May 16, 2010

Forex Crunch AUD/USD Outlook – May 17-21

Forex Crunch AUD/USD Outlook – May 17-21

AUD/USD Outlook – May 17-21

Posted: 16 May 2010 04:45 AM PDT


Meeting minutes from the sixth rate hike and many inflation figures await Aussie traders. Here’s an outlook for the Aussie events, and an updated technical analysis for AUD/USD, now in lower ground.

AUD/USD graph with support and resistance lines on it. Click to enlarge:

Another volatile week saw contradicting employment figures. While more jobs than expected were gained, the unemployment rate jumped to 5.4%. Let’s see what’s awaiting us this time:

  1. Monetary Policy Meeting Minutes: Published on Tuesday at 1:30 GMT. The sixth Australian rate hike since the crisis took some people by surprise, like the fifth hike. Explanations to this move will probably be seen when the minutes are released. More importantly, hints towards the timing of a seventh hike are likely to vbe revealed.
  2. Westpac Consumer Sentiment: Published on Wednesday at 00:30 GMT. The Westpac Banking Corporation surveys 1200 consumers about their economic mood. Last month’s figure disappointed as it dropped by 1%. Volatility will probably continue with a rise this time.
  3. Wage Price Index: Published on Wednesday at 1:30 GMT. This quarterly release combines employment and inflation in one figure. The wage price index rose by 0.6% in the last quarter, slower than previous quarters. A stronger rise of 0.9% is expected this time.
  4. MI Inflation Expectations: Published on Thursday at 1:00 GMT. The Melbourne Institute has shown a jump in inflation expectations – 4.1%, after many months around 3%. This goes hand in hand with the government’s numbers that are published only once per quarter. Expectations are expected to remain above 4%, indicating yet another rate hike. Also note that the same institute publishes its Leading Index figure at the same time.

AUD/USD Technical Analysis

The Aussie had a good start to the week, jumping above 0.90 and aiming for the 0.9135 resistance line. Things changed afterwards, and AUD/USD traded between 0.88 and 0.90 during the rest of the week, finally finishing at 0.8850.

The pair is currently bound between these two lines: 0.88 and 0.90. This is a lower range than in last week’s outlook. Most lines haven’t changed though.

Looking up, the next line of resistance is 0.9135, a place where the pair paused when it was trading higher. Above, 0.9220 is another resistance line that served as a support line recently.

Even higher, 0.9327 was a resistance line many times in the past, and despite being broken several times, it still has its role.

Looking down below 0.88, significant support is found at 0.8567, the area where the Aussie began trading higher, and also the 2010 low. Even lower, 0.8230 served as a resistance line last summer, and now provides support.

I remain bullish on AUD/USD.

Despite being carried away by the dollar strength, the Aussie's fundamentals, as seen in the job gains should help it outperform European currencies and the greenback as well.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Forex Weekly Outlook – May 17-21

Posted: 15 May 2010 04:00 PM PDT


Figures from all over the world are expected this week, with Japanese GDP, European surveys and major US inflation figures standing out. As the focus remains on the Euro – threatening the “Lehman level”, we can be sure to get an exciting week. Let’s see what’s awaiting us this week.

One aspect of recent week’s trading is the dollar’s safe haven status. The yen also enjoys this status, but it wasn’t always this way. Here’s a side story of how the yen took this role from the Swissy. OK, let’s begin reviewing the events:

  1. TIC Long-Term Purchases: Published on Monday at 13:00 GMT. This figure represents the flow of cash to the US, and expresses confidence in the economy. After rising to 120 billion and dropping to 20, 47.1 billion dollars flowed last month, exceeding expectations. It’s expected to be higher this time – 50.5billion.
  2. British CPI: Published on Tuesday at 8:30 GMT. Inflation picked up in Britain, and passed the government’s target of 1-3%. Mervyn King dismissed this rise and blamed it mostly on oil prices. Indeed, prices didn’t get out of control and they now stand at an annual rate of 3.4%. A rise towards 4% will stir the expectations for a rate hike, but expectations are talking about 3.5%.
  3. German ZEW Economic Sentiment: Published on Tuesday at 9:00 GMT. This major survey finally recovered last month – after 6 months of drops that hurt the Euro. The rise to 53 points helped stabilize the Euro. Given the deteriorating debt troubles across the continent, this survey of 350 investors will probably drop this time.
  4. American housing figures: Published on Tuesday at 12:30 GMT. American building permits surprised with a rise to 690K last month, exceeding expectations after a few stable months. Also housing starts surprised, and both figures pushed the greenback together. If both figures go in the same direction again, this will boost the dollar.
  5. American PPI: Published on Tuesday at 12:30 GMT. Here we got confusing figures last time – producer prices rose by 0.7%, almost double the expectations, yet Core PPI rose by only 0.1%, signalling that prices remain very very stable.
  6. American CPI: Published on Wednesday at 12:30 GMT. Consumer prices are more important for policymakers. Here, both figures are almost deflationary. CPI rose by 0.1% last month, while Core CPI remained unchanged. A rise of at least 0.5% in Core CPI is needed for talks about a rate hike to stir.
  7. American FOMC Meeting Minutes: Published on Wednesday at 18:00 GMT. The last meeting of the FOMC saw no major changes. The pledge to keep the Federal Funds Rate at low levels for an extended period of time remained intact. In this release, we might learn about the members’ different opinions. This will probably cause choppy trading, but no long term effects.
  8. Japanese GDP: Published on Wednesday at 23:50 GMT. This is the first release for Japan’s Q1 GDP. The land of the rising sun saw 3 quarters of growth. Last quarter’s 1.1% growth was well received, yet deflation still weighs on the currency. A smaller growth rate is expected this time.
  9. American Unemployment Claims: Published on Thursday at 12:30 GMT. As always, this weekly release causes the markets to shake, as it gives a fresh view of one of the most important indicators for the economy. A small drop from 44K to 439K will probably be printed now.
  10. American Philly Fed Manufacturing Index: Published on Thursday at 14:00 GMT. This important indicator is a good representation of the recovery in the US – it has risen in the past three months, exceeding expectations each time. From 20.2 points printed last month, its predicted to edge up a little bit higher.
  11. Japanese rate decision: Published on Friday. Japan’s Overnight Call Rate isn’t expected to move from 0.1%. The BOJ Press Conference that accompanies the release is of high importance – the words heard there always move the markets just before the London session begins.
  12. German Ifo Business Climate: Published on Friday at 8:00 GMT. This major European survey climbed steadily in the past year. Also last month, a positive surprise was recorded when score passed the 100 point mark.  It will probably remain unchanged now.

That’s it for the major events this week. Stay tuned for specific currency coverages.

Further reading:

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Still Looking For That Perfect Indicator?… Stop That Right Now If You Ever Want to Be Successful

Posted: 15 May 2010 02:45 PM PDT


Guest post by Jason Madison, independent trader and founder of BeatWallStreetNow.com

How many times have you been burned because an indicator got you into a trade too late? Well that is a common problem that many traders face because indicators by their very nature are lagging. An indicator will only tell you about a move after it has already happened. There is no way to combat it:

Let me not say that because there are traders that have found some success by using a certain combination of indicators, but who wants to do that? Do you really want to have wait for the 20 SMA to cross the 50 EMA while the RSI is simultaneously giving a reading of 75 and the MACD is at 1 before you take a trade? I hope not because while you are sitting at your computer waiting for the stars to align I guarantee that the real traders will not only be snapping up all the profits your missing out on, but that they will also be waiting for your lagging indicators to get you in the market so they can take your money too.

That may sound harsh but that’s trading. In order for you to make money someone else has too lose. Trading is a gun fight, so are you going to show up with a wiffle ball bat or are you going to come in ready for war?

So, if using indicators is the equivalent of bringing a bicycle to a drag race then how are you supposed to trade? By reading the price action itself that’s how. Once you are able to read the price action yourself instead of waiting for indicators to interpret it for you there will be no stopping you. You will be able to get in on moves as soon as they occur. This eliminates the fatal flaw of indicators and keeps you from opening a trade too late and quickly suffering a loss.

I completely understand the lure of finding the perfect indicator or combination thereof and automatically becoming the world’s greatest trader, but I’m here to tell you that it’s not going to happen. However, if you are willing to set your beliefs aside and learn to read price action I guarantee you will have success trading any market you choose.

Do you want to take your trading to new heights? Do you want to become one of the 5% of traders that actually make it in this business? Do you want to discover the revolutionary price action techniques that will allow you to trade for a living? Well then visit beatwallstreetnow.com

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

One Million Trades on Currensee

Posted: 15 May 2010 02:03 PM PDT


Currensee, the forex social platform, reached impressive milestones: $30 billion in trade and one million trades in total. You can guess which trade was the million – a short on the Euro.

More numbers from Currensee are 5,000 registered users from over 80 countries that are sharing their real live forex accounts with other traders. Still not there? You’re always welcome to join – click here to register for free.

Here’s more about these milestones in the official press release:

Boston, MA – May 14, 2010 – Currensee Inc., the first Forex trading social network that connects traders from around the world based on real-time trades, today announced that it has reached the one million trade milestone, just over six month after the site launched in October of 2009. The one millionth trade was executed on Thursday, May 13, 2010 at 1:32 PM EDT by a Currensee member from Romania who went short EUR/USD.

"We're quickly approaching 5,000 registered members and already welcoming traders from over 80 countries and supporting over 100 brokers," said Currensee CEO Dave Lemont. "Along with achieving our millionth trade milestone, we've also reached over $30 Billion in trading volume, which is a tremendous accomplishment in such a short period of time. Every one of our members must have a live Forex trading account to join and our members tend to be active Forex traders who trade often and have come to rely on the daily collaboration with the other members of our social network. The explosive growth in trading volume, membership and trader activity puts us on an exciting path to significant scale this year."

Currensee brings trust and transparency to Forex trading by enabling members of its trader network to see each other's actual trades and positions, trading strategies and performance to make more informed trade decisions. In addition to announcing Series B funding, full MT4 support and the innovative new Tweet My Trades™ feature, Currensee recently debuted the Forex industry's first Trader Leaderboard. The Currensee Trader Leaderboard™ ranks top Forex traders based on both historical and real-time performance, along with a proprietary performance authority and risk index. The Trader Leaderboard ranking system is a key element of the Currensee Trade Leaders™ investment program, which will launch later this year, enabling experienced Forex traders to be compensated for successful trading and allowing retail Forex traders to follow their trades.

In April, Currensee added new investor Vernon & Park Capital LP, which in addition to investments from North Bridge Venture Partners and Egan-Managed Capital, brings the Currensee total funding to $12.8 Million.

About Currensee
Currensee.com brings trust and transparency to retail Forex trading. The Currensee trading social network connects retail Forex traders from around the world so they can see each other's actual trades and share trading strategies in real-time to make more informed trade decisions. Currensee traders from over 80 countries have become members of the trading social network and linked their live brokerage accounts with one of the 100+ brokers supported by the platform. The unique Currensee Market Watch Social Indicators™ aggregate the wisdom of the network and deliver social trade data and a new way to look at the market. Currensee is funded by North Bridge Venture Partners, Egan-Managed Capital and Vernon & Park Capital and is a member of the National Futures Association. For more information, visit us at www.currensee.com. Fan us on Facebook, follow us on Twitter and watch us on YouTube.

Disclosure: I’m affiliated with Currensee.
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