technical analysis Posts on Forex Blog
Elliot Wave Preview, Bob Prechter on TV
Jun 24, 2008
Eliiot Wave, an awesome system of technical analysis, will be ending their free preview today. While you wait for the FOMC statement, check it out. If you are unsure about Elliot Wave, Bob Prechter, will be on Bloomberg during the 5pm eastern hour.
In July 2005, just before the housing peak, Elliot Wave put out this statement.
"This time, there's no mistaking who the Enrons of the bust phase will be. They will be the firms now peddling adjustable-rate, no interest/nothing down and assorted other types of subprime mortgages."
This sentiment was delivered when the consensus among mainstream investors was that real estate was the ultimate capital-growth investment. Of course, we now know that real estate was peaking at that very moment.
There's still time for you to read what Elliott Wave International sometimes calls "tomorrow's news today' right now during their FreeWeek. If time is an issue for you, you can even print out the publications before FreeWeek ends and read them at your leisure.
They are also offering a 58% discount for a limited time.
technical analysis
EURUSD Headed Higher?
Jun 21, 2008
A host of factors indicate the EURUSD will head higher this week and test 1.5800 resistance. But beware, the European Service PMI (June 23) and the FOMC meeting (June 25) may hold down advances.
With Euro-zone inflation hitting 8 year highs a steady stream of ECB comments came out all but guaranteeing an ECB rate hike July 3rd. On Friday, President Jean-Claude Trichet reaffirmed comments from earlier this month, stating "I have no message that would retract what I said"
This was further backed by comments from ECB executive board member Juergen Stark, who stated on Friday "The current inflation rate in the Euro-zone...is unacceptably high...In this environment, the firm anchoring of inflation expectations to conform to price stability is absolute priority"
ECB member Bini Smagh joined in the chorus, commenting that if "inflation is left to creep up, the cost of bringing it down later will be even higher."
Technical analysis confirms the fundamental factors. THE EURUSD has;
- set a new 3 Day high Friday
- crossed the 20 day moving average
- is kissing the 50 day moving average
However 2 events could drag the EURUSD down.
1. On Friday at 4am est Euro-zone service PMI will be released. Consensus is for a slight easing from 50.6 to 50.5 (like the US report, any number above 50 signals growth). Cash thinks this data may surprise to the downside. This view is based on the ZEW report last week, Axel Weber's comments earlier this month that Germany will not see the normal spring bump, and higher than expected inflation.
Of course, Chuck may be dead wrong based on on French wage increases (up 1.1%) and the turn around in Italian industrial orders up 12.8% YoY
2. The FOMC may shock us all.
The ECB has talked of a rate hike and seems certain to follow through. The Fed has talked tough for several weeks now, and may be forced to act. While many are expecting the first rate increase to come in September, Bernanke has used unusual timing to his advantage over the last year. A Fed hike this meeting in unlikely, but don't be shocked to see a hike on the discount window. At the very least, the FOMC statement should include some rather hawkish tones.
technical analysis, EUR, FOMC, USD
Rally in US Dollar Index?
Jun 17, 2008
The folks at Marketclub are calling for a rally in the US Dollar Index from the current level of $74 to a somewhere around $81. That is a whopping 10% swing.
They base this belief on a) their custom triangle trading indicator b) technical analysis and c) fundamental analysis of the marketplace.
Chuck has said for awhile now that the Triangle indicator is surprisingly accurate. Generally when using their indicator, traders can look at weekly charts for trends, and daily charts for entry points. However, with the US Dollar index, it behaves a bit different. Trends are indicated on a monthly level. Their triangle signal has given the first upside signal on the US Dollar Index in 20 months!!
From a technical analysis point of view, the index has been trading generally sideways for the past 4 months. The pivot point formed in early March 08 closely resembles the pivot point formed late 2004 that lead to a 1 year rally.
From a fundamental perspective, their call absolutely makes sense. The Fed has been talking up the dollar for a good month now. Except the Euro and Aussie, moth other banks have somewhat mollified recent commentary (including the BOE today).
Currently Marketclub is giving away a 2 week free trial. This is a rare opportunity that is only offered once a year. Take a few minutes out of your day and see what they are offering, it will be well worth your time.
Watch the US Dollar Index video
Greenback, technical analysis, USD
Forex Elliot Wave Analysis
Jun 1, 2008
In April. Elliott Wave International, the world's largest market forecasting firm, released a unique, free 20-minute video with tips on how to trade currencies using Elliott wave analysis. The video also includes a 4-page report showing how wave analysis can be used to trade forex at the time of an economic news release. The free video and report are available online at Elliot Wave.
Winning in forex is not easy. You need skill, discipline and sometimes, just pure luck. You also need a method, not emotional reactions. Elliott wave analysis is something many forex traders use. Wave analysis is not a crystal ball, but it helps you accomplish three crucial goals: Identify a trend, stay with a trend, and get out when the trend is likely over.
Elliott Wave International has multiple research tools. Of course, nothing trumps a good teacher. That's why you want to Watch Jim Martens, Senior Currency Strategist at Elliott Wave International. Learn from one of the best forex Elliotticians out there.
Here's what you'll learn:
- The simplicity of Elliott wave analysis
- Which waves are best for forex trading
- How to do identify trade setups
- At which point in a wave pattern to enter a trade
- How to manage risk with Elliott
If you've ever felt you could be better at trading forex around economic news releases, this report is a must-read.
technical analysis
A Fundamental and Technical Look at the GBPUSD
May 17, 2008
Starting in early March (right around the time Bear Stearns was bought by JP Morgan), the USD staged a comeback against the Sterling. And then negative US data last Thursday and Friday - contraction in manufacturing, weakest consumer confidence number in 28 years - combined to slam the dollar.
From one fundamental perspective, things look bad for the dollar. While the cheap dollar is definitely helping to boost exports, the trade imbalance hurdle is very high. In 2007, the deficit ran at a whopping $738.6 billion! And that is down -9% from 2006 ($811.5 billion). In addition, other major central banks remain reluctant to cut rates, as was reinforced by the May 8th BOE and ECB decisions to hold interest rates steady. Indeed, Trichet was very clear that inflation - not economic slowdowns - remained the number 1 concern.
Yet glimmers of hope remain for the greenback. Foreign inflow has risen from $56.7 billion in January to $80.4 billion in March. And futures markets show an expectation that the US Fed is done cutting rates, with a 50-50 chance of a hike by October.
It is at confusing times like these that Chuck turns to his good friend - technical analysis. Recently Chuck has became an ardent fan of MarketClub's Trading Triangle. They offer a lot of the standard stuff - a trade score based on common indicators, quotes, and tutorials. But the real meat and potatoes of their analysis suite is their trés cool charting tool. Not only does Cash find this to be a highly intuitive and easy interface (see below), but the indicators are working great. On April 1st, they put out this great video analyzing the GBPUSD pair. Using fibonacci retracements and weekly indicators, they called for a downturn to the 38% retracement level of 1.951 (from the high of 2.10) And low and behold, where did the GBPUSD hit? Just under 1.95. If you are unsatisfied with your current indicators, or just looking to try out a new set, definitely check out Market Club
Greenback, technical analysis, fundamental, GBP, USD
