FXCM/DailyFX Signals and Strategies

Last month, FXCM and H20 Markets hosted a seminar with guest speaker Richard Farleigh and the event booked out in 3 days. We will be hosting another seminar next Friday, September 23rd with Richard Farleigh again discussing "Trading Market Volatility".

The seminar will be hosted at The Grange Hotel on Friday September 23rd from 8:30am - 11:00am. If you're in the London area next Friday, we would love to see you there. Registration for the event can be found here http://www.fxcm.co.uk/richard.jsp

The Dow Jones FXCM US Dollar Index may be finally breaking through to the upside after settling into a range over the quiet summer trading period. Here's a look at the daily chart:

http://img571.imageshack.us/img571/3...dx39212011.png

You can find the Dow Jones FXCM US Dollar Index basket on the FX Trading Station II platform listed as USDOLLAR in the dealing rates window. This product is on all demo accounts, and currently on live accounts with FXCM UK, FXCM Australia, and FXCM Asia.

SSI
Next taking a look at SSI, GBP/JPY is nearly one-sided with 97% of positions in GBP/JPY being long. Important to keep in mind that the rate of increase for the actual SSI number will grow much faster as you get towards extreme levels such as 90%+ traders being on one side or the other. Also interesting to note is that open interest in GBP/JPY is now only second to EUR/USD. It will be interesting to look at the change in open interest week over week when the weekly SSI report is released tomorrow.

http://img840.imageshack.us/img840/6...jpy9212011.png

The USDOLLAR rally continued from yesterday with the Dow Jones FXCM US Dollar Index basket nearly hitting 10,000, which was the starting point of the index on January 1 of this year.

http://img707.imageshack.us/img707/2...01124424pm.png

BTW, has anyone noticed the new DailyFX+ Trading Signals layout? Any opinions or feedback on the new setup?

The DailyFX+ trading signals have undergone a re-design to make them easier to understand and use. Below is a screenshot of the main signals page you'll see when logging in, and below the image you can find a description of the tabs I have numbered in the image:

http://img689.imageshack.us/img689/2...s926201110.png

1. Sorting by time and by currency pair: The signals will be listed all together in one window, and you can sort between the signals by time and by currency pair. Clicking on the tab at the top located in the first box will let you switch between views. The signals now contain a time stamp for when the signal was issued rather than telling you how many hours and minutes ago it was issued.

2. Signal History: The signal history button marked in the second box on the image will give you a list of all the previous signal history. This has been frequently asked for feature.

3. My Watch List: If you look on the right side of the signal list, you will see a green box with a + symbol in it. Clicking on the plus allows you to add the signal to your watch list. All of the signals added to your watch list will appear in the "My Watch List" section.

4. Email & SMS Alerts: This feature was available in the previous version of the signals, but we wanted to make it more much apparent since many traders want to receive notification of new signals or changes to existing signals as soon as the update is released.

Finally, if you prefer to see the old layout of the signals, you can still find it here https://plus.dailyfx.com/tnews/fxsig...sic.do?lang=en. Please let us know if you have any feedback for the new design.

We're seeing a wave of risk rallies following the earlier developments with European sovereign debt woes and the rally in the stock market. As a result the US Dollar has started to weaken, and the AUD/USD and NZD/USD have been beneficiaries with the AUD/USD now trading near parity. Here's the latest article from Christopher Vecchio on the risk rally

European Session Summary
For the third consecutive day, commentary out of the Euro-zone guided global markets. Higher yielding and riskier assets, such as the Australian Dollar and the Euro, continued to find higher bids on Tuesday, well-supported throughout the Asian and European sessions following developments surrounding European sovereign debt woes yesterday. The two highest yielding currencies, the Aussie and the New Zealand Dollar, were the best two performing major currencies against the U.S. Dollar, up 1.10 and 1.41 percent respectively, at the time this report was written. The higher yielding assets have continued their rebound after their sharp sell-off last week, when the Federal Reserve announced it would not inject any new funds into the financial markets.

http://media.dailyfx.com/illustratio..._Picture_7.png

Indeed, the developments yesterday mark a positive shift in process and rhetoric out of Europe. Throughout the summer months, little but words emerged from meetings between European leaders. Now, with what appears to be a credible plan in the works, in the form of a European version of the American Troubled Asset Relief Program, markets are finding the threat of a Greek default less daunting than before.

The renewed optimism carried over into the hours before the North American session commenced, after the German and Greek heads of state held a joint press conference in Berlin, Germany. As expected, Greek Prime Minister George Papandreou called for further talks, saying that Europeans “must stop blaming each other for our different weaknesses and unite together with our different strengths.” Similarly, he noted “the Euro-zone must now take bold steps towards fiscal integration to stabilize the monetary union. Let’s not allow those who are betting against the euro to succeed.” German Prime Minister Angela Merkel issued a similar statement, though aimed more directly at Germans, who are bitterly divided over whether or not and how to help Greece.

Source: http://www.dailyfx.com/forex/fundame...n_Meeting.html

any word on when the us dollar index will go live for us accounts? or if it will at all?

Hi gimme,

Yes, the plan is to still launch it for US accounts, but we haven't been able to as of yet unfortunately. I know our US traders are really looking forward to it, and we're looking to launch it as soon as possible. Thanks for your patience with this.

-Jason

The Breakout Opportunities trading signal inside DailyFX+ generated a USD/CHF sell signal earlier this morning and USD/CHF has now dropped to the top of the entry zone. Here's a look at the signal setup on the chart:

http://img28.imageshack.us/img28/741...chartimage.png

Here's an overview of the signal as specified in DailyFX+

The system recommends entering this trade at any price between 0.88948 and 0.89494. The signal was issued because the USDCHF has broken its 24-hour low while our Speculative Sentiment Index was at 1.9973, suggesting that the USDCHF may have further to fall. A stop loss has been set at the 24-hour high of 0.90203 and a profit target has been set at the 1 Day ATR level at 0.88018. The system will move the stop to the next 24-hour high every time that 24-hour high is lower than the previous 24-hour high. Breakout Opportunities is a breakout strategy that aims to catch the significant moves that typically happen when currencies break through technical support or resistance. The SSI Breakout strategy tends to work well in volatile market conditions, generally when the DailyFX Volatility Percentage in a pair is above 75%. The volatility in USDCHF at the time of signal is 86%.

Source: https://plus.dailyfx.com/dailyfxsign...s.do?locale=en

FXCM To Pay Over $14.2 Million To Settle Charges


CFTC: FXCM To Pay Over $14.2 Million To Settle Charges
From efxnews.com
FXCM Inc. (FXCM) agreed to pay over $14.2 million to settle charges that the retail foreign-exchange brokerage didn't always offer clients the best exchange rates, the Commodity Futures Trading Commission said Monday. The $6 million fine and nearly $8.3 million in restitution to customers comes on top of a $2 million fine in August with the National Futures Association, an industry group. While the restitution comes out to about $17 per affected customer, the total settlement is relatively large for a CFTC action, and among the biggest ever for the NFA, analysts said. In a statement, the CFTC said FXCM failed ... (full story)

For today's post I thought I would compose an overview of charts the DailyFX analysts are watching for EUR/USD to see what the different thoughts are on future direction:


Michael Boutros
"...Possible wave count suggests Further Euro weakness. But not too sure. Risk looks a bit oversold here"

EUR/USD
http://img834.imageshack.us/img834/7...aelboutros.png

David Rodriguez
"...$USDOLLAR holding within its shorter-term uptrend channel, my EURUSD short seems safe for now"

Dow Jones FXCM US Dollar Index
http://img403.imageshack.us/img403/2...drodriguez.png

Jamie Saettele
"...The EURUSD sliced through the mid January pivot without much of a fight from bulls and is nearing a short term Fibonacci extension at 13115. The downside is favored against Monday’s high of 13379 and resistance is 13284-13313. The next downside objectives are the mentioned 13115 and the ytd low at 12856."

EUR/USD
http://media.dailyfx.com/illustratio...ody_eurusd.png

Joel Kruger
"....this should open the door for a measured move downside extension towards our next objective by 1.3000 over the coming sessions, with only a break back above 1.3690 to delay outlook and give reason for pause. In the interim, intraday rallies should be well capped ahead of 1.3400."

EUR/USD
http://media.dailyfx.com/illustratio...l_body_eur.png

And finally, below is the weekly EUR/USD chart I'm watching. I've placed a fibonacci retracement from the 1.19 - 1.49 trend, and the next support level looks to be the 62% retracement level at 1.3050.

EUR/USD Weekly Chart
http://img24.imageshack.us/img24/653...0420112340.png

The latest trading signal from DailyFX+ is targeting a EUR/USD breakout towards the 1.35214 level. Here's a look at the chart setup:

http://img262.imageshack.us/img262/3...nal1052011.png

Here's some of the methodology behind this signal from the DailyFX+ website:

The signal was issued because the EURUSD has broken its 24-hour high while our Speculative Sentiment Index was at -1.2548, suggesting that the EURUSD may have further to rise. A stop loss has been set at the 24-hour low of 1.31716 and a profit target has been set at the 1 Day ATR level at 1.35214.

While any breaking news out of the Euro-Zone pertaining to the debt situation could send the market moving such as yesterday's ratings downgrade of Italy by Moody's, the next major scheduled event is the ECB rate announcement on Thursday at 7:45am ET. Also of note is that this will be the last ECB rate meeting headed by ECB President Trichet before his term expires October 31.

The DailyFX+ Trading Signals can be accessed at https://plus.dailyfx.com with an live account username and password from FXCM.

what's stopping the launch? and how long do you think it'll take? i'm not trading live until it launches

Hi gimme,

I don't have a clear indication at this point so it may take a while, and I don't have any further information unfortunately. Sorry to disappoint.

-Jason

The next major economic news event is the Australian Employment Report being released tonight at 8:30pm ET (00:30 GMT on Thursday October 13th) and this one piqued my interest due today's 300+ pip rally from roughly 0.9870 to 1.0200. Here's a look at the chart for the past 24 hours:

http://img59.imageshack.us/img59/978...01140841pm.png

The Australia Employment Report is expected to show an increase of 10.0k jobs versus a decrease of -9.7k in last months release. I see more risk to the downside in AUD/USD considering last month's weak figure, and the fact that AUD/USD has rallied over 300 pips in the past 24 hours. This could be a case of buy the rumor, sell the news...

A full report on trading the Australian Employment Report can be found on DailyFX here http://www.dailyfx.com/forex/fundame...nt_Report.html

There was a small 50 pip move to the downside at the lowest after yesterday's post, but no breakout since then. Moving on to today's trading setups, Jamie Saettele is looking for the excitement to pick up in USD/JPY with a push lower towards 74.00.

http://media.dailyfx.com/illustratio...ody_usdjpy.png

Source: http://www.dailyfx.com/technical_ana...ttWave=USD/JPY

Written by Christopher Vecchio of DailyFX

The Aussie-Dollar pair has been exceptionally volatile the past few months, though as a carry trade, this would be expected in tumultuous trading conditions. Nonetheless, despite these swings – the AUD/USD just finished a 1000-pip move in less than two-weeks – a descending channel has been carved out since August 1. For the AUD/USD to move back towards its Range Bottom, there will need to be another fallout in equity markets, provoked by concerns that Euro-zone leaders won’t have done enough to contain a liquidity crisis from spreading from Europe to the rest of the world’s advanced economies.

Given recent commentary from the German leadership block – Chancellor Angela Merkel’s spokesman noted that while a “package” of measures would be agreed upon at the European Union summit in Brussels on October 23, but also said that “the chancellor reminds [everyone] that the dreams that are emerging again, that on Monday everything will be resolved and everything will be over, will again not be fulfilled" – it appears that European leaders are starting to come to this realization. This, coupled with the fact that the Reserve Bank of Australia was exceptionally dovish in its recent minutes, falling short of everything but calling for a rate cut at the next policy meeting, paints a scenario in which appetite for higher yielding currencies will be diminished in the coming weeks. As such, on confirmation that the pair is indeed in its next leg lower, a short opportunity has presented itself to range trade AUD/USD back towards its October low at 0.9386.

Levels to Watch:
- Former Range Top: 1.0370/80 (0.0 Fibo, 200-DMA)
- Range Top: 1.0046 (23.6 Fibo)
- October Low: 0.9386
- Range Bottom: 0.8993 (100.0 Fibo)

AUD/USD Daily Chart: July 2011 to Present
http://media.dailyfx.com/illustratio...Picture_19.png

The chart above details the descending channel that has materialized over the past few months on a daily timeframe. The most recent test of the Range Top proved fruitless, with no breakout occurring and thus priming the pair for another test of its Range Bottom. Nevertheless, given the volatility of the AUD/USD, the strategy is to remain on the sideline until there is a definitive break lower. Given the nearly 1000-pip range the pair is currently trading in, we’re looking towards the middle of the range for our short entry point.

http://www.dailyfx.com/forex/analyst...23.6_Fibo.html

Here are 5 economic events to watch this week highlighted by Christopher Vecchio of DailyFX http://www.dailyfx.com/forex/fundame...DP_on_Tap.html

CAD Bank of Canada Rate Decision: October 25 – 13:00 GMT
The Bank of Canada is widely expected to keep its rates on hold at 1.00 percent at its policy meeting on Tuesday, as the recent trend of deteriorating fundamentals for the world’s eleventh largest economy has been broken. Inflation remains well-contained, the housing sector is relatively strong, and the labor market has showed signs of growth in recent months. In fact, the October 7 labor market reading showed that the unemployment rate dropped back to 7.1 percent in September, from 7.3 percent in August; this is the lowest such rate since December 2008, when the unemployment rate was 6.8 percent. While inflation ticked slightly higher in September, up to 3.2 percent on a yearly basis, this in part has been due to a weaker Canadian Dollar.

The Credit Suisse Overnight Index Swaps are pricing out 0.8-basis points over the next 12-months, and there is a miniscule 3.0 percent of a 25.0-basis point rate cut at Tuesday’s meeting. Given recent global developments and how they have affected the Canadian economy, I fully expect the Bank of Canada to employ a dovish tone at coming meeting, though steer clear of talks of lower rates in the future.

USD Consumer Confidence (OCT): October 25 – 14:00 GMT
Consumer confidence is expected to remain below 50.0 after falling below the key level in August. This was the first time the reading came in below 50 since last October. September’s reading was slightly improved from July’s at 45.4 from 45.2, but the trend remains firmly to the downside; consumer confidence peaked at 72.0 in February. Such an occurrence wasn’t necessarily a surprise, especially given the state of U.S. politics and the downgrade of long-term U.S. government debt in early September. With the economy showing little signs of improvement over the medium-term, confidence is likely to remain lower for the coming periods. Looking ahead, October’s reading isn’t expected to inspire much confidence either, with a Bloomberg News survey showing a forecast of 46.5.

The worsening debt crisis in Europe is likely to have an increasing effect on consumer confidence, in a ‘trickle-down’ sort of way; as equity markets continue to head lower on contagion concerns, sentiment will deteriorate, despite the fact that the influence is mostly exogenous, at least to American consumers.Similarly, market participants should be aware of the fact that the Congressional committee in charge of presenting another solution to the debt ceiling has a deadline coming up in November, which could weigh on sentiment further down the road as debates over how to reduce American spending increases in the coming weeks.

AUD Australia Consumer Price Index: October 26 – 00:30 GMT
According to a Bloomberg News survey, economists forecast the Australian consumer price index to show signs of easing price pressures, with the median estimate calling for a 0.8 percent gain in third quarter, on a quarterly basis. Year-over-year, the index is expected to show that price pressures fell to a 2.9 percent clip, from 3.4 percent in the third quarter a year ago. As per the Reserve Bank of Australia’s Board minutes from their recent policy meeting, stating “revised measures showed recent outcomes for underlying inflation lower than those previously published.” Similarly, the minutes noted that “the inflation outlook appeared less concerning than was the case a few months ago.” Considering global growth showed signs of weakening in the third quarter, inflationary pressures do indeed to be tailing off for the Australian economy. If inflation is indeed suppressed, the likelihood for a rate cut in the future would increase. Currently, the Credit Suisse Overnight Index Swaps are pricing in a 78.0 percent chance of a rate cut at the RBA’s next meeting in November. Join a DailyFX analyst for live coverage of event!

NZD Reserve Bank of New Zealand Rate Decision: October 26 – 21:00 GMT
At its last meeting on September 14, the Reserve Bank of New Zealand decided to maintain its key benchmark interest rate at 2.50 percent, on the outlook that “global economic and financial risks have increased.” Still, the central bank noted in their policy assessment that “domestic economic activity has surprised to the upside,” a welcome development following the earthquakes that struck major metropolitan areas over the past few months. The relative strength of the New Zealand economy has led to a particularly strong New Zealand Dollar throughout 2011 thus far, which as the central bank noted was “having a dampening influence on some other parts of the tradable sector and on imported inflation.”

The Credit Suisse Overnight Index Swaps are pricing in 41.0-basis points over the next 12-months, and there is a slight 2.0 percent of a 25.0-basis point rate cut at Wednesday’s meeting. Nonetheless, it was determined that “if recent global developments have only a mild impact on the New Zealand economy, it is likely that the [key interest rate] will need to increase.” Accordingly, if volatility calms due to positive developments out of Europe, the RBNZ appears supportive of a higher interest rate and thus a stronger Kiwi in the future.

USD Gross Domestic Product (Annualized) (3Q A): October 27 – 12:30 GMT
The U.S. economy is expected to have experienced faster economic growth in the third quarter of 2011, with the first gross domestic product figure forecasted to show a 2.5 percent rate of expansion. The print is a notable improvement over the final reading from the second quarter, when growth was barely above 1.0 percent, at 1.3 percent at an annualized pace. Taking a look back to the previous prints, growth stalled in the first quarter of the year, at a paltry 0.4 percent print; growth was above 2.3 percent in the second half of 2010; and growth was above 3.8 percent from the fourth quarter of 2009 through the first half of 2010.

There’s been a slight upturn in data in recent weeks, with most of the positive data coming towards the end of September. Factory orders fells slightly in August after surging in July, while the ISM Manufacturing index barely held in expansionary territory, down to an average of 51.0 in the third quarter from 56.4 in the second quarter. On the other hand, consumer spending made a bit of a comeback in the third quarter, which is supportive of a stronger GDP print. Accounting for nearly 70 percent of the headline figure, consumption is the most important component of the overall growth reading. Thus, while growth appears to have picked up in the third quarter, the 2.5 percent forecast looks overly enthusiastic. Accordingly, a reading lower should not come as a surprise. If that should be the case, the U.S. Dollar would find bids higher, especially against the Canadian Dollar.

Alan Greenspan tells it like it is in this article from CNBC "Greenspan: Why European Union Is Doomed to Fail". Here's a quote from Greenspan in the article:

...former Fed Chairman Alan Greenspan told CNBC in a recent interview.

"At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t," Greenspan said. "Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits."

The next big event to watch out for is the RBNZ rate announcement at 4:00pm ET. Here's an overview from DailyFX:

Why Is This Event Important:
Although the Reserve Bank of New Zealand is widely expected to keep the benchmark interest rate at 2.50 percent, the statement accompanying the rate decision is likely to heavily influence the high-yielding currency as market participants weigh the outlook for monetary policy. The RBNZ may strike a cautious tone for the region given the slowdown in global growth, and we may see the central bank endorse a wait-and-see approach for the remainder of the year as policy makers aim to encourage an export-led recovery.

At the same time, Governor Alan Bollard may show an increased willingness to restore the cash rate to 3.00 percent as private sector activity improves, and hawkish comments from the central bank head should prop up the New Zealand dollar as market participants look for higher borrowing costs. According to Credit Suisse overnight index swaps, investors still see the cash rate increasing by more than 25bp over the next 12-months, and interest rate expectations should play a greater role in driving price action for the kiwi as the fundamental outlook for the world economy remains clouded with high uncertainty.

What’s Expected:

Time of release: 10/26/2011 20:00 GMT, 16:00 EST

Primary Pair Impact: NZDUSD

Expected: 2.50%

Previous: 2.50%

DailyFX Forecast: 2.50%


Potential Price Targets For The Rate Decision

http://media.dailyfx.com/illustratio...eenShot008.png

http://www.dailyfx.com/forex/fundame..._Decision.html

USD/JPY traders will likely have the Bank of Japan on their Christmas card list this year as nearly 94% of traders in the USD/JPY were long the pair going into the close of trading on Friday. Positioning has been scaled back somewhat since then as long positions are now 60% lower than yesterday according to the latest SSI update on DailyFX PLUS. Here's the latest SSI release on DailyFX PLUS:

http://img408.imageshack.us/img408/4...01120607pm.png

The next major event to watch for is the RBA rate decision being released at 11:30pm ET (3:30 GMT). The Reserve Bank of Australia is expected to keep rates the same, but the statement released released after the decision could cause market movement if they give an indication on the future of interest rates. Here's what DailyFX has to say about trading the RBA rate decision:

Why Is This Event Important:
The Reserve Bank of Australia is anticipated to keep the benchmark interest rate at 4.75%, but the statement accompanying the rate decision could weigh on the exchange rate should the central bank show an increased willingness to scale back the rate hikes from back in 2010. As the isle-nation faces a slowing recovery, we may see Governor Glenn Stevens continue to soften his hawkish tone for monetary policy, and the central bank head may talk up speculation for lower borrowing costs as growth and inflation falter.

According to Credit Suisse overnight index swaps, market participants see an 89% chance for a 25bp rate in November, while borrowing costs are expected to fall by more than 100bp over the next 12-months. However, we may see the RBA endorse a wait-and-see approach for the remainder of the year as the region continues to benefit from global trade, and the central bank may carry its current policy into the following year as the economy is expected to benefit from the rebuilding efforts from the Queensland floods.

http://media.dailyfx.com/illustratio...eenShot023.png

How To Trade This Event Risk
Trading the given event risk may not be as clear cut as some of our previous trades as we expect the RBA to keep the benchmark interest rate on hold, but hawkish comments from Governor Stevens could pave the way for a long Australian dollar trade as market participants weigh the prospects for future policy. Therefore, if the central bank head talks down speculation for lower borrowing costs, we will need to see a green, five-minute candle following the announcement to generate a buy entry on two-lots of AUD/USD. Once these conditions are met, we will set the initial stop at the nearby swing low or a reasonable distance from the entry, and this risk will establish our first target. The second objective will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade reaches its mark in an effort to protect our profits.

In contrast, the slowing recovery in the isle-nation may lead the RBA to strike a dovish outlook for monetary policy, and the central bank may look to abandon its ‘mildly restrictive’ stance as growth and inflation falter. As a result, if Governor Stevens shows an increased willingness to scale back the interest rate from 4.75%, we will implement the same strategy for a short aussie-dollar trade as the long position mentioned above, just in reverse.

Source: http://www.dailyfx.com/forex/fundame..._Decision.html

EUR/JPY: DailyFX PLUS just generated a short breakout signal for EUR/JPY. Below is a screenshot show the entry zone (between the blue lines), stop loss at the red line, and limit at the green line:

http://img856.imageshack.us/img856/2...11102404am.png

Here's part of the trade summary from DailyFX:

The signal was issued because the EURJPY has broken its 24-hour low while our Speculative Sentiment Index was at 3.697, suggesting that the EURJPY may have further to fall.

The trading signals can be found inside DailyFX PLUS at http://plus.dailyfx.com by logging in with a live account username and password from FXCM.