US New Home Sales

November 28, 2012 

US New Home Sales usually follows the trend of Existing Home Sales, therefore we´re likely to see similar release today.

Here is the forecast:
10:00am NY Time New Home Sales Forecast 385K Previous 389K
DEVIATION: 70K (BUY USD 455K / SELL USD 315K)

Definition
“Measures the annualized number of new residential buildings that were sold during the previous month. A rising trend has a positive effect on the nation´s currency because the housing market is a leading gauge for the overall economy. A high level of housing activity signals that the construction industry is healthy and that consumers have the capital to make large investments. More importantly, new housing activity creates an economic ripple effect as home owners buy goods such as appliances and furniture for their homes, and builders buy raw materials and hire more workers to meet demand.”

The Trade Plan
We´ll trade this release using a deviation around 70K; if the release is lower, it would strengthen USD aversion sentiment and we should look to SELL USD. A stronger number could provide temporary support for the USD and we may see a slight rally therefore we should look to BUY USD.

We´ll be looking for a possible after-news retracement trade. We need to wait for the release, then wait for the market to spike, and wait for decent retracement.

Recommended Pairs :  EURUSD, NZDUSD, USDJPY

USD/JPY - US Dollar / Yen

Resistances : 

Weekly 82.85 ; 

Daily 82.3 ; 

Hourly 81.95

Supports : 

Weekly 81.05 ; 

Daily 81.4 ; 

Hourly 81.7

BOOKS

ACH15® Discovery: always 100% won transactions in FOREX market! - florin iacob - EUR 64,14


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UK MPC Meeting Minutes

November 21, 2012 

MPC Meeting Minutes is scheduled to be released today and since it´s customary for BOE (Bank of England) not to release a statement along with its interest rate decision (2 weeks ago) if there were no changes to either rate decision or APF (Asset Purchasing Facility, UK´s quantitative easing program); today will be the first time for a glimpse into what took place during this meeting, here is the forecast:

4:30am NY Time UK MPC Minutes
Rate Forecast 0-0-9 Previous 0-0-9
APT Forecast 0-0-9 Previous 0-0-9
DEVIATION: 2 Votes (BUY GBP on 2 votes of rate hike / BUY GBP on 2 votes of APT Increase)

Definition
The MPC meets every month to set the interest rate. Throughout the month, the MPC receives extensive briefing on the economy from Bank of England staff. This includes a half-day meeting known as the pre-MPC meeting which usually takes place on the Friday before the MPC’s interest rate setting meeting. The nine members of the Committee are made aware of all the latest data on the economy and hear explanations of recent trends and analysis of relevant issues. The Committee is also told about business conditions around the UK from the Bank’s Agents. The Agents’ role is to talk directly to business to gain intelligence and insight into current and future economic developments and prospects.

The monthly MPC meeting itself is a two-day affair. On the first day, the meeting starts with an update on the most recent economic data. A series of issues is then identified for discussion. On the following day, a summary of the previous day’s discussion is provided and the MPC members individually explain their views on what policy should be. The Governor then puts to the meeting the policy which he believes will command a majority and members of the MPC vote. Any member in a minority is asked to say what level of interest rates he or she would have preferred, and this is recorded in the minutes of the meeting. The interest rate decision is announced at 12 noon on the second day.

 Recommended Pairs : GBPJPY , GBPUSD 

GBP/USD - British Pound / US Dollar

Resistances : Weekly 1.596 ; Daily 1.5935 ; Hourly 1.591

Supports :    Weekly 1.582 ; Daily 1.5835 ; Hourly 1.5875

BOOKS

The Little Book of Currency Trading: How to Make Big Profits in the World of Forex - Kathy Lien - EUR 12,93 

Lien does a really good job of explaining the basics of the forex market and some topics that are usually avoided in other books such as the biggest scams in the market and the top 10 mistakes (which I have been guilty of at one point or another!). For those of you that are a bit more advanced like yours truly, the Bollinger Bands were an interesting and practical tool. I actually backtested it with some relatively good results.

LEFT Brain Trading - the right mindset and technique for success in Forex: 2012 revised edition - Olga Sheean - EUR 20 

LEFT Brain Trading technique can help improve trading confidence and performance through a process of self-discovery coupled with a revolutionary new way to set up charts to reveal the universal framework that governs all currency movements. This full-colour, illustrated book describes how mental programming can affect trading and how this can be changed for the better. It also introduces a new way to use the Fibonacci ratios to provide the trader with a one-time framework set-up; easier identification of trading opportunities; a means of identifying the size of a trade; and improved risk management. Purchasers of this book are invited into a dedicated online forum and a video channel at youtube.com/leftbraintrader. Trading appears be a good way to generate wealth. For many traders this isn't their experience. We are all driven by our subconscious programming, and much of it is negative. At an early age, we take on beliefs about ourselves and about the way the world works that have a huge impact on how we live our lives. Because this dynamic is largely subconscious, we don t realize it is happening, nor appreciate its impact on our ability to generate success or happiness. Spending time on techniques, books and positive affirmations can, ironically, make matters worse by increasing the internal conflict between our subconscious programming and what we want. In Forex we know that the candlesticks move to patterns, so the patterns must exist behind the candlesticks. It makes sense to find the pattern on the charts, rather than in the resulting currency movements. The Absolute Fibonacci Framework shows this. It is applied to charts permanently and can be used in conjunction with any trading system. For more, see Customer Discussions and Amapedia below the reviews. Set your charts, take some time to watch them and see the patterns.  

US Core CPI

November 15, 2012

We´ll be trading US Core CPI m/m release tomorrow. CPI or Consumer Price Index, also known as the “true cost of living”, is what drives Central Banks to raise/cut interest rate, therefore this release will be widely watched. Here´s the forecast for the CPI:

8:30am (NY Time) US Core CPI m/m Forecast 0.1% Previous 0.1%
DEVIATION: 0.2% (BUY USD 0.3% / SELL USD -0.1

DEFINITION:“CPI, Consumer Price Index, is a statistical estimate of the movement of the prices of goods and services bought for consumption purposes by households. Its computation uses price data collected for a sample of goods and services from a sample of sales outlets in a sample of locations for a sample of times and estimates of the shares of the different expenditures in the total covered by the index which are usually based upon expenditure data obtained for sampled periods from a sample of households wikipedia).” It is also known as the “True Cost of Living”.

The Trade PlanOur minimum tradable deviation for this release is 0.2%; if the release number (core) decreases to a minimum -0.1% then we will SELL USD; if the core release is 0.3%, we’ll BUY USD. Historically even at a difference of 0.1%, market is likely to exaggerate its move, therefore if our tradable release is hit, there is about 80% of chance market will move 50 pips within the next 90 minutes or so. 

Recommended Pairs: EURUSD, USDJPY

USD/JPY - US Dollar / Yen

Resistances : Weekly 81.7 ; Daily 81.4 ; Hourly 80,95

 Supports : Weekly 80.1 ; Daily 80.5 ; Hourly 80.7

EU ECB Interest Rate

November 8, 2012

ECB (European Central Bank) will be rendering its rate decision today, and it will have a pivotal short term impact on the Euro dollar. However, it is widely believed that ECB will keep rates unchanged at 0.75%… Here´s the forecast:

7:45am (NY Time) EU ECB Rate Decision Forecast 0.75% Previous 0.75%
Deviation: 0.25% (SELL EUR 0.50%)

Definition:The rate at which the European Central Bank (ECB) charges banks in EU member states to borrow money. The minimum bid rate is an important tool in the ECB’s monetary policy and changes in this rate affect other interest rates in the EU banking system. The Minimum Bid Rate is also the The lower limit to the interest rates at which counterparties may submit bids in variable rate tenders.; The Main Refinancing (Refi Rate) is the rate on the main refinancing operations, often referred to as the refi rate. The level is determined by the ECB Governing Council. The Deposit Rate is the Interest rate at which credit institutions may at all times place overnight deposits with the national central bank. The deposit rate is normally 100 basis points below the minimum bid rate, thereby setting a lower limit on short-term money market rates.

The Trade Plan
ECB rate decision comes in two part, the first one is the 7:45am rate announcement followed by the 8:30am Press Conference where ECB chief Draghi issues the official statement on this rate decision. Since it is extremely unlikely to get a surprise from ECB (we stand corrected as Draghi has surprised the market twice during his first three rate meetings), there is usually no volatility following this release.

However, in the unlikely event that ECB surprises the market by cutting rates 25 basis points or more, then expect market to go into a selling frenzy and we should jump in immediately on a spike trade because no matter what the slippage or spread is, we will end up making positive pips. Of course, if ECB decides to keep rates unchanged to as expected at 0.75%, then we should see relatively no change in the market as this lack of move is expected… Please follow the recommendations above ONLY if ECB surprises the market.

Here´s the link to watch the Webcast Live at 8:30am EST – Highly recommended!
http://www.ecb.int/press/tvservices/webcast/html/webcast_121108.en.html

Recommended Pairs : EURUSD, EURNZD

EUR / USD - Euro / U.S. Dollar

Resistances : 

Weekly 1.2875 ; 

Daily 1.284 ; Hourly 1.278

Supports : 

Weekly 1.2655 ; 

Daily 1.271 ; Hourly 1.2735

BOOKS

Forex Price Action Scalping: an in-depth look into the field of professional scalping - Bob Volman - EUR 30,69  

Forex Price Action Scalping provides a unique look into the field of professional scalping. Packed with countless charts, this extensive guide on intraday tactics takes the reader straight into the heart of short-term speculation. The book is written to accommodate all aspiring traders who aim to go professional and who want to prepare themselves as thoroughly as possible for the task ahead. Few books have been published, if any, that take the matter of scalping to such a fine and detailed level as does Forex Price Action Scalping. Hundreds of setups, entries and exits (all to the pip) and price action principles are discussed in full detail, along with the notorious issues on the psychological side of the job, as well as the highly important but often overlooked aspects of clever accounting. The book, counting 358 pages, opens up a wealth of information and shares insights and techniques that are simply invaluable to any scalper who is serious about his trading.

Forex Price Action Scalping: an in-depth look into the field of professional scalping - Bob Volman - EUR 30,69  

AU RBA Interest Rate

 November 5, 2012

RBA (Reserve Bank of Australia) is expected to keep its borrowing costs unchanged at 3.50% as per general market consensus, this is following last meeting’s decision to also keep the rates unchanged…

Here´s the forecast for this news release:
10:30pm (NY Time) AU RBA Rate Decision Forecast 3.00% Previous 3.25%
DEVIATION: 0.25% (SELL AUD 2.75% / BUY AUD 3.25%)

Definition:Australian interest rate is often refers to as the “cash rate target”, also called the official cash rate (OCR) or cash rate. This is the Australian base rate. Banks pay this interest rate when they take out a loan with a maturity of 1 day from another bank. By buying or selling bonds and other securities issued by the government the RBA can influence the money supply and thus the cash rate target. A rise or fall in the cash rate often also leads to a change in the interest rates for mortgages, loans and savings.

The Trade Plan
If RBA decides to cut interest rate, we will stay out… If RBA decides to keep rates unchanged, we’ll BUY of AUD as market expects a cut. Ultimately we are neutral to slightly bullish on the AUD as AUDUSD has risen from recent low levels and could continue after today’s rate decision, especially considering the potential for more economic stimuli from China. With China likely to cut its RRR or benchmark interest rate soon, RBA has slight higher probabiliby of an upside move after the decision today, regardless of the outcome…

Recommended Pairs : AUDUSD , GBPAUD, AUDJPY

AUD / USD - Australian Dollar / U.S. Dollar

Resistances : Weekly 1.042 ; Daily 1.0395 ; Hourly 1.0365

Supports : Weekly 1.0235 ; Daily 1.0305 ; Hourly 1.033 

THE BEST OF MUSIC

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THE BEST OF BOOKS

Currency Trading and Forex 100 Success Secrets - 100 Most Asked Questions on Becoming a Successful Currency Trader - Frank Brill - EUR 14,73 

Currency Trading in the Forex and Futures Markets - Carley Garner - EUR 28,69 

Carley Garner has created the perfect book for anyone interested in getting started in currency trading. Whether you are an experienced trader of stocks or options looking to diversify markets you can trade or you are completely new to trading in general this book will get you on the right path very quickly.

The book warns novices of both the dangers and possible rewards of trading currencies. "The goal is to give you a realistic idea of what to expect in order to avoid becoming a statistic".

The author takes you through currency trading step by step from understanding the difference between FOREX and currency futures to how to trade them. The reader will get an understanding of each currency pair and a table with each three letter abbreviation for currencies and the order in which they are paired. You are advised to stick with the currency 'majors' for liquidity and avoid the 'minors' so you are not hurt with the wide bid/ask spreads in low volume markets.
Currency pair values per contract are $100,000 per standard contract, $10,000 per mini contract, and $1,000 per micro. The book also has a table for currency futures contracts.

While FOREX traders are able to leverage their trades with 50 to 1 margin the author warns traders about the dangers of leverage and how it can wipe out your account. There is always an equal downside risk for every possible upside profit with leverage and currency traders would be wise to trade appropriate position sizes that does not put their entire account at risk in one trade.

Carley warns readers that many FOREX brokers that claim to be commission free are really just taking the other side of your trades as off exchange trades instead of executing your trades on the open market like currency futures brokers do through a centralized and regulated exchange. Many FOREX brokers make their money through the bid/ask spreads that you buy and sell at when getting in and out of trades. Also FOREX trading has counter party risks while currency futures trading is guaranteed by the exchange to make all parties whole.

"FX and futures traders are not buying or selling an asset; instead they are trading a liability that is dependent, or derived, from the value of the underlying asset; thus, they are known as derivatives."

She also covers different technical indicators to use in your trading and how they measure price to give buy and sell signals. You will also get the basic styles of trading and what usually works in the currency markets.

I strongly advise any trader interested in trading currency markets to first read this book by Carley Garner before you venture into those waters. 

UK Services PMI

November 5, 2012

We´ll be trading the UK Services Purchasing Manager Index today at 4:28am (NY Time). This is a leading indicator similar to the Manufacturing PMI that was released early this week, here´s the forecast:

4:28am (NY Time) UK Services PMI Forecast 52.0 Previous 52.2
Deviation: 2.5 (BUY GBP 54.5 / SELL GBP 49.5)

The Services PMI is tradable with a minimum deviation of 2.5 between the forecast and the actual release. If we get at least 54.5 or better, we could see some demand in the GBP and we will consider BUYING GBP against weaker currencies. If we get a 49.5 or lower, GBP could weaken and we should look to SELL GBP against stronger currencies.

DEFINITION:
The Chartered Institute of Purchasing and Supply (CIPS) Services Purchasing Manager´s Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation´s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company´s performance, which can be a leading indicator of overall economic performance.

Recommended Pairs: GBPUSD, EURGBP

GBP / USD - British Pound / U.S. Dollar

Resistances : Weekly 1.6135 ; Daily 1.6085 ; Hourly 1.605

Supports : Weekly 1.591 ; Daily 1.595 ; Hourly 1.6005


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