AUD/USD Support Provides Scalpers With Level To Enter and Exit Positions

The AUD/USD has a firm level of support under it, limiting downside risks and creating an area for traders to target for potential consolidation and reverses. The range bound pair makes it attractive for traders looking to scalp profits as it has provided solid entry and exit levels.

Euro/Dollar Remains Driven by Risk, After Fed Tempers Interest Rate Expectations

The EURUSD continues to see its correlation to risk hold firm as equity markets are currently explaining 47% of price action. The pair continues to see little relationship with interest rate expectations with overnight index swaps holding only a 0.1 correlation with price direction. The ECB and FED have continued to try and temper interest rate expectations with warnings of downside risks and pledges to continue stimulus efforts. However, as signs of stabilization mount and prices start to rise, policy decisions will become more difficult and yield expectations would grow in importance regarding price action for the pair. Conversely, if growth signs falter then waning risk appetite could weigh on the pair as it would remain its primary driver of price action.

AUDNZD Might Have Reached the Extreme of Its Range

Seeing as how both the Australian and New Zealand dollars are considered the high-yield currencies among the majors, there is some level of buffer to violent swings in risk appetite. Nonetheless, the slow trends that this pair takes over time reveals there is a bias for which currency is considered to be positioned for the greatest increase in yield with time – and that prejudice currently falls in the kiwi’s favor. It is important to recognize that risk appetite (and this pair’s correlation to this underlying driver) will not disappear. Therefore, our setup has to take this reality into account. In establishing support, we are fundamentally accounting for a rally in the kiwi’s favor that has been founded on speculation for a time table for rate hikes from the RBNZ; but the reality is that the RBA holds a premium over its counterpart and is still far more hawkish in their disposition. As for the position, we have recently formed what could be a double bottom with the April lows around 1.2050/20 that is further established through a long-term Fibonacci retracement and as the bottom of a prominent trend channel. Our stop is purposefully wide as reversals can be extended before finally correcting. Timing is also a factor. A reversal should occur relatively quickly; so if we are not entered by tomorrow, we will cancel all open positions.

US Dollar Forecast Bearish on Clear Downward Momentum

The US Dollar dropped like a stone on its way to fresh 2009 highs against nearly all major forex counterparts, breaking its long-standing trading range against the Euro in fairly dramatic fashion. The first full week of post-summer trading finally brought the sustained price moves we have long been waiting for. FX Trading volume increased notably through mid-week trade and fueled US Dollar losses, but fundamental “justification” for renewed US Dollar weakness was far less clear. According to FXCM execution desk data, open interest in the Euro/US Dollar jumped by as much as 20 percent before the week was through. A busy economic calendar in the week ahead suggests that the US Dollar may remain volatile, and it will be critical to see whether its recent downtrend may be sustained.

Euro Fundamentally Weak but Still the Dollar's Counterpart

There are two general assessments of the euro: the strength of the currency of its own accord; and how it is performing against the benchmark dollar. This past week, the euro was actually depreciating against most of its liquid counterparts; yet the market was largely focused on EURUSD – and for good reason. The most liquid currency pair in the market, enjoyed another burst of momentum this past week easily clear 1.45 and set a new high for the year in the process. To discern whether this trend will continue or collapse through the immediate future, we need to discern the fundamental drivers behind the pair and individual currencies. And, it is important to note that these are two separate concerns. There are certainly a range of scheduled economic releases to take account of and the media is keen on attributing each fluctuation on readily available long-term fundamental concerns; but to develop a real sense of the current trend, we need only look to risk appetite.

USD Slides vs GBP, CHF

The greenback was weaker against the British pound, falling to its lowest level in a month to 1.6676 and tumbling to its lowest level since December 2008 versus the Swiss franc at 1.0367. The US economic releases saw weekly jobless claims, which improved to 550k from 570k and the July trade deficit. The deficit figures revealed an increase in July to $31.96 billion versus the June reading at $27.49 billion.

The reports due out on Friday include July wholesale inventory, wholesale sales and the September University of Michigan consumer confidence survey. The preliminary confidence report is seen marginally lower to 65.3 from 65.7 while the current component edging up slightly to 67.0 from 66.6.

EURO: At Key Levels Against the U.S. dollar

The Federal Reserve and the European Central Bank should keep rates steady for the first part of 2010 as well, since the economic recovery remains fragile in some sectors and inflation is low. The Euro is once again at key resistance lines against the U.S. dollar. A breakout would possibly set the currency for a strong move up.

TRADING: A MIND GAME

You must change your mental attitude first from a normal person to that of a speculator. Almost all traders I have met, except a few successful ones who really made millions and billions trading in the market, simply waste all their time trying to learn the easiest part in perfection, like about how to read data and charts, and trying to perfect entry and exit skills, etc. Trading is a mind game and without having a right frame of mind, it is a losing game even before it starts. Training a trader�s mind is the first step for any successful trader but almost all new traders neglect that part and that explains why more than 95% of traders are a failure in the long run.

Acquiring the knowledge of the market is not difficult for anyone with average intelligence after a few years of hard study in the market. But it is neither the level of intelligence nor the knowledge that decides the outcome of the market operations of a trader. It is the decision making process that is so hard for most traders to overcome and that is the main reason for a success or a failure for all the traders. Some find it easy to make decisions and stick to it and most find it so hard to make decisions and stick to it. Unfortunately, any decision making process in trading is a pain-taking process and humans tend to avoid pains and go for pleasures even if for temporary ones. Assuming one has acquired enough market knowledge and acquired one�s proven trading system (this is the second most important element of success in trading, in fact. An edge in any system is based on the quality of info one has, charts being only an info of secondary quality not the best one)

Through studies and research, a trader faces the task of making decisions to put this knowledge and system into practice. Then, how many traders can honestly say they can commit their ranch when the trade is suggested by their own system (given that trading is just a chance game) and let the profit run for weeks and months when their system tells them, and how many can manage to cut the loss as a routine process when the situation arise. It all sounds so easy when saying it but so difficult when doing it affecting real money in the market. I still do not sleep well when I am running position because even if the profits are running into a few hundred dollars and the system is telling you to carry on, there is no guarantee that the profit will turn into a yard or two in a month time, and it may even turn into a loss in a day or two when something unexpected happens. A painstaking process in real sense. The pain is not knowing what will happen in the future and in fear of losing. So at the end of the day, assuming one has decent trading system and market knowledge and decent info, it is ultimately how disciplined and how well that trader can take the pain of making right decisions at the right time that decides the outcome of the trades. Hence I call trading a mind game. When I interview prospective young traders, I always look for disciplined and strong-willed person as my first priority as long as one has decent education, but strangely in many cases, it is some kind of genius or half-genius with lots of brains with no disciplines who turn up for an interview thinking only bright people can make good traders.

In fact, I always try to pyramid while position trading medium-term once I am convinced of a new medium-term trend emerging. Like in USD/JPY position trading 135-132 as an initial position, adding in 132 and 129 areas. Same for AUD/USD and EUR/USD with similar strategies. But sitting on positions and watching the counter-rallies costing truck load of money is not easy job to do and causes lots of pain all the time. Most traders even among experienced ones cannot bear that pain and give up too early. But there is no other way to make a big money and we have to bite the bullet and "sit and accumulate" as long as the medium-term trend is intact. That is why I always believe psychological aspects of trading is far more important than anything else in successful trading. A mind game like those bluffing game of poker.

Entries and exits can never be "irrelevant" for any trader for any purpose. It is just that psychological aspects of trading are much more important than entries and exits, and decisive for the success or failure of a trader in the long run. Perhaps exits are more important than entries because any perfect or near-perfect entries are possible only in hindsight.

US Dollar: Will a Recovery in Liquidity Usher in a Breakout?

Liquidity has been the bane of currency traders’ existence this past week; but a gradual return to normalcy may finally allow the dollar and general risk appetite to find its bearings once again. Even a perfunctory glance at a EURUSD chart conveys exaggerated congestion. This pair – and indeed all of the majors – has been relegated to a controlled range or gradual channel for the better part of three months. Now, passing through the extended Labor Day weekend holiday in the US, we are encountering the worst of the unusual market conditions. It wasn’t by chance that the dollar tumbled to test its lows through this past Friday’s close. At critical levels, the speculative ranks could either attempt a break against the dollar while most of the American market is offline or wait for the liquidity pool to deepen and instead work to reconcile the divergent outlook between fundamentals and risk appetite.

Canadian Dollar Volatility Ahead on Rate Decision, Risk Trends

The Canadian Dollar could see heavy volatility in the week ahead as a flux in risk sentiment is compounded by an interest rate decision from the Bank of Canada. An actual change in benchmark borrowing costs is effectively off the table – the BOC has explicitly expressed the intent to keep rates at 0.25% at least through the first half of next year. The markets are in agreement, with overnight index swaps showing that traders are pricing in virtually no change in rates this time around. Whether or not the news proves market-moving will depend on the bank’s rhetoric vis-à-vis the Canadian Dollar in the statement accompanying the monetary policy announcement. BOC Governor Mark Carney has said that the currency’s appreciation over recent months has been a major obstacle for economic growth, adding that he has the “flexibility” to deal with it. Finance Minister Jim Flaherty echoed Carney’s comments, saying “steps could be taken” to check the currency’s ascent. It should not be too difficult for policymakers to make good on such threats because they can simply print more money and let it loose into circulation, so the markets have little reason not to take any language suggesting intervention at face value. To that effect, traders will likely sell the Canadian Dollar should the likelihood of such an outcome be perceived as increasingly likely.

British Pound May Find Relief from Dire Growth Outlook Through Risk

How is it that the developed economy with the worst fundamental prospects touts a currency that is among the best performers for the year? Risk appetite. It is true that the currency market - indeed all markets - are highly efficient at pricing in new economic, political, exogenous data and events. However, when speculation is added to the mix, the otherwise clear view is muddled beyond recognition. For the sterling, the disparity seems particularly prominent. Over the past few weeks, data has confirmed a deepening recession, policy groups have projected a significant lag in its recovery relative to its peers and ballooning asset purchases by the central bank means rate hikes are the furthest thing from their mind. Yet, despite all of this, the pound could still break above 1.66 (1.70?) against the dollar, push the EURGBP exchange rate below 0.87 once again and even climb back towards a nine-month highs of 163 against the Japanese yen should risk appetite continue its march higher.

Currency Market and Risk Appetite will Rediscover Volatility and Direction Soon

Risk appetite has diminished for months; yet the positive bias behind the capital markets has not faltered whilst traders sought out the fundamental fuel for the next trend. However, we may see a resolution on both the direction and intensity of sentiment soon as the technical and fundamental pressures build to a breaking point behind the scenes. Whether in the FX, stock, fixed income or any other speculative market; liquidity is acting as a dampener for price action. The height of the summer holiday season has drained the markets and the extended US holiday this coming week will certainly exacerbate the situation. Under such unusual circumstances, volatility can be artificially inflated; but news and meaningful trends are very difficult to establish.What’s more, with both the dollar-based Majors and the Japanese yen crosses in the same position; a break will likely be echoed across the market and further fuel an shift in sentiment itself. EURUSD would be an appropriate gauge for any new trends that develop. The most actively traded currency pair is not highly sensitive to risk appetite; but that works in our favor as it will follow a trend rather than mere volatility. For motivation, three months of congestion has turned into a terminal congestion pattern and the average true range (with a 10-day average) has fallen to its lowest level since February of 2008. A break is inevitable; but the next trend will likely rely on fundamentals.

How Do You Earn Superior Profits in Forex Trading?

Do you want to earn great profits in Forex Trading? Well, in that case, you'll need to chalk out a good, strong plan, one that gives you a clear picture about the present situation. It's also important to remember the unexpected changes that may occur in the future. So, while formulating your Forex Trading plan for the long run, you keep both the present and the future in mind, as this is the primary prerequisite.

Now, the question is, without adequate experience in this field, how can you form a plan that works fine and gives you high profits as well? At this point, you'll need to remember that patience is the keyword for you at the beginning. After all, all good things take time to happen, right? And, this will probably be the best thing happening to you, if you go the right way, armed with the right plan to support your future steps.

One way for you to proceed without taking much trouble is to trust the right Forex Trading software. Such software will take care of all the details for you, and, at the same time, manage your account. So, the advantage is that you won't have to trust a broker with all your account information. Also, you will be in a better position to manage your margin calls. When you're trading currencies in Forex market, the last thing that you'll want is to get margin calls. And, in the presence of the Forex software, you can be sure that you will not have to spent sleepless nights expecting margin calls!

If you wish to create a plan on your own, then you will need to keep a few important points in mind. But, for this, you'll need a certain amount of experience either in trading or as a serious observer to understand the behavior of exchange rates, such as when they fall down or what makes them rise up and things like that. Or, you can also take a quick self-tutorial course by searching the internet for a reliable source.

You may also take the help from experts in this field to create a plan that will protect your margins even in the toughest of situations. Consulting the person with the right knowledge and experience always helps in forming the right plan for Forex Trading and earning profits.

Another effective way to form a Forex Trading strategy is to learn reading the Forex Trading charts. Knowledge about signals along with an ability to read and understand the Forex charts is one of the ways to get the right plan made. If you can understand the signals of rise or fall of currency prices, then you can easily include the same in your plan.

So, if we take a good look at all the above mentioned ways to form a good plan to trade successfully in Forex market, then there's a common link that joins all these points together - a good knowledge about the market, its components, and its nature. You may need to keep in mind that like all trading markets there are specific reasons for the rise and fall of currency prices in this market also.

So, now, with all this information in place, you can proceed with the actual trading process and look forward to earning great profits in no time at all!

Learn Forex Trading - What You Need to Know

Forex trading is the world's largest business in which money of one country is traded with another. To learn forex, it is important to know that the term "Forex" can also be called "The forex exchange" or "Plain FX". In order to learn forex trading, one should know what type of business actually forex trading is? It is the business of "Currencies".

To learn forex trading, one should know the fact that typically trading is a business in which one country imports goods from another country and pay them in their own currency. As every country has its own currency so every currency is assigned by a three coded word i.e. USD for US dollar and EURO for Europe etc

The only problem with the trading is that, there is no central exchange where everyone can trade the currency. Some famous trading centers around the world are: New York, Frankfurt, London, Tokyo, and Sydney. All the exchange of currency is done via telephone and through internet which connects all the commercial agents and currency traders with each other. To learn forex trading it is important to understand it is a risky business.

In order to learn trading, it is important to know about the term "liquidity". It is basically a skill to convert an asset into cash money without a lot of effect on the price. In foreign exchange market, because of its liquidity there are always buyers and sellers to trade with.

Techniques for Advanced Forex Trading

Forex is a potential platform for earning substantial profit. In fact it is one of the largest trading markets of the world. Featuring an average daily trade of US$ 2 trillion and above, this market is best known for its high scale trading volume and intense liquidity. Adding to this, today with the advancement of technology it can be done from anywhere of the world. Backed up by world-wide web, you can easily trade in the forex market at the comfort of your own home. However, it is important to understand that fx trading is based hugely on speculation. You must be smart enough to guess exactly when the rate of a certain currency pair will rise and go down, and then buy or sell based on that. Indeed it is said that if you learn to study the speculation of this market, you will have a better chance of getting profit.

Today, it is more advanced and turned into an active investment arena, where only a factual understanding of the intricacies and complexities can make your capital grow every day. Moreover, like any other business, it also involves some amount of risks. There is no shot fx trading technique for success in the currency trading market, but there are some well-known techniques that can assist you formulate a good advanced foreign exchange trading strategy. Here are few essential techniques that can help you cut your losses and increases profits:

Forex Scalping: It is a latest technique of trading where profits are taken after relatively small moves in the forex market. It is a technique where trading is done over small time frames, and smaller profits are taken more frequently. As the position exposed to the market is shorter, it automatically reduces the risk of adverse market events causing the price to go against the trade. It is a different approach to most other forex strategies, but still requires you to analyze the market to ensure that the set up for a trade is present. This type of trading greatly appeals to day traders and those who look to reduce the risk involved in trading currencies.

Forex Hedging: It is a technique that helps in reducing some of the risk involved in holding an open forex position. It decreases the risk by taking both sides of a trade at once. If your broker allows it, a simple way to hedge is just to initiate a long and a short position on the same pair. Advanced traders sometimes use two different pairs to make one hedge, but that can get very complicated.

It is important to understand that much of the risk involved in holding any forex position is market risk; i.e. if the market falls sharply, your losses may escalate dramatically. So if you have an open Forex position with fine projection but you think the currency pair may reverse against you, it is advised to hedge your position.

Forex Position Trading: Forex position trading approach is yet another trouble-free technique to boost your position size without increasing your risk. This trading tactic is very effective with mini lots. The major highlight with this technique is that - with forex position trading your exposure to the market is less and so therefore is no need to monitor the market continuously. Moreover, you may even earn profit with negligible loss that can further boost your trading confidence. For Example- you might make a short trade on EUR/USD at 1.40. If the pair is ultimately trending lower, but happens to retrace up, and you take another short at say 1.42, your average position would be 1.41. Once the EUR/USD drops back below 1.41, you will be back in overall profit.

Today forex trading is all about watching your options when you make a trade. Aside from using effective risk management and extreme vigilance, advanced trading can be an alternate way to make profits and control losses. Nevertheless, these above mentioned advanced trading techniques are more about using the market behavior to your advantage. Utilizing these advanced techniques can give you the edge from other average trader.

Looking for Cup and Handle Chart Patterns before Buying a Stock

One of the biggest factors an investor should consider before buying a stock is what type of chart pattern the stock is forming. A company may have great fundamentals but if it has an unfavorable chart pattern then it may not be a good company to invest in. One of the basic chart patterns to look for before investing in a stock is called a "Cup and Handle" pattern. Typically a "Cup and Handle" looks similar to a coffee cup if you were holding the cup in your right hand.

Generally I look for stocks that take 3 Months or more to form a Cup and then develop a Handle for at least 2 Weeks. Some examples are shown below.

AMHC formed a Cup for 14 Months and then developed a Handle for 8 Weeks (point A). AMHC broke out of the Handle in December of 2001 and then preceded to rise from $8 to $37 a share over the next 12 months for a gain of over 400%.

EASI developed a 2 year Cup and then formed a 10 week Handle (point B) before breaking out in August of 2000. EASI then preceded to rise from $12 to $38 a share over the next 12 months for a gain of over 200%.

FRNT developed a 12 Month Cup and then formed an 8 Week Handle (point C) before breaking out in November of 2000. FRNT then preceded to rise from $12 to $26 a share for a gain of over 100% over the next 5 Months.

Finally TARO developed a Cup for 10 Months and then formed a 6 Week Handle (point D) before breaking out in October of 2001. TARO then rose from $17 to $50 a share for a gain of 190% over the next 6 Months.

By focusing on companies with good fundamentals that are breaking out of a favorable chart pattern such as a "Cup and Handle" will allow you to find winning stocks even in a Bear Market environment. The purpose of our site is to help focus investors on those stocks that have good fundamentals which are forming favorable chart patterns such as the "Cup and Handle".

Dollar Will have to Turn to Risk Aversion as Rate Forecasts Dim

Over the past week, the dollar has maintained its high-level volatility; but the pace of the market still has not translated into direction. This is partially a consequence of thin liquidity through the end of the summer and into the long, holiday weekend; but the same general affliction for the broader speculative market suggests the unusual calm has deeper fundamental roots. Investor sentiment (and thereby capital markets) has steadily appreciated over the past six months through an evolution of early adoption, an influx of sidelined capital and on prospects for an economic recovery. Yet, just as pessimism overshot reality through the end of the financial crisis; so too can optimism exceed reasonable expectations for returns when the masses are eager to reenter the market and recover wealth lost over the past two years. Sentiment makes for an overwhelming theme and it will very likely decide the ultimate break in the dollar and its subsequent trend. However, these fundamental winds will steadily lose their influence with the markets and the greenback in particular. Ultimately, the degradation of this fundamental link may very well be hastened by the economic prospects for the currency itself. Growth and interest rate forecasts could shift the dollar’s position on the risk spectrum. Though, with speculation of early rate cuts constantly checked and actual expansion elusive, it seems the US will maintain its anti-risk qualities.

Dollar extends its recovery above 92.50 against Yen

The Dollar's recovery against Yen from 7-week low at 91.90 has continued during the American session to post fresh intra-day high at 92.65 after rising around 75 pips.

Currently the pair is trading around 92.50/60, on consolidation mode, posting 0.35% daily gains from opening price action.

U.S. Unemployment Claims to Set the Level for the USD Today

The U.S. Unemployment Claims is the primary publication today that is set to determine the level of the USD when it is released at 12:30 GMT. The other main releases that are set to dominate forex trading, especially for currencies such as the Dollar and EUR is the publication of the Services PMI for Britain at 08:30 GMT, the EUR Minimum Bid Rate at 11:45 from the Euro-Zone, and the ISM Non-Manufacturing PMI from the U.S. at 14:00 GMT.

Euro falls further and tests 1.4250

The Euro's rejection against the Greenback from intra-day high at 1.4348 has continued after the better than expected US Aug ISM non-manufacturing index. The EUR/USD has fallen around 50 pips in the last minutes from 1.4300 level to post intra-day lows close to 1.4245.The Euro has pulled back from intra-day high at 1.4348 to break 1.4285 support on the back of Trichet call to patience and prudence, on his Press release after the Bank announced its decision to keep its benchmark interest rate at 1.0%.

U.S. services PMI grows to 48.4 in Aug from 46.4; Dollar ticks up against Euro

U.S. services sector's activity has contracted in August, but at a slower pace than in July, as Non Manufacturing PMI rose to 48.4 from 46.4 in July, approaching the 50 reading, the level between expansion and contraction.

The Dollar inched up against Euro and Pound; EUR/USD retreat from 1.4350 high has extended after U.S. ISM, and the Euro dipped to test intra-day low at 1.4255.

GBP/USD retreat from 1.6415 is holding above 1.6335 (Aug 31 high) so far, while the USD/JPY remains moving between 92.50 to 92.65 after having bounced at 91.95 intra-day low.

EUR/USD: Trading the European Central Bank Interest Rate Decision

The European Central Bank is widely expected to hold the benchmark interest rate at 1.00% in September as central bank President Jean-Claude Trichet anticipates economic activity to improve going into the following year, and long-term expectations for higher borrowing costs may continue to support the rally in the euro as market participants speculate the Governing Council to tighten policy over the next 12 months.

Three Months of Congestion Doesn't Guarantee a Successful USDCHF Range Trade

Event Risk for the US and Switzerland

US – With sentiment starting to stumble, we have seen the dollar turn into one of the immediate benefactors. This connection to risk appetite means that the long awaited breakout for the world’s most liquid currency may come from out of the blue as optimism often rises and falls without the helm of a specific indicator. There are a few notable pieces of event risk on the economic docket over the coming week (like the ISM services sector survey and trade balance); but the real threat to volatility is the Friday’s NFPs. The market-moving influence of this report has not been absolutely consistent recently; but we should not discount its potential impact. With the trend clearly set in a steady improvement, a smaller than expected net loss (or an actual gain) would likely find the best follow through.

Switzerland – The greatest threat of domestically derived volatility was the recent 2Q GDP report. However, the slower than expected pace of contraction would ultimately fail to make a lasting impression on price action. Now, looking ahead, there are only second tier releases on the docket. Both the August CPI figures (due Friday) and next week’s labor data are economically important but consistently overlooked. Speculators will instead keep their sights trained on the health of the Euro Zone – Switzerland’s largest trade partner – to discern the health of the small, independent nation. It will further be important to keep abreast of risk trends. Low liquidity could help catalyze a meaningful shift in sentiment should US NFPs or the G20 meeting alter the outlook for global growth, financial health or interest rates.

Three Months of Congestion Doesn't Guarantee a Successful USDCHF Range Trade

Trading Tip

The difficulty for range traders now is not in finding congestion patterns but in finding congestion patterns that have consistent and definable levels that can support a reasonable setup. USDCHF has established a very consistent channel for the past three months and has recently built up confirmation for relative support. However, this pair has more than its fair share of risks. From a broader market perspective, range conditions are very fragile. The widespread, technical stability seen in every corner of the market suggests there is something amiss. This can be partially attributed to thin liquidity; but more importantly, investors are awaiting the signal for the next substantial trend. In essence, a breakout is inevitable. This is something to keep in mind in taking this trading approach – regardless of the pair. In the meantime, the particulars for USDCHF do little to further confidence. From a fundamental perspective, the franc is losing its status as a safe haven through intervention, protectionist efforts and the diminishing sense of secrecy for the nation’s renowned banking industry. This will provide a clear direction for this pair should sentiment shift. What’s more, the bearish bias in the market is putting pressure on a substantial level of support. Altogether, we will keep the life of open orders short and cancel them before NFPs.