Technical Talk: 20-03-2018

Technical Talk: NZD/USD turns a blind eye towards breakdown in NZ/US yield differential long positions above 0.7215 with targets at 0.7260 & 0.7280 in extension. Alternative scenario: below 0.7215 look for further downside with 0.7195 & 0.7175 as targets.

Swiss National Bank looks set to follow ECB’s lead

The Swiss National Bank will maintain its expansive monetary policy when it gives its latest update on Thursday, according to a Reuters poll, as the Swiss wait for the European Central Bank to call time on its stimulus program.All 35 economists questioned by Reuters said the central bank would keep its target range for the benchmark interest rate at minus 1.25 percent to minus 0.25 percent. None of them predicted a change until December at the earliest.Respondents also expected the SNB to keep its negative rate of 0.75 percent on sight deposits, one tool it has used over the past three years to reduce the franc currency’s attractiveness. SNB Chairman Thomas Jordan will not want to jeopardize a recent weakening of the Swiss franc and is instead likely to wait for the ECB to tighten its monetary policy before he alters the SNB’s course.The ECB took a further baby step last week towards ending its stimulus package, dropping a long-standing pledge to increase bond buying if necessary

But ECB President Mario Draghi would have to go further and start increasing the ECB’s interest rates before the SNB did the same, most analysts said.

The SNB will change its policy “either when the ECB starts to increase its interest rates or if the euro-franc exchange rate weakens materially towards 1.25” said Maxime Botteron, an economist at Credit Suisse.On Tuesday, the franc was trading around 1.17 versus the euro EURCHF=.The SNB has had negative interest rates in place since January 2015, when the central bank upended currency markets by ditching its policy of pegging the franc at 1.20 per euro.

The resulting rapid rise in the Swiss franc, dubbed the “Frankenshock” in Switzerland, has now been largely overcome, the government said earlier this month. But a highly-valued franc remains a risk to the export-reliant economy by making Swiss products more expensive in the euro zone — its main export market — and reducing the profitability of Swiss companies.As well as negative interest rates, economists polled by Reuters between March 9-13 expect the SNB to continue to use verbal interventions to head off currency appreciation.Last September, the central bank changed its description of the franc from significantly overvalued” to “highly valued”, a description analysts expect the bank to maintain in its communication on Thursday.The franc is roughly in line with where it was prior to the December meeting,” said Jessica Hinds, an analyst at Capital Economics.And given the appreciation of the franc against the euro in late January, we suspect that it [the SNB] won’t want to risk further franc strength by toning down its language.”

Eyes on US CPI as inflation fears could return

Flashing back a month earlier, an upward surprise in consumer prices caused a sharp but temporary reaction to the markets, with stocks sinking and government bond yields surging. While the consumer price index is not the Fed’s favorite inflation measure, and someone could expect the figures to be more informative rather than a market-driver, the numbers popped up in times when investors were already worrying that the economy would start generating more noticeable inflation. Indeed, in February, speculation that price growth could pick up speed increased after the Nonfarm Payrolls (NFP) wage component reached its highest pace since 2009 in yearly terms. Therefore, an upbeat CPI at that time was enough to add fuel to the fire and cause another market turbulence. This time, however, things are different, as Friday’s NFP report did not raise inflation fears but lifted risk appetite as wage growth eased. Therefore, it would be interesting to see whether CPI figures will gain further positive momentum as the forecasts suggest, reviving concerns over inflation ahead of the FOMC policy meeting next week.

 

Happy Trading,

 

Economic Events of the week-IN GMT(12-02-2018)

Key Events of the week

US Consumer Price Index and EU Gross Domestic Product

TUESDAY, FEB 13
09:30    GBP Consumer Price Index 

WEDNESDAY, FEB 14
07:00    GER Harmonised Index of Consumer Prices
10:00    EUR Gross Domestic Product s.a. 
10:00    EUR Gross Domestic Product s.a. 
13:30    USD Retail Sales ex Autos 
13:30    USD Consumer Price Index
13:30    USD Consumer Price Index Ex Food & Energy 

THURSDAY, FEB 15

01:30    AUD Unemployment Rate s.a.
01:30    AUD Employment Change s.a. 

22:30    AUD RBA’s Governor Philip Lowe Speech 

Key economic events for this week: IN GMT

 EVENT OF THE WEEK:  BoE and RBA Interest Rate Decision

TUESDAY, FEB 6
03:30    AUD RBA Interest Rate Decision
03:30    AUD RBA Rate Statement

WEDNESDAY, FEB 7
08:00    EUR Non-monetary policy’s ECB meeting
20:00    NZD RBNZ Rate Statement
20:00    NZD Monetary Policy Statement
21:00    NZD RBNZ Interest Rate Decision
21:00    NZD RBNZ Press Conference

THURSDAY, FEB 8
09:00    AUD RBA’s Governor Philip Lowe Speech
12:00    GBP BoE Asset Purchase Facility
12:00    GBP BoE Interest Rate Decision
12:00    GBP Monetary Policy Summary
12:00    GBP BOE MPC Vote Unchanged
12:00    GBP BOE MPC Vote Cut
12:00    GBP BOE MPC Vote Hike
12:00    GBP Bank of England Minutes

FRIDAY, FEB 9
00:30    AUD RBA Monetary Policy Statement
13:30    CAD Unemployment Rate (Jan)
13:30    CAD Net Change in Employment (Dec)

How to read Forex quotes? Part -1

Understanding and reading Forex quotes

For most traders, the very first thing that they will learn when studying the financial markets is reading Forex quotes. Price quotes are the language of the markets, so it’s of no surprise that it’s a language that every trader is – or aspires – to be fluent in. Once you become a trader, whenever you hear the word quote you will automatically think of the financial markets, rather than the official definition of someone repeating the words of another.

Quote name

First of all we have two currency symbols (or ISO codes) separated by a slash. EUR, which is the currency code for the European Union euro – and USD, which is code for the United States dollar. Usually, codes are comprised of the two first letters defining the name of the country and the last letter for the name of the currency. Thus, the United States dollar is the USD, the Great British pound is GBP and the Japanese yen is JPY.

Two codes make a currency pair. All currencies are quoted in pairs. The reason for this is simply because in order to express a value of anything, you need something else to compare it to – or in our case, quote against. Continuing with this example, EUR/USD is a currency pair where the relative value of the euro is expressed in US dollars. The first currency in all Forex trading quotes – in this case the euro – is called the base currency, while the second one is called either the counter currency, terms currency, or quote currency.

Most currencies you will deal with as a spot Forex market trader will be quoted against the US dollar, with a few rare exceptions (mostly from a list of exotic currency pairs). Among the major currency pairs, the only two with the US dollar being the base currency are USD/JPY and USD/CHF. The first pair is easy to read, as it’s simply the US dollar against the Japanese yen. However, the second pair, which is the US dollar to the Swiss franc, is more difficult to interpret. This is because the CHF code references the old Roman name of Switzerland, which is Confederatio Helvetia.

To be Continued ……

 

Happy Trading,

D.Edward

 

Economic events of the week-IN GMT

EVENT OF THE WEEK: Non-Farm Payrolls (FRIDAY, FEB 2-13.30)

MONDAY, JAN 29
13:30 USD Core Personal Consumption Expenditure – PI
13:30 USD Core Personal Consumption Expenditure – PI

TUESDAY, JAN 30
09:00 GER Harmonised Index of Consumer Prices (YoY) (Jan)
10:00 EUR Gross Domestic Product s.a. (YoY) (Q4)
10:00 EUR Gross Domestic Product s.a. (QoQ) (Q4)

WEDNESDAY, JAN 31
00:30 AUD RBA trimmed mean CPI (QoQ) (Q4)
00:30 AUD Consumer Price Index (YoY) (Q4)
00:30 AUD RBA trimmed mean CPI (YoY) (Q4)
10:00 EUR Producer Price Index (YoY) (Dec)
13:30 USD Average Hourly Earnings (YoY) (Jan)
13:30 USD Average Weekly Hours (Jan)
13:30 USD Nonfarm Payrolls (Jan)
13:30 USD Labor Force Participation Rate (Jan)
13:30 USD Unemployment Rate (Jan)

10:00 EUR Consumer Price Index (YoY) (Jan)
19:00 USD Fed’s Monetary Policy Statement
19:00 USD Fed Interest Rate Decision

THURSDAY, FEB 1
15:00 USD ISM Manufacturing PMI (Jan)
15:00 USD ISM Prices Paid (Jan)

FRIDAY, FEB 2
13:30 USD Non-farm Payrolls (Jan)
13:30 USD Unemployment Rate (Jan)

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Best Elliott Wave software!

Traders are often curious in terms of automating their analysis and receiving entry and exit signals instead of just looking at shapes plotted over a chart. This is the case with many popular indicators, yet the popularity of automated software for Elliott Wave analysis seems to be growing in the demand in recent years. Once you start trading Forex online and base your trading strategy on EW indicators, you might eventually start looking for Elliott Wave software, as it can simplify the whole wave determination process.

Using software to automate a certain process is usually treated as a step forward, yet when it comes to trading, there are many companies that promise to deliver cutting edge technology, but instead only deliver another EA that wrongly plots entry and exit points, making you lose money. This is why any software that is designed to substitute a trader’s analytical process should be chosen with a great care. In this article, we’re going to explain what Elliott Wave analysis is, and then we’re going to discuss what the best Elliott Wave software for Forex trading and how to use it.

What is EW analysis?

Developed in the first half of the 20th century by Ralph Elliott, EW analysis currently occupies an important niche in technical analysis in the Forex market.

Elliott’s theory of waves looks into the study of crowd thinking. It tries to find a pattern in trader psychologies and aims to predict the possible outcomes of it on a chart. The idea behind EW analysis is to determine the waves caused by a general set of investors’ emotions. Once there is a substantial amount of traders that believe in an asset price going up, they will go follow it, and inevitably the price will go up due to this.

While wave analysis is not too difficult, it is important to note that it can be difficult for beginners. This is the main reason why novice traders tend to look for various trading applications that can simplify the process of identifying waves for them.

Advanced traders will want to focus their efforts elsewhere rather than spend time trying to identify patterns and waves, so this is usually another reason why people look for Elliott Wave analysis software.

How to choose EW software ?

To answer this question shortly – you should go for the software that will help you trade better. In addition to this, the application that you are planning to get should always come with a free trial, as any respected trading software developer should offer traders the chance to preview the program and to see if it is right for them. It is also advisable to choose EW software that is available for your browser or has a plugin for MT4. This way you can avoid installing multiple applications that could slow down your machine. When it comes to selecting Elliott Wave software for Forex trading, it is necessary to mention that there are many scams in the industry. Usually such companies are trying to sell you useless codes that claims to generate 40 – 60% daily payouts, while it costs 25 USD. It’s better to avoid anything offering low prices for high payouts – they are usually too good to be true.

What you have to understand is that advanced software for trading analysis comes at a high price. This is normal. If something enables you bring in thousands of pounds worth of profit each month then a cost of 100 – 200 USD per month is reasonable. You are getting back much more than what you are investing. The software that we are going to review in this article is useful, but expensive. You may start with a free trial of course, yet it may have a limited value to you if you are not a professional trader.

Happy Trading !

Learn How To Trade Forex Successfully?

Once you have developed an interest in Forex trading, the next step is to learn how to trade Forex successfully. There are a number of ways you can learn Forex trading online and in this article we will show you the best methods when learning to trade, as well as provide you with five vital tips for starters. We’ll begin by explaining why education is so important at the start of your journey into Forex trading.

Importance of Forex education

The Forex market is constantly changing, so traders need to be able to understand the ups and downs of this market. There is no patterned formula or set of rules to guarantee success in Forex. Instead it is a combination of many things all at once – and to succeed in this market traders need to be patient, talented and mindful. Understanding this is the first step in Forex learning.

Being able to talk about ratios, charts, indexes and trading should be be regarded as a skill to aspire to when you start to learn about Forex trading. In the beginning it can be tempting to rush through your learning, but it’s important that you step back, take the time you need and advance at a sensible rate. You need to be able to constantly evaluate your performance, and understand the reasons behind your wins and losses. Now let’s see why should you learn how to trade Forex the right way.

How to trade in Forex

Below are some tips that can help you become a successful trader in the Forex market. These tips will help you understand how to trade on Forex, especially if you are an absolute beginner.

Recognition

In order to earn maximum profit, you must acknowledge the risk and safety zones in the market. For this you have to be self-aware. The first step in becoming self-aware is to make sure that any capital invested and risk tolerance to Forex trading is at the right level. In short, you have to be able to analyse your aims and objectives and trade accordingly. This is the most important thing to note on how to trade Forex for beginners.

Invest what you can bear

One of the best tips for any new trader is to start with small amounts and only increase the capacity of your account with your profit – not by further deposits. You don’t have to invest a large amount to earn profit – you can maximize your investment however small it is. By starting out small, you cut down the risk of heavy losses when large volumes of cash are involved. This is an essential part in understanding how to trade Forex online.

Start with a single currency pair

The currency trading world is complicated due to the unpredictable nature of markets, different characters and tenancies of it’s participants. It is difficult to be a perfect trader in the financial world. For this reason, it advisable to begin by focusing on a single currency pair – preferably one you are familiar with and can easily update yourself on. It may be better to choose one which uses the currency of your nation, or one which is widely traded. This will make it easier for you to learn Forex market trading.

Control your emotions

If you find yourself becoming concerned about the market and effects on your trading, don’t follow your emotions. Giving into feelings of panic, greed or excitement is a surefire way to ruin your trading career. Instead, maintain a logical and practical approach to your trading. All traders should have a predetermined trading strategy to follow, so make sure you follow it. Don’t suddenly change your mind halfway through a trade based on emotion – you’re more likely to make irresponsible decisions which can cost you greatly. Whilst this tip isn’t a direct answer on how to trade Forex, it can certainly help you avoid costly mistakes.

Keep a record

We learn from our mistakes, and this can be deeply implemented in Forex trading. Keep a record of your successes and failures and any key mistakes and positive steps that you have taken in order to achieve your desired profit. This is an important step in learning how to be successful in Forex

USD/JPY takes a sharp U-turn on Trump, breaches 109.50

A renewed risk-off wave gripped Asia, in response to the latest comments from the US President Trump, sending the USD/JPY pair sharply lower from four-day tops of 109.83.

USD/JPY: Risk-off back in vogue?

The spot failed just below 20-DMA resistance located at 109.92, and came under aggressive selling pressure after the US President Trump threatened a government shutdown over the Mexican border wall funding, fuelling nervousness across the financial markets, which propped the safe-haven demand for the Yen at the expense of the  US currency.

As a result, the USD/JPY pair quickly eroded 50 pips and moved lower towards 109 handle, as souring risk sentiment dents the sentiment around the Asian stocks, with the Nikkei 225 index paring gains to now trade at daily lows of 19,431.50 points.

Moreover, a cautious tone sets into the markets as investors remain wary ahead of the Jackson Hole Symposium commencing this Thursday, with expectations that the Fed Chair Yellen may offer some hawkish hints on the US interest rates outlook.

Meanwhile, the pair also remains under pressure amid better-than expectedJapanese flash manufacturing PMI report, which lifted the sentiment around the Yen, as markets look forward to the US flash manufacturing PMI and new home sales data due on the cards during the NA session.

USD/JPY Technical levels                 

To the topside, a daily close above 10-DMA located near 109.50 would shift risk in favor of a re-test of 109.92/110 (20-DMA/ round number) beyond which 110.37 (Aug 17 high) would be back on sight. A break below 109 (zero figure) would open doors for 108.58 (multi-month low). A break lower would yield a test of 108.11 (April lows).