FOREX, CURRENCIES, COMMODITIES
- Cable broke through the 1.5860/90 support region which could be start of something bigger to the downside, especially if we consider that prices slipped below the support line of a trading channel as well. But notice that even if we still count move from the top in a corrective way, such as double zig-zag, we still need one leg lower (wave (C)) after wave (B) bounce, which may occur in the coming session or two. Alternate count also signals for weakness after corrective retrace into 1.5860/90 area which will now tend to react as a resistance either in wave (2) or (B) wave! “Support becomes resistance; Resistance becomes support”. Bottom line: Weakness to come after any pull-back higher, while pair trades below 1.6090!
Video Analysis: Commodities Supportive For Majors
Hello traders!
Stocks are higher, USD reached new lows against the majors during Asian sessions, and it seems that this type of a price action will continue this week, especially after a sharp impulsive break on Eur/Usd yesterday out of its 6-day consolidation range. USD weakness is also seen across the board because of higher commodities. Gold and oil are looking very bullish after reversal from the lows few sessions back.
Article source: http://www.forexmansion.com/premiumrss/forex/video-analysis-commodities-supportive-for-majors/
* Dollar Is Headed Even Lower In Coming Weeks
A sharp fall from 81.80 area seen in the past few weeks is impulsive, which means that we have a temporary top in place, likely of a wave I, which was an expanding diagonal. That is type of a motive wave, where structure allows overlap between waves four and one. With this being said, at least three waves of a pull-back is now underway within wave two, which will ideally reach 50-61.8% retracement area and then reverse from.
Article source: http://www.forexmansion.com/premiumrss/forex/dollar-is-headed-even-lower-in-coming-weeks/
* Short-Term Oulook in EUR/USD
EURUSD: 1.3218
Short-Term Trend: weak downtrend
Outlook:
A week ago I favored longs on a small pullback against the 1.2670 level. Depending on your risk tolerance, you are either long already or have missed to enter long by a small margin. I will consider that we have a hypothetical long position. The daily chart now looks quite positive. The prices are above the rising 21-day MA and that’s bullish. Of coure, the daily trend is objectively still on the downside because the prices are below the 100-day MA. But based on the presented wave structure, an advance twd at least 1.3520/1.3720 is expected.
On the downside, below 1.2870 negates, risks re-test on the Jan low.
Strategy: Holding long from 1.2900 is favored. Stop below1.2870. Target=1.3700
Article source: http://www.forexmansion.com/premiumrss/forex/short-term-oulook-in-eur-usd/
* ECN vs. the Market Makers: Who’s the King of the Hill?
Like our children often argued on whether Terminator beat Robocop or vice versa, one of the most discussable topics through FX trading world is, which is better, the ECN brokers or the market makers. Well, answering that will be possible if you know your ultimate goal. Once you got it, then we need to explore what actually differs from the ECNs and M-Makers. Furthermore, read 5 Forex broker types you need to know about.
The Market Makers’ Quandary
It’s a well-known fact that retail brokers are the party to all Forex transactions.
I got an example for you. Imagine two FX participants, where Bob is selling while Jessie is buying; at this time, an exchange broker gets his cut presenting Bob and Jessie and holding the transaction. At TopFX, for instance, whether Bob is buying or Bob is selling. TopFX is the counterparty to his trade. TopFX has a couple of tricks to apply; they can put that trade into the pool and afterwards cover their position with help of their liquidity provider who is equal to their own position, or they can just hold on to Bob’s position, considering that he is likely to lose a position anyway. No matter which action they take, there’s only a single movement (or at most two), in the ECN type of environment, between Bob and the other party.
The difference in steps is where Bob’s market maker’s problems lie during high volatility. Let’s say there is a central bank somewhere which issues the “powerful” press release to greatly move the market. Bob and his broker had a deal where the last one promised some serious stuff. Not a forever love or “fills guaranteed”, or “fixed spreads” etc. but then comes the CHANGE. So TopFX’s clients are up to the news trading – their strategy works as market conditions are predictable. However, news releases make TopFX nervous as their business model is insufficient enough and brings losses. The reason why they are losing lies in those couples of steps between Bob and the bigger market.
You see, TopFX is selling the relative currency to Bob and other thousands of their clients at the time when no one else does it. Therefore, no one is willing to sell to Bob, and no one is going to sell to TopFX as well, so TopFX is unable to cover their trades. The only solution they have is to play against the client: widen the spread, or “create” some slippage, or simply close down before any news reports are released.
The ECN Way
A human nature has remained the same for ages – our expectations are based on what we think we know. Don’t believe the FX ads which tell you about low-and-lower spread as 1 pip or absolute inter-bank access whatever. If you take all of these tales seriously the “real” market will hit you hard.
Just to say, we expected ECNs brokers to be a lot like “old-fashion” ones, but with no being ripped off by their dealing desk, and having the benefit of tighter spreads. Be realistic. Still, you will be experiencing a sort of slippage when trading your ECN account. So, you get what you wanted to.
Huge exclamation mark! ECN environment is no grocery shopping in a super-market where every can of beans has it sticker price. FX traders have been swayed by the simplicity of retail brokers, and they don’t actually care for how the market really works to increase their own profit margins.
In the real FX market like the Inter-bank network, a market order is a market order. Traders ask for a currency at a market price is simple enough to understand. What’s complicated to comprehend is the swiftness in the market movements? In the very second between your brain’s strike to buy/sell a currency at a specific price, and the pressing of your finger on the keyboard to put that market order in, the price changed. Your market order for a USD at 0.9626 hits the “real” market, when a seller of that USD is sitting at 0.9826 or even higher.
The ECN-style market reality is that sometimes there just may not be anyone buying at the current price you’re selling, and vice versa. This may be difficult to accept for some traders, who will think they are cheated when they thought better the ECN guys would be better.
It’s doubtless that after only a couple of days on your ECN-style platform. You’ll get your first understanding of how things work after any of economic reports has been released. You’ll be gladdened to see that you’re not receiving those weird fixed spreads – pips of 20, 30 and even up to 50 – like you’d get from your old TopFX platform. However, what will eventually throw you for a loop is the frenzied spreads you will see – widening, narrowing, even inverting at some point? Scary stuff; especially in the few seconds before a press release comes out. You can bet that banks are pulling their orders, and last second speculators are standing at the ready. It’s a dangerous world. At the same time, it’s closest to how the inter-bank network really works. A kind of like an aerialist working without a net beyond. You won’t find any guaranteed stop losses on the ECN platform. You’ll only find real buyers and sellers and transactions of whatever the market can and will bear.
What about commissions? Well, your ECN broker works for a profit, doesn’t he/she/them? So, they will charge you a commission or fee for every transaction. That’s pretty obvious, unlike TopFX, who hides the broker profits between the price of the liquidity provider and your price. And while commissions and fees will differ among them, generally most of the ECN brokers charge 1 or 2 pips for each round turn, of course dependent on the currency paired. Your ECN broker has to show a spread of a pip or two (or less) as compared to the old market maker broker you used to use. However, are the net spreads from your new ECN broker better than TopFX’s? The answer is Yes and No.
So, who is the King of the Hill? ECN or Market Makers?
Hopefully, you know now how each type of broker is structured, and what are their specific advantages and disadvantages. Active FX traders may likely be more pleased with an ECN styled broker; a novice trader might better take the simplicity of a well-experienced market maker broker that has the requisite safety features.
Who is better? It’s really a matter of personal choice and needs.
Article was written by Alexander Collins, who is a creator of Forex robots and blogger. Also find out Forex trading tools for better Forex trading on Alexander’s blog.
Article source: http://www.forexmansion.com/premiumrss/forex/ecn-vs-the-market-makers-who-s-the-king-of-the-hill/
* 3 Golden Rules for Damage Control in Forex Trading
In times when even a lazy expert has already told his word about the recession, Forex market seems to remain immensely huge as a rock to be out of recession reach. Therefore, profiting in hard times, as well as during economic stability, is more than possible with Forex.
However new traders are easily swayed by a massive spam-like avalanche of information, which comes from multiple sources (i.e. outdoor and internet ads) and promises you riches overnight. In this respect, smart traders before starting to trade gather “tons” of information first: read an endless number of FX articles coming through the web, go to forums where traders discuss trading platforms, etc.
As they say, “Trouble is the Beginning of Disaster.” However, you can avoid it by following the simple three golden rules. I don’t mean that knowing them brings you an expert’s tie. Following the “golden rules” will give you a head start and help to avoid the troubles of disaster.
Article source: http://www.forexmansion.com/premiumrss/forex/3-golden-rules-for-damage-control-in-forex-trading/
* Get Ready For Stock Market Collapse In 2012
A fall from 2007 down to 2009 March lows unfolded clearly in impulsive structure, which we know is indication of a trend. As such, we are very confident that larger trend has now turned down, especially after only 3-waves of recovery into 1370 region; exactly for 78.6% retracement of previous impulsive fall! In fact, even a fall from this year high unfolded impulsively labeled as wave (1) followed by wave (2) corrective pull-back, which will look for a top around 1300 area.
Notice that we are also monitoring a huge head and shoulders pattern, which is about to complete very soon! Right shoulder is wave (2) on the chart, which is in final stages!
However, only price can confirm our bias, so we still need to see 1150 break, before wave (3) accelerates to the downside!
Article source: http://www.forexmansion.com/premiumrss/forex/get-ready-for-stock-market-collapse-in-2012/
* Video: EUR/USD vs. EUR/JPY Forecast Example (Elliott Wave)
this past week. In this video you will find out “how and when”, “we or you can” become more confident into your analysis and forecasting in currency markets, which potentially can improve your success in trading.
We think, that intra-market analysis and correlations, key market levels and patience are three very if not the most important facts. Check out video below for more details.If you would like to join and try our analysis absolutely three then register now and get immediate access to our members around for 72hours ABSOLUETELY FREE (no credit card needed, just your name and email!
Article source: http://www.forexmansion.com/premiumrss/forex/video-eur-usd-vs-eur-jpy-forecast-example-elliott-wave/
* 16/1/2012 – The Current Market Sentiment
The pressure on the single currency continued in the beginning of this week versus the greenback as the fear of downgrading the credit rating of the EU countries has materialized by the end of last week by cutting the credit rating of 9 of the Euro area remembers by SP giving all of the EU countries a negative outlook but Germany and Slovenia which has been cut by one notch like Slovakia, Malta, Austria and France which was having a triple A rating like Germany, Finland, Netherlander and Luxemburg who had been maintained with no change while Italy, Spain, Portugal and Cyrus have been cut by 2 notches as the credit rating downgrading risk was one of the elements which were weighing down on the single currency recently especially after SP’s warning on the 5th of last month by placing the credit ratings of 15 euro zone countries on negative credit watch.
The reactions of the EU Members were mixed. While Germany has decided to get use of this chance to praise the need of financial structure reforms placing the stricter budget rules soon which have been granted in the recent EU summit on the 9th of last month highlighting the need of activating the EU stability mechanism soon too.
but France has lowered the risk of this action which was expected while some other members like Austria has seen that its is not an understood or right action while the EU members are doing the best for solving the EU debt crisis which caused this downgrading by SP which have seen these efforts are not enough as it has announced after the action.
The EU Economic and Monetary Affairs Commissioner Ryan has mentioned that this is an action from an agency has made mistakes before and this decision has been made with no right evaluation of the current efforts to stem off the budget deficit of the EU members.
But The EU Commissioner Janker has reacted to this action in an active way to the markets suggesting that this action can encourage the EU countries to increase the amount of the EFSF from its current amount at 500B euros which is worrying the markets as it is not sufficient to bail out countries like Italy which is in need to refund 341b Euros this year paying 54b as interest.
In this same time, the greenback is still getting strength by the improvement of the US economic which has been highlighted again by the end of last week by another better than expected release of Jan UN. Michigan consuming sentiment preliminary reading which has shown rising to 74 while the markets were waiting for just 71.5 after rising to 69.9 from 64.1 in November increasing the speculations of having no QE3 soon supporting the greenback which is taking advantage currently from another side by the falling of the risk apatite again on the increasing worries about the financial market after these downgrades.
God willing, the single currency can face now a new supporting at 1.2586 which has been the formed bottom on 24th of August 2010 and this can be followed by 1.2151 which is the last low before 1.1876 whereas the pair has rebound forming its bottom on 7th of June 2010 to 1.4939 whereas the pair has managed to ease back again on 4th of May 2011.
While the pair can face a resistance now at 1.2877 which could cap its gains after rebounding from 1.266 on series of successful EU bonds auctions last week specially the Spanish ones driving their yields down which were supported the ECB’s recent efforts for lowering the cost of borrowing and providing cheap money in the forms of 3 years loans for the financial markets which praised these actions positive effects specially over the short term as they give time for the financial market lowering the pressure on it and on the single currency in the same time which has become exposed to the risk of failure recently while the EU economy is in need for the low cost money which can spur the investments in the same time and God’s will, breaking 1.2877 can be met with another resisting level 1.2954 before the psychological level at 1.30 which can open the way for more resisting levels to come at 1.3098, 1.3283 and 1.3432 before 1.4385 again which contained the pair recent gains forming another lower high to put technical pressure on it.
Article source: http://www.forexmansion.com/premiumrss/forex/16-1-2012-the-current-market-sentiment/
* EUR Continues Its Downtrend Against USD
EURUSD: 1.3042
Short-Term Trend: downtrend
Outlook:
A few weeks ago I favored a short position in the 1.34/1.35 area. Since then EUR has been under heavy pressure and has already declined below 1.3000 level. As the daily chart remains quite negative with prices below the declining 21-day moving average, I expect to see fruther weakness twd 1.2870 and possibly to 1.2670 before this leg lower is over and a strong counter-trend move up develops. Having said that, holding short remains my favored strategy here.
On the upside, a firm and sustained trading abv 1.3200 will suggest a temp. low has been found already….
Strategy: Holding short remains favored with a stop abv 1.3250
Article source: http://www.forexmansion.com/premiumrss/forex/eur-continues-its-downtrend-against-usd/
* 15/12/2011 – The Current Market Sentiment
The single currency could find the power to get over 1.30 versus the greenback because of the flash release of Dec EU manufacturing PMI index which has come at 46.9 while it has been expected to be 46.2 from 46.4 in November and also the flash reading of Dec EU Services PMI index which rose up to 48.3 from 47.5 in November while it was expected to decline further in the shrinking territory below 50 to 47.1 but the single currency has eased back below 1.30 as it is still finding difficulty to have a place above it after breaking it yesterday as the uncertainty is still remaining about the crisis outlook as the market participants have not found out what can make them sure about that the worst of the debt crisis is over while the signs of the recession are still emerging in the Euro area
Article source: http://www.forexmansion.com/premiumrss/forex/15-12-2011-the-current-market-sentiment/
*Potential Trade Set-ups For The Week Ahead (Dec 12)
Despite some action on the FX market in the past week, provided by the ECB rate decision and EU summitmost of the major pairs remained trapped in a range, sideways market. As such, we decided to take look on some FX crosses, such as Eur/Chf and Eur/Aud for potential trade set-ups.
We will pay a very close action to Eur/Chf, which is forming a very nice clean triangle pattern from where we expect a bullish breakout in the coming week. We know that SNB will do everything possible to prevent any gains of the Swiss franc, and if we aso consider the euro zone’s latest plan to solve its debt crisis, then this should be supportive for the Eur/Chf! Click on the video below for a technical analysis, which also includes Eur/Usd and SP500.
Article source: http://www.forexmansion.com/premiumrss/forex/potential-trade-set-ups-for-the-week-ahead-dec-12/
* 9/12/2011 – The Current Market Sentiment
The Single currency is still under pressure versus the greenback after the ECB’s interest rate decision of cutting the interest rate by 0.25% to be at its previous all times low at 1% again as it was before April meeting.
The ECB kept its role as funds provider again with no announcement about new buying bonds plans directly which have been aimed by the markets which have seen offering new 3 years loans or lowering the EU reserve banking rate of deposits at its central banks by 50% to be 1% of its assets instead of 2% from the beginning of next year or even cutting the interest rate meanwhile are not enough and can not replace buying bonds directly by the ECB to restore confidence in the EU bonds markets to fall the risk appetite strongly during the ECB’s president press conference which focused on the ECB’s offering of cheaper money with no reference to direct interventions injecting funds in the EU bonds markets adding that the ECB is forbidden from monetary financing on the current treaty to the governments referring to that the ECB should stick to the treaty spirit and the governments should do too.
Draghi has shown his surprising too by the understanding of his words of “other elements” to be done by the ECB in the face of the crisis, in the case of reaching stronger financial unity amongst the EU countries as a hint of buying more bonds on reaching this has been really done last week when he was addressing in front of the EU parliament while the speculation have increased toward these direction from the germane and French side giving the markets high level of cheeriness by the EU summit.
And now, it’s the word of the political and financial authorities after the monetary authority has turned the word to it to reach a new accepted modification of the current agreements between the EU suffering from high levels of debt like Greece and the countries which are funding this debt like Germany.
And in the case of germane bowing to their demands, there can be a bigger financial role of the ECB and the IMF which has announced earlier this week that it’s in need for more resources to do as long as Germany is still refusing the idea of united bonds issuance.
But in the case of germane refusal there can be imposed sanctions in a new financial treaty on the EU countries which allows its debt to get over 60% of its GDP or its budget deficit to be more than 3% of it.
But between this and that there can be a reached deal for lowering the bonds yields at least over the short term as a joint demand from the countries in debt and the offering countries which have been negatively impacted recently by the crisis and well- exposed to credit rate lowering as SP credit rating agency has warned earlier by the EU summit this week.
It is also expected from the summit to identify a greater active role of the IMF intervention even it is to be a last defending line behind the FESF as it has been obvious in the EU Fin ministers’ meetings last week which could not find recourses to grantee the 1 trillion which has been announced as a new size of it in the recent summit on 27th of October. So, it’s important issue to be discussed too in the summit specially as the lack of details about its funding resource has dampen the market sentiment after that previous summit.
The Single currency has fallen during Draghi’s press conference well below its previous supporting level at 1.3332 after failing to continue rising above 1.3458 on the ECB assurance that there is no monetary financing in the EU treaty and God willing, in the case of falling further, there can be consecutive supporting levels at 1.3258, 1.3211 whereas the pair has formed its bottom after falling from 1.4245 which has been reached after the EU summit agreement in Brussels on 27th of last October and breaking it can open the door again for 1.3144 which could contain on 4th of last October the pair falling from 1.4939 andbreaking it can open the way for 1.3 psychological level which can be followed by 1.2873 whereas the pair has recorded this year low on the 10th of last January.
While its way up can be met by resisting level now at 1.3458 which capped the pair gains yesterday and this can be followed with another resistance at 1.3546 which has been reached after the Fed’s coordinated action to lower the USD cost of borrowing with other five Central banks and the ECB was one of them and breaking 1.3546 can be followed directly by 1.3567 which stands before 1.3613 and breaking it can open the door again to 1.3808 then 1.387 which pressed down the pair capping its rising many times last moth putting technical pressure on the pair and breaking it can lead to test higher resisting levels at 1.3959 before the psychological level at 1.4.
Article source: http://www.forexmansion.com/premiumrss/forex/9-12-2011-the-current-market-sentiment/
* Washington announced the allocation of six billion dollars to spend in Iraq in the year 2012
11/27/2011 | (Voice of Iraq) – Add comments – Sumerian News / Baghdad announced that the U.S. Embassy in Baghdad, Sunday, that the United States will spend six billion dollars in Iraq over the next year 2012, stressing that the amounts allocated to programs that include refugees and security issues.
* Nice Example On Gbp/Usd “How Support Becomes Resistance”
Pound is one of the weakest today, down almost 300 pips from Friday highs, currently trades around 1.5600. We anticipated that move, on some basics of technical analysis “how broken support becomes resistance”.
Here is the chart and comments that we shared with our subscribers on Thursday, Nov 17th 2011 past week
And here is now the updated chart:
Article source: http://www.forexmansion.com/premiumrss/forex/nice-example-on-gbp-usd-how-support-becomes-resistance/
* EURUSD: Collapses, Outlook Lower Towards The 1.3482 Level
EURUSD: The pair has reversed its Friday gains and now eyes a return to the 1.3482 level, its Nov 10’2011 low. Below here will annul its two-day recovery and resume its short term weakness towards its Oct 10’2011 low at 1.3377. Further down, the 1.3144 level, its Oct’2011 low comes in as the next target where a break will aim at its bigger support standing at the 1.3000 level, its psycho level. Its daily RSI is bearish and pointing lower suggesting further weakness. Alternatively, the pair will have to break and hold above the 1.4241 level, its Oct 27’2011 high to end its present bear threats and bring further gains towards the 1.4342 level, its daily falling trendline. Further out, resistance resides at the 1.4550 level, representing its Aug 29’2011 high. All in all, with EUR bearish and holding below the 1.3604 level, bear pressure continues to dominate with risk towards the 1.3482 level.
Article source: http://www.forexmansion.com/premiumrss/forex/eurusd-collapses-outlook-lower-towards-the-1-3482-level/
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