FXCM/DailyFX Signals and Strategies

So to clarify: The performance figures take into account all the separate positions (i.e. 3 separate lots for each call) and they are all included within the winning % and average points - not just the best out of the 3 lots.

Exactly. All 3 separate lots are included in the performance.

This morning's "News in 60 Seconds" from Sean Hyman of the DailyFX Powercourse:

Biggest % gainers: CAD/JPY up 0.88%, CHF/JPY, EUR/JPY, NZD/JPY, AUD/JPY on JPY weakness.

Biggest % losers: GBP/AUD down 0.58%, AUD/CAD down 0.40% on AUD weakness. Also, the exotics are bringing down the majors today...EUR/TRY down 0.73%, USD/ZAR down 0.64%, USD/TRY down 0.45%.

Gold hits an intraday high of $1,244 and sets another "all time high"! Currently gold is at $1,238. http://www.dailyfx.com/forex/fundame...r_Gold_as.html

Oil $76.16

BOE Inflation Report:
The Bank of England said risks to the U.K. economic recovery have increased, highlighting the importance for David Cameron’s coalition government of tackling Britain’s deficit.
Sterling snapped two days of gains versus the dollar after the central bank said inflation is likely to be below its 2 percent target. The bank hasn’t ruled out further asset purchases, Governor Mervyn King said at a media briefing following the publication of the bank’s inflation report today. http://www.dailyfx.com/forex/technic...cover_But.html

Greek workers call a 24 hour strike!

CAD Trade Balance worse at 0.3B vs. 1.6B expected. Last time was revised lower to 1.2B vs. 1.4B formerly.

USD Trade Balance basically in line at -40.4B vs. -40.0B expected. Last time was -39.4B.

FOMC's Rosengren speaks at 10:15am EST today.

FOMC's Bullard speaks at 1:15pm EST today.

Aussie Employment numbers come out at 9:30pm EST tonight.

EUR/AUD never ceases to impress me. Take a look at today's strong move following last evenings strong AUD employment numbers:

http://img140.imageshack.us/img140/2536/euraudtrend.jpg

If you want to take advantage of strength in the Australian economy, AUD/USD has not been the best of trades. The risk aversion play has had to great of an impact on the USD. Better to choose currencies that are seen as much weaker such as GBP or EUR to play it against. Be careful about chasing the trade, maybe it's prudent to wait for a better entry on a retrace?

In case you missed the AUD employment release, here's the stats from DailyFX:

Australia’s Employment report surprised to the upside to reveal the economy added 33,700 jobs, topping forecasts for a 22,500 increase. Yet more encouraging, all of the gains came from full-time employment, hinting firms are becoming confident enough in their outlook to be comfortable with longer-term increases in labor expenditures. Further still, the previous month’s results were revised meaningfully higher, showing the economy added 27,700 jobs in March versus 19,600 originally reported.

Read more: DailyFX - Australian Dollar Soars on Jobs Gain, US Dollar and Yen Fall on Stock Rally http://www.dailyfx.com/forex/fundame...#ixzz0novJRJKX

Take step back to look at the EUR/USD big picture on a monthly candlestick chart. The EUR/USD is at a critical support level. If 1.2500 doesn't hold, then the next levels we could see are 1.23, 1.20, and even 1.18.

http://img40.imageshack.us/img40/9614/eurusdbigpic.jpg

What could be the catalyst for a break lower? The turmoil in Europe of course surrounding Greece etc. Just when you think things couldn't get worse, you have an article like this from Bloomberg Businessweek:

Sarkozy Threatened to Quit Euro, El Pais Says (Update1)

May 14 (Bloomberg) -- French President Nicolas Sarkozy threatened to pull out of the euro unless German Chancellor Angela Merkel agreed to back the European Union bailout plan at a summit last week in Brussels, El Pais newspaper said.

A German government spokeswoman, speaking on the customary condition of anonymity, said today the report “lacks any foundation.”

El Pais, a Madrid-based newspaper, cited comments made by Spanish Prime Minister Jose Luis Rodriguez Zapatero at a May 12 meeting of Socialist politicians, five days after the summit. A spokeswoman at Sarkozy’s office in Paris declined to comment on the report. A spokesman for Zapatero had no immediate comment.

....http://www.businessweek.com/news/201...-update1-.html

And this gem from former Fed Chairman Paul Volcker:

You have the great problem of a potential disintegration of the euro,” Volcker, 82, said in a speech in London yesterday. http://www.businessweek.com/news/201...-update1-.html

The problem with the Euro is that it was starting to be seen as an alternative reservable currency to the US Dollar. Now that the stability of Euro and European Union is being tested, jitters are running through the market.

SSI: How are retail traders reacting to recent events?

Retail traders are long the EUR/USD but not at extreme levels. In fact, it's been kind of boring.

http://img295.imageshack.us/img295/7157/ssi.jpg

That wraps it up, Happy Trading!

FXCM is developing a new automated strategy platform as an alternative to the MT4 platform. The new platform is called Strategy Trader, and it is currently in beta testing. Since the platform was designed by FXCM and built for NDD execution, there are no bridges or synchronizations. Here are some of the highlights and new features for the platform:

- Tick Charts
- Create any time frame chart
- No bridges
- Advanced backtesting with detailed strategy/trade analysis
- Access to all fxcm order types
- Uses C# for coding, easy to hookup and debug in visual studio
- Over 150 chart indicators, one of the most powerful charting package to be offered by FXCM

And here's a snapshot of the platform:

http://img689.imageshack.us/img689/9...tegytrader.jpg

The platform is currently in beta testing, and you're welcome to request a demo if you would like to join in on the beta testing: http://www.fxcm.com/lp-strategy-trader-beta.html

A couple things to note about Strategy Trader. The platform uses exchange based execution so hedging is not available and FIFO applies. The platform will work on hedging disabled accounts. MT4 will continue to be offered alongside the Strategy Trader platform.

Interesting. Is that beta testing with a LIVE account or DEMO? Looks like you guys are taking the best features out of MT4 and TSII then combining it into one platform.

We will send a demo to you, but there's really nothing stopping you from logging in with a live account. The platform is setup so that any account on FXTSII can access Strategy Trader. Before using your live account, I would just caution that it is a beta version and beta testing is meant to pinpoint flaws in the software.

The DailyFX trading signals are giving two signals for long positions. First time in a long time I've seen long signals for this pair. EURUSD may be overdue for a retracement and the signals are targeting 1.2500, 1.2608, 1.2717, and 1.2825.

Practicing proper risk management is the absolute most importan thing right now. Volatility is really picking up, and retail traders tend perform poorly when the market gets volatile. The reason is due to leverage magnifying the moves in the market. This is when you should consider scaling down the leverage. Take a look at the ATR measure on the EURUSD chart below:

http://img231.imageshack.us/img231/998/eurusdatr.jpg

ATR is rising after a quiet(er) period from July '09 through April '10.

The volatility measure on DailyFX is maxing out for nearly all of the currency pairs:

http://img163.imageshack.us/img163/9...itymeasure.jpg

You can find the above information in the technical analysis section of DailyFX: http://www.dailyfx.com/technical_analysis/

Turning to the EURUSD, here's a great quote from the IMF's Dominique Strauss-Kahn.

"The idea that you can have a common currency and everyone can do whatever they want is false,"...."You need an instrument to make policies consistent. The French may call this economic governance and the Germans the Stability Pact. It doesn't make a difference what you call it." http://www.reuters.com/article/idUSL...pe=marketsNews

This sums up the problems with the Euro-zone at the moment. There's no accountability for breaking the rules of the Maastricht Treaty and there's no concerted effort between member countries to speak of the same mind. In short, confusion breeds contempt and the Euro is reflecting that.

For those of you following the EUR/USD trading signals, the long positions were closed out and there are no signals for EUR/USD at the moment. Here's a chart that Tom Long of the DailyFX Powercourse posted this morning for EUR/USD:

http://www.dailyfx.com/export/story-...G_49632353.jpg

The next test is the 1.2143 low of May 18th. I would continue to look for selling opportunities as long as the market remains below the 1.30933 high of May 10th.

Read more: DailyFX - EUR/USD http://www.dailyfx.com/forex/educati...-EUR_USD.html?

EUR/USD SSI is practically neutral with a reading of -1.05. What's been happening to the EUR/USD over the past week? In my opinion, it was so overextended that many traders were caught in a short squeeze. IMM data last week showed speculative short positions at record highs. According to the latest data in this Reuters article the speculative positions have been cut back. The article also touches on the latest Euro jitters due to a Spanish bank takeover by the Bank of Spain. Should be another interesting week in the market.

Hello Everyone,

I will be away on vacation from May 27 through June 6. Any new posts will be answered on June 7th.

For any pressing questions about FXCM or the trading signals, please contact FXCM client services http://www.fxcm.co.uk/contact-fxcm.jsp.

BTW, trading hours will continue as normal this weekend. The Memorial Day holiday in the US and other public holidays around the world on Monday will not affect the trading hours. Trading closes on Friday at 4:00pm EDT and opens on Sunday at 5:15pm EDT.

Until then, happy trading, and I'll be back in a couple of weeks!

Jason

Back from vacation and catching up on the markets. Let's take a look at the most recent SSI figures first:

http://img27.imageshack.us/img27/4397/nzdusdssi.gif

NZD/USD SSI is the most extreme at the moment with a reading of 3.11 which signals further losses in NZD/USD. The Breakout2 strategy is currently short NZD/USD with limit targets set for 0.6560 and 0.6498. Both momentum strategies are short as well; however, a trailing stop is being used instead of limits. Here's a look at the NZD/USD chart with the limit levels for the breakout strategy.

http://img295.imageshack.us/img295/6527/nzdusdchart.jpg

You can register for a free trial of the trading signals through FXCM's website http://www.fxcm.com/trading-signals.jsp . All live accounts with FXCM get free access to the DailyFX Plus trading signals.

Something I failed to see earlier today in NZD/USD, we're right at the 38.2% fibonacci retracement level. I found the below chart in a DailyFX article:

http://www.dailyfx.com/export/story-...0-05-08-02.gif

The RBNZ rate decision will be key event to watch to see whether this level holds or not. DailyFX has a complete article on tomorrow's decision http://www.dailyfx.com/forex/fundame...ty_Ahead.html?

Waiting for the release of this afternoon's SSI data...

Looks like the fibonacci support mentioned by DailyFX limited the downside. The Breakout2 signal from yesterday reached the first limit but then closed the position. Now only Momentum1 has a signal short and it's nearly back to breakeven. The signal is set to "Hold" which means don't get in. SSI has also pulled back somewhat to 2.39 (2.39 long positions for every short position).

The RBNZ rate decision comes out at 17:00 EDT, right whenever rollover occurs. This could make for very volatile market conditions in the NZD pairs. Be careful!

And lastly, DailyFX released their updated central bank overview article today which you should read before the RBNZ rate decision today:

New Zealand Dollar Set to Move on Interest Rate Decision

The New Zealand dollar is in focus, as an eventful week of central bank interest rate decisions kicks off tomorrow. While the RBNZ is widely expected to hike its official cash rate by 25 basis points, markets suggest there is a 28% chance that the central bank surprises by holding rates steady.

http://www.dailyfx.com/export/story-...ly06092010.png

Expectations are for the RBNZ to hike rates 25 basis points tomorrow. Market conviction is currently medium, with overnight index swaps suggesting a 72% probability that a hike occurs. Though Governor Alan Bollard has indicated that monetary tightening would be taking place over the coming months, there is a small possibility that action will be delayed as the European crisis unfolds.

Read more: DailyFX - New Zealand Dollar Set to Move on Interest Rate Decision http://www.dailyfx.com/forex/fundame...#ixzz0qMiNsOAl

FYI, a new update has been put through for Strategy Trader. The newest version is Build 220. If you don't have the newest version, please uninstall/reinstall. Programming documentation was added to the Strategy Editor, and we are in the process of commenting the code for strategies.

And move it did....

Strong move to the upside since yesterday, and SSI positioning has gone from long to short, with short positioning increasing 78% according to the latest SSI release. Overall positioning is now -1.27.

Addition:

This just posted by David Rodriguez on Twitter: $EURUSD SSI flips to net-short as the Euro takes out the 1.2100 mark. Next target is reaction high at 1.2200. Looks like traders are starting to fade the moves.

Can I get in mobile trading signals for the breakout2 system

Hi meirk,

Not yet. We've been working on an email alert system (for quite a while) for all of the trading signals, but it's not completely finished yet. I'm hoping to have more positive developments to share about it this summer.

-Jason

Written by Michael Wright

European woes continue to remain in the spotlight, and it is unlikely that the lens will change focus in the near or medium term as ballooning budget deficits in the 16-member euro area continue to rattle the markets. Indeed, Europe’s outlook seems to progressively worsen week by week, and we may see the bloc slip back into recession by the end of this year.

Talking Points
• Euro Defines “the Unholy Trinity”
• Concerns increase of Double-Dip Euro-zone Recession
• Why a Euro Breakup Will Lead to Chaos

Taking a look at recent developments, on Friday, May 28th, Fitch downgraded Spain’s long term foreign and local currency issue default ratings from “AAA” to “AA+,” while Hungary’s Prime Minister on June 8th raised the possibility that the country might default because the previous administration “manipulated” figures. As of late, Moody’s became the third rating agency to downgrade Greece’s government bonds. Greek notes were slashed into junk territory, deepening worries about Europe’s debt crisis. With the credibility of Greece on the line, there are not too many solutions for the ailing economy.

First and foremost, the EU-IMF life line worth nearly $1 trillion will give Greece time to cut its fiscal deficit, one being, scaling back its stimulus measures. If indeed fiscal measures remain controllable amid domestic resistance, the recent jump in bonds may calm, and fears that the Greek government is not credible coupld perhaps taper off. On the other hand, a debt restructuring plan/debt swap could be proposed, similar to the Brady Bond plan. The program was effective in Latin America during the 1980’s where toxic assets were transformed into marketable debt through the use of another financial instrument. In this case, Greece will remain a part of the euro-zone and negotiate with its bondholders. All in all, we can expect the euro bloc to do everything in its power to avoid one or more countries from exiting the euro in order to avoid further negative spillover effects. However, as the bloc remains intact, market participants fear that the Euro-zone will slip back into recession by the end of the year.

Concerns of Double-Dip Euro-zone Recession
As of late, I noted that concerns of a downturn for the 16-member euro area were increasing as it comes to light that governments will have to phase out stimulus measures amid ballooning budget deficits that they are faced with. Adding onto my specualtion, Fitch Ratings recently said that they see “increasing concern that there will be a double-dip recession in the euro-zone”, and went onto say that “it’s becoming an increasingly plausible alternative.” This alternative may become a reality as the lifeline package is surely not enough for the indebted countries.

Why a Euro Breakup will lead to Chaos
If one or more countries leaves the euro, the likely result will be an abundance of lawsuits. Preston Keat, research director of consulting firm Eurasia Group notes that local companies with contracts linked to the euro will be thrown in turmoil, and “all contracts- including those governing wages, bank deposits, bonds, mortgages, taxes, and almost everything else” will have to be redenominated in the new currency. “In short, this would violate all kinds of laws and treaties and rules at the national, EU, and internal levels,” he later adds. I concur with Keat, however, it is noteworthy that a default will also destabilize the euro zone and trigger a recession, with the after effects of global contagion. Thus, the talk of Greece or any other country leaving the euro is highly unlikely.

Euro Defines “the Unholy Trinity”
In academia, some economists would say that the single currency is a pure example of the Mundell-Fleming “trilemma,” in which the model is used to argue that an economy cannot simultaneously maintain a fixed exchange rate, free capital movement, and an independent monetary policy. However, the model does not take into consideration, default, inflation, or future price levels. Whether this model is right, one thing for sure is that fiscal contraction in the 16-member euro area will cause deflation over time, and an exchange rate is expected to return to some sort of purchasing power parity in the long run. Therefore, the expected deprecation means a nominal and real depreciation in the single currency within the short term.

What can we expect going forward?
Looking ahead, the ECB is said to take a 5 percent haircut on all Greek bonds which are posted as collateral with the central bank, leading Greece to post additional bonds in order to cover the spread. At the same time, an EU draft report warned that there is a need for more deficit cuts in both Portugal and Spain by next year. Moreover, the report said the “snowball” effect will impact Spanish and Portuguese debt, and a similar report is likely to be released about Italy as the country is heavily indebted as well. All in all, though there is a much needed correction for the EUR/USD, we may see price action push lower in the medium term.

Read more: http://www.dailyfx.com/forex/fundamental/article/special_report/2010-06-15-1825-Weekly_Spotlight__Europe_s_Outlook_Progressively.html?