FXCM/DailyFX Signals and Strategies

Here's an SSI update. USD/CAD SSI as of this morning was over 5 which is an extreme reading. That means over 80% of USD/CAD retail traders at FXCM are buying USD/CAD. Both momentum strategies are giving bearish USD/CAD signals:

http://img145.imageshack.us/img145/3...cadsignals.jpg

The Trade Details section gives you an overview of the trades being placed by the trading signal. If the signal is green and says Enter Now, it's indicating that the market is still at an optimal level to enter the position. If the Action is red and says Hold, that means don't enter the trade and those already in the trade should still follow the stop/limit parameters outlined by the signal. In this case, both strategies are using trailing stops.

I placed a short USD/CAD based on SSI extreme overbought reading for a 40 pips profits around 2 AM EST. It worked

Are you joking or what?

Good to hear!

Take a look at EUR/USD. Testing support level for the 3rd time over the past 2 months.

http://img406.imageshack.us/img406/6803/eurusdx.jpg

EUR/USD SSI is not extreme, but I'm watching it for any increase in traders trying to pick a bottom.

Here's what DailyFX had to say about the Euro in this mornings daily update:

The budget deficit in the Euro-Zone increased to 6.3% of gross domestic product last year, which was more than more than double the 3% limit set by the European Union, while the debt-to-GDP ratio widened to 78.7% from a revised 69.4% in 2008. In addition, the EU said that the uncertainties tied to Greece’s recording of off-market swaps and its social security surplus could push the deficit higher and top 120% of GDP for 2009, but went onto say that Greece is on track to meet its pledge to reduce the deficit by 4% this year. Meanwhile, a separate report showed manufacturing and service-based activity expanded at a faster pace in April, with the PMI readings increasing to 57.5 from 56.6 and from 54.1 to 55.5 respectively, which raised the composite index to 57.3 from 55.9 in March to mark the highest level since August 2007. Nevertheless, as the European policy makers and the IMF convene with the Greek government to lay out the foundations of the EUR 45B bailout, the uncertainties surrounding the outlook for future growth could lead the European Central Bank to maintain a loose stance throughout the second-half of the year, which could certainly stoke increased selling pressures on the euro as investors weigh the prospects for future policy.

Read more: DailyFX - Euro Extends Decline as 2009 Deficit Exceed EU Limit, British Pound Pares Advance http://www.dailyfx.com/forex/fundame...#ixzz0lq1Qm66v

And if you thought things in Greece were not bad enough.... this headline from Reuters "Greece deficit worse than feared..." http://www.reuters.com/article/idUST...edName=topNews . Below are some highlights from the article.

"What concerns me is the general uncertainty about the Greek official figures. This affects market perception about Greece ...that one can't rely on the Greek statistics and that the deficit is revised up and up and up," Giada Giani, economist at Citigroup, said on Thursday.

...

The cost of insuring five-year Greek government debt against a default shot up to the highest level in Europe, surpassing Ukraine. Greek credit default swaps hit 565 basis points, or 565,000 euros per 10 million of bonds, against 485 on Wednesday.

...

Greece will need to refinance 8.5 billion euros of bonds maturing on May 19, and the markets think it will almost certainly have to apply for a 40-45 billion euro aid package from euro zone states and the IMF -- though the German public's opposition to helping Greece could delay the disbursal of funds.

A bigger question than USD/CAD is...could EUR/CAD reach parity?

http://img714.imageshack.us/img714/7366/eurcad.jpg

Take a look at this picture. David Rodriguez just tweeted (www.twitter.com/drodriguezfx) the below image with the following line:

Spread between German and Greek 10yr yields has exploded to fresh records. Not looking good for $EURUSD

http://web13.twitpic.com/img/8993125...b60-scaled.gif

Looks like something happened to David's picture on Twitpic. The spread between German and Greek 10 yr yields is over 6%. Here's an article from Bloomberg Businessweek http://www.businessweek.com/news/201...t-concern.html.

EUR/USD testing 1.34 after a strong bounce starting earlier this morning...

Here's the schedule for DailyFX's live coverage of news events next week:

 

1. Tue (Apr 27th, 10:00 EST) – US Consumer Confidence (APR) with John Rivera
2. Tue (Apr 27th, 21:30 EST) – Australian CPI (1Q) with Ilya Spivak
3. Wed (Apr 28th, 14:15 EST) – FOMC Rate Decision with David Rodriguez
4. Wed (Apr 28th, 17:00 EST) – RBNZ Rate Decision with John Kicklighter
5. Thu (Apr 29th, 3:55 EST) – German Unemployment Change (APR) with Matt Russell
6. Fri (Apr 30th, 8:30 EST) – US GDP (1Q A) with David Song

http://www.dailyfx.com/calendar/trade_the_news/

Have a great weekend, and see you on Monday.

-Jason

5 Key Events to Watch from John Rivera:

The potential for the FOMC to initiate a asset purchase program will make their upcoming policy meeting as the biggest event risk for the week. Another pause by policy makers would shift focus to the 1Q GDP report to end the week as the U.S. economy is expected to have grown by 3.4% over the period. An RBNZ policy meeting could also generate volatility as a change in the post release language is expected. Outside the FOMC decision the issues in Greece have the potential to dominate headlines as the indebted country has asked for the aid package outlined by the E.U. and IMF.


•Australian Consumer Prices(1Q) – April 28 - 01:30 GMT
Australian headline CPI is expected to have risen by 0.8 percent in the March quarter for an annual pace of 2.8 percent. This compares with a headline CPI of 0.5 per cent in the December quarter, for an annual rate of 2.1 per cent. While most economists are forecasting the Reserve Bank of Australia will keep interest rates on hold, a bigger than expected March quarter consumer price index, issued on Wednesday, could influence the central bank's May 4 board meeting on monetary policy. The RBA has already lifted the cash rate five times since October last year, but Governor Stevens recently commented that rates were near average which has raise speculation that the central bank will bring an end to their tightening policy.


•FOMC Rate Decision – April 28 – 18:15 GMT
Speculation that several FOMC members will push for the central bank to start selling assets from its balance sheet will increase the importance of this week’s meeting. There are still concerns that the economy remains too fragile for the Fed to start removing liquidity which may see another decision pass before action. Nevertheless, diverging opinions is the first step toward a tightening policy which could raise the outlook for interest rates and generate dollar support. Policy makers are expected to keep rates on hold until the end of this year with markets only pricing in a 42% chance of a rate hike in September.


•RBNZ Rate Decision – April 28–21:00 GMT
The RBNZ is expected to keep their target lending rate at 2.50% as the central bank has committed to remain on hold until mid-year. Consumer prices holding at 2.0% in the first quarter gives policy makers the flexibility to wait for stronger signs that the economic recovery is sustainable. However, we could see the committee chose to signal a future hike similar to the BoC by removing the mid-year commitment language from the post release statements. The New Zealand dollar has been trading in a tight range and the rate decision could spark enough volatility to lead to a breakout with a bullish move favored on hawkish statements.


•German Unemployment Change (APR) – April 29- 07:55 GMT
The German labor market continues to strengthen as the economy benefits from foreign demand. The number of unemployed is expected to have decline by 10,000 in April which would mark the tenth straight month without an increase. However, the unemployment rate is forecasted to remain unchanged at 8.0%. Meanwhile, investor and business sentiment significantly improved during the month despite the issues in Greece, which bodes well for future hiring. Therefore, with help from the IMF and E.U. on the way for the indebted nation, signs of job creation from the region’s largest economy should help provide Euro support.


•U.S. GDP (1Q A) April 30 – 12:30 GMT
Gross domestic product in the U.S. is forecasted to have risen by 3.4% in the first quarter as the economy built upon the prior period’s 5.6% improvement. The manufacturing sector has been the main driver on the back of demand from abroad and companies replenishing inventory levels. The current inventory cycle is expected to continue over the short-term which should help offset potential weakness from ending government stimulus. However, although we saw the labor market add jobs in March, elevated unemployment remains a weighing factor on domestic spending. Therefore, we could see personal consumption figures weigh on overall growth. Nevertheless, a third straight quarter of growth following the worst recession since WWII could spark optimism and generate dollar support.


Read more: DailyFX - Markets Will Focus on FOMC Meeting With Potential For Asset Purchases http://www.dailyfx.com/forex/fundame...#ixzz0mDOnpRFn

FXCM is developing a new web based platform called the Trading Station Gateway.

http://img541.imageshack.us/img541/8642/tsg.jpg

Eventually this platform will be our web based solution for anyone that has an Apple computer, can't download the platform due to download restrictions, or can't access the platform from behind a firewall. In short, it will be much better than the current java platform option available. The platform is also ideal for those that have slow internet connections.

While the official launch of the platform is a couple months away, I would like to invite anyone interested to beta test the platform. If you would like to be included in the beta testing, please send an email to [email protected] asking for information to access the TSG platform.

We would love to have your feedback and input about the platform.

-Jason

News in 60 seconds from Sean Hyman of DailyFX

Biggest % gainers: USD/CAD up 0.74%, USD/CHF on USD strength (exotics: USD/TRY up 1.06%, USD/ZAR up 0.78%)

Biggest % losers: GBP/JPY down 1.37%, NZD/JPY, CAD/JPY, EUR/JPY, CHF/JPY, AUD/JPY on JPY strength. This is where the momentum is so far...in being long the yen.

USD Bernanke speaks at 10am EST

CAD BOC Gov. Carney speaks at 3:30pm EST today.

Goldman Sachs basically says, "Make my day...punk", as they are prepared to go to court with the SEC. Do ya feel lucky, SEC? Well do ya?

Yen soars overnight as investors worry that Portugal could become the "new Greece". Also, Chinese stocks fell to a 6 month low overnight.

Portuguese public transport workers went on strike on Tuesday...left commuters stranded.

Moody's says that healthcare reform likely to bring financial pressure on States from Medicaid expansion.

The US Dollar is strengthening nearly across the board, and the DailyFX Plus signals are starting to generate new signals. Here's a look at the majors:

http://img249.imageshack.us/img249/8779/dfxsignals.jpg

Note that USD/CAD is giving conflicting signals long and short. Here's the login page for DailyFX Plus: https://plus.dailyfx.com/login/loginForm.jsp


So what's causing the USD strength? Continued concerns about Greece, and now Portugal. This from Bloomberg "Greece Cut to Junk at S&P as Contagion Spreads " http://www.bloomberg.com/apps/news?p...VNxY7eto&pos=1

Greece was lowered to BB+ from BBB+ by S&P, which also warned that bondholders could recover as little as 30 percent of their initial investment if the country restructures its debt. The move, which puts Greek debt on a par with bonds issued by Azerbaijan and Egypt, came minutes after the rating company reduced Portugal by two steps to A- from A+.

And one of the more shocking headlines from ABC News "German FDP: Temporary Greek Euro Exit an Option" http://abcnews.go.com/Business/wireStory?id=10484465. Keep in mind the statement was made by the FDP which is the junior partner of Angela Merkel's coalition government.

Take a look at the EUR/USD chart posted by the DailyFX team on twitter (www.twitter.com/dailyfxteam. EUR/USD testing very long term support.

http://img441.imageshack.us/img441/7125/eurusdtrend.jpg

In other news, here are some key points outlined by Sean Hyman in his "News in 60 Seconds" blog post today:

Greece’s securities regulator banned short selling on the Athens stock exchange for two months from today as stocks around the world continued to fall after Greece’s credit rating was cut to junk.

USD FOMC Interest Rate announcement comes out around 2:15pm EST today.

NZD New Zealand Interest Rate announcement comes out around 5pm EST today. Both U.S. & NZD rates are anticipated to stay unchanged but the market will look to see if the "extended period" wording stays in the U.S. statement and if NZD hints at when rate hikes will start. NZD hikes could only be 1-2 months away according to the last speech I heard from the NZD central banker some months ago. Let's see what they say today.

Japan is on a Bank Holiday today to celebrate a former Emperor's birthday. So that could cause thinner liquidity in JPY pairs and make them a bit more easily moved around in the market as a result.

Expo Information

The FXCM Currency Trading Expo is next Monday and Tuesday (May 3-4, 2010). For those of you planning to attend, here is some important information regarding times, schedule, where to find tickets, etc.

Times
The workshops begin at 9:00am and the last workshop wraps up at 5:30pm.

Schedule
A complete schedule can be found on our website here http://www.fxcmexpo.com/workshops.jsp . The schedule lets you put a mark next to your "favorite" workshops and then you can print the schedule with the workshops you want to attend marked as your favorite. Schedules will also be given out at the expo.

Tickets
Tickets were sent out by email last week. Traders that registered with a US mailing address should also have received a ticket by snail mail. If you dont' have a ticket, that is ok. We will still let you in . The front desk staff will create a new ticket for you.

Location
The expo is being held at the Rio All Suite Hotel and Casino. Address: 3700 W. Flamingo Road, Las Vegas, NV 89103 (Google Map)

OTHER:

For those of you that use Twitter and FourSquare....

I will be live tweeting from the expo providing coverage for many of the workshops. If you plan to live tweet, please use the hashtag #FXCMexpo . For those unfamiliar with hashtags, a hashtag is used to make tweets easily findable. So you can goto http://search.twitter.com/ and search for #FXCMexpo to find all tweets related to the currency trading expo. You can find me on twitter here www.twitter.com/jasonforex

For those that like to use FourSquare, we have a FourSquare location created for the expo http://foursquare.com/venue/3137109 .

-Jason

Hi Everyone,

Back from the expo in Las Vegas, and a thank you to everyone that attended. The turnout was great! Some big market moves while I was gone, and I'll discuss the events shortly.

Before we get back to market discussion, I wanted to let you know about a major announcement made earlier this morning by FXCM. Here is the press release:

ODL Group Limited To be Acquired by FXCM Holdings, LLC

ODL Group Limited ("ODL"), a leading, independent forex, derivatives, equities and commodities broker, announces today that it has agreed on terms to be acquired by US-based FXCM Holdings LLC ("FXCM"), a leading global forex broker that caters to both retail and institutional markets. ODL's strong UK and European businesses will provide an excellent complement to FXCM's sizeable operations in both the United States and Asia. The combined companies will operate as one of the largest non-bank forex brokers globally servicing over 200,000 live trading accounts with combined client assets in excess of US$800 million. The deal is still pending final due diligence review and regulatory approval.

Founded in 1999, FXCM is one of the largest forex brokers, regulated by several financial regulators including the Financial Services Authority in the UK and the Commodity Futures Trading Commission in the U.S. FXCM is one of very few forex and CFD brokers to regularly publish its balance sheet. With over $135 million in firm capital (assets minus liabilities), FXCM exceeds regulatory requirements.

Post acquisition, ODL will continue to trade under its current name. A major benefit to ODL clients will be that they gain access to FXCM's No Dealing Desk execution on forex trades. Under No Dealing Desk execution, forex trades are fully-automated and executed back-to-back with one of the world's premier banks or financial institutions. Over ten banks compete to provide FXCM with bid and ask prices, resulting in low spreads and fast execution, with no intervention from a dealing desk on forex trades. Another major benefit of No Dealing Desk execution is the ability to place orders within one pip of the market with no restrictions.

Commenting on the acquisition, Drew Niv, CEO of FXCM, said: "For several years, FXCM has been working towards becoming a major player in Europe. The deal with ODL will provide us with a great opportunity to achieve this. We believe FXCM will be the only retail forex firm with a truly global footprint. In an industry in which size and scale are important, this is a major advantage."

The following advantages will be realized post acquisition:

 

1. Client assets in excess of US$800 million
2. Over US$150 Million In Firm Capital
3. Over 200,000 Live Trading Accounts
4. Over 700 Employees Worldwide
5. Regulated by the FSA (United Kingdom); the CFTC (United States); the SFC (Hong Kong); the ASIC (Australia). Additionally, FXCM is
6. regulated in Italy, France, Germany and Dubai.
7. Member firm of the London Stock Exchange and NYSE Euronext, LIFFE.

Back to the markets...So much has happened since I left for the expo on Friday.

GBP/USD: Wish I had posted about this earlier this morning when it was on the top of my mind, but GBP/USD has dropped below 1.5000. Is this a case of trading the (election) rumor? We're approaching support, but if the market can push through, I could see GBP/USD dropping another 300-500 pips.

http://img269.imageshack.us/img269/3068/gbpusdbreak.jpg

EUR/USD: The market continues to push through big figure after big figure. The only question is how far does this thing go. None of the SSI figures are extreme and only USD/JPY and AUD/USD are above 2 at this point.

If you plan to hold any positions open through the weekend with stop orders or waiting entry orders, be careful due to weekend event risk. The IMF is scheduled to meet on Sunday to discuss the Greek bailout. Bloomberg Businessweek article http://www.businessweek.com/ap/finan.../D9FER88O0.htm.

EUR/USD is dropping yet again...

The 1.2520 levels looks to be a reasonable target and was previously reached in March 2009.

http://img687.imageshack.us/img687/5988/eurusdtrg.jpg

In case you've forgotten, tomorrow is NFP. DailyFX will be providing live trading coverage of the NFP release starting at 8:15am EDT. The economic release is expected to show that 100k jobs were created for the month of April.

http://img263.imageshack.us/img263/7...wscoverage.jpg

Complete market insanity. That's the only way I can describe what just happened. At one point, the Dow was down 900 points!

EUR/USD touches 1.25. EURJPY and GBPJPY down 1000 pips at one point today, and we're continuing to see big moves with a 300 pip bounce in those pairs over the past hour.

This article from CNBC: "Greek Debt Crisis On Verge Of 'Going Global': Pimco's El-Erian" http://www.cnbc.com/id/36992469

A couple of sentences from the article:

"We've seen a crisis start in a country—Greece—become regional, impact the whole of the Euro zone and is on the verge of truly going global," said El-Erian, CEO of the world's biggest bond fund.
....
One trader who spoke on condition of anonymity said fixed-income desks in Europe shut down early for the day and that "European banks are halting lending now."

I note the most successful signals seems to be given from 'Breakout2' on the DailyFX signals. However, this is the strategy that quotes several stops and limits. How are the results compiled?

Hi jw,

Some of the strategies will open multiple positions. Breakout2 is one of those. Let's take a look at the current USD/CAD strategy.

Entry:
Sell USD/CAD 1.03398

Limits:
1)1.0207
2)1.0141
3)1.0074

Stops:
1)1.0605
2)1.0556
3)1.0539
4)1.0472

If you used this strategy on your account, you would open 4 separate positions. Each with a separate stop loss. There are only 3 limits, so you will need to decide where you want to place the limit on the 4th position, or you can watch the signal for an updated limit later on. The stops and limits can change based on price action, so check the Alerts section for any updates to the stops and limits.

The strategy performance is also an aggregate of that strategy based on all of the currency pairs it generates a signal on.

The trading signals seem to be taking a breather after Thursday through Sunday's chaos. No signals for the 4 majors except for one on USD/JPY, and I'm not a big fan of shorting USD/JPY.

http://img405.imageshack.us/img405/7...0may102010.jpg

DailyFX is calling for more Euro losses and USD gains despite the EU bailout progress. Here's a excerpt from the weekly forecast:

After the close of the markets on Friday, European officials ended a summit with another round of promises for regional stability and efforts to defend the euro from speculation. Under normal circumstances, these would be considered strong remarks; and the currency would likely be set up for a strong open next week. However, the problem facing the regional economy is far from normal. After weeks of cat and mouse where officials have tried to reassure without actually paying for its efforts; policy makers have been forced into action as the prospect of a financial crisis has neared the point of inevitability. Having delayed in its response to market participants’ concerns, the EU (in conjunction with the IMF) has seen its obligations inflate from 45 billion to 110 billion euros in loans just to prevent Greece from collapsing. Since the begrudging agreement to these bailouts, it has become quite clear that not even these sums can keep the nation afloat. What’s more, with downgrades to Spain’s and Portugal’s sovereign credit ratings, doubt has been cast over the health of other EU members....

Read more: DailyFX - Euro Future Bleak Regardless of ECB or EU Bailout Efforts http://www.dailyfx.com/forex/fundame...#ixzz0nXNzfbSG