FXCM/DailyFX Signals and Strategies

Thanks!

Quick Update...

EUR/USD range between 1.3460 and 1.3670 has developed over the past 2 weeks. We're now testing the top of that range.

http://img522.imageshack.us/img522/8434/eurusdg.jpg

The EUR/USD range pointed out in yesterday's post held, though I'm sure traders were stopped out due to the false breakout. I was somewhat concerned yesterday as well when watching it yesterday.

http://img16.imageshack.us/img16/3558/eurusd.jpg

Allowing for some flexibility in setting a stop loss order in terms of the upper and bottom limits of the range is important to guard against breakouts.

Here are 5 key economic events to watch this week, analysis courtesy of DailyFX:

•RBNZ Rate Decision – March 10, 20:00 GMT
The RBNZ is expected to keep rates on hold at 2.50% and if policy makers re-commit to leaving monetary policy unchanged until the middle of the year we could see a bearish reaction from the “kiwi”. The RBA, New Zealand’s antipode counterpart, raised their target rate for a fourth time last week. Earlier hikes have raised the outlook for RBNZ tightening, but we have seen Overnight index swaps go from pricing in 191 bps of hikes to 140 bps since the beginning of February. Therefore, a dovish statement from New Zealand policy makers may not generate a substantial reaction but does hold the potential to weigh on “kiwi” sentiment.

•Australian Employment Change (FEB) – March 11, 00:30 GMT
Forecasts are for the Australian economy to have added jobs in February, for a sixth straight month. The 15,000 that is expected would be the smallest gain over the period which could be a sign that the central bank’s tightening is beginning to curb growth. Following the RBA rate hike last week there may be limited upside potential for the Aussie following a positive employment report as tightening is a clear sign that the economy is experiencing significant growth. However, a downside surprise or job loss could weigh on the antipode currency as it would dim the outlook for interest rates.

•SNB Rate Decision – March 11, 14:00 GMT
Preceding employment, inflation and retail sales reports may take away from the potential impact of the SNB rate decision. Nevertheless, it will be important to see the comments from policy makers as the Swiss National Bank is suspected to have been intervening in currency markets to limit the Franc’s appreciation. There is virtually no chance that the central bank will raise rates and may look to temper any expectations for future tightening. Deflation remains a concern and with consumer prices expected to remain at 1.0% on an annualized basis, any dip in growth would increase downside risks for inflation. The Swiss Franc has yet to regain its safe-haven status which has seen it maintain a positive correlation with risk appetite, limiting the impact of yield expectations on volatility.

•Canada Net Change In Employment (FEB) – March 12, 12:00 GMT
The Canadian economy saw a string of positive fundamentals end with the unexpected 4.9% decline in building permits which was followed by a miss in the Ivey PMI. A weaker than expected employment report could start to raise concerns that growth is waning as weak U.S. demand catches up with the export driven economy. Emerging markets have been the main consumers of Canadian exports which may not be sustainable as inflation concerns have led to countries like China to take steps to slow activity. However, evidence of sustainable job growth will raise the outlook domestic demand which could help offset weakness from abroad. Downside risks may be greater following the recent rally which makes the release significant, especially if risk appetite has started to fade.

•U.S. Advance Retail Sales (FEB) – March 12, 13:30 GMT
Consumption figures from the world’s largest economy have the potential to be the greatest event risk on the week. Judging by the reaction to a small surprise in the employment figures, an improvement in domestic demand could generate its own bout of risk appetite. However, early forecasts are for a 0.2% decline as severe weather which shutdown large parts of the country. is expected to have weighed on demand. State specific cash for appliances programs could have created some artificial demand. Additionally, cash strapped Americans were filing their tax returns as soon as possible which had several receiving their rebates at the end of the month. A dip in retail sales will fuel speculation that absent government stimulus growth will stagnate which may generate broader risk aversion.


Read more: DailyFX - Weak U.S. Retail Sales Could Overshadow Improving Labor Markets http://www.dailyfx.com/forex/fundame...#ixzz0hb2xLf9w

Here's a list of the beginner classes being taught at the expo. We should have a more detailed description of each workshop added to the webpage very soon:

General Trading
- Intro to FXCM and FX markets
- No Dealing Desk vs. Dealing Desk Q&A with CEO Drew Niv
- The Right Trading Platform For You
- DailyFX+ Trading Signals and the Technical Analyzer
- Speculative Sentiment Index
- Currency Overlay Strategies
- Developing a Trading Plan
- Trading Mistakes to Avoid
- Money Management: The Good, the Bad, and the Ugly
- DailyFX Tips and Trading Strategies

Technicals
- Chart Reading 101
- Beginner Fibonacci
- Top Ten Basic Technical Indicators
- Beginner Elliott Wave Analysis

Fundamentals
- Trading the Top Five Economic Indicators
- Carry Trade Survival Kit
- Trade the News
- Trading Opportunities and Forecasts 2010

MT4 and Automated Trading
- Forex System Selector and Auto Trading


Full Schedule Found Here http://www.fxcmexpo.com/workshops.jsp

USD/CAD is at a critical level. This mornings SSI reading came out at 4.67. That means there are 4.67 positions long the USD/CAD for every position short. SSI is used as a contrarian indicator, meaning it believes the majority of traders will be wrong. This occurs frequently during trending markets because retail traders like to pick tops and bottoms, trying to catch reversals and trade a range.

http://img694.imageshack.us/img694/7901/usdcadssi.jpg

Looking at a daily chart, it's no wonder traders are loading up on long positions at this point. It's tested this level twice before creating a support level.

http://img696.imageshack.us/img696/3...cadsupport.jpg

Here's a list of the advanced trading classes being held at the expo in Las Vegas. Organized by type.

Market related post to follow this afternoon...


General:

 

1. Active Trader - Scalping the Market
2. How to Trade like a Hedge Fund Manager
3. Techno/Fundo Analysis
4. Trading Against the Crowd (Using FXCM SSI, Stops & Limits)
5. Currency Overlay Strategies to Complement Stock Portfolios
6. FXCM Active Trader Program - resources and benefits for the Active Trader Community
7. Real Time Trading
8. FXCM Active Trader
9. Trade Forex like a Buinsess: Remove Emotions
10. Using Options to Trade Currencies

Fundamental:

1. Importance of Identifying Drivers of Price Action
2. Using Commodities (Oil and Gold) to trade Currencies
3. China and India: Impact on the Global Currency Market
4. Interest Rate Analysis for Forex Traders
5. FX Cross Currencies & Emerging Markets Currencies

Technical:

1. Trading with Sentiment Indicators (SSI, COT, etc)
2. Using Seasonal Cycles to Gain an Edge in FX Trading
3. Advanced Elliott Wave
4. Top Ten Advanced Technical Indicators
5. High Probability Breakout Trading in the Forex Market

MT4 / Automated Trading / System Trading:

1. High Frequency Trading with FXCM Strategy Trader
2. Best Practices to Develop your Trading Systems
3. Tools & Techiques of Successful Black Box Traders
4. Strategy Development I : Focus Correct Strategies on Correct Markets
5. Strategy Development II : Take your strategies and Develop Portfolios
6. Strategy Development III: Going from Back Testing to Live Trading
7. Fast and Furious Trading : High Frequency Trading Techniques
8. API and Programing Service

The complete Beginner, Advanced, MT4 workshop list can be found on the expo webpage www.fxcmexpo.com

Didn't have time to post yesterday afternoon, so sorry about that, but let's go back to USD/CAD. Looks like 3rd times the charm for USD/CAD.

We're seeing a break in the support level with USD/CAD now trading down to 1.0170. The 1.01 level is obviously a target, but not sure how long it will take to get to that level.

Why did we see a break? The Canadian unemployment level dropped from 8.3% to 8.2% and employment rose by 21,000 compared to expectations of 17,000. Take a look at what happened during the announcement:

http://img28.imageshack.us/img28/1820/usdcaddrop.jpg

USD/CAD SSI remains at 4.42.

I'm running a twitter contest for the FXCM Expo and the contest starts Sunday at 5:15pm EST. Here are the details:

Tweet To WIN an iPod Touch

HERE IS HOW YOU CAN QUALIFY FOR THE CONTEST:

 

1. Use the hashtag #FXCMexpo in any tweet.
   
2. Each tweet containing #FXCMexpo qualifies as an entry. There's no limit to the number of entries so tweet as many times as you want!
   
3. Follow @JasonForex, @FXCMUS, or @FXCMUK. Entrants must be following one of the three twitter accounts to be eligible.

VIEW CONTEST TERMS AND CONDITIONS.

Looking through Jamie Saettele's (@jamieSaettele) tweets just now and found this one:

eurusd rolling over from channel res.

Take a look at the Daily chart. Jamie pointed out the downtrend on the EUR/USD and today's daily candle is bouncing right off of it.

http://img23.imageshack.us/img23/7956/eurusdj.jpg

Pre-FOMC analysis.

The main thing to watch for is the FOMC statement to see whether they change any text, particularly about whether rates will stay at current levels for "an extended period" of time. A change of the word extended could give a small signal about the Fed's plans. Here's more from DailyFX:

Trading the FOMC rate decision is certainly not as clear cut as some of our previous trades but nevertheless, comments from the central bank could set the stage for a long U.S. dollar trade as the MPC prepares to unwind its emergency measures this year. Therefore, if the Fed holds an improved outlook for the economy and sees scope to normalize policy in the second-half of 2010, we will need to see a red, five-minute candle following the release to generate a sell entry on two-lots of EUR/USD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance taking volatility into account, and this risk will establish our first mark. The second objective will be based on discretion, and we will move the stop on the second lot to cost once the first trade reaches its target in order to preserve our profits.

On the other hand, the ongoing weakness in the private sector paired with tightening credit conditions may lead the Fed to maintain its current policy stance going into the second-half of the year, and dovish remarks following the rate decision are likely to weigh on the exchange rate as investors scale back expectations for a rate hike this year. As a result, if we see the FOMC hold a cautious outlook for the region and reiterate borrowing costs will stay low for an “extended” period of time ,we will favor a bearish outlook for the greenback, and will utilize the same strategy for a long euro-dollar trade as the short position laid out above, just in reverse.

http://www.dailyfx.com/export/story-...03.15_TTN4.jpg

Read more: DailyFX - EUR/USD: Trading the Federal Open Market Committee Interest Rate Decision http://www.dailyfx.com/forex/fundame...#ixzz0iLqPRTCO

Remember that during the last meeting, Thomas Hoenig of the San Francisco Fed dissented with the other FOMC members saying rates no longer needed to be this low for an extended period due to the budding economic recovery. Will he have enough sway to convince other members this time?

Add this article http://www.businessweek.com/news/201...statement.html to today's Fed watch:

Mishkin says the FOMC statement will contain the "extended period" phrase. Keep in mind Mishkin is not a voting member of the FOMC whereas Hoenig is.

Great title for this afternoon's SSI update on DailyFX Plus: SSI: Retail Traders Keep up the Fight as USDCAD Slowly Approaches Parity. The question seems not if but when parity will be reached. We're about 100 pips away right now. Here's the latest SSI:

http://img179.imageshack.us/img179/7901/usdcadssi.jpg

Reminder that this coming Monday, March 22, is the deadline for submitting comments to the CFTC regarding the 10:1 leverage proposal. If you wish to submit your comments either for or against the proposal, here's the information on how to do so:

Send your comments directly to the CFTC at: [email protected].

Include 'Regulation of Retail Forex' in the subject line of your message and the identification number RIN 3038-AC61 in the body of the message.


You can also submit your comments by either of the following methods (include above ID number):

Fax:

(202) 418-5521


Mail:

Mr. David Stawick, Secretary
Commodity Futures Trading Commission
1155 21st Street, N.W.,
Washington, DC 20581

The weekly SSI report was released from DailyFX today. If you've been following along on the USD/CAD trade, it's important to keep track of the DailyFX weekly analysis to get an idea of the week to week changes in overall trend and market sentiment. Here's what David Rodriguez had to say about USD/CAD

USDCAD – Continued USDCAD declines have left the pair’s SSI ratio in strongly net-long territory, but it is interesting to note that said ratio has not hit further extremes as the pair drops to fresh lows. The ratio of long to short positions in the USDCAD stands at 2.95 as nearly 75% of traders are long. Yesterday, the ratio was at 3.48 as 78% of open positions were long. In detail, long positions are 2.5% lower than yesterday and 2.4% weaker since last week. Short positions are 14.9% higher than yesterday and 49.3% stronger since last week. The small drop in long interest and the relatively sharp climb in short positions leave us on the lookout for trend reversals as crowds begin to join the trend.

Read more: Forex Sentiment | Forex Technical Analysis http://www.dailyfx.com/technical_ana...#ixzz0iYMc50rI

It would be much better to see SSI net positioning for USD/CAD to stay at consistent levels or increasing as USD/CAD drops. Any decrease in SSI gives me pause for a push to parity in the short term.

If you're a fan of the SSI data, DailyFX will be holding multiple workshops at the upcoming Las Vegas expo May 3-4, 2010. Here's a list of the classes devoted to SSI

 

1. Speculative Sentiment Index Overview (SSI)
   
2. Trading with Sentiment Indicators (SSI, COT, etc)
   
3. Trading Against the Crowd (Using FXCM SSI, Stops, and Limits)
   
4. DailyFX + Power Tools: Trading Signals and the Technical Analyzer
   
5. DailyFX Tips and Trading Strategies

Full workshop schedule can be found on the expo website www.fxcmexpo.com . We're happy to have Forex Factory as the sponsor for the FXCM Expo!

USD weakness is the topic of the day. Tom Long of the DailyFX Course team had a great chart analysis of the USD index. Take a look...

Sometimes when you take a step back, you can see things more clearly.
This chart of the US Dollar Index is a good example of what I mean.

http://www.dailyfx.com/export/story-...G_49633314.jpg

While the FX markets offer the opportunity to trade the USD against a variety of individual currencies, this chart offers a more general view of the state of the USD as it is compared to a basket of currencies. When looking for trades in the USD pairs, I often check this chart out just to make sure that I am seeing the USD strength/weakness in its purest form. Right now the USD is strong and has been since the beginning of December. So this gives me confidence that trending moves, like the downtrend of the EUR/USD is based not only on the EUR weakness, but real underlying strength in the USD. The uptrend continues on the USD as it appears poised to move up to a new recent high, so traders would most likely increase their chance of success by looking to take advantage of this strength rather than its relative weakness against a stronger currency. An example would be the recent sideways trading in the AUD/USD, it may not be based so much AUD weakness, but rather a USD that is continuing to gain strength.

Tom is scheduled to present at the FXCM Expo. Here are the workshops he will be presenting:

 

1. Chart Reading 101
2. Top Ten Basic Technical Indicators
3. Top Ten Advanced Technical Indicators
4. High Probability Breakout Trading in the Forex Market

Complete expo schedule: http://www.fxcmexpo.com/workshops.jsp

FYI...for any traders still worried about how to account for forex gains/losses on tax returns, DailyFX is hosting a tax webinar tomorrow (March 23) at 2:00pm EST. The special webinar moderator is Robert A. Green, CPA, CEO Green & Company CPAs, LLC. To attend the webinar, login five minutes before it starts here.

Topics:

Basic Tax Information for Forex Traders
How to Report Forex on your Tax Returns
Live Question and Answer Session

The webinar topics will be most relevant to US residents. If you can't make it at 2pm, we'll have the recording available afterwards.

Here are some key technical levels for USD/CHF, EUR/USD, and GBP/USD if setting up for USD strength:

http://img135.imageshack.us/img135/3599/usdtrio.jpg

The spread for some of our CFD products was reduced last week. Here's the list of product's with new spread:

USOil
Old: 8
New: 5

SPX 500
Old: 8
New: 5

NAS100
Old: 3
New: 2

UK 100
Old: 2 (4)
New: 2 (3)

GER30
Old: 2 (4)
New: 2 (3)

FRA40
Old: 4
New: 2 (3)

JPN225
Old: 25
New: 15

AUS200
Old: 4
New: 2 (4)

We're also in the process of beta testing CFD trading on the MT4 platform. Look for that to be released within the next couple of months once the beta testing is complete!

love ur analysis Jason, you go beyond just the technicals ..... very insightful ....I always read your thread ur call on USD/CAD based on SSI was simply great