Please Visit My Daily Market Commentary at:
http://www.financebanter.com/category/forex
Thanks,
Brian
Wednesday, February 22, 2012
Tuesday, February 21, 2012
Next Up in SPY: 1370
Good Morning,
Let's get fundamentals out of the way. Greece is in the news daily and regardless of the outcome, the big question is are we priced in or not? Meaning, no one has a clue as to what the markets will do post announcement. I will talk about this "conviction/lack of conviction" in the technical session. Additionally on the fundamental side, the US data continues to improve. This week, we have a very light week of data and if recent data is any forecaster, when the data calendar is light, the markets move to the upside.
Technically, we obviously have a conviction and that conviction is to buy equities. 1370 is the technical level that if breached, will finally signal new highs that are clearly above last summer's highs. Again, as my webinars suggest, this "new economy" makes it hard to put to much emphasis on technical data that is "stale".
What I am looking to use to trade is recent data and solid technical patterns. There aren't any recent technical patterns in the broad markets, just the very strong updtrend and if you fight the trend, well, you know the consequences.
So using recent data and understanding the low voalitity, range bound day in forex led me to a nice day trading opportunity. No guarantees though that a rangebound day stays rangebound, so I used a pre-determined stop for a loss and target based on the charts and my trading timframe and overall risk appetite.
Check out the past few days of resistance in the EUR/USD and my thinking was, if the equity markets are rallying, the EUR should rally against the USD. As the equity markets approach 13,000, they may pause and if they pause long enough, the EUR may run out of steam at the old resistance level:
Past performance is not indicative of future results
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Let's get fundamentals out of the way. Greece is in the news daily and regardless of the outcome, the big question is are we priced in or not? Meaning, no one has a clue as to what the markets will do post announcement. I will talk about this "conviction/lack of conviction" in the technical session. Additionally on the fundamental side, the US data continues to improve. This week, we have a very light week of data and if recent data is any forecaster, when the data calendar is light, the markets move to the upside.
Technically, we obviously have a conviction and that conviction is to buy equities. 1370 is the technical level that if breached, will finally signal new highs that are clearly above last summer's highs. Again, as my webinars suggest, this "new economy" makes it hard to put to much emphasis on technical data that is "stale".
What I am looking to use to trade is recent data and solid technical patterns. There aren't any recent technical patterns in the broad markets, just the very strong updtrend and if you fight the trend, well, you know the consequences.
So using recent data and understanding the low voalitity, range bound day in forex led me to a nice day trading opportunity. No guarantees though that a rangebound day stays rangebound, so I used a pre-determined stop for a loss and target based on the charts and my trading timframe and overall risk appetite.
Check out the past few days of resistance in the EUR/USD and my thinking was, if the equity markets are rallying, the EUR should rally against the USD. As the equity markets approach 13,000, they may pause and if they pause long enough, the EUR may run out of steam at the old resistance level:
Past performance is not indicative of future results
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Thursday, February 16, 2012
1350 Still Resistance!
Good Morning,
One more day until expiration and I will be watching things closely as the 1350 seems to be a key level going into the final day. Europe is down due to Greece fears - anyone getting tired of the "it's all about Greece syndrome"? The US is up on better than expected data coming from the jobs and manufacturing sectors. Bernanke was on the docket, but his speech was a dud.
Technically, a leader in the "old" economy would be Financials. Looking at XLF, we had our MACD bearish divergence - see the webinar link below for more information on MACD's and bearish divergences. THE leader, AAPL had a big reversal day and overall, the SPY had a very bearish candle yesterday - let's watch the close today. A close below yesterday could signal some a bearish entry based on the bearish divergence in its MACD. As always, stops and trading plans are necessary to enter any trade comfortably. It should be an interesting trade up here at these "lofty" levels.
With Greece being in the news, the EUR/USD dropped pretty significantly over the past few days, but with the inter-market relationships hanging in there, the EUR found some support and had a swing/intermediate trade to the upside. It was a tough call down there. Obviously the risk reward down there was not a good place to be a seller as it already came down 350 pips. But buying it as I mentioned, was a tough call due to the fundamentals at work. This is the point of understanding value using Fibonacci retracements. You are able to understand the longer trend, the amount the trend retraced and then decide where your stop and target goes depending on the volatility, your trading timeframe and the range of the markets:
I will be looking to see what the SPY does at the close today. If we close at or near the highs of the day, we may run a bit tomorrow into the weekend - the famous, no reason for it, Friday rally.
MACD Bearish Divergence Webinar: https://www1.gotomeeting.com/register/542544601
Most recent webinar on Moving Averages: http://www.youtube.com/user/InterbankFXvideos?ob=0#p/c/928F4D24203A3621/0/4bJsyd8VIHo
Happy Trading and Be Environmentally Cool
Coach Brian
Tuesday, February 14, 2012
Forex Leads Equities!
Good Morning,
Our fundamental views continue to hinge on Europe. As austerity measures continue to push forward, is the success of government intervention priced into the markets? On the "regular" data side, we had retail sales today - bit softer, but nothing out of the ordinary given our recent batch of good news over the past 6 months. If gas prices continue to climb, do we see a stall in retail sales. Maybe, but it won't be because of oil prices. We as Americans have had much higher gas prices and are totally willing to pay for them. How do I know this? Well, Ford dropped its Hybrid Escape SUV for 2013 and more importantly, why are all electric cars so ugly? Is it a deal between big oil and carmakers to make totally unattractive electric cars? Oh yeah, we still have Bernanke, claims and yaaaawwwn, inflation data.
Technically, check out the EUR/USD as it broke hard yesterday, even when the equity markets finished near their highs of the day. Then, today, we have the USD continuing its upmove while US equities open lower. Did the strength in the USD yesterday afternoon lead equities to open lower today? Overall, 1350 is still resistance in SPX:
Past performance is not indicative of future results
Technically, does XLF lead the markets? The financial sector used to. Check out the MACD as it is showing a bearish divergence. If you listened to last night's webinar, you heard me talk about trends and a great technical indicator for trends: moving averages. In the next webinar, see how we adapt moving averages into the MACD (Moving Average Convergence Divergence) to show "bearish divergences" and see if the trend is losing steam. Is the trend on XLF finally losing steam? The MACD says yes:
Past performance is not indicative of future results
Thursday Metastock Webinar: http://www.equis.com/events/webinars/?t=SEMWEB-TIBM&p=37637
Feb 29 MACD Webinar: https://www1.gotomeeting.com/register/542544601
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Our fundamental views continue to hinge on Europe. As austerity measures continue to push forward, is the success of government intervention priced into the markets? On the "regular" data side, we had retail sales today - bit softer, but nothing out of the ordinary given our recent batch of good news over the past 6 months. If gas prices continue to climb, do we see a stall in retail sales. Maybe, but it won't be because of oil prices. We as Americans have had much higher gas prices and are totally willing to pay for them. How do I know this? Well, Ford dropped its Hybrid Escape SUV for 2013 and more importantly, why are all electric cars so ugly? Is it a deal between big oil and carmakers to make totally unattractive electric cars? Oh yeah, we still have Bernanke, claims and yaaaawwwn, inflation data.
Technically, check out the EUR/USD as it broke hard yesterday, even when the equity markets finished near their highs of the day. Then, today, we have the USD continuing its upmove while US equities open lower. Did the strength in the USD yesterday afternoon lead equities to open lower today? Overall, 1350 is still resistance in SPX:
Past performance is not indicative of future results
Technically, does XLF lead the markets? The financial sector used to. Check out the MACD as it is showing a bearish divergence. If you listened to last night's webinar, you heard me talk about trends and a great technical indicator for trends: moving averages. In the next webinar, see how we adapt moving averages into the MACD (Moving Average Convergence Divergence) to show "bearish divergences" and see if the trend is losing steam. Is the trend on XLF finally losing steam? The MACD says yes:
Past performance is not indicative of future results
Thursday Metastock Webinar: http://www.equis.com/events/webinars/?t=SEMWEB-TIBM&p=37637
Feb 29 MACD Webinar: https://www1.gotomeeting.com/register/542544601
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Friday, February 10, 2012
Trend Is Your Friend, Until...
Good Morning,
Today's trading activity could be far from over as we have Bernanke on the docket in about 1 hour. Could we also see the "famous Friday rally" where equity prices take back there losses and then some? I hope not as the 1350 equity level will hopefully provide some resistance for a few more trading day.
I still feel like the longer we stay up on our highs and the longer the buying comes in at the lows of the day to take us higher, we are setting up for a 500 point day to the upside where finally all shorts are squeezed (if there are any left).
Finishing off the fundamental picture, as mentioned, we have Bernanke today. Next week we have the regular international event/speaker onslaught, but in addition, we have:
**retail sales
**weekly initial jobless claims (trending down and backing up the upmove in equities)
**bernanke (again)
**philly fed
**inflation data (doesn't matter due to the Fed telling us that there isn't any worry of inflation, hence it is ok to maintain record low interest rates). Tell the Fed to buy food, diapers, health benefits, prescription meds, etc...
One important piece of information to remember is the Fed mentioned that the pace of growth will slow and will be well below their expectations - again, that is why interest rates are being held to very, very low rates. So watch the economic calendar to see if the recent growth starts to lag.
Technically, as mentioned, I am watching the 1350 level in SPX and hoping we hang below it for another 3 to 5 trading days. Technically, if you read yesterday's post, it talked about trends and the length of the uptrend and eventually the trend stopping. I am not saying the trend is stopping just because equities went down today, but, the higher it goes, the less your risk to reward ratio lines up. Bottom line: manage each and every trade with stops and have a trading plan that helped you arrive at the appropriate number of shares or contracts traded for your trading style, for your trading timeframe and for your account size.
To the charts: BP and its approach to resistance. Would it be far fetched to write covered calls, take buy puts or lighten up your position at these levels?
Past performance is not indicative of future results
Overall, you have to remember, backing off a few percentage points doesn't mean anything as far as a trend is concerned. We have gone up 100% in the stock market in less than 3 years. We are still in an uptrend!!
In forex, the USD is still in a downtrend. Just because the USD strengthened today (see inter-market relationships between USD and equity prices), doesn't mean the downtrend in the USD is over. Is it a retracement? Is it a sideways consolidation?
Happy Trading and Be Environmentally Cool
Link to Monday's Webinar on Moving Average Crossover's
Coach Brian
Today's trading activity could be far from over as we have Bernanke on the docket in about 1 hour. Could we also see the "famous Friday rally" where equity prices take back there losses and then some? I hope not as the 1350 equity level will hopefully provide some resistance for a few more trading day.
I still feel like the longer we stay up on our highs and the longer the buying comes in at the lows of the day to take us higher, we are setting up for a 500 point day to the upside where finally all shorts are squeezed (if there are any left).
Finishing off the fundamental picture, as mentioned, we have Bernanke today. Next week we have the regular international event/speaker onslaught, but in addition, we have:
**retail sales
**weekly initial jobless claims (trending down and backing up the upmove in equities)
**bernanke (again)
**philly fed
**inflation data (doesn't matter due to the Fed telling us that there isn't any worry of inflation, hence it is ok to maintain record low interest rates). Tell the Fed to buy food, diapers, health benefits, prescription meds, etc...
One important piece of information to remember is the Fed mentioned that the pace of growth will slow and will be well below their expectations - again, that is why interest rates are being held to very, very low rates. So watch the economic calendar to see if the recent growth starts to lag.
Technically, as mentioned, I am watching the 1350 level in SPX and hoping we hang below it for another 3 to 5 trading days. Technically, if you read yesterday's post, it talked about trends and the length of the uptrend and eventually the trend stopping. I am not saying the trend is stopping just because equities went down today, but, the higher it goes, the less your risk to reward ratio lines up. Bottom line: manage each and every trade with stops and have a trading plan that helped you arrive at the appropriate number of shares or contracts traded for your trading style, for your trading timeframe and for your account size.
To the charts: BP and its approach to resistance. Would it be far fetched to write covered calls, take buy puts or lighten up your position at these levels?
Past performance is not indicative of future results
Overall, you have to remember, backing off a few percentage points doesn't mean anything as far as a trend is concerned. We have gone up 100% in the stock market in less than 3 years. We are still in an uptrend!!
In forex, the USD is still in a downtrend. Just because the USD strengthened today (see inter-market relationships between USD and equity prices), doesn't mean the downtrend in the USD is over. Is it a retracement? Is it a sideways consolidation?
Happy Trading and Be Environmentally Cool
Link to Monday's Webinar on Moving Average Crossover's
Coach Brian
Thursday, February 9, 2012
The Trend Is Your Friend
Good Morning,
I am guessing we will see a shift at some point in the fundamentals and/or technicals that will tell us this bull run is over. By my count, in 2 months, we went from 1200 in SPX to 1352. The math comes out to 13%. As of the first of the year, the SPX is up 7.4 percent.
If you are an intra-day trader, you know that the ranges are tightening up as equities rally and volatility declines. You also know that there is a lot of buying pressure and the fact that sellers are non-existent and that more money "is on the sidelines" and could come in, equities STILL have huge upside potential.
You know me, I am conservative and even though the trend is motoring to the upside, I still approach it cautiously and trade strategies that I think are appropriate for the "frothy" markets. I am not saying I am necessarily standing in the way of them, I am just saying that I am happy to catch SOME part of the move. As the title suggest, the trend is up and strategies that work in a bullish market are fair game...until something tells us the bull market run is over.
Let's face it, someone will get in as the markets get to their "highs" and then reverse. That someone will have to take a loser as things start to roll over. That person has seen their portfolio increase substantially over the past few years if it is tracking the broad index. You can not forget how well the markets performed and at some point that will change and at some point we may have a loser buying the equity market. We have to be OK taking a loser, that is part of trading, right? As long as we use technical analysis, the proper risk to reward and the proper strategies, we won't have a loser that is abnormal to our trading account, risk tolerance, prior gains, etc...
Moving over to forex, the trends are in place with the USD getting weaker and weaker and weaker. The same thing will happen. Someone inevitably will have a loser selling the USD. If you keep it on context with your recent trades and performance, a loser going with the trend and using fundamentals and technicals is OK!
Just a sidebar, the Bloomberg commentator just said: "Equities are having a rough day". Is she serious? Equities are having a rough day? The SPX was at 665 less than 3 years ago, we are now at 1352 - more than 100% in gains. And she is saying that we are having a rough day? So you can see where I am going with this. As I said, I am not standing in the way until fundamentals and technicals tell me to do so. But, I am approaching this bull market with conservative bull market strategies (and bear market strategies for the USD).
Link to Monday's Webinar on Moving Average Crossovers
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
I am guessing we will see a shift at some point in the fundamentals and/or technicals that will tell us this bull run is over. By my count, in 2 months, we went from 1200 in SPX to 1352. The math comes out to 13%. As of the first of the year, the SPX is up 7.4 percent.
If you are an intra-day trader, you know that the ranges are tightening up as equities rally and volatility declines. You also know that there is a lot of buying pressure and the fact that sellers are non-existent and that more money "is on the sidelines" and could come in, equities STILL have huge upside potential.
You know me, I am conservative and even though the trend is motoring to the upside, I still approach it cautiously and trade strategies that I think are appropriate for the "frothy" markets. I am not saying I am necessarily standing in the way of them, I am just saying that I am happy to catch SOME part of the move. As the title suggest, the trend is up and strategies that work in a bullish market are fair game...until something tells us the bull market run is over.
Let's face it, someone will get in as the markets get to their "highs" and then reverse. That someone will have to take a loser as things start to roll over. That person has seen their portfolio increase substantially over the past few years if it is tracking the broad index. You can not forget how well the markets performed and at some point that will change and at some point we may have a loser buying the equity market. We have to be OK taking a loser, that is part of trading, right? As long as we use technical analysis, the proper risk to reward and the proper strategies, we won't have a loser that is abnormal to our trading account, risk tolerance, prior gains, etc...
Moving over to forex, the trends are in place with the USD getting weaker and weaker and weaker. The same thing will happen. Someone inevitably will have a loser selling the USD. If you keep it on context with your recent trades and performance, a loser going with the trend and using fundamentals and technicals is OK!
Just a sidebar, the Bloomberg commentator just said: "Equities are having a rough day". Is she serious? Equities are having a rough day? The SPX was at 665 less than 3 years ago, we are now at 1352 - more than 100% in gains. And she is saying that we are having a rough day? So you can see where I am going with this. As I said, I am not standing in the way until fundamentals and technicals tell me to do so. But, I am approaching this bull market with conservative bull market strategies (and bear market strategies for the USD).
Link to Monday's Webinar on Moving Average Crossovers
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Tuesday, February 7, 2012
1350 In SPX, Now What?
Good Morning,
Fundamentally, we have Bernanke on the microphone right now. Additionally, we have claims later in the week and a Friday appearance by Bernanke. I will be looking for the AYOH trade setup on Friday if Bernanke provides any fireworks (yeah right!!!)
Technically, we are bumping up against the 1350 level in SPX. It seems like given recent buying pressure the 1350 area really isn't a level. Technically, you have to be very careful to "lean" on previous levels or ideas as every day, week and month presents us with new overarching mentalities and obviously as of late, the overarching mentality for the technicals has been buy, buy, buy as it relates to equities. For the most part, that has translated to a soft US dollar.
I have been posting some recent articles about the 'V' pattern and I want to expand on that to include "dual timeframe" analysis. The first chart is a Daily chart of the EUR/USD. Look at yesterday's bar - the rejection we saw as the EUR was on its lows. It shows a classic hammer, where the lows were clearly rejected. The second chart will show the intraday chart - a 30 minute view of yesterday's action with a 'V' drawn in and the famous Fibonacci that shows the full retracement and a close near the highs of the day. When we have a close that takes back all of the downside action, you usually have a follow through the next day. We have seen it day after day in equities and we are seeing it day after day in the USD as it loses ground:
Past performance is not indicative of future results
Past performance is not indicative of future results
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
Wednesday, February 1, 2012
Buying Pressure in the SPX
Good Morning,
First off, thanks to all who made the webinar full of great content. As I said, the more you participate with questions, the better it gets as we can cover more ancillary topics. If I didn't get to your question, feel free to get in touch with via email or on the IBFX Connect Site at "thelocalstake".
Fundamentally, we still have Bernanke, claims and unemployment. Is Bernanke going to warn us and try to temper a poor unemployment report so that the markets take some of the pain out on Thursday and it isn't a total shock to our system on Friday?
Technically, we have local resistance at 1330 and then major resistance from last summer at 1350(ish).
Getting to today's main topic, buying in the SPX. Take a look at the low price of the day over the past few trading days and then look at the close. Every time the SPX dips, buyers step in. Accumulation, accumulation, accumulation. Sellers dry up because they are beat up and buyers know they have the right of way to the upside:
Past performance is not indicative of future results
Eventually you explode out, like today. And, even though the SPX isn't above recent resistance, many fore pairs are. Check out the GBP/USD, AUD/USD, NZD/USD and USD/CAD (new lows). But, this brings an important relationship into play. The USD/CAD is at new lows, but oil is stagnat at the 100.00 mark. Thus, USO is stagnant as well - so USO and oil aren't participating (yet) in the equity rally and the weakening US dollar:
Past performance is not indicative of future results
Now you can see what a trading range looks like. Still opportunities to trade, but instead of focusing on a trend, you are focusing on support and resistance.
Link to Upcoming Webinar
Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
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