Two days into the week and we still find ourselves little change between the dollar and Cable and Euro. Thus far we have seen data to support the weak dollar scenario yet daily resistances for both pairs have pretty much kept them from making any headway with mere knee-jerk reactions giving us daily highs only to close right around the open. Meanwhile brewing trouble elsewhere has actually seen the dollar in a limited rally against its neighbor to the north and with the currency from down-under.  

Latest releases from Canada have underscored the difficulties posed by a strong currency, while demand for its commodity exports remains strong the higher currency actually means that on a local currency basis we have seen exports dropping accounting for much of the GDP surprise Monday. This in turn has also seen the Bank of Canada going for a more aggressive 50bps easing yesterday, rather note worthy given that decisions by the Governing Council is not a mere vote but consensus that all six members have to agree on. In practical terms this more aggressive policy will now have me searching for possible shorts in the Loonie.   

For USDCAD this means our daily close above the 0.9895 (38.2 Fib of the drop from 2/20 highs) should be seen as a signal to seek out higher ground. Immediate objective right now would be a return to parity and from there 1.0090.  It has to be noted though that the coming days will sorely test this scenario given the US own vulnerability (if not more so) to poor economic numbers. What is important for core positions at this juncture is that we do not see prices dipping back below the 38.2 Fib levels at 0.9895.   

Our other mover Tuesday was the Aussy seeing numbers of its own with another rate hike to 7.25% and a none textbook reaction of a drop. As previously stated the move was largely expected and in the context of a surprisingly flat Retail Sales for January only underscored a growing belief that this could be the last. With the subsequent fall in the Aussy breaking our trendline from Jan-22 lows in AUDUSD we are now in search of a confirmation for this break an immediate objective being a close below 0.9263. Consistent with trend break outs we look to establishing new shorts at the pull back towards the trend line with generous stops above it on the odd reentry.  

Looking ahead we have another one of those days when Eurozone, UK, and US releases are on the same page, “what’s happening in services?”, though I have serious doubts that we are going to get markets reacting much to this.   

The more interesting results to me will be the ADP hiring figures where median forecasts call for a sharp drop to 17.5. Originally seen to provide a gauge on the official NFP figures from government note that ADP is now also seen as a high impact indicator by itself though its ability to consistently predict the official payroll results is far from desirable. For now I leave you with a number +/- 55,565 (from the median) the allowance I am going to use as a trigger whether to expect the initial volatility that accompanies the release to be sustainable or not.

Dollar falls against all major after disappointing data.

US Consumer Confidence printed 75.0 against the forecast of a fall to 82.0, Which Triggered a rally In All the Majors.

With EUR/USD finally hits the elusive 1.5000 level, and AUD/USD back above 0.9300.
PPI m/m printed 1.0% above expectations of 0.4%, And Core PPI printed 0.4% above expectations of 0.2%.

A drop in Consumer Confidence, which indicates a Slow Growth in the Economy, together with Above expectations PPI which means a Higher Inflation sign, only complicates matter for FOMC in terms of their Interest Rate Decision Making.

Forget Recession, US Economy is entering a Stagflation Economy. It will be interesting to see what move FOMC will take. Will they ease The interest rate again to boost growth, like what most People are assuming right now. Or hold rates as it is to deter any possible rise in inflation? (more…)

Carry Trade Back in Play?
With JPY weakening since the past 2 weeks, Fear of US Recession does not seem to dampened the appetite for Carry Trade.
With AUD/JPY Leading the race.Our Favorite Comm dollar has been on a rampage the past month, This is mainly attributed to the High risk of Inflation The Australian Economy is facing. (more…)

Well, From the Previous Market outlook, everything seems to go as predicted in that outlook.

No Major News Coming out on the 8th of January 2008.

Market went Out “GUNS BLAZING” yesterday after the interest rates statements from ECB and BOE, US Data came out lower but still better than previous month’s drop. All This Weighing down on Cable and EUR/USD.

The Previous Charts i posted is still Valid for Friday, so a move to the downside for Both Cable and Euro is still probable. I’m Leaving that aside for now, and I’m Going to have a look at AUD/USD today. (more…)

This is a video summary of the Live Forex Trading Room session on November 19, 2007.

Today’s Summary, by Sunil Mangwani:

This was the first day of the week, and as the market opens, we generally try to look for gaps. Weekend opening gaps are quite effective, and there is a method to trade it. It usually succeeds quite well.

AUD/USD opened with a gap. The general theory is that when price opens with a gap, the market will come back to fill the gap most of the time. If the gap opens to the upside, we tend to target short trades. Subsequent to price filling the gap, it gives further clues on the expected further movement.

The gap begins to act as a sort of channel. As we can see on the AUD/USD intraday, price closed the gap, went beyond it, and came back to retest it, which gave us the indication that price would remain short for some time. (more…)

This is a video summary of the Live Forex Trading Room session on October 26, 2007.

Today’s Summary, by Sunil Mangwani:

Lets go over the long term things first which we’ve been following. On the GBP/USD, we were looking for a breakout on the daily timeframe from a Bullish Flag Formation. Price has been moving with lots of upwards momentum, and so far has remained above the mid channel of the flag. We were expecting a breakout this week, but it has not yet taken place. We have a penetration, but not a close.

On the intraday timeframes we did have an indication that today we might not get the close that we are looking for, because we had a Bullish 1-2-3 Formation. As I always say, “give me a 1-2-3 formation, and I can give you the targets”. We plotted Fibonacci Expansions to determine our targets, and price was rejected at the 127 level, so we do expect some retracement. Today is just not the day for the breakout. Lets see how it goes. Monday we do expect strong upmoves on the GBP/USD. (more…)

This is a video summary of the Live Forex Trading Room session on October 24, 2007.

Today’s Summary, by Sunil Mangwani:

As I always say, its the procedures and technique that are more important than the result of a trade. I know we are all here to trade and win, but ultimately its the procedure that counts more - how you go into the trade, how you analyze it, how you plan your exit. We’ll go over a few setups from today and the techniques which we used to analyze them.

Lets start off with one of the setups we managed to catch in time that is going so far in our favor.
On the GBP/CHF we were looking at a Regular Bearish Divergence, with price making higher highs, and stochastics lower highs. Based on our procedure we calculate our targets using Fibonacci projections on the last move down. So far its on a pause, but expect further moves down. (more…)

This is a video summary of the Live Forex Trading Room session on October 23, 2007.

Today’s Summary, by Sunil Mangwani:

No trades today, just observing the markets after the large moves of Monday’s open, and waiting for the currencies to recover and gain some technicals to let us enter into new trades.

Looking at the GBP/USD, the pair recovered - and the recovery was quite amazing, to say the least. After the large drop on Monday, it recovered almost the entire move, and while we were expecting a recovery, we did not expect quite so much of it. (more…)

This is a video summary of the Live Forex Trading Room session on October 22, 2007.

Today’s Summary, by Sunil Mangwani:

Today the markets opened the new week with gaps, and we concentrated today’s trading activites on trading the gap. There is a specific way we trade the gap, which works a lot of the time and gives us the direction of the trend, subsequent to the day.

On the NZD/USD, we had a Short trade which we were able to predict due to the gap strategy, going in right after the price broke out of the gap channel, for a good trade.

The AUD/USD had a similar situation, giving a good entry for a Short trade, though not taken. (more…)

This is a video summary of the Live Forex Trading Room session on October 15, 2007.

Today’s Summary, by Sunil Mangwani:

Today we had surprizingly large moves for a Monday. Mondays are typically quite slow, but today the market seems to have given us some good technical patterns which contributed to a trade.

Lets go over the AUD/USD first, on the 30 min charts. The pair opened with a gap, and we expect the price to come back to fill the gap. More importantly though, when the price bounced off the lower level of the gap, it went up to form a Bearish Divergence. We were waiting for this Bearish Divergence to be confirmed by the stochastics. We used fib projections on the upmove to get our 127% and 161.8% targets, which the price surpassed.

(more…)