Forex Story

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Notice the following on the weekly chart:

– Prices are forming a triangle consolidation pattern

– All the SMAs are moving lower

– The shorter SMAs are below the longer SMAs

– Prices are still below all the SMAs, although prices are running into resistance at the 10 week SMA level

– The MACD is oversold

– The RSI is oversold

Notice the following on the daily chart:

– Prices have been running into upside resistance from the SMAs for the last 6 months

– The 10 and 20 day SMAs are moving sideways but are still below the 50 day SMA

– The 50 day SMA is still moving down

– The MACD has been rising for the last three months

– The RSI is OK but not great

Bottom line: the monthly chart is lining up for a rally. The daily chart’s SMA/price picture is good, but the MACD is a concern at current levels. In addition, the fundamentals for oil are weak right now — demand is low because of the recession and stockpiles are high.

From the WSJ:

Some $1.4 billion in junk bonds were up for grabs Wednesday as speculative-grade companies continue to capitalize on renewed investor interest in riskier assets.

Natural-gas producer Chesapeake Energy sold $1 billion of new senior notes after increasing the deal from an initial target of $500 million. Meanwhile, Inergy LP, which sells propane and leases propane supplies, bought home $203 million by selling its six-year bonds at a discount.

…..

It has also allowed speculative-grade borrowers to sell more than $4.2 billion of bonds already in January, making it the busiest month for junk, or high-yield, issuance since July 2008 when companies raised more than $3.8 billion in the market, according to data provider Dealogic.

There are a lot of reasons for this.

1.) The yield on Treasury Bonds does not compensate investors for the risk they are taking. With the government now promising to issue a ton of debt to pay for the stimulus plan, yields have no where to go but up.

2.) The Fed has been aggressively trying to get the credit markets jump started for the last 6-9 months. And the efforts are starting to pay off:

The a2p2 spread is coming in

Financial paper issuance has ticked-up and asset-backed issuance is evening out.

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• TeleTRADE — Russian Forex and CFD Broker

  TeleTRADE is a very old Forex broker company. It’s quite popular in the ex-USSR territories due to the large amount of the off-line offices and the free trading seminars they are offering from time to time. The company was created back in 1994, but the on-line services were presented in 2001. Actually, the company’s age is probably its only advantage. The trading is done via MetaTrader 4 platform. Apart from Forex, CFD and gold trading is also available. The trading account can be opened with $2,000 and there is no mini-trading available — the minimum position size is 1 lot. TeleTRADE offers probably the highest spreads in the industry — 5 pips on EUR/USD. I don’t know why would anyone even bother trading with such a high spread. Another disadvantage of this broker is the numerous accounts of traders complaining about their brokerage ethics and services (including training).

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• EUR/USD Posts Biggest Daily Gain This Year

  Today EUR/USD rose at a fastest pace since December 17. As the fundamental data reports were very positive in the United States, traders thought that it might be a good chance to bet against the dollar in the favor of the more risky and high-yielding currencies. EUR/USD rose from 1.2916 to 1.3141 as of now.

  Existing home sales rose by 6.5% from the annual rate of 4.45 million to 4.74 million in December. The market analysts expected a decline to 4.4 million. That can bring a much needed positive wave into the realty market — the one that damaged most by the ongoing financial crisis.

  Leading indicators of the U.S. economy advanced by 0.3% in December after falling by 0.4% in November. According to the forecasts it was expected to decline by 0.3% in December. Although this indicator is quite weak in its influence on the financial markets it can signal the beginning of the economic revival in the United States.

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• CGTIM — Another Jordanian MT4 Forex Broker

  CGTIM (or Commercial Group for Trading in International Markets) is a MetaTrader 4 Forex broker based in Jordan. As the other Jordanian brokers it offers Muslim-friendly trading accounts — with no overnight interest or swaps. Trading with this broker can be started with $1,000 for mini-Forex accounts. The deposit/withdrawal methods are limited to wire transfer, check and credit cards. Apart from Forex it offers CFD and some futures and indexes to trade on. Although, it’s presented on-line only since 2004, it already looks like it’s dying from an age — the website works with problems and opening a demo account via MT4 platform alone isn’t possible. In addition, the spreads offered by CGTIM look ridiculous nowadays — 4 pips on EUR/USD currency pair is simply too much. In my opinion, this broker can only be useful to the Islamic traders — and even not all of them, but those who live in Jordan and can confirm the legitimacy of CGTIM and quickly solve any problems with this broker. Because I don’t know for what someone would pay 4 pips per trade.

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• Forex Technical Analysis for 01/26—01/30 Week

  EUR/USD trend: sell.
  GBP/USD trend: sell.
  USD/JPY trend: sell.
  EUR/JPY trend: sell.

  Floor Pivot Points
  Pair	3rd Sup	2nd Sup	1st Sup	Pivot	1st Res	2nd Res	3rd Res
  EUR/USD	1.2075	1.2420	1.2696	1.3041	1.3317	1.3662	1.3938
  GBP/USD	1.2447	1.2975	1.3387	1.3915	1.4327	1.4855	1.5267
  USD/JPY	83.08	85.10	86.92	88.94	90.76	92.78	94.60
  EUR/JPY	117.35	119.72	117.40	119.77	117.45	119.82	117.50

  Woodie’s Pivot Points
  Pair	2nd Sup	1st Sup	Pivot	1st Res	2nd Res
  EUR/USD	1.2403	1.2663	1.3024	1.3284	1.3645
  GBP/USD	1.2975	1.3387	1.3915	1.4327	1.4855
  USD/JPY	85.10	86.92	88.94	90.76	92.78
  EUR/JPY	119.72	117.40	119.77	117.45	119.82

  Camarilla Pivot Points
  Pair	4th Sup	3rd Sup	2nd Sup	1st Sup	1st Res	2nd Res	3rd Res	4th Res
  EUR/USD	1.2631	1.2802	1.2859	1.2916	1.3030	1.3087	1.3144	1.3315
  GBP/USD	1.3282	1.3541	1.3627	1.3713	1.3885	1.3971	1.4058	1.4316
  USD/JPY	86.63	87.68	88.04	88.39	89.09	89.44	89.80	90.85
  EUR/JPY	115.04	115.06	115.06	115.07	115.07	115.08	115.08	115.10

  Tom DeMark’s Pivot Points
  Pair	EUR/USD	GBP/USD	USD/JPY	EUR/JPY
  Resistance	1.3490	1.4591	91.77	118.64
  Support	1.2869	1.3651	87.93	118.59

  Fibonacci Retracement Levels
  Pairs	EUR/USD	GBP/USD	USD/JPY	EUR/JPY
  100.0%	1.3385	1.4443	90.96	122.15
  61.8%	1.3148	1.4084	89.49	122.13
  50.0%	1.3075	1.3973	89.04	122.13
  38.2%	1.3001	1.3862	88.59	122.12
  23.6%	1.2911	1.3725	88.03	122.11
  0.0%	1.2764	1.3503	87.12	122.10

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We expected a price movement out of the recent coil (consolidation) and we got it today in spades.  The break was to the upside which surprised many bears, but let’s look inside the DIA’s 5-minute chart to gather where we might have entered some high probability trades and learn from the day’s structure.

DIA 5-min Trend Day:

The day started with a large-scale (greater than $1.00) upside gap that was began and was discussed last night in the post-market hours.  Statistics show that it’s not best to try and fade a gap greater than $1.00 in the DIA (100 Dow Points).  Price made a partial move into the gap but fell short of testing the rising 20 EMA.

Remember that in gaps, we generally have to turn off our classic indicators until they ’shake out’ the gap price from their periods – they really become useless until you do so.  Price made a new momentum high, but gaps themselves serve as momentum impulses.

Price carried back up to find resistance and then consolidated as it hugged the rising 20 EMA as traders waited patiently for the announcement of any Fed policy.  Today’s intraday action represents an idealized structure of what to expect on Fed Days.

Price has an initial morning gap, consolidates through the afternoon, then makes three sharp swings on greatly increased volume after the decision is given.

Price formed a major Bollinger Band Squeeze into 1:00pm (which meant place bracket entry orders outside this range) and then burst into a quick 5-wave push to new highs on a negative momentum divergence.  Alternately, one could call this the “Three Push” pattern which is also a reversal-style pattern.

We had a downswing that perhaps ’should’ have found resistance at the confluence of the 20 and 50 EMA, but alas it did not and the ‘double dip’ beneath the 50 likely stole away some well-placed stop-losses.

It’s often a battle over where to place your stops – if they’re too tight, you’ll almost always be stopped out unnecessarily but if they’re too far away, though you’ll be stopped out less, you’ll also suffer larger losses when they occur.

Today’s action was a testament to the “Further Stops” crowd, as price breached these averages then made a run to try to test new highs which was cut short by the Closing Bell.

Let’s see if Bulls can consolidate these gains and hold the breakout they managed to achieve today.

Corey Rosenbloom
Afraid to Trade.com

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Gold prices have been confusing traders lately, as most have expected gold to be surging in this environment while in reality, it is forming a downward-sloping consolidation.  Let’s take a look at a daily chart of Gold Prices to see a critical area that could give us clues about the next swing in gold prices.

Gold Daily Chart:

Let’s start from the top.  Price is in a short-term uptrend that started in November as price comes into prior resistance.  However, on the weekly chart, Gold is in a down-trend channel corrective phase, so we have a conflict of timeframe trends.

The most obvious price point is the prior resistance around $920 per ounce that set in with a triple-top in early October 2008.  Price tested the $920 level recently and appears to be forming a down-swing against this level, re-confirming this area as resistance.  The most likely support zone for the current down-swing would be the confluence of daily EMAs around $850 per ounce.

Next, we see a Five-Wave potential fractal Elliott Pattern that took price from $700 to $920 – notice the wave labels in the diagram.  An alternate interpretation of this move is the “Three Push” pattern which is a reversal pattern that forms as price makes three symmetrical swings in the same direction while forming a momentum divergence.

We have such a momentum divergence here, as price has made new swing highs while the momentum oscillator has failed to make three new highs, signaling possible weakness.

While it appears that the next likely swing would take price down to the $850 to $860 area (and then we’ll need to see what happens then to determine the next swing), price certainly could consolidate at resistance and break the $920 level.  If so, we could see a rally that takes us to test the $1,000 per ounce high to test prior resistance from July 2008.

Keep watching Gold Prices for additional clues, as we stand currently on an interesting price juncture.

Corey Rosenbloom
Afraid to Trade.com

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The Forex currency market is the largest market in the world.Because the Forex market is so huge, it attracts people from all over the world as well as beginners and experts who are all trying to make their money currency trading.  Another attractive feature, is you can trade on the Forex currency market online 24 hours a day, 7 days a week.

Even though these are attractive features, beginners should be very careful. This is because the vast majority of people who jump into the online Forex currency market lose their investment because of lack of education, not analyzing the data and not predicting the trends.The best thing to do is be patient and jump into the Forex currency market only when you feel you are well educated.

Many investors, speculators and traders have aquired great wealth trading on the Forex market so there is nothing stopping you if you are properly educated. By becoming well-prepared, it will be a lot easier to avoid pitfalls and reach your goals.

For beginners, Forex online trading should start with learning the history of the market and the trends that occur.  By looking in the past, it will allow you to recognize patterns in the future.Even though the Forex currency market rises and falls, being educated in the different trading patterns will go a long way in helping you predict the market which will produce gains or minimize your losses.

The next thing you should do is to learn as much as you can about the Forex market.Make sure you are thorough and don’t cut corners.  When you enter this market you have to remember that you are investing your hard earned money even though you are just pushing buttons to make trades through online Forex software. 

Finally, be sure to set up a free practice account and use it until you are certain that you are ready to invest your own money.You will be tempted to get into the Forex market after a few practice sessions because you may have seen an immediate gain.Take your time and track your success over a long period of time so you can be sure it wasn’t beginners luck.Remember, it’s all about educating yourself and understanding the Forex market so you don’t lose your hard earned money. 

Just to re-cap, if you’re a beginner, Forex online trading takes some education so you will be well prepared to take advantage of this lucrative market. Make sure you practice until you are certain that you have the skills, look at the past so you can spot future trends and learn as much as you can before you enter the Forex currency market.

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The good news is people will be better able to withstand hard economic times. The bad news is the economy needs people to spend.

So comes the exit of some hugely profitable trades.

It has been a while since we had so many big profits per market. In the Usd/Chf alone, we made more than 5 times in profit what we were risking on the trade.

Many will think these are outsized gains that can’t possibly repeat, but anyone who has been trading FirstStrike for any amount of time knows that this is exactly the way the method