Forex Crunch How Middle East Violence Impacts Forex |
- How Middle East Violence Impacts Forex
- If You Are Going To Use Indicators Then Do It The Right Way
- Forex Daily Outlook – August 9 2010
- Binary Options Setups – August 9-13
| How Middle East Violence Impacts Forex Posted: 09 Aug 2010 03:25 AM PDT
Political tension in the Middle East heightens from time to time, and some of them have a strong impact on currencies – some benefit and some retreat. Here’s a guide. Towards the end of June, there was a rumor that Israel will attack Iran. This rumor, which didn’t materialize, had a strong impact on currencies – it temporarily stopped the EUR/USD rally. There’s new tension now in Lebanon, and this may have a similar, and perhaps a stronger effect:
Sensitive Background The murder of former Lebanese Prime Minister Rafiq al-Hariri is still an open wound in Lebanon. His son, Saed al-Hariri is the current Prime Minister. The government of the young al-Hariri is funding an international tribunal that is about to point the finger on members of the armed rival party – Hizballah. Tensions are high in Lebanon, and there’s fear of a civil war. And how do internal Lebanese affairs have to do with the rest of the world? This conflict is far from being only internal. The Saudi king and the Syrian president have already made a historic visit to Beirut in attempt to calm things down, as both countries have interests in Lebanon. Also Iran, backing Hizballah is highly involved in Lebanon. Hasan Nasrallah, the leader of Hizballah, will hold a press conference on August 9th and is expected to blame Israel for the murder of Hariri the father, demanding that the son will call off the tribunal and not blame Hizballah. There are fears that Nasrallah will chose to divert the internal tensions to another conflict with Israel. Similar tensions in July 2006 brought to the outbreak of a full scale month long war between Israel and Hizballah. A border clash, the worst since the war in 2006, already occurred last Tuesday, August 3rd, and claimed the lives of 4 Lebanese and one Israeli. The clash was contained and didn’t deteriorate into a war. Tensions are very high towards Nasrallah’s press conference due today at 17:30 GMT, and the actions that will follow. According to rumors, 4 armies are in the Middle East are on alert. Impact on Forex Trading CAD: The Middle East is rich in oil, and an escalation will make oil less accessible – raising its price. The currency that will immediately benefit from a crisis is the Canadian dollar. The loonie’s correlation with oil prices is quite strong. Note that the impact won’t be as strong as it usually is with sparks in oil prices, as the loonie isn’t the classic safe haven currency. USD: The safe haven currencies are the Japanese yen and the US dollar. In times of world crisis, both currencies rise against all the rest. Currently, the US dollar is somewhat more vulnerable due to the US slowdown, so also here, it will probably gain, but not leap. JPY: So, if the current situation deteriorates, the Japanese yen will benefit most. After a strong rally against the dollar, USD/JPY stalled before breaking 84.82, the 15 year low. This could take it over the cliff. CHF: Another currency that will be relatively strong in case of a Middle East crisis is the Swiss Franc. The Swissy isn’t the No. 1 safe haven currency it used to be, but it’s still resilient. The other currencies are more vulnerable, due to their status as “risky currencies”: Euro, British Pound, Australian dollar and New Zealand dollar. They are likely to fall on an outbreak of a Middle Eastern conflict. A full-scale Middle Eastern crisis might be avoided once again, but it may break out anytime in the future. So, this guide should be useful in the long run as well. Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| If You Are Going To Use Indicators Then Do It The Right Way Posted: 08 Aug 2010 10:27 PM PDT
Guest post from visionsofaffluence.com Do you use indicators in your trading? If you're like most traders then you are probably going to answer yes. You probably refuse to trade without an indicator of some type plastered to your charts. No I personally don't believe in the use of indicators. I think that the best and dare I say only way to trade like a professional is to develop the ability to interpret price action for oneself as opposed to depending on indicators to do it for you. That being said I realize that trying to get an indicator addicted trader to go cold turkey is a near impossible feat, so I'm not going to try. Instead I am going to insist that if you are going to use indicators then you should at least learn the correct way to use them.
You see a lot of new traders use indicators in a manner that is completely wrong. So many traders put a bunch of indicators on their charts because they believe that the indicators are going to tell them what the market is going to do. That couldn't be further from the truth because an indicator is no more capable of predicting what the market is going to do than you or I. They are called indicators for a reason, because they indicate what price may do. If they were able to predict the market then they would be called predictors. If you are a new trader then you are going to have to understand that if you are going to blindly follow the signals of indicators because you think the can forecast the markets then you are terribly mistaken. So then, how should indicators be used? That's simple instead of being used as the be all end all for your trading decisions, you should use them as a heads up of possible changing market conditions. So for example if the RSI is reading oversold then you shouldn't just automatically start buying. Instead you should take that as an indication that the current move down may soon be coming to an end and to manage your positions accordingly. That is how indicators should be used and if you use them with that mindset then you should have no problem using indicators to profit. Don't get me wrong I still think you would be better off not using indicators at all, but I realize as traders we all have to find what works for us as individuals. So, if like to use indicators then more power to you, but remember if you going use them then use them right. Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| Forex Daily Outlook – August 9 2010 Posted: 08 Aug 2010 02:00 PM PDT
We start the week with interesting news in Australia Home Loans, In Europe German Trade Balance, in Japan the Economy Watchers Sentiment and more. Let’s see what awaits us today. In Australia, Home Loans decreases by 0.2%, the monthly a leading indicator of demand in the housing market, that measurers the change in the number of new loans granted for owner-occupied homes and provides an excellent gauge of how many qualified buyers are entering the market.
In Europe German Trade Balance, the Difference in value between imported and exported goods during the reported month, rise by 1.8 points and Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports. Export demand also impacts production and prices at domestic manufacturers Also in Europe, Sentix Investor Confidence, a monthly survey of about 2,800 investors and analysts which asks respondents to rate the relative 6-month economic outlook for the Eurozone, indicates optimism of 2.4 points. For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis. In Great Britain, British Retail Consortium (BRC) Retail Sales Monitor stabilized at 1.2%. A monthly report that measures the change in the value of same-store sales at the retail level/ More in Great Britain, Royal Institution of Chartered Surveyors (RICS) House Price Balance, a leading indicator of housing inflation because surveyors have access to the most recent price data by virtue of their job and measures the level of a diffusion index based on surveyed property surveyors decreases by 4%. Read more about the Pound in the GBP/USD forecast. In Australia, Australia and New Zealand Banking Group (ANZ) Job Advertisements, monthly data that have more impact when it’s released ahead of the government employment data rather than after, and measures the change in the number of jobs advertised in the major daily newspapers and websites covering the capital cities. For more on the Aussie, read the AUD/USD forecast. In Japan, Economy Watchers Sentiment, monthly survey of about 2,000 workers which asks respondents to rate the relative level of current economic conditions, and measures the level of a diffusion index based on surveyed workers who directly observe consumer spending by virtue of their job; rise up by 0.5 points but still indicates pessimism with 48 points. More in Japan, Current Account, a monthly report linked to currency demand – a rising surplus indicates that foreigners are buying more of the domestic currency to execute transactions in the country, rise up by 0.54 T and measures the Difference in value between imported and exported goods, services, income flows, and unilateral transfers during the reported month That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It's free. |
| Binary Options Setups – August 9-13 Posted: 08 Aug 2010 07:12 AM PDT
This week consists of quite a few market moving events that could provide opportunities for binary options trading. Here are 10 market moving events with potential market reactions and binary options setups. Binary options can be used as an alternative to the traditional stop loss, as a tool for protecting against false breakouts and lots more. One-hour binary options can be used for trading on news events. You can trade binary options at StartOptions, a respected binary options provider. I’ve selected the events and the setups based on study already done for the forex weekly outlooks, and the potential reactions to surprises. Some events collide with each other and could offset each other. These events weren’t selected. Quick explanation:
OK, let’s review the events:
These expected market reactions and setups are general market commentary. This is by no means investment advice. If you're interested in binary options, you're welcome to go to StartOptions. They're a leading binary options provider. This is how it looks on their screens: For our subscribers only we worked a special deal and we got you a $300 free bonus on opening your account. All you need to is deposit $1000 into your options account. Not spend. Just Deposit.
Full Disclosure: I'm affiliated with StartOptions. |
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