EU ECB Interest Rate Decision

 December 6, 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.

Recommended Pairs: EURUSD.

Here´s the link to watch the Webcast Live at 8:30am EST – Highly recommended!
http://www.ecb.int/press/tvservices/webcast/html/webcast_121206.en.html

AU Employment Change

December 5, 2012 

Australia Employment Change is similar to U.S. NFP (Nonfarm Payroll) and Canada Employment Change, this is an economic indicator for the Employment Changes in Australia, here´s the forecast:

7:30pm (NY Time) AU Employment Change
Forecast 1.0K Previous 10.7K
AU Unemployment Rate
Forecast 5.5% Previous 5.4%
DEVIATION: 25K (BUY AUD @ +25K / SELL AUD @ -25K)

DEFINITION“Measures the change in number of employed people during the previous month. A rising trend has a positive effect on the nation´s currency. Job creation is an important indicator of economic health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP.”

The Trade Plan
The deviation that we are looking for is at least of 25K. Historically a 25K~30K of difference has produced about 40~50 pips of movement in the direction of the difference about 75% of the time. Expect to see the effect of this news to last minimum 45 minutes to 2 hours; typical news effect should last under 2 hours. One other important news to pay attention to is the Unemployment Rate, which is expected to be tick up at 5.5%. If we don´t get a conflict with the Employment Change, then we will proceed with the trading plan.

We´ll look to trade this using after news retracement trading method, we´ll wait for the market to retrace and stay out of the market during the release time. If we get a +25K of release, our bias will be to BUY AUD against other currencies; if we get a -25K of release, our bias will be to SELL AUD against stronger currencies. We´ll only enter after we see a decent retracement from the initial spike and if we get those release numbers…

Recommended Pairs: AUDUSD, AUDJPY

AUD/USD - Australian dollar / US Dollar

Resistances : 

Weekly 1.055 ; 

Daily 1.05 ; 

Hourly 1.0485

Supports : 

Weekly 1.0395 ; 

Daily 1.0435 ; 

Hourly 1.045

BOOKS
Attacking Currency Trends: How to Anticipate and Trade Big Moves in the Forex Market - Greg Michalowski - EUR 40,41  

I believe 99% of the forex market "mentors" are cons and exploiters, nothing short of ruthless and heartless, the cons have burnt me out of precious moneys, however I read this book(reading again now). I have never ever been in the pips like I am now and recouped most of what the forex crooks robbed me of and it cost me all of 40 usd on Amazon...and I dont open an email about forex unless its my statement, my forex vision is purged of stochastics, RSI, MACD etc clutter and all the associated gumph, I found a simple sharp reliable strategy with this book.

Charts look so clear to me now, I feel like I am seeing inside the market makers mind, After reading this book I can look at a chart, flick thru time frames, through on fib re-tracements correctly and find entry and reentry points onto trends and the greatest thing is... I dont climb off the trend after what I use too think was respectable pips either... I now re-enter and make more.

I can honestly say that I was not profitable before I read this book. Since I got it I have put my 2 trading friends onto it, we all have bought a copy now, and is it coincidence that all 3 of us are trading in the money now...

If you would appreciate some history and roots of technical analysis development and advancement; the first 20 pages are fascinating and are a highlight of nothing less than a revolutionary technical approach to the markets in evaluating risks and identifying targets. It makes one really really grateful for the charting technology we have now at our finger tips. It took 5 reads to grasp, but even if you skipped the whole "Market Profile system" in early pages it wouldnt matter. the book is fantastic.

If I lived in the States I would try and meet the author, its so apparent that this book was not written to make money, its never going to sell enough to be lucrative, how many traders are there out there..., and I am sure he can "print" money with his trend surfing skills, why would he author a book if it wasnt for sincere interest in helping people like me. So I say thank you Greg and some guy "ChaosTrader63" on youtube that directed me to the book.

UK Services PMI

December 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 51.0 Previous 50.6
Deviation: 2.5 (BUY GBP 53.5 / SELL GBP 49.0)

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.

The Services PMI is tradable with a minimum deviation of 2.5 between the forecast and the actual release. If we get at least 53.5 or better, we could see some demand in the GBP and we will consider BUYING GBP against weaker currencies. If we get a 49.0 or lower, GBP could weaken and we should look to SELL GBP against stronger currencies.

Recommended Pairs : GBPUSD, GBPJPY

GBP/USD - British Pound / US Dollar

Resistances : Weekly 1.6175 ; Daily 1.615 ; Hourly 1.6125

Supports : Weekly 1.5995 ; Daily 1.605 ; Hourly 1.6085

BOOKS
Currency Trading in the Forex and Futures Markets - Carley Garner - EUR 28,81 

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.

Currency Trading in the Forex and Futures Markets - Carley Garner - EUR 28,81 

 

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


 A revolutionary method which will change for ever the way of trading in FOREX market. * The FOREX code was unveiled through this ACH15® strategy and now it is not a secret anymore. * A unique discovery which represents a different kind of FOREX, without stress, emotions (feelings). * A harmonious combination between arbitrage, correlation, hedging, plus 15 original and dynamic principles.

The author is a discoverer and also an engineer. So far he has made 4 discoveries (the first one is a financial method/mechanism using compounding for obtaining financial independence after several years, the second one is a spatial chess on 3 levels which is 20 times more powerful than the classical chess, the third one is this 100% safety FOREX strategy, and the fourth one is a gravitation/anti-gravitation perpetual motion device for producing green electricity).  

 

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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