Forex Trading Analysis

How Will the Dollar React to the G20?

The dollar slid quickly in overnight trading as investors awaited today’s decisions from the Federal Reserve and the upcoming G20 summit in Pittsburgh.  Meanwhile, equity markets surged and oil edged up after a slight trimming in Monday trading.

The euro hit a one-year high against the battered dollar rising to $1.48 and closing in on the vaunted $1.50 threshold.  Most investors feel the euro will top the $1.50 mark by the end of the year.  In overnight trading, traders took advantage of the dollar’s Monday success and a lack of liquidity as the Japanese markets remained closed for the holiday.  The dollar hit a 14-month low against the Swiss frank settling at 1.0248 franks.  The euro was up 0.8% at the close.

Against a basket of currencies, the dollar .DXY fell 0.8%… Continue Reading

G20 Summit in Pittsburgh Critical to Recovery

The September 24-25 G20 Summit in Pittsburgh must be more productive than the last meeting in London and may well determine the shape and depth of the recovery from the world’s deepest recession.  Leaders are positioning themselves to lay out their agenda and reach an understanding that has both substance and direction.

The Group of Twenty (G20) is a group of Finance Ministers and Central Bank Governors that was established in 1999.  The specific purpose of the G20 is to promote open and constructive discussion between the industrial and emerging-market countries related to global economic stability.  The purpose of the G20 is to strengthen the international financial architecture by providing opportunities for dialogue on national policies, international cooperation and international financial institutions.

The upcoming summit is expected to concentrate on a host… Continue Reading

Sheila Bair & FDIC Stand Alone

The FDIC To Go It Alone

Tough-minded FDIC Chairperson, Sheila Bair, has her own visions of the recession and the trajectory of the recovery.  Her views rarely coincide with Treasury Secretary Timothy Geithner or Federal Reserve Chair Ben Bernanke.  The strong willed and decisive Bair’s FDIC has seized 94 banks so far this year.  Along the way, Bair has established a reputation for strong-willed individualism.

It may be her personality that is preventing the FDIC from tapping a $100 billion credit line with the Treasury.  Then again, it may be Bair’s unwillingness to face Congressional scrutiny as she navigates the agency through turbulent waters.

As reported by the New York Times, Bair is considering asking healthy banks to participate in creating a fund to continue the FDIC’s aggressive actions.  The FDIC’s available cash… Continue Reading

On Wall Street – Change is Coming

Embroiled in the political turmoil surrounding a national health care initiative and with an economic recovery seemingly underway, the Obama Administration appeared to have moved its cry for investment regulation to a back burner.  On Monday, President Obama re-asserted his call for reform while reminding the country that one year ago, Lehman Brothers, the fourth largest investment bank in the country, stunned global economies by filing for bankruptcy.  The filing triggered a series of events that had the U.S. financial industry reeling and on the brink of collapse. 

“Normalcy cannot lead to complacency,” the President warned.

Speaking at the Federal Hall in the heart of Wall Street, the President pushed his regulation reform principles to a less than enthusiastic crowd of financial investors and executives.  Reiterating many of the points put forth… Continue Reading

Price Support For The AUD/USD From Ascending Trendline

The AUD/USD fell sharply during the closing hours of the US equity market as traders induced a sharp sell off in the US equity market due to the release of the US FOMC statement. Because of the selloff, the US dollar has rallied significantly verse the vast majority of the currencies, ultimately putting downward pressure on the AUD/US.

Despite the bearish sentiment that was produced by the FOMC statement, the recent selloff has presented an advantageous trading opportunity for traders looking to enter a long position in the AUD/USD. From a technical perspective, the AUD/USD should encounter strong price support from the ascending trendline that has formed over the past month. This trendline has already been validated during a previous trading session… Continue Reading

Technical Analysis Daily: EUR/USD

The Daily Forecaster: GBPUSD

Pound Faces Choppy Trading as Traders Disect BOE Minutes

The release of minutes from this month’s Bank of England monetary policy meeting headline the economic calendar in European hours. The announcement itself produced no surprises with interest rates left at 0.5% and the magnitude of quantitative easing unchanged at 175 billion pounds.

Just five days later, however, BOE chief Mervyn King gave resoundingly dovish testimony to House of Commons Treasury Committee, saying poor credit growth remains a direct drag on demand and revealing that policymakers are considering cutting the interest rate they pay on bank deposits to encourage idle reserves to be channeled into lending. The latter comment in particular sent the British Pound tumbling, with traders clearly caught off guard as the BOE was seemingly preparing for more, not less, monetary easing despite the recent… Continue Reading

Support and Resistance Levels in Forex Trading

You should learn technical analysis. It will give you the edge as a currency trader. It will develop your confidence in your ability and capacity to predict what will happen in the markets in the future.

But the most important drawback with most of the technical indicators is that they lag behind the markets. Lagging means part of the price action has already taken place before the movement is reflected by these technical indicators.

However, support and resistance levels especially those based on Fibonacci levels are considered to be leading indicators because they lead the markets in predictable paths. Now, when we say predictable, it does not mean guaranteed. But it can be pretty close.

Support is the price level that a currency pair touches… Continue Reading

What I Learn Losing £60,000 My First Year as a Full-time Trader

During my first year as a local (independent trader) on the floor of LIFFE, I bought and sold 8804 FTSE futures contracts, about 40 contracts per day on average. The result was a loss of £61,620 or -£267 per trading day. I was profitable on 55% of days with an average gain of £1009, my average loosing day was -£1780. My biggest one day gain was £7730 and my biggest loss -£12,426.

As you can probably imagine, this was a difficult time for me. I was trying to work out how to make money consistently. It was the consistency that seemed so hard to find. As you can see I was having a regular experience of making money, what was killing me were my losses. It seemed that every… Continue Reading