FXCM/DailyFX Signals and Strategies

Hi pipwarrior,

We're getting everything organized this week and also trying to launch this week. If you haven't already done so, please send a request to join the beta testing to David Rodriguez of DailyFX by email at [email protected] . I will also post more details in this thread once I have firmer details on when the beta testing is set to start.

-Jason

I am sending a request to David to join Beta per your direction.

Thanks

Take a look at the US30 chart which is the CFD stock index with FXCM UK tracking the Dow. It's testing the high's from back in January of 2000.

http://img15.imageshack.us/img15/463...11110936am.png

Jamie Saettele wrote a special report yesterday titled "Equities: The Picture of an Unhealthy Market" where he noted divergences in volume and certain sectors of the market:

"The sideways nature of the stock market for the last 10 years is obvious when one views a plot of monthly bars. In fact, the rally from the 2009 low has almost reached the January 2000 top (7 Dow points shy of the 2000 top as of 1/11/11). The January and March 2008 lows are less than 1% below the January 2000 high, which increases the importance of the current level. I also want to point out that volume has plummeted since the 2009 low. The blue line is a 3 month average of DJIA volume. Volume increased throughout the 90s bull market, the bursting of the tech bubble, the recovery and rally to all-time highs in 2007 and the credit crises decline. The 3 month average of volume has declined over 50% from its high. If the old adage that ‘volume follows trend’ has any merit, then this market is unlikely to hold up much longer."

Full article found here

But stocks are still making a push higher this morning. You can trade stock indices through FXCM UK, and the cfd tracking the Dow is listed as US30 in the dealing rates window. A demo can be registered here http://www.fxcm.co.uk/free-forex-accounts.jsp

SSI positioning is at extreme levels for USD/CAD. The latest reading updated a short while ago in DailyFX+ shows that there were 8.39 long positions for every position short.

http://img97.imageshack.us/img97/998...01111859pm.png

If you pull up a longer time frame chart (8 hour chart below), you see exactly why traders have been increasing their long positions over the past week. USD/CAD was testing a fairly significant support level around the 0.9975 level which range traders were trying to play.

http://img25.imageshack.us/img25/568...01113011pm.png

SSI is a contrarian indicator and the extreme long positioning is suggesting there could be further downside for USD/CAD.

FXCMExpo.com was recently updated with recordings from FXCM's 2010 Forex Trading Expo. So if you weren't able to attend in person, you can now watch all of the DailyFX analysts workshop recordings online.

http://img691.imageshack.us/img691/7...3201110044.png

The videos can also be downloaded directly from iTunes if you want to watch them from your iPhone, iPod Touch, etc. http://itunes.apple.com/us/podcast/i...ign-mpt=uo%3D4

EURUSD is trading at a key level. You'll notice on the 4 hour chart that it has been confined to a large range between roughly 1.3425 - 1.3000 since mid-November.

http://img534.imageshack.us/img534/3...8201111075.png

Last week as EUR/USD rallied, trader positioning in SSI switched from net long to net short. Here's the most recent SSI update from this morning on DailyFX+:

http://img11.imageshack.us/img11/564...011110619a.png

And lastly, here's what's happening with the EUR/USD signals in DailyFX+ now that SSI has flipped to net short and we're at a crucial level:

http://img407.imageshack.us/img407/1...011111526a.png

For those of you that asked about beta testing the DailyFX+ automated trading signals, the email was sent out yesterday. So check your email. If you didn't get the email or you would like to join as a beta tester, please let me know by emailing [email protected].

-Jason

Hi Jason,

I've sent a email to David a while ago as you said on this thread but I did not receive it, anyway I'll send again as you said here.

Thanks for keeping us updated!

Did you get the information? I had a couple of requests come in to [email protected] yesterday, and those should now be sent out.

-Jason

Silver seems to be one of the growing hot topics amongst financial news sites, and it's down nearly 5% on the day. Take a look at this daily chart and today's nasty bearish candle.

http://img37.imageshack.us/img37/397...11105744am.png

John Kicklighter mentioned on Twitter earlier this morning that Bloomberg has a technical analysis article out today calling for a 20% drop in silver after coin sales hit a record saying that the bullish trade has become crowded. Here's an excerpt from the Bloomberg article:

“The coin sales are an indication of the level of interest in silver,” said James, who oversees $2.4 billion in Xenia, Ohio. “It’s too popular. When the crowd discovers a good deal, it’s usually long over.”

Prices have more than doubled in two years as investors bought precious metals to protect against a weakening U.S dollar and Europe’s financial crisis. Holdings in exchange-traded products backed by silver have dropped 1.6 percent since touching a record in mid-December. The metal tumbled 24 percent in 2008 after gaining for seven straight years.
Source: http://www.bloomberg.com/news/2011-0...-analysis.html

The Silver cfd can be found in the FXCM UK trading platform listed as XAG/USD in the dealing rates window. More information on silver CFD trading with FXCM UK found here .

Take a look at the possible head and shoulders pattern developing on the GBP/USD daily chart. GBP/USD was stopped dead in its tracks at 1.6000 resistance earlier this morning at the start of the New York trading session.

http://img153.imageshack.us/img153/9...0201131255.png

The one thing I would be cautious about is SSI positioning which is net short GBP/USD. DailyFX's weekly SSI report released today shows that traders are still net long the USD for most of the major pairs so this may not be the best pattern. But an interesting pattern developing nonetheless! Here's a screenshot of the latest SSI figure released this afternoon.

http://img573.imageshack.us/img573/7...01131528pm.png

Hi Jason,

I've somehow managed to close manualy a breakout2 trade and now I have a difference between Chart position and Broker position. when I close the trade it was with 5 lots, and in the mean time the signal close the first lot, and on my platform open one lot at that time. thats tells me that the open/close trade is the same signal, is like "0" for open if is closed and "0" for close if open, is not like "1" for open and "0" for close.
please see the attached image for this.

The signal is send by your server at 31 minute and 15 seconds and is executed at least 45 seconds later with a pip difference 16.5 I believe into this difference is the broker spread (3.1 now while I am typing) but 16.5 is a lot and it will affect sharp the final profit/loss
please see the attached imagine EUR-CHF

Regards,
pipwarrior

Hi pipwarrior,

Thanks for the information! I have forwarded this to the Strategy Trader team asking them to take a look over it and I will post more information once I receive more details.

-Jason

DailyFX released their Top Forex Trading Ideas for 2011 on Dec. 31, 2010 and 4 out of 6 DailyFX analysts gave a bearish outlook on the EUR/USD. The initial market move turned in their favor as EUR/USD dropped 300 pips from the start of the year, but has since rallied nearly 800 pips to current levels. Take a look at the EUR/USD chart with the price action for 2011:

http://img80.imageshack.us/img80/492...01134303pm.png

Granted we still have a little over 11 months to go for the analysts setups to pan out. Here's where you can find the full report and why 4 out of 6 analysts are shorting the EUR/USD: http://www.dailyfx.com/forex/fundamental/article/special_report/2010/12/16/Top_Forex_Trading_Ideas_for_2011.html

You'll remember from last Thursday's post I pointed out a possible head and shoulders setup on GBP/USD but the SSI positioning was still net short. Well after this mornings dramatic UK GDP figure, SSI positioning turned net long which gives a contrarian signal to short. Here's a look at the SSI data from earlier this morning.

http://img33.imageshack.us/img33/504...01191145am.png

Couple things to point out with gold and GBP/JPY.

Gold:

I had originally started watching this the first week of January when Ilya Spivak pointed out a possible triple top in the market. The technicals now look terrible and the market is sitting at (about to break?) a key level. Take a look at this 4 hour chart of gold since August 2010:

http://img816.imageshack.us/img816/6...01133035pm.png

DailyFX Analyst Jamie Saettele is talking about a drop down to $1,270 if $1,317 doesn't hold.

Gold Reverses from Former Congestion:
Gold is testing a multiyear support line. A break below 1317.10 (10/22 low) would put 1270.30 (June high) in play. Resistance does extend to 1352.70 but price has reversed from the center of a former congestion zone. What’s more, the rally from the low is in 3 waves. Bottom line – gold remains vulnerable.
- Written by Jamie Saettele

GBP/JPY

The second thing I want you to take a look at is the SSI positioning in GBP/JPY. David Rodriguez had this to say about GBP/JPY positioning: Short positions are 58.1% higher than yesterday and 91.6% stronger since last week. Open interest is 42.7% stronger than yesterday and 117.7% above its monthly average. . SSI stood at -1.17 yesterday morning which is very near 50/50, and has since moved to -6.42 as of the update this afternoon. A big change in positioning as nearly 87% of traders are now short.

http://img28.imageshack.us/img28/5189/gbpjpyssi127.png

If you look at the chart below, you'll see that GBP/JPY is near a resistance level. Fundamentally, neither country is doing very well. You have UK disappointing with GDP earlier this week, and then Japan's sovereign credit rating being downgraded earlier this morning. This is turning out to be a battle of who's weaker...and SSI is indicating GBP/JPY to the upside.

http://img64.imageshack.us/img64/698...01140109pm.png

Check out this article from Reuters by means of WSJ.com. We find out a possible cause for recent gold weakness:

Jan 28 (Reuters) - Hedge fund SHK Asset Management liquidated a U.S. gold futures position this week valued at over $850 million, more than 10 percent of the main U.S. futures market, the Wall Street Journal reported on Friday.

As a result of the move, which was made on Monday, the number of gold contracts on CME Group Inc.'s Comex division plunged by more than 81,000, to about 500,000, in their biggest single fall ever, the WSJ reported. It said an average daily move is about 3,000 to 5,000 contracts.
http://www.reuters.com/article/2011/...70R0TH20110128

The original article on WSJ.com is titled "Small Gold Trader Makes Big Splash".

DailyFX has a full schedule of live events next week, including NFP on Friday February 4th. Here's the full schedule for next week:

http://img593.imageshack.us/img593/7...radingroom.png

All of the listed events have live coverage on the DailyFX website starting 15 minutes before the scheduled release time. Here's where to access the trading room: http://www.dailyfx.com/live_forex_trading_room/

Below is the bias for this week's forex strategy outlook from DailyFX:

http://img251.imageshack.us/img251/6...egyoutlook.png

Also beware of the RBA rate announcement being released today at 10:30pm ET. It will be important to see if the flooding in Australia over the past month may have any impact on the outlook for growth and the RBA's future rate decisions.

EURUSD SSI is currently net short with 2.59 short positions for every long position, and the Momentum2 and Breakout2 signals are both giving bullish indications. Breakout2 is giving a green signal for entry but Momentum2 has turned red with a hold. We have ISM coming out in 30 minutes, so some caution is warranted due to the release.

http://img28.imageshack.us/img28/211...1201192632.png