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Archive for the ‘Euro’ Category

Friday 04/18/08

  • Asia – Look at the inverted head n shoulders on FXI
  • Europe – Great Britain giving out pounds – look for institutional traders to step in
  • US – James look into the Financial futures crystal ball and tell me what you see?
  • James how do I trade the financials and the JPY?
  • $ up and commodities down.why??? – Interest rates may not fall as much as the market had been pricing in?
  • $CRX.X what does that tell us, POT,MON, EOG, PCU, IWM -UYM
  • Look at commodities/ w JPY
  • FX Pup Lesson on Stochastics
  • Have a great weekend

Audio commentary Link

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Tuesday 04/15/08

  • To quote from Andrew Busch, currency strategist for BMO Capital Markets: Happy Tax Day! Most likely, this will be the lowest tax rate you will be paying for the rest of your life…….
  • AUD rally then retracement overnight on rumors and then spends the rest of the nigh selling off
  • $CRX.X, GLD, SLV, OIL make the commodity picture increasingly more bullish based off of demand – $ gets whacked
  • UK housing meets up with Browns Approval ratings and gets sold
  • EUR rallies on Poor German News?
  • SKF – Up but CHF and JPY still not selling off??
  • US PPI and what that means for CPI tomorrow? Want to see commodities follow through to get long Commodity equities and currencies
  • FX pups postponed, James Boyd is MIA

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Monday 04/14/08

  • Currency trading end of last week into this week is like the Abbet and Costello “Who is on first and what’s on second” bit, confusing and violent.
  • G7 Language was purposefully vague not referencing China’s currency but general currency fluctuations- market tried to anticipate intervention action which caused more violent price action overnight and through today’s trading sessions.
  • Sunday Asian and European markets took the time to reduce risk led by Fridays’ GE news and US equities had potential and going into today to sell off dramatically – WAMU posts poor earnings prompting dollar selling and JPY holding steady while SKF rises. While US markets holding up steady as well – By commodity stocks and a weak dollar
  • Commodities rally while the currencies struggle??? Re-iterate the strong correlation between $ and Commodities. Highlighted by NY trading session.
  • Promptly discount US retail sales – housing later on this week could be a catalyst
  • UK housing tonight watch for a drag on the good news overnight of PPI input
  • NZD might be showing some weakness on Retail overnight and then CPI tonight may put a drag on the bear flag on the AUD/USD 4 hr chart
  • What are pro CTA’s doing YTD: 2.5% to crack top 10, 27% to be par with #1 ytd leaders managing over a mil and under 10 mil

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293homealone121107.jpgWell, maybe while you were getting ready for bed. The Federal Reserve Bank decided to make an emergency move this evening and cut the bank lending rate to 3.25 percent from the 3.50 percent it was at earlier. This move made by the Fed was meant to “try” and create some stability in the financial markets. Also, at the same time, Bear Stearns (BSC) is being bought out by JP Morgan (JPM) at a steal of a price. This last minute buyout and the move by the Fed (who also approved this buy out by guaranteeing the deal with $30 billion) had an immediate effect on the overseas market and crushed the dollar. The EUR/USD hit a high of 1.5905 and the YEN hit 12 year low against the dollar at 95.74. Gold also was trading (at time of posting) around 1,026 an ounce. (I guess there goes the gold teeth I was considering!)

One way to help you against the falling value of your dollar is to hedge against it with the other currencies like going long the Euro or even long the Yen. Any trading against the dollar seems to be the most logical move. When asked what should be done about the financial crisis in the US, Federal Reserve chairman Ben Bernanke said “I don’t know!” No wonder the dollar is crashing and the basic carry trade is dead.

Well, hedge your bet for now or wait and see if the fed moves some more on Tuesday with another cut of 75 basis point. Bernankes strategy seems to be trying to keep the economy supported and worry about inflation later. We may see on the EUR/USD 1.6000 before Tuesday if the market sees even more weakness. Also, the USD/JPY may see an even lower level below 95.00 as weakness in the dollar continues. Tomorrow is a new day.

~ G

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fishjump.jpg Remember we were talking about the EUR/GBP last week, and the stair-step pattern that is especially evident with the Bollinger Bands? Well the pair closed above the upper band yesterday. So let’s say we got in and let the experiment begin.

This really isn’t a “paper” trade – we don’t have many clearly defined rules, etc. – but we are doing this for several reasons. We noticed a pattern in the pair and want to see this thru to an extent and watch what happens if we participate in it, having seen it ahead of time. We are learning more about Bollinger Bands. We get to test how we would consider exiting based on the pattern’s past. We get to fool around with different exit options.

eurgbp1.jpg

For example, let’s say we want to have an emergency exit. There’s all sorts of ways to do a stop loss, but for simplicity’s sake of choosing one we’ll say we get out if the pair goes below the low of the day before the entry day’s candle. That’s 0.7475 so we’ll say 0.7465. We’ll worry about topside exits later as it gets going (like I said, quite different from how a paper trade would be…)

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eurusd1.jpg EUR/USD continues its bounce, and today the Stochastics crooked up – and out of oversold – on the 3 green arrow (Workshop) study set. If the pair was just above its moving average that would be perfect. But that’s the problem. The pair, technically, is not uptrending. It’s in a bit of a funk, in this triangle pattern. Real aggressive people would buy on this signal. Real aggressive usually = you’ll lose money, unless you’ve developed some edge. At any rate, it’s looking up for the pair.

The best buy signal using this method would be everything you see here AND the pair is making higher highs and higher lows.

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The euro got its bounce

bull24.jpg By the way the euro did get it bounce versus the buck. That means it’s time to buy the EUR/USD if all three of these conditions are met:

1. You consider the pair to be uptrending according to however you’ve decided to define the trend. That could be higher highs/lows, price is above a moving average, a moving average is going up, etc. Pick one and let it be your gauge.

 

eurusd.jpg 2. You got buy signals according to your method. For example, if you are using the Investools workshop study set under Studies, one way of doing this is if the pair is close to getting a green arrow on the MACD and the Stochastics has crooked up.

3. Your posture precludes it. No, I don’t mean you’re slouching in your chair and you can’t reach the mouse! This means you wouldn’t buy the pair if you have a bias against the euro right now for some reason, or are bullish the dollar.

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