CFD demo. You can register for a CFD demo here.

The DailyFX signals are bullish the USD on the EUR/USD, AUD/USD, and NZD/USD currency pairs. The GBP/USD and USD/CHF pairs are giving mixed signals, so not included in the screenshot.

http://img692.imageshack.us/img692/8779/dfxsignals.jpg



You can register here for a trial login to DailyFX Plus.

Also, Nouriel Roubini is calling an end to the USD carry trade http://www.cnbc.com/id/33477456/

Reminder to everyone that the next King of the Micro competition starts Nov. 1. All FXCM micro accounts with a balance of at least $500 are automatically entered. You can find more details on our website here.

Take a look at the rollover amounts on the AUD currency pairs. I hadn't been paying much attention to rollover with interest rates so low. Now that Australia has started to hike rates, the rollover amounts will start to mattter if you're holding a long term position. In particular, take a look at the AUD/USD. As of this morning, you can earn $4.93 by buying 100k AUD/USD or pay $10.69 selling AUD/USD. Rollover is applied to positions held open at 5pm EST.

The Australian Dollar has appreciated over 40% since March so rollover is an added bonus for AUD bulls but can become a painful short for long term AUD bears.

The new DailyFX site has an easy to read rollover calendar displaying how many "days" worth of rollover you will earn or pay for holding the position open at 5pm ET. Here's a screenshot for the month of November. Click on the picture to goto the full calendar.

http://img171.imageshack.us/img171/7...rcalendar2.jpg

Here's the link http://www.dailyfx.com/calendar/rollover_calendar/

Missing picture.

Oops...I think the picture was a little too big.

Thanks for letting me know!

np.

Do you think they can send the news alert on dailyfx site using actual SMS?

Right now they are sent as email.

I checked and current setup doesn't have an option to send it as an actual SMS rather than email.

I will let DailyFX know about your request.

-Jason

We have put together a webpage that goes into detail about trading execution and how a dealing desk operates versus STP/No Dealing Desk.

Very interesting read on the parts about dealing practices and how a dealing desk offsets their risk. http://www.fxcm.com/fxcm-forex-execution.html

Point 3 of the spread section is very interesting in that it goes into natural currency pairs versus synthetic crosses and how spreads are determined.

Below is the DailyFX volatility index. You can see that during the height of the credit crunch volatility spiked and since then it has slowly decreased. David Rodriguez pointed out that volatility has turned up which could be important seeing that we have some major economic events this week: Non-Farm Payroll, FOMC Meeting, RBA rate decision tonight, BOE Rate Decision, ECB Rate Decision, Canadian Employment Report. Should be an exciting week in the forex market.

http://i37.tinypic.com/2envjmu.jpg

David's full forex strategy outlook is found here.

Take a look at today's surge in gold. DailyFX is attributing this to the IMF sale of gold to India's central bank.

isk appetite has generally contracted over the past 24 hours; but gold has nonetheless rallied to a new record high. This juxtaposition can be fully attributed to a single event that has plastered the newswires since the early Asian session. Back on September 18th, the executive board of the IMF approved a sale of 403.3 tons of gold to raise money for loans. Today, a large portion of that auctionable reserve was purchased by the Indian Central Bank. The 200 ton deal amounts to $6.7 billion and 8 percent of the annual global production of the precious metal. Alone this is a significant purchase and was justifiable in its immediate impact on underlying price. However, there is also potential for lasting strength from this event.

What is interesting is that we didn't really see a weakening of the dollar versus the major currencies to go along with this gold move. Below is a daily chart of gold.

http://img682.imageshack.us/img682/1281/goldn.jpg

You can read more about gold trading through FXCM UK here.

Let's take a look at trader positioning before this afternoon's FOMC announcement. The positioning numbers are not extreme. This makes me cautious about any trends developing. Traders are the long dollar against the EUR, GBP, JPY, CAD, CHF, and short the dollar against the NZD and AUD.

http://img204.imageshack.us/img204/7157/ssi.jpg

Will wait to see how the market reacts to the FOMC statement.

EUR/USD at an important resistance level right before FOMC...

http://img687.imageshack.us/img687/3558/eurusd.jpg

FXCM has created a new webpage that analyzes the major pairs (and some lesser known ones) to give you insight their characteristics. Opinions will differ from trader to trader. For example, I may look at GBP/USD and see a range to trade on a daily chart, whereas you may watch short time frames for breakouts and momentum. This is intended more as a general guide. Some of the information also touches on differences in liquidity and spreads between NDD and dealing desk firms.

1) EUR/USD: The most liquid pair in the world with the tightest prices. Most bank market makers are excellent at providing this pair, which makes it a no brainer to trade at a No Dealing Desk. Liquidity is good and deep 24 hours a day. It's the best currency pair to do large orders, as well as the best currency to scalp during Asian hours given the lower spreads. Most high frequency institutional systems that go for few pips to even one pip profit per trade generally use EUR/USD.

2) EUR/JPY: An excellent highly liquid pair with the same characteristics as USD/JPY but just a notch under. This one happens to have better defined trends and is more volatile due to the concentration of speculators and carry traders. EUR/JPY is a great currency pair for breakout, momentum, and other typical technical strategies.

3) USD/JPY: Another great liquid currency pair that's almost as good as the EUR/USD but slightly less consistent spread wise. This is another great pair to move as well as scalp on low spreads. This is a safer currency pair to scalp or range trade since it's less volatile on intraday basis than the EUR/USD. Same as above, this is another currency pair that is widely used by high frequency systems.

4) GBP/USD: After the euro, this is the most popular currency pair to trade. It is volatile intraday and long term. Spreads and liquidity are far below EUR/USD and USD/JPY, even in the best of times. The London session is best for trading GBP/USD. During the Asia time zone, GBP/USD is hard to trade in large sizes because liquidity is less and its spreads are inconsistent. GBP/USD is the single biggest reason people who lose money trading currencies lose. Range trading strategies are not recommended, neither is scalping. GBP, just like GBP/JPY, is a great breakout and momentum currency. Market makers usually do a better job in GBP/USD during the Asia time zone as they understand that GBP/USD trading is where the majority of people lose money so they are willing to offer fixed spreads or tighter spreads during the Asia time zone. However, when this currency pair does move, usually during London session, it is heavily re-quoted by market makers thus offsetting their initial advantage of fixed or tight spread during the Asia session.

5) GBP/JPY: This is one of the most volatile and most favorite currency pair of the retail forex trading community. Just like GBP/USD, it's a pair that has left massive customer losses in its wake and requires iron discipline to trade. Liquidity and spreads vary widely as it is a synthetic pair created from GBP/USD and USD/JPY. Range trading should not even be remotely attempted and only momentum and/or breakout trading should be tried as strategies. Traditional retail forex market makers love this pair since many clients blow up here, so usually they provide good spreads. However, as mentioned it is a volatile pair so when news does break this is also a pair market makers heavily re-quote.

6) AUD/USD: A great currency pair to trade 24 hours per day. Australia, being in the Asia time zone, ensures there is activity in the pair during these times, so spreads don't deteriorate.

7) USD/CAD: Liquidity is greatest in the U.S. time zone due to cross border investment and trade (U.S. and Canada are each other's largest in both respects). Outside of the U.S. time zone, spreads are wider and liquidity is lower. USD/CAD is used for macro bets on oil and, although it is not volatile intraday, USD/CAD tends to have great trends on long term basis.

8) NZD/USD: A much smaller economy and currency means that, although similar to Australia, spreads are wider and there is less liquidity. In most years, interest rates are higher than in Australia and people usually trade NZD crosses for the carry.

9) EUR/CHF: This pair is noted for its low intraday ranges and in most years it tends to range period. It's a perfect pair for range trading strategies and scalping. Liquidity and spreads in the European and U.S. time zones are excellent. During Asian hours the pair deteriorates significantly from liquidity and spreads perspective.

10) EUR/GBP: This pair is very similar to EUR/CHF with low intraday ranges. Great liquidity and spreads during European and U.S. markets. During the Asian session the spreads widen and liquidity is much less.

11) Other yen crosses: The yen is the world's most consistently borrowed currency for carry trade purposes. Most yen crosses are therefore used for their carry potential with exception of USD/JPY, EUR/JPY, and AUD/JPY other crosses do have fairly wide fluctuations in spread and are usually good for macro bets, breakout and momentum trading. Many people range trade them at times but overall these are rending currencies.

12) Emerging market currencies: These should be traded only in their respective time zone and be thought of as longer term macro bets on the particular country and/or commodity. Spreads won't allow for scalping and it's very hard to trade large sizes in short periods of time. It's better to scale into it. Overnight markets for these are thin to non-existent and so strategies must retrain use of leverage to avoid needing to exit overnight margin call.

13) Scandinavian currencies: These should be thought of in the same way as emerging market currencies. The only exception is that they are much more stable economies and therefore the risks are smaller than emerging market countries.

You can find more details about currency pairs and execution on our website here: http://www.fxcm.com/fxcm-forex-execution.html

Check this out...Goldman loses $3.6 billion trading currencies in Q3. I wonder who was on the other side of those trades. http://www.bloomberg.com/apps/news?p...Zy5a_Dz8&pos=5

USD/CHF is testing an important short term support level (I'm watching a 60 minute chart).

http://img21.imageshack.us/img21/4327/usdchf.jpg

Breakout2 is living up to its name positioning for a breakout in USD/CHF targeting 1.0093, 1.0046, 1.0000 and 0.9953. The breakout strategies scale out of trades, so you will see multiple stops and limits on the signals. The breakout2 strategy is based on SSI.

http://img254.imageshack.us/img254/9...dchfsignal.jpg