FXCM/DailyFX Signals and Strategies

CHF/JPY price channel developing

DailyFX trading instructor Walker England recently tweeted about a price channel developing in CHF/JPY. The general trend of the price channel is downwards, so with the pair currently trading near the top of this channel, there is an opportunity to go short at current levels.

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As shown in above a profit target can be set near the bottom of the price channel at around 101.80, with a stop above the channel at around 106.30. To keep up to date with his latest trade ideas, you can follow Walker England on Twitter.

Increased Volatility Means Opportunity for Dollar and Yen Traders

10-year US Government Treasury Notes recently saw their biggest 1-week decline in a decade as yields surged. With the world's supposed foremost safe-haven asset seeing truly historic sell-offs, there's reason to believe there will be an increase in volatility across the board in global stock markets, bond markets and forex.

Forex Options market and S&P 500 Volatility Prices From 2007-2013

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Past performance is not necessarily indicative of future results, but our sentiment-based trading strategies have done well in highly-volatile markets. Our major focus remains the Momentum2 strategy—also known as the "Tidal Shift" system. It's thus far caught some fairly substantial turns in the Dollar, Yen, and other pairs.

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

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If you have a live FXCM Trading Station account, you can now use those same account login details to access the Mirror Trader platform and automate the Tidal Shift strategy and other DailyFX trading signals.

Technical Setup: Trading the Aussie Downtrend

This morning the instructors at DailyFX.com tweeted about a recent bearish signal they spotted for AUD/USD. RSI has hit resistance again at the 50 level. Since the pair is in a strong downtrend, this can act as an overbought signal.

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They are looking to go short AUD/USD at current levels, with a profit target at 0.9000 and a stop loss at 0.9350. To keep up with their latest trade ideas you can follow the DailyFX instructors on Twitter.

SSI Signals Further Euro Losses

Today, the DailyFX team tweeted that EUR/USD just fell below the 1.3000 for the first time since June 3rd. As you can see in the chart below, SSI (the bar graph) flipped from negative to positive today just as EUR/USD (the green line) broke through this key price level.

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That means retail traders went from being net short to being net long this currency pair and are trying to pick a bottom to this downtrend. You can see in the bar graphs below how retail long positions dramatically increased in the EUR/USD during this period.

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That is actually a contrarian signal that indicates the downtrend could continue. As I've highlighted in the chart below, the Fibonacci levels above the current market price act as resistance, the Fib levels below the current price at as support.

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For a short term trade, you could look to go short at current levels, with a profit target near the 1.29417 Fib level, and a stop loss above the 1.30323 Fib level. For a medium term trade, you could set your profit target near the 1.27953 level, with your stop above 1.31055.

Trading the Downtrend in Gold

The weekly update of our Speculative Sentiment Index (SSI) was just posted on DailyFX.com and it says that crowds are now their most net-long Gold since its virtual meltdown in April as it hits fresh multi-year lows.

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Below is an overlay of a Gold (XAU/USD) chart on a bar graph of SSI for the same time period. Notice that when SSI says that crowds are net short (brown bars) Gold tends to rise, and when crowds are net long (green bars) Gold tends to fall.

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That means SSI is currently giving us a strong bearish signal for Gold. We can use the Technical Analyzer on DailyFX PLUS to get key price levels to enter a short position.

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The chart above shows that we can go short at current levels with a stops above resistance (at 1250, 1271 or 1290) and profit targets near 1202 or 1195.

SSI: Crowds Continue Buying into Aussie Declines

The latest readings from our Speculative Sentiment Index (SSI) show that crowds continue to buy into Aussie declines. As I discussed in my previous post, this is a strong contrarian indicator that the price could continue to fall further.

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Notice above how AUD/USD tends to drop when crowds are net long (when the SSI bar graph is positive instead of negative). It's not surprising then that the SSI-based Breakout1 strategy has just given a signal to short AUD/USD at current levels with a trailing stop at 0.9187

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Breakout1 and other DailyFX trading signals are available as automated strategies at FXCMapps.com

Big Week as Risk Trends Settle - RBA, ECB, BoE, and US NFPs On Deck

There are several events on the economic calendar this week that are all likely to produce volatility. We have three major central bank meetings, and Non-Farm Payrolls on Friday.

Rate Hike Probabilities / Basis-Points Expectations

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While past performance is not necessarily indicative of future results, such volatility has traditionally been favorable to the DailyFX trading signals that are based on our Speculative Sentiment Index (SSI).
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Most recently the Tidal Shift strategy from DailyFXplus.com gave a trading signal this morning to buy EUR/JPY anywhere between 129.626 and 130.203 (blue lines) with a trailing stop at 128.761 (red line).

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Tidal Shift and other DailyFX trading signals are available as automated strategies on the Mirror Trader platform. If you already have an FXCM trading account, you can use the same username and password to log into Mirror Trader.

Momentum Scorecard: Yen Looks to Weaken Against European Trio

Christopher Vecchio wrote an article on DailyFX.com today showing how you can use the Moving Average Dashboard from FXCMapps.com to get trend signals as shown below:

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As you can see, the moving averages on the hourly, 2-hour, 4-hour and weekly charts for EUR/JPY, GBP/JPY and CHF/JPY all point to a bullish momentum for these pairs.

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Yesterday I posted about the Tidal Shift strategy on DailyFX PLUS giving a signal to buy EUR/JPY, so today I wanted to share a trade signal for one of the other yen crosses.

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There are currently no signals for GBP/JPY on DailyFX PLUS, but there are several for CHF/JPY.

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The latest is signal is from the Momentum1 strategy and it says to buy CHF/JPY at current levels with a trailing stop at 104.913

SSI: Mixed Sentiment Except for Aussie

With ECB and BOE rate decisions tomorrow and the all important Non-Farm Payrolls coming out of the US on Friday, it's no surprise that the latest readings from our Speculative Sentiment Index (SSI) show that traders have a fairly neutral bias for most of the major currency pairs, not being overly long or short.

For example, the SSI reading for EUR/USD is -1.07, which means there are 1.07 short positions for every 1 long position. That's almost a 1 to 1 ratio, not much of a short bias.

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The one outlier among the majors is AUD/USD where the ratio of long to short positions stands at 4.23 as 81% of traders are long. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the pair may continue lower.

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The trading crowd has grown further net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias for AUD/USD.

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We can now use the Technical Analyzer on DailyFX PLUS to get our profit targets as shown above in red, if we enter a short position at current levels.

Today on DailyFX.com quantitative strategist David Rodriguez reiterated his view that "the US Dollar stands to hit further multi-year highs as the largest bond bubble of a generation bursts. This may be particularly true against the yield-sensitive Japanese Yen as the USD/JPY exchange rate hits fresh peaks."

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Taking a look at the 4-hour charts we can see an opportunity to go long at current levels around 101.00 (blue line) using the 10-period EMA as support.

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Our profit target can be set around the high in May of 103.731 (green line) with a stop loss around the 61.8% retracement level of 99.930 (red line) of the recent pullback since then.

USD/JPY Technical Analysis: Push Above 102.00 Signaled

As a follow up to my post yesterday about signals to buy USD/JPY, I wanted to share technical analysis that currency strategist Ilya Spivak posted on DailyFX.com today:

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"Prices took out resistance at 100.68, the 61.8% Fibonacci expansion, exposing the 76.4% level at 102.31 as the next upside objective. A push beyond that eyes the May 22 high at 103.73. The 100.68 mark has been recast as near-term support."

Yesterday, I showed that there were signals to go long USD/JPY around 101.00 with at stop around 99.930 and a limit around 103.731:

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Using Ilya Spivak's new analysis, we can look to adjust our stop from below 99.930 to just below 100.68, if the market breaks through the 76.4% fib level of 102.31. That allows us to reduce our downside risk as the trade moves in our favor.

The FOMC minutes will be released today at 18:00 GMT/14:00 EDT. Currency analyst David Song has highlighted some potential price targets for EUR/USD in his article on DailyFX.com:

"Although we're seeing the EURUSD hold above the April low (1.2743), a more upbeat FOMC Minutes may spur a more meaningful run at the 23.6% Fibonacci retracement from the 2009 high to the 2010 low around 1.2640-50"

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EUR/USD is currently trading just above the trend line shown in blue. We could look to go short on a break below that line around 1.2800, with a stop above the weekly high of 1.28975.

Continue following Ilva and have fun. It was clear UJ was going down from the daily I posted it somewhere else here. Any more bets from Ilva please post.

A key aspect of sound risk management is the idea of not risking too much of your total account equity on a single trade. The Risk Management Indicator available free on FXCMapps.com can help you calculate the appropriate trade size and stop level for your trade based on your risk parameters. Those trade details are then displayed directly on your Trading Station charts.

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The inputs and outputs for the Risk Management Indicator work as follows:

Risk Percent: Input a value as a percentage of account equity. The Output will display a hypothetical trade size.

Limit: Input a value in pips. The Output will display a hypothetical profit for this trade, should the market price reach the inputted pip value.

Stop: Input a value in pips. The Output will display a hypothetical loss for this trade, should the market price reach the inputted pip value.

Position: Move the box to a new position so that it doesn’t interfere with other items on your chart

You can find more tips on how best to use the Risk Management Indicator in James Stanley's article "The ABC's of Risk Management".

Hi Claudia,

That's a nice call you made on USD/JPY

I think the important thing is that long or short, it's always wise to use stops to manage risk in case a trade idea doesn't pan out. My EUR/USD trade idea from yesterday was stopped out as the US Dollar took a beating after yesterday's dovish commentary from Bernanke clarifying the Fed's intentions to taper QE asset purchases. As a result the US stock market is targeting new all-time highs today.

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Entering a long position in SPX500 at current levels, it's possible to set stops below the 0.618 and 0.764 Fib levels at 1,638.9 and 1.657.6 respectively. Profit targets can be set around the all-time highs at 1.687.9 and the 1.272 Fib extension at 1.722.8.

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The latest readings from the Speculative Sentiment Index (SSI) on DailyFXplus.com show that the crowd is heavily short SPX500. SSI for SPX500 stands at -4.66 which means 82% of retail traders are short and only 18% of are long. Since SSI is a contrarian indicator, this is a signal that SPX500 could continue to make new highs.

Using Mirror Trader for Semi-Automation

In the past, I have mentioned how the same username and password you use to log into your account on Trading Station can be used to log into Mirror Trader. This platform allows you automate trades in your account from various trading strategies including the ones on DailyFXplus.com.

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Today, I wanted to show you how you can use Mirror Trader for semi-automation. The "Open Signals" section displays all the buy and sell signals from all the strategy providers available on your Mirror Trader account. You can follow these signals in real-time and use them to support your own trading analysis. Available statistics for a given signal include:

1. Pips: The number of pips gained or lost by a strategy during the last 30 days
2. T-Score: A scoring method used to evaluate a strategy's performance over time
3. Max Draw Down: The worst losing sequence of the strategy in pips
4. Number of "followers": The number of users who "mirrored" the signal.

A signal is only available for mirroring 30 seconds from the moment it appears. The time-sensitive window is intentionally small to assure that you only execute the most relevant signals.

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30 seconds after the signal is open, the "Mirror" button is replaced by a "No entry" sign, indicating that the signal is no longer available for mirroring.

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If you choose to Mirror the signal and execute it, a check mark will appear and you will see it appear in the "Open Positions" list on both Mirror Trader and Trading Station platforms.

Aussie drops below 0.9000 first time since 2010; SSI says it can fall further

Today, AUD/USD briefly dropped below 0.9000 for the first time since September 2010. It has since rebounded trading around 0.9060, but retail positioning indicates that the Aussie could still fall further.

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The latest Speculative Sentiment Index (SSI) reading for AUD/USD stands at 4.73. That means among retail traders there are 4.73 long positions for each short position. This is the most extreme positioning of any major currency pair at this time, and has only gotten more extreme as retail traders are trying to pick a bottom.

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Long positions are 14.3% higher than yesterday and 24.9% above levels seen last week. Short positions are 4.6% lower than yesterday and 34.4% below levels seen last week. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are long and continuing to buy gives a strong signal that the AUD/USD may continue lower.

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Two of the SSI-based trading strategies on DailyFX PLUS recently posted signals to short AUD/USD. The signal from the Momentum2 strategy has already moved enough into profit, that the Action status has changed from "Enter Now" to "Hold", which means if you're not in the trade already, it's too late to enter now.

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It's still possible to enter now manually on the Breakout2 trade signal to go short with stops at 0.9346, 0.9289 and 0.9193 and limits at 0.8949 and 0.8892. DailyFX trading signals are also available as automated strategies at FXCMapps.com

Calender of Live Webinars

With another week of trading in the books, I wanted to take this time before the start of the next trading week to highlight a new section of the FXCM website. The Calendar of Events lets you see the complete lineup of live webinars scheduled for the new week by our DailyFX analysts and trading instructors. The times below are listed in GMT, but on your computer they will display in your local time.

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There is even an option to add your favorite webinars to your personal calendar so can receive reminders when they are about to start.

SSI: US Stocks Could Go Higher Despite Retail Sales Miss

Retail sales rose less than forecast in June (0.4% vs. 0.8% expected), but the latest readings from our Speculative Sentiment Index (SSI) suggest that US stocks might still continue higher. SSI for SPX500 stands at -4.90 which means there are 4.9 short positions for every long position.

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We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the SPX500 may continue higher. In fact, the trading crowd has grown further net-short since last week.

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On Friday, the SSI reading for SPX500 was -4.56. Long positions are 0.4% lower than Friday and 12.2% above levels seen last week. Short positions are 6.8% higher than Friday and 40.6% above levels seen last week. The combination of current sentiment and recent changes gives a further bullish trading bias.

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SPX500 is currently within striking distance of the all-time high of 1,687.9 set on May 22nd, and a break above that could target the 1.272 Fibonacci expansion at 1,722.8. Stops can be set below the 0.764 Fib level at 1,657.6.

May 30th ...

July 12th ...

You have to love those retail traders and their daft ideas about picking bottoms...