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  • #341
  • Apr 6, 2010 9:17am Apr 6, 2010 9:17am
rpm, where do you get your position info from?
  • #342
  • Apr 6, 2010 10:19am Apr 6, 2010 10:19am
Below is the latest currency correlation report from DailyFX. As John said in the correlation update, "it is very important to keep in mind the correlation between various currency pairs and their shifting trends.

http://www.dailyfx.com/export/story-...04.05.img1.gif


Read more: DailyFX - Risk Appetite and Aversion is Starting to Loosen its Hold Over Currencies http://www.dailyfx.com/forex/technic...#ixzz0kLEiPYUa
  • #343
  • Apr 6, 2010 11:12am Apr 6, 2010 11:12am
Those Correlation Charts are cool. Thanks for the info.

Quoting Jason Rogers
Below is the latest currency correlation report from DailyFX....
  • #344
  • Apr 6, 2010 6:53pm Apr 6, 2010 6:53pm
Jason,
Are you implying here that trading fib retracements aren't useful?


Quoting Jason Rogers
Hi cprao,

Thanks for the post and great question. It's helpful to go back every now and then and talk about retail traders and why SSI positioning can be used as a contrarian indicator.

Retail forex traders like to fade momentum. Traders often sell into rallies and buy into declines. They tell themselves..."look at how much the market has moved, it can't possibly go any further! I'm calling the bottom, time to trade the retracement!". Only to see the market continue trending.

I'm of the same opinion that volume should follow trend. The problem...
  • #345
  • Apr 6, 2010 8:23pm Apr 6, 2010 8:23pm
Jason,
I think a good way to filter the SSI signals would be to use the correlation chart and the most extreme SSI readings. For example:

Most extreme SSI reading over the last week has been u/ca, and the next most extreme signal has been u/ch, and both pairs with a "+" number. Since these 2 pairs are correlated, go short on u/ca because it's the most extreme reading, but don't go short on u/ch. The FXCM analysis over the last week has been to go short on u/ch since SSI has been "+". However, u/ca charts have been decreasing and u/ch has been increasing.

Another example, the next most extreme reading after u/ch is a/u, with a "-" number over the last week. A/U is inversely correlated to u/ca. Since these 2 pairs are inversely correlated and the SSI readings are opposite, then it is confirmed to go long on a/u, which has in fact has been increasing.

In other words, do not enter trades based on SSI unless the correlations agree.

Let me know if you agree with my assessment.
  • #346
  • Edited 7:44am Apr 7, 2010 7:32am | Edited 7:44am
Quoting eagle4x
Jason,
Are you implying here that trading fib retracements aren't useful?
Not at all. In fact, I like fib retracement a lot. I generally use fib retracements to see how far a currency pair may move and pick possible targets for exiting a trade. I've been watching fib retracement on GBP/USD daily chart. Markets bouncing in between the 50-62% retracement levels over the past month and SSI has been rather neutral. If SSI showed a majority of traders watching the same levels I'm watching, then I would become more concerned about a breakout. I'm more so looking forward to next month's UK elections causing a hung parliament leading to a lower GBP/USD.

http://img260.imageshack.us/img260/7799/gbpusdfib.jpg

  • #347
  • Apr 7, 2010 8:01am Apr 7, 2010 8:01am
Quoting eagle4x
Jason,
I think a good way to filter the SSI signals would be to use the correlation chart and the most extreme SSI readings. For example:

Most extreme SSI reading over the last week has been u/ca, and the next most extreme signal has been u/ch, and both pairs with a "+" number. Since these 2 pairs are correlated, go short on u/ca because it's the most extreme reading, but don't go short on u/ch. The FXCM analysis over the last week has been to go short on u/ch since SSI has been "+". However, u/ca charts have been decreasing and u/ch has...
I would be cautious about doing this and would need to test more long term before making a decision. I could be wrong, but it's not as clear a strategy to me.

All other things being equal, I could see myself doing what you suggest if I believe both trades are equally good and I don't want to replicate the trades because they are highly correlated.

USD/CAD and USD/CHF have a 1 month correlation of 0.50 and the average is around 0.60-0.55. You may decide to do both for diversification purposes.

I like to look at fundamental events as well to see if they justify my position. For example...."Is there a good fundamental reason to short USD/CAD. Is the CAD generally the strongest out of all the currencies. What does it have going for it that could push it lower." And start ticking off reasons. Oil is pushing higher. Employment continues to increase month after month, often times exceeding expectations. Bank of Canada will probably raise rates after June and BOC members have been hawkish. All indications lead towards a stronger CAD. Another reason why I was looking for a break of CAD/JPY out of the range from my post on March 24 http://www.forexfactory.com/showpost...&postcount=321

Recent strength in oil has coincided very nicely with moves in CAD/JPY and USD/CAD.
  • #348
  • Apr 7, 2010 11:16am Apr 7, 2010 11:16am
On China and the Yuan...

Interesting article from BusinessWeek titled "China Said to Consider Yuan Trading Versus Ruble, Won" http://www.businessweek.com/news/201...-update1-.html

The decision would make sense due to each countries proximity and trading relations, but could this also be a prelude to China allowing further appreciation of the Yuan to the Dollar? Take a look at recent events...the Treasury Department delays the release of a report on currency manipulation and now Treasury Secretary Geithner will be visiting Beijing on Thursday.

Below is a chart of the USD/CNY basically flat lining at the 6.81 level:

http://img441.imageshack.us/img441/1273/usdcny.jpg

  • #349
  • Apr 7, 2010 1:20pm Apr 7, 2010 1:20pm
CFD Announcement...

Last week we announced the addition of oil, gold and indices onto FX Trading Station II accounts through FXCM UK (excluding US residents).

FXCM has now added the CFD products (oil, gold, stock indices) onto all MT4 demo accounts, and they will soon be on all MT4 live accounts.

If you don't see the the CFD symbols in the Market Watch window, you will need to add them. To do this, right click anywhere over the Market Watch window, and choose Symbols from the menu. In the Symbols window, look for CFD min 1, CFD min 10, and CFD min 100. You will need to enable each one you want to see.


More market discussion in tomorrow's posts! If you plan to trade during the BOE rate announcement, then join David Song starting at 6:45am EDT for live coverage of the announcement http://www.dailyfx.com/calendar/trade_the_news/ .
  • #350
  • Apr 8, 2010 8:10am Apr 8, 2010 8:10am
Since we've focused on USD/CAD SSI readings over the past couple of weeks, here's the USD/CAD SSI chart from todays release of the weekly SSI analysis from DailyFX:

http://www.dailyfx.com/export/story-...1727801346.gif


And analysis from DailyFX:

USDCAD – The ratio of long to short positions in the USDCAD stands at 2.96 as nearly 75% of traders are long. Yesterday, the ratio was at 3.08 as 76% of open positions were long. In detail, long positions are 11.9% lower than yesterday and 0.3% weaker since last week. Short positions are 8.2% lower than yesterday and 16.3% stronger since last week. Open interest is 11.0% weaker than yesterday and 0.6% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

Read more: Forex Sentiment | Forex Technical Analysis http://www.dailyfx.com/technical_ana...#ixzz0kWOy9vpR



I'm happy being biased short USD/CAD as long as we don't see it close above 1.0220

http://img34.imageshack.us/img34/6674/usdcadl.jpg

  • #351
  • Apr 13, 2010 7:44am Apr 13, 2010 7:44am
There was an update to the FX Trading Station II over the weekend, and the most noticeable changes are in the Marketscope charts. Here's a highlight of some of the changes.


1. Heiken Ashi and Fractal Indicators

http://img269.imageshack.us/img269/5...hifractals.jpg



2. ZigZag

http://img386.imageshack.us/img386/4438/zigzag.jpg



3. Improved Pivot Point Indicator: You can now set the candle period for the pivot independent of the chart time frame you are viewing. In other words you can base the pivot point off of the daily candle while looking at the 5 minute chart. Previously, the pivot was based off of the candle period of the chart period you were viewing. Also, the pivot point will now be located in the indicators list rather than as an icon in the icon menu at the top of the chart.

http://img168.imageshack.us/img168/4029/pivotpoints.jpg



4. Chart Signals: Basic feature (for now) added to the charts. You can have a signal plotted onto the chart for basic indicator signals uses such as moving average crosses, RSI oversold/overbought levels, etc.

http://img245.imageshack.us/img245/9...ragesignal.jpg




5. Charts from the Market Order Window

http://img685.imageshack.us/img685/2...arketorder.jpg



Feedback is welcome as always!
  • #352
  • Apr 14, 2010 7:28am Apr 14, 2010 7:28am
Back to market discussion...Check out the latest SSI readings from this morning:

http://img72.imageshack.us/img72/5444/ssidata.jpg


USD/CAD SSI is now up to 4.45 and USD/CAD is trading comfortably below 1.00. Something else I also find interesting is the amount of open interest for USD/CAD is now rivaling that of USD/JPY.
  • #353
  • Apr 15, 2010 6:57am Apr 15, 2010 6:57am
Tom Long of the DailyFX Powercourse bringing up a good point with his beginner's article today. I hope I'm not jinxing the GBP/AUD trend by posting this article

I often hear new traders state that they are buying a currency pair because the price is too low or selling a currency pair because the price is too high.

The GBP/AUD lows in October of 2009 and January of 2010 were good examples. Many bought because they determined that since the market was at a 25-year low that it had to move up. If you look at a daily chart of this pair you can see where there was a nice bounce up off of those lows.

http://www.dailyfx.com/export/story-...G_49631512.jpg


However, the fundamental picture had not changed. The only change was the number of traders who were convinced that the market had sold off enough and was due to rally. It did rally, but right up to a nice place to sell before the market move through those lows, to even lower lows. This brings us right back to the title of this piece. There is no such thing as too high or too low when it comes to prices in the financial markets, unless of course the price is zero. There is a good reason that a market trades at 25-year lows and until that reason changes, traders should assume that lower lows are in store. This may be the trend of the year, so we want to take advantage of these moves by trading with the trend instead of assuming that we can predict the end of the move. So the next time you hear about a market reaching a multi-year high or low, don’t start looking for the end of the move, but rather look for a place to jump on board in the direction of the move and ride it out for as long as possible. There is no telling just how long that move will last.


Read more: DailyFX - There is No Such Thing as Too High or Too Low http://www.dailyfx.com/forex/educati...#ixzz0lB2VCdyj

  • #354
  • Apr 15, 2010 7:18am Apr 15, 2010 7:18am
FYI, the FXCM Currency Trading Expo in Las Vegas is about 2 weeks away. If you're still thinking of joining, there are some discounted rooms at the Rio left but you will need to book through the Rio link for the expo.

Also, we will be raffling off ten complimentary rooms at the Rio. Reference FXCM when booking a room at the Rio for May 2, May 3, or May 4, and you will not only receive a discount, but you will also be automatically entered in our drawing to have your Rio room fee reimbursed. You must book by April 16 to qualify for this drawing.

I will be there, and we hope to see you there as well if you can make it.

-Jason
  • #355
  • Apr 16, 2010 7:52am Apr 16, 2010 7:52am
EUR/USD

Market direction seems to be undetermined at this point. The Greek bailout announcement from earlier in the week gave some strength to the Euro but no major retracement in site. Taking a look at news articles,

BusinessWeek

"EU Finance Chiefs Tell Greece to Brace for IMF Bailout Terms" http://www.businessweek.com/news/201...out-terms.html


A very reassuring title. Brings up bad images from action movies right before a big crash is about to happen... BRACE FOR IMPACT, potential catastrophic damage ahead. Not very re-assuring for me to go long the Euro. And this line from the article:

Greek 10-year yields increased to 7.255 percent today, approaching the rate before the 45 billion-euro ($61 billion) rescue package for the cash-strapped nation was unveiled on April 11.


So despite the announcement of a bail-out, it hasn't inspired potential bondholders to offer better rates. I see this as a potential reason the Euro is still hovering around the 1.35 area rather than moving back towards the more optimistic 1.39-1.40 level.


USD/JPY

Here's some USD/JPY analysis from Jamie Saettele of DailyFX.

The USDJPY has slid lower and former resistance at 9200 is now in focus. Bigger picture, I remain bullish against 9100 in anticipation of a move above 9480.

http://www.dailyfx.com/export/story-...1727798554.gif


A possible bottoming of USD/JPY has popped up on my radar as well, but I would wait for a retest of the bottom of the channel because USD/JPY SSI reading is at 3.17 as of this morning. Then look to see if SSI pulls back to more neutral levels or possibly even negative.

Here's where to find the tech analysis on DailyFX http://www.dailyfx.com/forex/technic...Middle_of.html .
  • #356
  • Apr 16, 2010 8:38am Apr 16, 2010 8:38am
The 91 on the USD/JPY may happen now. 92 is being tested right now. And the GS fraud charges have just spooked the markets down.
Quoting Jason Rogers
EUR/USD

Market direction seems to be undetermined at this point....
  • #357
  • Apr 19, 2010 6:42am Apr 19, 2010 6:42am
Quoting Leche Mocha
The 91 on the USD/JPY may happen now. 92 is being tested right now. And the GS fraud charges have just spooked the markets down.
Indeed. No sooner had I made the post than the GS news came out and SSI proves worthwhile again.
  • #358
  • Apr 20, 2010 8:54am Apr 20, 2010 8:54am
FYI...SSI on DailyFX Plus has not been updated yet, but David Rodriguez just posted on his twitter feed that USD/CAD SSI is now at 4.5. Looks like traders were caught off guard by the BOC statement and are now hoping (praying?) for this level to hold.

http://img260.imageshack.us/img260/4241/usdcad.jpg


I'm looking forward to the SSI figures being released this afternoon!

In case you missed the BOC announcement, here's an overview from Businessweek http://www.businessweek.com/news/201...es-coming.html
  • #359
  • Apr 20, 2010 9:21am Apr 20, 2010 9:21am
Good Morning Jason,

I have been with FXCM since 2006 and I have tried always to trade the SSI but it is confusing sometimes to me. What is more stronger:?

1 - If SSI changed from positive to negative / negative to positive?
2 - Or if the negative or positive position grows?

This morning the report showed AUD/USD jumped from -1.04 to -1.24 giving more bullish power. And look at the morning rally.


Thanks
  • #360
  • Apr 20, 2010 11:34am Apr 20, 2010 11:34am
Quoting Forexaccount
Good Morning Jason,

I have been with FXCM since 2006 and I have tried always to trade the SSI but it is confusing sometimes to me. What is more stronger:?

1 - If SSI changed from positive to negative / negative to positive?
2 - Or if the negative or positive position grows?

This morning the report showed AUD/USD jumped from -1.04 to -1.24 giving more bullish power. And look at the morning rally.


Thanks
Hi there,

Good to have you on the thread!

I primarily look for positive or negative numbers greater than -3 or +3. DailyFX often points out changes from positive to negative / negative to positive as situations to look for a change in market direction, but I don't use it very much. I find that I get better signals by looking at the magnitude of positioning and waiting for extreme levels.

In general positioning greater or less than 3 is considered significant. A positioning of -1.04 to -1.24 would not be significant. Remember that a reading of 1 means that there is 1 trader short for every 1 trader long. There would be no strong bias of shorts to longs.

Here's the reading from this morning at 9:24 GMT.

http://img534.imageshack.us/img534/7157/ssi.jpg


Everything was fairly neutral except for USD/JPY and USD/CAD. Even then both are still at or below the 2 level.

Second, I would check the chart to make sure trader positioning is going against the trend. I typically look at the daily or 4 hour chart for this to get a sense of the general trend.

That's my $0.02

-Jason
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