FXCM/DailyFX Signals and Strategies

The British Pound has been a top performer in August while the Japanese Yen has struggled – even as global equity markets have come under pressure. The latest readings from the Speculative Sentiment Index (SSI) show retail traders have been increasing their short exposure to GBP/JPY.

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The lengthening brown bars in the graph above show that SSI has continued to become more negative as GBP/JPY has risen. Since SSI is a contrarian indicator, this is a sign that the recent bull run may continue.

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If a long position in GBP/JPY is entered at current levels, the stop loss could be set below the pivot level at 152.50 (red dotted line) as indicated by the Technical Analyzer, and the profit target could be set around the high set back in May at 156.776 (green dotted line).

Momentum Scorecard: Long EUR/USD or GBP/AUD Strongest Bets

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 all time frames point to a bullish momentum for EUR/USD and GBP/AUD.
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These momentum signals are given further confirmation by the sentiment-based trading strategies on DailyFXplus.com

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For example, the Momentum2 strategy says a long position can be entered in EUR/USD at current levels with a trailing stop at 1.3327.

British Pound Finds New Role as Haven During Emerging Market Turmoil

Going into today's FOMC release, the British Pound has emerged as an unlikely top performer and perhaps safe haven du jour as few developed economies have seen the resiliency the UK economy has since May.

GBP/AUD 15-min Chart: August 14 to 21, 2013

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For the past week or so, the Sterling has been quite strong against the commodity currencies such as the Australian dollar in particular, as emerging market weakness has started to impact the entire Asian-Pacific region. The pair is now trading near the bottom of the price channel for this recent uptrend.

http://img14.imageshack.us/img14/3643/66ph.png

That could maybe present an opportunity to buy GBP/AUD at current levels. A stop could be set below the 76.4% retracement level to the earlier high of 1.73415 set back on August 7th which has since been broken. A profit target could be set around the 161.8% extension level at 1.75753.

Some food for thought today before the weekly SSI release.

Everyone is talking about the Federal Reserve tapering, which ultimately about interest rates. Interest rates have a huge impact on the financial markets, including forex. US Treasury rates are going higher. Mortgage rates are going higher. And now corporate yields seem to be spiking higher. The spike in corporate yields tend to spike along with major market moving events as demonstrated by this chart was tweeted out by Marketwatch today:

http://img24.imageshack.us/img24/3116/ybk2.png

Source: http://blogs.marketwatch.com/need-to...-83/?link=sfmw

What does this mean for the forex market? Financial market volatility can lead to big moves in the forex market.

GBP/USD has been a currency pair on my radar because of the topping action occurring on the daily chart. Just a little while ago, the DailyFX PLUS Tidal Shift Strategy issued a bearish signal for GBP/USD based on a shift in SSI positioning. Here's a look at the chart including the entry zone and the stop loss levels.

http://img153.imageshack.us/img153/6054/hpz.png

Full signal details can be found by logging into DailyFX PLUS with your live FXCM account username and password at http://www.dailyfx.com/forex_trading_signals?dfxplus=true

There's a lot happening in the markets today that you should be keeping an eye on.

1. JPY Crosses: David Rodriguez notes that traders have been buying the JPY crosses, including the EUR/JPY and the GBP/JPY which have seen sharp declines today. Here's a copy of the SSI update David posted to his Twitter account:

http://img821.imageshack.us/img821/1666/b2so.png


2. Gold: Retail traders are continuing to sell gold which as a contrarian indication could mean there is more upside to gold. The situation in Syria could be a fundamental catalyst to take into account. Here's a look at the gold SSI chart:

http://img14.imageshack.us/img14/3227/vstw.png


3. Turkish Lira: The lira hit another record high, crossing above 2.00, and is now up over 10% for the year. The focus of this pair heading higher in previous weeks was due to Fed tapering and money leaving emerging markets. Now the situation in Syria could add further pressure on the Lira due to Turkey's close proximity.

http://img10.imageshack.us/img10/4741/k9xb.png

I won't put a chart here, but USOil and UKOil are more pairs to watch for upside due to Syria.

Good luck with your trading, and follow the DailyFX Real Time News feed for more updates throughout the day http://www.dailyfx.com/real_time_news

This chart comes from the DailyFXEDU twitter account.

GBP/USD bounced off of the 200 period daily moving average presenting a possible bullish opportunity similar to the setup earlier in August.

http://img189.imageshack.us/img189/3728/m7u8.png

GBP/USD dipped and then rallied off Mark Carney's first public speech as governor of the Bank of England. DailyFX Analyst Christopher Vecchio summed up the results of today's speech:

THE TAKEAWAY: Governor Mark Carney’s first public speech as Bank of England chief > Emphasizes improving economic recovery contingent on credit growth > BoE intends to keep rates low even if data improves > GBPUSD BULLISH

Read the Full Article http://www.dailyfx.com/forex/market_...ey_Speech.html

US Dollar Turnaround the Real Deal. That's the headline from today's weekly SSI release.

For the EUR/USD, David Rodriguez said that it’s been a slow process, but we think the Euro set a substantial top as forex crowd short positions hit a record. The recent pullback in both price and retail forex sentiment confirms the turnaround.

You can see from the below chart how short positions hit a record in July and since then the pair has been pulling back.

http://img46.imageshack.us/img46/3941/8th5.png

You can read the full weekly SSI report here: http://www.dailyfx.com/technical_analysis/sentiment

Next week should be an action packed week for the forex market according to the DailyFX economic calendar. Here's a look at the events ranked HIGH in importance. It includes 5 central bank rate decisions, Australia GDP, US Non-Farm Payroll, and a whole lot more:

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The full weekly economic calendar can be found here: http://www.dailyfx.com/calendar

John Kicklighter, chief strategist at DailyFX.com, recently tweeted about how GBP/JPY is trading near a channel top. He's considering entering a short position at 154.25 with a stop 100 pips higher at 155.25.

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A limit order near the channel bottom around 150.25 would give this trade a 1:4 risk/reward ratio. To keep up with all his latest trade ideas, you can follow John Kicklighter on Twitter.

Emerging Markets: South African Rand

Last month Morgan Stanley analysts dubbed Brazil, Indonesia, India, Turkey and South Africa as the Fragile Five saying "Their currencies will be held back by high inflation, large current-account deficits, challenging capital-flow prospects and potentially weak emerging-market growth."

http://img542.imageshack.us/img542/6622/ktgp.png

source: MarketWatch

Indeed, these headwinds have caused the Fragile Five currencies to take a hit over the past few months, with the US Dollar rising to all-time highs relative to the Indian Rupee (INR). DailyFX senior technical strategist Jamie Saettele now sees possible signs of a reversal for at least one of the Fragile Five, namely the South African Rand (ZAR):

"A head and shoulders top from 8/21 may be unfolding with a weak right shoulder. Below 10.15 would trigger the breakdown."

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If USD/ZAR breaks below 10.15, stop losses could be set above the head and right shoulder at 10.50635 and 10.36680 respectively. Profit targets could be set around support levels set back in July and August at 9.61220 and 9.72860 respectively.

Japanese Yen Poised for Major Move Lower

The weekly update of our Speculative Sentiment Index (SSI) was just published on DailyFX.com

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It shows that Japanese Yen buying has surged versus the British Pound.

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In fact, forex retail crowds are now their most net-short GBP/JPY in over 2 years.

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Since SSI is a contrarian indicator, this is a strong bullish signal for GBP/JPY.

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The Momentum1 trading strategy on DailyFXplus.com has just given a signal to buy the pair at current levels with a trailing stop at 154.584

US Dollar Tanks on August NFPs Miss Despite Unemployment Drop - Again

The US unemployment rate dropped to 7.3% when it was expected to remain unchanged at 7.4%, but the US Dollar still tanked on the news. That's because the main reason for the drop was a shrinking labor force as the participation rate fell to its lowest since August 1978. The headline figure at +169K was also below expectations.

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Looking for opportunities to short the US Dollar, we can see that since the NFP announcment, the Tidal Shift Strategy on DailyFX PLUS just bought GBP/USD at current levels with a trailing stop set at 1.55333. The signal was issued because our Speculative Sentiment Index (SSI) has hit its most extreme negative level for the past 145 trading hours at -2.1218, which suggests that the GBPUSD could be trending upwards.

The Tidal Shift Strategy can be automated on FXCM Trading Station accounts by logging into the Mirror Trader platform with the account username and password.

good day sir:
at first sorry for my bad English
could you please explain what Tidal Shift Strategy and how it work.?
and how can I know if the price will goon same direction or maybe flip by using ssi?
how I can identify or know if there is soon breakout will Accor by using ssi ?

best regards

The DailyFX PLUS trading signal from last Thursday to buy GBP/JPY has worked out well so far. In fact, the British Pound continues to look strong across the board. This morning DailyFX analyst Alejandro Zambrano tweeted about his latest trade idea to go long the currency versus the Swedish Krona (SEK).

GBP/SEK 30-Minute Chart

http://www.dailyfx.com/forex_forum/a...013-gbpsek.png

According to him "A correction to 1.3850 will most likely be used by traders to enter new long positions. We should be able to reach 1.44 which is the prior high as long as we trade above 10.35". To always receive his latest trade ideas, you can follow Alejandro Zambrano on Twitter.

Tidal Shift is a trend trading strategy that aims to catch shifts in trend using trader sentiment as an indicator. The strategy looks to buy when the Speculative Sentiment Index (SSI) reaches its lowest value for the past 145 trading hours, and looks to short when it reaches its highest value for the past 145 trading hours. The strategy also goes by the name "Momentum2" in the Trading Signals section of DailyFXplus.com


SSI is primarily used as a contrarian indicator. That means when the majority of traders are buying, it's a signal to sell and vice versa. For example, if the price is rising, and SSI shows that the majority of traders are selling (SSI is negative), this is a sign that price could potentially continue higher. On the other hand if the price is rising, but SSI shows that the majority of traders are buying as well (SSI is positive), this could be a sign of a potential reversal.



While SSI can't tell you when a breakout will occur, it can be used for possible confirmation on whether a given breakout might continue. For example, the "Breakout2" is another SSI-based strategy in the Trading Signals section of DailyFXplus.com. It buys when the price breaks above its 24-hour trading range and the SSI ratio is at or below -1.22. The strategy sells when the price breaks below its 24-hour trading range and the SSI ratio is at or above 1.22.


Both Breakout2 and Momemtum2 are available as automated strategies at FXCMapps.com

Mirror Trader strategy for S&P 500

In addition to the DailyFX trading signals, the Mirror Trader platform lets you see signals from hundreds of third-party trading strategies and not just for currencies. For example, FXcn1985.cn is a strategy that trades the SPX500, a CFD based on the S&P 500 index.

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While past performance is not necessarily indicative of future results, the strategy currently has a T-Score of 9.72 (on a scale of 1 to 10) meaning that according to Mirror Trader's unique scoring method, it has a high relevancy to current market conditions, which may be of interest to people following the US stock market.

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If you have a live FXCM account, you can use your Trading Station login to access the Mirror Trader platform. From there you can choose this strategy or others for automation or semi-automation. With automation, trades are automatically placed in your account. With semi-automation, you receive an alert when a trading signal is generated, so can decide then whether you want to mirror the trade in your account.

Dollar gains vs. yen on easing Syria tensions

In the past, we've seen USD/JPY drop as tensions have escalated regarding Syria, because the Japenese yen is seen as a safe haven when traders are risk averse. So it makes sense that today with possible signs of progress to avoid military conflict, the US dollar is gaining strongly versus the yen.

http://img835.imageshack.us/img835/6976/0h0e.png

USD/JPY is already up 100 pips for the day, but according to our Speculative Sentiment Index (SSI) it could climb further. The Tidal Shift Strategy on DailyFXplus.com has just bought USD/JPY at current levels with a trailing stop set at 99.673.

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The signal was issued because SSI has hit its most extreme negative level for the past 145 trading hours at 1.352, which suggests that the USD/JPY could be trending upwards. The Tidal Shift Strategy can be automated on your FXCM account by logging into the Mirror Trader platform with your Trading Station username and password.

SSI: GBP/USD Takes out Highs and at Potential Sentiment Extreme

Positive employment data out of the UK sent cable (GBP/USD) to its highest levels in seven months. We use our Speculative Sentiment Index (SSI) as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that GBP/USD may continue higher.

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The latest SSI readings on DailyFXplus.com show that the ratio of long to short positions in GBP/USD stands at -2.77 as 27% of traders are long.

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Yesterday the ratio was -2.56; 28% of open positions were long. Long positions are 4.4% lower than yesterday and 5.3% below levels seen last week. Short positions are 3.4% higher than yesterday and 53.6% above levels seen last week.

http://img716.imageshack.us/img716/6387/y5s1.png

The trading crowd has grown further net-short from yesterday and last week. The combination of current sentiment and recent changes gives a further bullish trading bias.

http://img89.imageshack.us/img89/4483/0tbd.png

It's no surprise then that two SSI-based trading signals (Breakout2 and Momentum2) are currently holding long positions in GBP/USD. Both of these trading signals are available as automated strategies at FXCMapps.com

Japanese Yen Likely to Continue Lower for this Reason

Retail forex traders are their most heavily long the Japanese Yen versus the British Pound (short GBP/JPY) since 2011, and very heavily one-sided sentiment leaves DailyFX quantitative strategist David Rodriguez in favor of further Yen weakness across the board.

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The graph above shows the power of the Speculative Sentiment Index (SSI) as a contrarian indicator. Notice how GBP/JPY has traditionally risen when traders are net short (when SSI is negative).

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Currently, the ratio of long to short positions in GBP/JPY stands at -3.86 (meaning there are 3.86 short positions for every 1 long position) as 21% of traders are long. Since we use our SSI as a contrarian indicator to price action, the fact that the majority of traders are short gives signal that GBP/JPY may continue higher.

http://img194.imageshack.us/img194/3103/y2gn.png

If a long position was entered at current levels, then the stop could be placed below support at 154.123 with profit targets around the Fibonacci extension levels at 159.411 and 162.762.