You can check it out by clicking on the below link:

Sorry for those that missed last month’s edition, I was away on vacation so I was unable to publish it.

October’s edition of the fabulous magazine:

Also, last month’s edition can be found by clicking the below link:

The current account is also known as an economy’s trade balance. If you have a surplus trade balance it means the economy is exporting more than it is importing. The Japanese traditionally have a surplus while the US has had a large deficit for decades.

The current account is one half of the balance of payments. The balance of payments measures all capital and trade flows in and out of an economy. The other half of the balance of payments is the capital account. The capital account should be nearly the mirror image of the current account and therefore “balances” the trade surplus or deficit.

Because the U.S. sustains a large current account (trade) deficit it has a large capital account surplus. The capital account tracks all changes in asset ownership. For example, the U.S. “finances” its current account deficit by selling debt. The transfer of that ownership in debt is tracked in the capital account. The balance of payment in Japan works similarly.

Now that you know what the balance of payments is and how the current account or trade deficit fits within that measure, you can start to apply that information to the trend on the USD/JPY. If exports continue to drop in Japan and the deficit grows, demand for the JPY should weaken. The deficit also creates problems for economic growth in Japan, which should also weaken the JPY.

If you know that the fundamentals are aligning themselves in favor of a weaker JPY you know what direction the USD/JPY or other JPY forex crosses are likely to trend in the near term. Take the chart below as a good example of this application. The JPY has strengthened a few times over the last few weeks and each time has bounced back up from the 23.6% retracement support level.

Daily Chart of USD/JPY


The USD/JPY is at the 23.6% retracement level again and may be lining up for an interesting buy opportunity. A move up from this level could extend all the way to the neckline of 2008’s head and shoulders pattern near 105.00. Aligning fundamentals with technicals like this can help forecast the near term trend.

June’s information edition:

To help combat the rampant slime in the market, we frequently offer tips and hints for avoiding forex scams. Here’s a link to our most recent article on Avoiding Trading Scams.

To supplement that, I thought I’d give a few links to recent forex scams in the news as a warning for traders to watch and be prepared.

A man in Washington state used his church connection to run a forex scam:
http://www.hedgeco.net/news/04/2009/seattle-scam-targets-church-members-senior-citizens.html

The CFTC raids a Florida company in the middle of the night and secured documents proving the company’s forex investment product was a $17 million scam:
http://www.naplesnews.com/news/2009/apr/07/naples-man-part-group-charged-17-million-investmen/

Surprise! A Forex Investing company in Nigeria wasn’t quite on the up and up:
http://www.thetimesofnigeria.com/Article.aspx?id=1581

An article on the general cost and pain of investment scams:
http://www.politonomist.com/the-unspoken-ponzi-price-tag-002096/

And in case you’ve missed last month’s edition, you can find it below:

You can hit up the website by click on the following link: ForexLive!

Launched today in beta form, Trader Sentiment lets you broadcast your opinion on currencies, commodities, stocks, and interest rates – right on your FF profile!

It’s pretty simple – you share your sentiment through an interface in your Control Panel, which then shows up on your public profile. Now everyone knows your detailed market outlook at any given time!

At this point Trader Sentiment is just a neat feature, but it can become a super useful tool if lots of people use it regularly. For starters, we could mine the community data to show aggregate sentiment in truly useful and groundbreaking ways. We could also create alerts for sudden sentiment changes, show community and individual sentiment history, let you subscribe to another member’s sentiment, or even view your friend’s aggregate sentiment!

So try it out now!

If you missed out on April’s edition, you can click on the below link to download your copy today:

Click on the below picture to download your copy today.

If you missed last month’s edition, you can download it by clicking the below cover.

Due to the successful launch of the MetaTrader 4 (MT4) platform, we have decided to make it available to more traders by lowering the funding requirement.

You can now fund an FXCM MT4 account with as low as $2000! Open an Account

Here’s what an FXCM MT4 account offers you:

1. Financial Strength and Transparency

   We offer you the advantage of trading with one of the largest and most financially strong Forex Dealer Members (FDM). As of December 31, 2008, FXCM Holdings held over $145 million in liquid assets.

   Financial worth is especially important in view of the current transformation of the forex industry, as tough new minimum capitalization requirements force small brokers to terminate their regulatory status. In fact, several brokers currently offering MetaTrader 4 are unregulated in the U.S.

2. No Dealing Desk Execution*

   Most other forex brokers offering MetaTrader 4 do not have No Dealing Desk execution, which means that they may be assuming the trade risk themselves. FXCM chose the No Dealing Desk model to eliminate that kind of uncertainty, as well as to avoid a conflict of interest with traders.

   FXCM’s monthly trade volume of $600 billion is the reason we have maintained close relationships with eight global banks and financial institutions—some of the most aggressive forex price providers in the world. With MetaTrader 4 as the front end and No Dealing Desk execution as the back end, we fill your orders from the best prices available to us from these institutions as they compete to provide FXCM with tighter spreads.

Open an Account today!

Each month, Currency Trader magazine brings you the best strategies, analysis, news and trading resources for the global forex market. Among the features covered in every issue:

Trading strategies and systems
The best source for technical, fundamental and quantitative approaches of trading strategies and systems. We also focus on the all-important issues of risk control and money management.

Trading Strategy articles discuss both the why and the how – the logic behind a trading approach, not just the rules to execute it. Strategies are spelled out so you can research and test them yourself, with programming code for top analytical software platforms provided when applicable.

Special strategy articles (“Spot check”) statistically explore behavioral characteristics and tendencies in different currencies and the relationships between currencies and economic data. This type of analysis can provide excellent ideas for trading strategies and systems.

The “Big Picture” section features articles with a more macro perspective, looking at the longer-term picture and analyzing the larger market relationships that provide the context for trading.

Articles give subjects in-depth treatment — clearly explaining key concepts and providing background information and detail often absent in other sources.

Download the latest copy here FOR FREE!

If you’ve missed last month’s edition, you can get get it by clicking the below cover.

If you’ve missed it, below is December’s edition of Currency Trader magazine:

In 2008, a perfect storm hit the world financial markets, flooding hundreds of firms to the level of bankruptcy and forcing many investors to liquidate their leveraged positions. Many were quick to blame Wall Street, but only history will tell what was the real cause behind such a terrible year from an economic stand point. The truth is that the biggest housing and credit bubble in history continues to threat the entire global financial system and the once resilient global economy is slowly succumbing to tight credit conditions. In fact, I expect more pain in 2009, possibly triggered by a second wave de-leveraging in the financial sector and by more payment defaults in the U.S. mortgage sector. Having said that, I expect risk aversion to dictate most of next year’s price action in the currency market which will probably help lower yielding currencies like the Japanese yen and safe-heaven currencies like the U.S. dollar. On the other hand, with the global economy slowing down is reasonable to think that the demand for commodities will also begin to slow down which could make the Australian and the Canadian Dollars very vulnerable going forward. I have been short AUD/JPY since the beginning of October 2008 and I expect the Australian dollar to fall to 50 yen in the first half of 2009.

 

Risk is on everybody’s mind these days, and the January issue of Active Trader (now on newsstands) features an interview with risk expert Ken Grant — founder of Risk Resources and the former risk manager for SAC Capital and Tudor Investments. Grant, whose firm handles risk management for hedge funds and also numbers the Chicago Mercantile Exchange among its clients, had begun advising clients to reduce risk more than a year before the September-October massacre. As the crisis deepened this year he also sounded early warnings that the hedge-fund redemption process was still far from over — a story that has come to the forefront of financial reporting in recent weeks. In the January issue, Grant offers his perspective on the nature of this historic financial panic and the challenges the markets face in the months to come.

If you missed last month’s juicy copy, you can download it here:

Here’s further details I got from my ‘Early Release’ e-mail from FXCM:

The minimum account size is $5,000.

As an FXCM MetaTrader 4 client, you will enjoy the following advantages:

1. Our financial strength—and transparency

   The forex industry is being transformed. Tough, new financial regulations may force many small member-brokers out of business or may terminate their regulatory status. In fact, several brokers currently offering MetaTrader 4 are unregulated in the U.S. Many of them are, in our opinion, dangerously under-financed.

   We offer you the advantage of trading with one of the largest and well-capitalized Forex Dealer Members (FDM). The FXCM Holdings, LLC. is regulated on three continents—North America, Europe, and Asia—with over $95 million in capital and approximately $700 million in customer funds trading on FXCM platforms. And we are the only North American FDM to publish a complete financial statement on our Web site. 

2. Our trading signals help you find trading opportunities—at no cost

   Our DailyFX Plus site offers our clients free access to a powerful new suite of strategies, signals, and trading ideas unique to FXCM. One program, for instance, finds high-probability trade signals. Still another provides clear buy/sell alerts to timely trading opportunities discovered by DailyFX, one of the largest and most prestigious research groups in the industry.

3. No Dealing Desk* execution: Tighter spreads

   At $350 billion monthly, FXCM’s trading volume may be among the world’s largest single source of retail currency trades. That is how we have maintained close relationships with eight global banks and financial institutions—some of the most aggressive forex price providers in the world. With MetaTrader 4 as the front end and No Dealing Desk execution as the back end, we fill your orders from the best prices available to us from these large banks and financial institutions as they compete to provide FXCM with bid and ask prices—some of the tightest spreads in the industry.

Sorry I haven’t been in for a while as I have been real busy with school and work however I have kept an eye on the markets and they are quite volitile with all the U.S. debacle that is going on with the mortgage crisis and the bailout of several public and private financial service companies.  At this moment, I would recommend staying on the sideline with plenty of $ to capitalize with there is some kind of direction and stability which should occurr after the Presidential elections take place.  For the time being I am still short USD as it is quite imminent that a fall will occur given that there is a long term dead cat bounce on the dollar.  Happy trading!

Click on the below picture to obtain this month’s sizzling copy of the premier Currency Trader magazine or last month’s edition which is below it.

Last Month’s Edition (for those who missed it)

I am seeing two great setups at the moment, both Australian Dollar based pairs:

AUD/CAD – Daily Chart

AUD-JPY, Daily Charts

…..

In other news, the fine folks at FXCM.com have released their MetaTrader based platform and the big plus in going with FXCM lies in their No Dealing Desk trading execution and is one of the largest Forex institutions on the planet.  You can find more details here.

….

July’s Edition of Currency Trader Magazine! – jam packed with articles, strategies and all things related to the world of Forex.

Last month’s magazine can be found here.

Not many new trades taken on the horizon especially with red-important news meetings going on today but will be looking to capitalize this recent rise in the USD and subsequent EUR rises due to inflation worries in both nations.

I haven’t seen much potential trades lately as the markets are still in disarray with many companies posting lower profits and write offs.  The general consensus for the upcoming interest rate decisions coming out from the Federal Reserve seems to favour a mild 25 bp cut on April 30th.  On the opposite spectrum lies the differentiating policies shown by the ECB gear towards further possible inflation combating hikes as their CPI still remains above their comfort zone.

As for potential setups, I am seeing a lot of Yen and Swiss Franc appreciation on the longer time frames.

The Japanese Pairs: 

Any breakout showing Yen strength may signal a short entry on the pair.  Below are two examples of such on the daily charts: USD/JPY, CAD/JPY.  A similar setup can be also found on the GBP/JPY.

 The Swiss Franc: 

Similarily to the Yen, the Franc has seen rapid appreciation in its currency against the USD, CAD and GBP (all of whom are on rate cutting campaigns).

EUR/USD: 

The crown jewel of the currency trading community keeps rising everyday and there hasn’t been any hints by Trichet stating a change in policy.  Thus, everyone should looking to keep capitalizing off its continued ascent.  Another powerful trending pair would also lie in the EUR/GBP pair.

Happy trading! and I will be out of the country for beautiful Hong Kong for the next two weeks thus I will not be able to capitalize off these plentiful opportunities but I hope that I have shown you enough where you can score off major pips which may occur in the next few days/weeks!

Taken this in account, I see a potential setup coming nicely along on the 4 hour charts on the AUD/NZD pair.

For those daring folks, I see juicy setups on the GBP/JPY and USD/JPY both on the Daily charts and trending downward quite nicely.

and if you missed last month’s issue, here is the link as well.

A great setup I am spotting at the moment is the AUD/JPY pair as it is beautifully bouncing off its 200-day SMA and the last time it did this, it bounced up for 2000+ pips within a two months span last year.   Thus, i’ll be looking to enter this trade on the Daily charts with a breakout of the downward range going on.

Here are the charts so you can see what i’m jabbering about:

Weekly Setup Chart:

Daily Trigger Chart:

With regards to my previous position on EUR/AUD, it basically broke out and then came crashing back resulting to my break even stop loss.  No harm done!

March Trading Results:

March 13 – AUD/CHF – +120 pips
March 13 – EUR/AUD – +120 pips
March 12 – EUR/USD – +92 pips
March 5 – EUR/GBP – +34 pips

Total Pips for February = +366

Here is the current setups that I am looking to capitalize upon and if you’ve noticed, all three consist of an Aussie dollar within the pair:

EUR/AUD, 4 Hour Setup

AUD/JPY, 4 Hour Setup 

AUD/CHF, 4 Hour Setup 

Similarly, the CAD pairs are showing strong trendy strength especially in the EUR/CAD and CAD/JPY pairs however I am currently not looking at these due to a major news being released today.

In that case, it is good news as a majority of pairs have now moved back into the dynamic area of resistance (area between the 30 and 50 simple moving averages) which may result in a spring board like effect to the direction of the SMAs.

Here are a 3 potential setups on the 4-hour chart that I am currently eying and may likely break within the next couple of hours.

EUR/USD:

USD/CHF:

USD/JPY:

I also stumbled upon this great article written by the fine folks over at DailyFX.com regarding the Top 5 Most Market Moving Indicators for the U.S. Dollar and may help the newbie trader determine what news exactly impacts the US Dollar and is also a good primer for those who’ve been in the game for a while as well.

What a spectacular Friday we had last week with the announcement of a pending Fed bail out of the 5th largest American investment banking company, Bear Stearns, which subsequently allowed another American bank, JP Morgan & Chase, to purchase the company for a fire sale price of $2/share ~ $236 million.  Even more hilarious was that the buyout was brokered by none other than the Federal Reserve at this stunning low price as many analysts predicted that the company was still worth a good $30/share.

So how does this relate to the Forex world?

Massive risk in the market signified by the Dow Jones Industrial Average Volitility Index (^VXD) spiking to the 28.62 area caused traders/investors/speculators to bail out of their positions which was financed by the carry trade leading to appreciation in the Yen and Swiss Franc pairs.  Such drops of 1,000 pips were noticed on a majority of these carry trade crosses stemming on Friday until Sunday night.  Meanwhile, the U.S. Dollar continues its free fall into oblivion as seen by the US Dollar Index (^DX-Y) approaching a critical 70.000 support level shortly.  Next week the market will follow the Bear story and will then quickly turn its focus to the FOMC rate decision on Tuesday.  Most analysis were looking for a 50bp cut, but with Friday’s news now affecting trade, expectations have ratcheted to 75bp or even an unprecedented 100bp cut.

So how can I capitalize off this?

I’d be looking to exploit further USD weakness especially pertaining to the commodity pairs such as the Canadian, Australian and New Zealand dollars simply due to the fact that Gold is approaching the critical $1,000/oz tag and Oil trading at record highs on an almost daily basis currently at $120/barrell.  The risks on any carry trade based pairs are simply too risky at this moment in time and I shall be staying far away from those.

Potential Setups:

NZD/USD (Kiwi) on the Daily Chart

GBP/AUD on the Daily Chart

GBP/USD (cable) on the 4-hour Chart

Well well, nothing going on lately with regards to high probability trades so I decided to experiment on a demo account regarding HectorTrader’s dynamic resistance area.

If you don’t know what the area is, it basically consistutes the area between the 30 and 50 SMA where most positions reverse to the direction of the trend.  In this instance, I basically took trades early that were in the reisistance area at the first sign of a bar into the direction of the trend.

Example #1:

I took this trade based on the 4-hour chart on the AUD/CHF pairing while the pair traded at the dynamic resistance area where it breached the previous weeks support.  At the time of this post, this pair is up +120 pips and has reached the second resistance area at the bottom blue line.

Example #2:

My second experimental trade was similar to the above trade as in taking the position early into the trade when the pair is trading within the resistance area.  The results were again positive with +120 pips at its peak and the pair traded all the way to the previous resistance area before pulling back and now looks like a head and shoulders pattern which may be heading back to the dynamic resistance area.

Conclusion:

More experimental trades to come as the dynamic resistance area so far proves to be a good indicator of a momentum change.

March’s edition is jam packed with information and for those who haven’t heard of this magazine, it is the premier magazine dedicated to the currency market and contains tons of information pertaining to whats new in the industry.  You can kindly download a free copy of March’s edition or if you missed last month’s edition, you can find it here.

Status of Open Trades:

My prior EUR/USD position is still open and is currently up +60 pips and has been seesawing within a narrow band between 1.5300-1.5400 and I have already set stop loss to break even so no harm done.  My target still remains to be 1.5450.

Potential New Trade Opportunity:

Another possible position may present itself at the moment is the GBP/CHF pair on the 4-hour time frame to the downside.  It has been trading for the last two weeks in a consolidated range and has finally broke out towards the trend of the 3 simple moving averages.  I will look to exploit this downside upon the breakout and pull back configuration.  Here’s what is showing up on my screen at the moment:

As expected, both the European Central Bank and Bank of England kept their interest rates changed at 4% and 5.25% respectively.  ECB President Trichet signalled that strong upward pressure on inflation will remain their central focus which boads well for the appreciation of the Euro.  The USD continued its downward spiral into oblivian with more bad news of write downs and here is 5 reasons why it will continue.

Positions:

My second portion of the open EUR/GBP position is only up +2 pips at the moment and was very close from hitting my stop loss which would have resulted in an -9 pip loss but I will leave it open as it is trading in a narrow range especially given the Euros strength.

I also opened a second position on EUR/USD after the interest rate announcement with a smaller than usual lot size and it is currently up +84 pips and am looking to exit before the 1.500 area however if there is a lot of resistance at the 1.5400, I may well cash out early.

EUR/GBP

As you can recall from this trade I took last Thursday on the Daily chart, it has been moving relatively sideways until last night where it shot up for a good 25 pips to the upside breaching above its prior triple top confirmation on the 1-hr.  Hence my reasoning for taking one half of position off resulting in a profit of +34 pips.  The other lot will trade risk-free but 0.7695 remains a profit target as the pair seems to be trading a little ahead of itself.

Another potential setup on the 4-hr chart for the EUR/USD with a breakout of the 1.5300 area.

It’s been a very busy week for me outside of the Forex world and i’m back to update you on the progress of my outstanding positions.  From a quick glance, it looks like the looming sub prime mortgage debacle is still lingering around and is pounding the U.S. Dollar into submission with fresh new lows against the Euro,  Kiwi and Aussie and the USD/CAD pair is trading below par along with traders pulling out of risky pairs hence the reason for the Yen (3-year low) and Swissy’s appreciation the last couple of days.

I’ll be looking for long on the Euro and short on the dollar for the time being and staying away the CAD and AUD pair for now as there will be major interest rate news to come.  The Reserve of Australia is expected to raise interest rates by 25bp to 12 year highs while the Bank of Canada is expected to cut rates by 25bp to 3.75 percent.  Once the news is out of the way, I will be looking to capitalize from the hawkishness sentiment coming out from the European Central Bank, Reserve Bank of Australia and the Reserve Bank of New Zealand.

February Trading Results

All together, not too shabby month even though I missed countless opportunities on the downward spiral of the British Sterling Pound but again, I was too busy to concentrate fully on Forex hence the majority of the trades were taken on the Daily charts.

February 1  – +288 pips – GBP/NZD
February 5  – +45 pips – EUR/GBP
February 6  – +14 pips – EUR/GBP
February 18 – -33 pips – EUR/GBP
February 28 – +48 pips – EUR/GBP
February 28 – +37 pips – AUD/USD

Total Pips for February = +399

Updated chart of current open position

Currently up +20 pips on my favourite pair as it broke out nicely towards the upside out of its narrow range and would be looking towards exiting half my position near the 0.7700 region.

Also took a trade off the daily charts on my favourite pair, EUR/GBP, as it broke out of its sideways consolidation range to the upside and as this pair is slow moving, it may take a while to materialize.

Another interesting trade taken albeit with a very small lot was on the USD/CAD pair. Similar to the Aussie, I am going with the theme of a declining USD to capitalize upon. The pair broke out of its sideways trading range to the down side and there seems to be no large support really for this pair until the 0.9000 region.

The other trade, GBP/NZD, which I was up +48 pips was stopped out at break-even as the pair simply is trading with a narrow range after breaking out of the downward triangle pattern.

Here is the chart for the EUR/GBP pair:

Another beautiful trade that I missed last night was on the GBP/CHF in which it broke out with ease of its sideways range to the downside. I guess you can’t get them all.

Hey folks! I have decided to switch it up today and have a guest poster chime in and advance our keen knowledge of the forex markets with a very informative article. You find more superb articles from the writer’s collection in the link at the end of the article below.

Most Forex traders, and certainly those who have had any success in the markets, have at least a cursory understanding of the fundamental factors that influence the Dollar. Even those who are new to the markets can be expected to be familiar with the effects of such fundamental factors as inflation, trade deficits, and political on the Dollar’s standing. These, and several dozen other rather obvious variables, are important to study intensely and a good Forex trader should always keep abreast of important developments in all of these areas. And while it is important to never lose sight of these big issues, it can be useful to look around once in a while and examine some more unconventional factors that can influence the Forex markets. These are three of the bigger little factors influencing the Forex markets today.

1. Who’s Who in the EU

The formation of the European Union and the adoption by its member states of the Euro as their currency of choice has caused a dramatic paradigm shift in the Forex markets over the last couple of decades. The Euro has gone from a weakling utilized by just a few small countries to a powerful force backed by some of the most established economies in the western hemisphere. As the composition of the EU changes (the current 27 member states are considering allowing admission to 3 more countries in the near future), the influential Euro is affected, along with the entire Forex landscape. When a new country is admitted to the EU and adopts the Euro as its currency, this development can have one of two effects on the EU’s collective economy and its currency. When an emerging country that has a stronger economic growth rate relative to the EU as a whole is admitted, the outcome is labeled as accretive. When the opposite is true, the effect is labeled as dilutive. It is important to keep track of the ever-expanding EU and its make-up to determine how its currency will be affected and how these fluctuations in the Euro might influence the Forex markets as a whole.

2. Countries with Fixed Exchange Rates

It might seem counterintuitive for a Forex trader to show any interest at all in a country that has fixed its currency to that of another nation. After all, the only action that you can find in the Forex markets is between currencies covered by floating exchange rate regimes. Currencies that are pegged are not affected by the same market principles that affect unfixed currencies and therefore would seem to be entirely uninteresting to a Forex trader. However, a pegged currency can have a huge impact on the currencies to which it is linked, making them very interesting indeed. A prime example of how a fixed currency can affect the Forex markets is the powerful Chinese Yuan. The Yuan is pegged to a number of currencies, primarily to the US Dollar. As of late, the Chinese economy has been expanding exponentially, so in order to hold the value of the Yuan artificially low and keep from breaking its link to the Dollar, the Chinese have been stockpiling Dollar-dominated assets. These actions by China’s Central Bank keep the Yuan low and boost the value of the Dollar. Thus a regime that employs a fixed exchange rate for its currency is able to dramatically affect the Forex markets, however counterintuitive that might seem.

3. China’s growing consumption of raw materials

The Canadian Dollar has recently achieved parity with the US Dollar for the first time in recent memory and the Australian Dollar is creeping up on American currency as well. In addition, the Russian Ruble has outperformed in recent years. What is the driving force behind these success stories? Oddly enough, it’s that no-longer-slumbering economic giant China and its ceaseless demand for raw materials. Canada, Australia, and Russia have stores of valuable commodities such as oil, natural gas, steel and cement; the Chinese want and need these essentials to feed their booming economy and they will pay whatever price is necessary to obtain them. Therefore, the countries that can give China what it needs are benefiting from Chinese expansion. This is yet another way that China, which was until recent years a devoted practitioner of economic isolationism, is now significantly affecting the Forex markets and the global economy.

By-line:

Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for CurrencyTrading.net, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com.

GBP/NZD trade opened last Wednesdays is currently up +48 pips (entered short @ 2.4295) and EUR/GBP (entered long @ 0.7545) is down -8 pips. Both positions were taken on the Daily chart and will probably take a while to materialize.

Aside from the AUD and NZD based pairs, everything else seems to be moving sideways and consolidating right now leaving no real good opportunities to capitalize on. Stay tuned folks, more to come eventually.

I took another trade to capitalize on the GBP downward spiral with a short on the GBP/NZD pair on the Daily chart and I am aiming for +300 pips. Here’s the chart of the action:

Other two possible setups that I am very interested are at the moment lie in the GBP/CHF and CAD/CHF pairs. Other pairs which closely mimic (although are not as nice as the two listed) are the GBP/NZD, GBP/USD, GBP/JPY and CAD/JPY. Here are the two charts as follows:

GBP/CHF: A possible breakout to the down side out of the range support @ 2.1250 would surely signal a short entry.

CAD/CHF: I’m looking for a break-out pull back for me to enter this short position with the target clearly set at 1.0650-1.0600 area as it lies right on the 200-day SMA on the weekly chart.

In terms of news, Chairman Ben Bernanke delivered another pessimistic forecast to Congress on Thursday leaving little doubt that the Fed will continue to lower rates, most likely by another 50bp at the next meeting in March.

There also seems to be a fire sale on the GBP with ALL crosses involving the sterling pound and there exist multiple pairs which anyone can capitalize on at the moment it seems. This new downtrend was sparked by UK government has decided to nationalize the troubled mortgage lender Northern Rock PLC and rejected two private offers despite complaints and threats of litigation from the companies shareholders. This in turn has led the market to believe that more rescues of other UK banking institutions caught in the sub-prime credit crisis may persist in the near future.

I’ve re-entered the trade again as the pair broke out of its flag formation last week however I will enter with a smaller lot than usual as the Northern Rock news also helps my case. If the pair breaks the .7500 region today, it’ll act as great support.

…..

In other news, you guys might want to peek at my buddy Autopips’ blog as he has been having tremendous results on the Demark Trend Line technique with GBP pairs highlighted with 2,543 PIPS on GBP/CHF Auto Trading System alone in January 2008. Perhaps I should go back and revisit this method soon?

If you have been reading my blog posts for the past 2 weeks or so I have been big on the EUR/GBP pair on the Daily charts especially due to its strong appreciating trend that started in September, which coincided with the sub prime fiasco in the U.S. and in turn spilling over to the U.K. With the interest rate decisions out of the way and with BOE and the ECB having differencing goals at this moment, the EUR remains the stronger of the two. BOE cut rates and will remain in an strong retracting phase mimicing the U.S. counterparts whereas ECB kept rates unchanged and is primarily concerned in battling inflation however rate cuts may be in the intermediate horizon.

I have also decided to play around with my entry strategy and to take trades earlier especially in the dynamic area of support between the 30 and 50 SMA as the pattern suggests a breakout to the upside out of the flag formation. Prices has already bounced off the support area three times within the prior 5 months and if history repeats itself, the pair will continue to appreciate.

• CAD (Trade Balance on Thursday)

Bearish for this week:

• CHF (no real significant news this week)
• JPY (GDP q/q (p) on Wednesday)
• NZD (PPI Input q/q on Tuesday, Retail Sales m/m on Thursday).
• AUD (RBA Monetary Policy Statement on Sunday, Employment Change on Wednesday)

Range Bound:

• GBP (CPI y/y and RICS House Price Balance on Tuesday, BOE Inflation Report on Wed.)
• EUR (no real significant news this week)

As predicted, the Board decided to increase the cash rate by 25 basis points to 7.0 per cent yesterday, the highest since 1996, and was spot on with analysts’ forecasts. What was more interesting was what was said afterwards by the Reserve Bank of Australia as new information points to significant inflation pressures. CPI inflation on a year-ended basis picked up to 3 per cent in the December quarter, with underlying measures around 3½ per cent. Indicators of demand remained strong through the second half of 2007, and reports of high capacity usage and shortages of suitable labour persist. In the short term, inflation is likely to remain relatively high and will probably rise further in year-ended terms, though the Bank expects it to moderate somewhat next year. Thus for now, the Aussie remains one of the hottest commodity currency due to current and future anticipated interest rate spreads.

Not much is going on with regards to the trading front as the majority of currencies are sideways trending simply due to the upcoming interest rate decisions from the BOE and ECB. Furthermore, investors also seem hesitant to take bets on major currencies with most Asian financial markets, including Hong Kong, closed on Thursday and Friday for the upcoming Lunar Chinese New Year celebrations.

The BOE is expected to lower its rate further while the ECB rate will likely stay unchanged at 4 percent and all eyes and ears will be glued to the ECB’s subsequent statements regarding any future policy changes and its intended directions as some are betting that the rates will go down by the end of this year, while others expect the ECB to keep the rate on hold for 2008 and start increasing in early 2009. While there is pressure on the ECB to follow its US and UK peers in easing monetary policy, the high inflation in the Euro Zone is preventing it from doing so.

Proceed with caution as the market is trading within a narrow range awaiting for a clear direction as there is also tons of vital U.S. economic data coming in on the horizon on Tuesday and Thursday.

……

Regarding the on-going long-term trade on the Daily chart for EUR/GBP, I’ve decided to close one portion of my lot for a gain of +45 pips simply due to the uncertainty in the market regarding the ECB’s future direction and subsequent profit taking the past two days. The other position is running risk-free with position already set to stop loss and barring any good news, I will look to re-enter again possibly in the 0.7550 area and shooting for the stars with the previous swing high and the full extension of the previous swing to the upside. But for now, I have decided to bank some profit for the month and considering the EUR/GBP’s pip value is twice that of a USD-based currency, it isn’t too shabby at all.

All right, not much went on last week due to the influx of important news stemming solely from the United States stipulating that further rate cuts are forthcoming with many predicting cuts to 1.00% a realistic probability. Job growth as per the Non-Farm Payrolls numbers released on Friday declined dramatically from the already lowly December figures as the biggest job losses were seen in the manufacturing , financial and business services. If February payrolls decline even further, look for the Federal Reserve to cut another 50bp at the March meeting.

The spotlight for this week resides in the interest rate numbers from the AUD, EUR and GBP. Look for rate hikes coming from the Reserve Bank of Australia on Monday at a 25 bp increase to combat inflation as the RBA’s weighted-median index of inflation jumped 1.1% in Q4. Meanwhile the Bank of England takes the opposite view on Thursday as the latest PMI Manufacturing data missed badly signaling UK monetary authorities to follow their US counterparts by initiating a sustained policy of easing via rate cuts. Meanwhile the ECB continues to maintain maintain its rather hawkish posture and will be adamant in keeping rates at their current 4.0% due in part to their industrial sector remaining in an expansionary mode.

Meanwhile according to PFX Global’s Total Fundamental Strength Analysis chart, the pattern is exactly the same as last week with the the New Zealand and Aussie currencies continuing to be the most dominant pair with the Swiss and Yen to remain the weakest.

With respect to trading, the long-term EUR/GBP trade I have going on has reached the +75 pips mark and is 40 pips away from my first target which was the previous swing high and stop loss has been set to break-even.

The only current setup I see that is most likely to take place in the next few hours is the GBP/CHF on the 1-hr time frame and the fundamentals are in line with the weakening of the GBP as seen late last week. Entry around the 2.1380 area seems like an ideal area given that it is the current low of the day, we’ll see how this pans out.

• Further to my last post wherein I entered the GBP/NZD trade, I revised my exit point to 2.4755 seeing that its Friday and profit taking would most likely occur after noon (EST timezone) and the Average Daily Range was literally blown out by a good 200 pips as the usual range is 377 wherein we experienced 578 today. Thus, it is highly unlikely that my original target of 2.4715 will be met within 4 hours (although its currently at 2.4740 w/lots of momentum on its side) and carrying the position over the weekend is rather risky and i’m not keen on letting all that profit disappear given that this pair is a high flyer.
• Anyhow, it is a great start to the month with +288 pips in the bank.

• This trade was taken on the 30th and has never turned negative on me from the get-go however has been ranging from the 0.7450 – 0.7500 region all yesterday and finally broke out to make a new weekly high. It still has a far ways to go and could see lots of resistance to come beginning at the 0.7550 and on. I will monitor the trade however stop loss has been set to break even and current pip count is at 65+ per lot.

GBP/NZD:

• I’ve also taken a minuscule position on this pair as I like the downward outlook on the pair as per the Daily chart and given the relative strength of the New Zealand Dollar (COT + Commodities) lately and poor news coming out of the UK (negative Manufacturing PMI results), this is a decent trade. However I am breaking one of the golden rules by having two pairs of a currency trading at the same time; GBP, however the lot size is minimal and I will try to minimize this doing this in the future.
• Currently up +100 pips on this pair with only one very small lot and will probably terminate this trade very shortly being that its Friday and profit taking sets in. Furthermore, the pair has already overshot its Average Daily Range for the day which only adds to the argument of quitting while your ahead.

…..

In other news, today was U.S. Non-Farms Payrolls and it turns out that the US economy lost jobs in January for the first time in more than four years, a decline likely to further stoke recessionary fears even though the unemployment rate dipped a bit from the prior month. The economy lost 17,000 jobs in January, a surprise drop compared to the 58,000 jobs economists polled by Thomson’s IFR Markets had expected from the survey of employer payrolls. This marks the first monthly loss in non-farm payrolls since August 2003. In summary, nothing really dramatic has changed as the downward spiraling trend and sentiment of the U.S. economy continues and hence putting continued pressure on the lowly U.S. Dollar.

According to DailyFX, “originally we expected a return gradualism, meaning that the 50bp rate cut would be followed by a smaller move, but at this point, we may even see another intermeeting cut. A return to 1.00 percent interest rates is also a realistic possibility. Traders should hold their horses however since we have over 6 weeks before the next rate decision and incoming economic data could easily change the Fed’s minds.”

Jan. 10, -23 pip
Jan. 11, +40 pip
Jan. 16, -32 pip
Jan. 16, +157 pip
Jan. 18, +324 pip
Jan. 23, +240 pip

Total = +706 pips

I think I will continue playing around with my two methods of trading as so far the Demark Trend Line technique has given a bigger risk/reward ratio however with a lower loss ratio than of the HectorTrader 3 SMA technique. However the 3 SMA technique is much more conservative and precise but trading opportunities are quite rare.

The current EUR/GBP trade looks promising too and is currently up +18 pips and since this is a slow moving pair, it’ll be a while until profit targets are met. I’ll add the total to the February pip count since it may be a while until it materializes.

As expected, the Federal Reserve cut interest rates by 50 bp as expected by most analyst and futures traders. Seems like the market enjoyed the news with the EUR/USD and many USD-based crosses skyrocketing close to 100 pips upon the news release.

According to GlobeInvestor.com, “the cumulative 1.25 percentage point reduction in the benchmark overnight rate in less than two weeks ranks among the most abrupt rate-cutting sprees in the modern history of the U.S. central bank.” Let the continued down trend continue throughout the next couple of months which will surely no doubt add fuel to the Euro’s rise above the psychological 1.5000 mark.

…

In trading news, my EUR/GBP pair finally materialized and broke out of its flag formation on the daily charts and i’ll be aiming for the prior high near the 0.7600 region and the full projection around 0.7800. Here is the daily chart and ignore the abundance of trend lines as I got quite bored waiting for this setup to arrive, although I must admit, it does look beautiful.

As currency traders get set for the FOMC meeting announcement at 2:15 EST Wednesday afternoon the only question on everyone’s mind is will the Fed cut 25bp or 50bp this time?

The futures markets are assigning an 86% probability of a 50bp cut however a large majority are betting that the Feds will only cut by a measly 25bp. If the 50bp cut does happen, prepare for major downward pressure being forced on the U.S. Dollar due to the decline in interest rate differentials which may trigger the rise of the EUR/USD to the pivotal 1.500 levels. Furthermore if the latter were to occur with a 25bp cut, short term volatility in the equity market would escalate dramatically yet such actions would allow US policy makers more flexibility to lower rates in the future.

On the trading front, not much is going on and many pairs are off their Average Daily Ranges considerably due to pending announcements in the U.S. which will then set the tone for future trends to occur. Given that I just watched Rambo, I feel pumped for a trade as it has been a while.

As per my last post, EUR/GBP is still ranging within its downward flag formation and any break above the 0.7450 would signal at outbreak with the 0.7400 region providing a great area for support if it were to occur. Here is a quick graph of the triangle formation on the 4 hr time frame:

Another potential setup may lie in the GBP-NZD Daily time frame and given the relative strength of the New Zealand Dollar, another down swing may be inevitably be triggered when the 2.5450 region has been breached.

Lots of news is coming out of the U.S. this week with the big anticipated interest rate statement on Wednesday and Non-Farm Payrolls on Friday. I don’t expect to be trading any U.S. pairs this week as there will be extreme volatility that can go either way. According to Bloomberg, analysts are calling for only a 25bp rate cut but the futures market is pricing in a greater chance of a 50bp cut.

According to PFXGlobal’s Total Fundamental Strength Analysis for the week, it suggests that the AUD and NZD will be the strongest pairs this week with the Yen and Franc again remaining the weakest.

On the COT report charts, EUR/USD and AUD/USD both crossed to the downside which signals a potential downtrend for the week.

I stumbled upon a neat article on DailyFX regarding a New Zealand Dollar’s potential break off its 10-year support line against the Euro and predicts a swing to the upside with potential 3,000+ pip increase once the triangle formation breaks out of its pattern.

I have currently been swinging back and forth between two trading methods: The Demark Trend Lines and the HectorTrader 3 SMA methods. My dear friend, Autopips, is having great success with the the Demark Trend Lines method and I will keeping a close eye on his findings as it provides huge returns albeit with more risky. He has netted 3,216 pips in December alone!

With the 3 SMA method, the EUR/GBP may be ready for its next move up on the Daily charts which can potentially result in an easy 150+ pips to the previous swing high once the downward triangle breaks and as we all know, the pip value on this pair is twice those of USD crosses.

Bernanke and the Federal Reserve responds to the current market cries with an emergency 75bp rate cut to temporarily stop the bleeding sustained in the equities markets around the world . This has limited the downturn on the Dow Jones for the time being with its peak drop today of -300 points. With no hesitation, the Bank of Canada followed suit by cutting interest rates by 25bp to further ease the huge draw downs occurring on the TSX stock index.

According to DailyFX’s Kathy Lien, the market “still expects another 25 to 50bp on January 30th because 75bp is just not enough. It failed to push Dow futures back into positive territory – we may only get a dead cat bounce in stocks which necessitates further easing.”

The Fed’s primary concern was increasing downside risks to growth, a deepening of the housing contraction and softening labor markets. The announcement has driven the US dollar lower against every major currency with the exception of the Japanese Yen. Significant rebounds have been seen in all of the carry trades. Further easing equals further dollar weakness.

Meanwhile a report put by PFXGlobal suggests a rate increase by the Reserve Bank of Australia due to rising inflation coming from Chinese demand for mineral resources. Keep a close eye on this week’s Australian Consumer Price Index (CPI) announcement. If it is high, watch for the AUD to gain strength.

No trading today due to the copious amounts of news flows coming out from the U.S. however the trend is still down wards on U.S. based pairs.

Well the results are in from last Friday’s trade which was taken on the 4 hour chart and has reached the target profit at the previous swing low at 207.05. Total profit for this trade is +324 pips which isn’t too shabby. It’s too bad I only entered with one lot instead of the usual two in which the other half would have been riding free. Given the weak British pound and the shaky markets still feeling the affects of the sub prime fallout, a good bet would be on the Yen still. Another rambling, here is the chart:

• Currently up +177 pips on a trade off the 4 hour charts on the GBP-JPY pair as Yen pairs have pretty much moved sideways today after all the dynamic appreciation brought upon this entire week. On the GBP front, all Pound crosses where taken a nosedive across the board which made this trade pretty easy as retails sales fell dramatically.
• I went aggressive on this trade and entered right after the pullback knowing there was lots of momentum pushing the Sterling down.
• Profit target hasn’t been reached yet as I am looking at the 207.00 region to exit which was Wednesday’s low and if hit, total potential profit would be in the vicinity of +300 points.

Attached are the 4 hour charts and 1 hour setup chart.

• Rational is that there will be more subprime write offs within the next couple of days as earnings reports are out as reported yesterday that Citigroup could write down as much as 24 billion US dollars in losses on subprime mortgage-backed investments and eliminated up to 24,000 jobs.
• Speculation that the Fed could implement an emergency 50 basis points inter-meeting interest rate cut and Goldman Sachs said the economy may already be in a recession.
• With all these worries and fear occurring on the macro level, this will only improve the status of the Yen as this pair overall has been pointing downwards ever since early November when the first news of the subprime shenanigans occurred. The pair has broken out of its bottom support level as per the Demark Trendlines and see looks bluesky until the 103.00-104.00 region.

AUD/USD

• The Australian currency gained yesterday after it was announced that average weekly job ads in Australia reached a record high last month and that the TD Securities-Melbourne Institute monthly inflation gauge accelerated, providing further evidence that the economy is growing at a fast clip. This may prompt the central bank to raise rates next month which will make the Aussie pairs more favourable due to yield differences.
• In conjunction with the weakness in the US Dollar, this seems like a no brainer pair for he time being.
• The only risk I see pertains to that gap that occurred in early November wherein a gap existed .9085-.9100 regions which can act as heavy resistance. The pair has broken out of its 1HR and Daily Demark Trendlines are heading towards that 0.9400 region provided that there isn’t much resistance at the gap area.

The COT reports also confirms bullishness amongst the commodity currencies especially favouring the Aussie. The sentiment for the Aussie longs are crossing across in favour of the longs as displayed by the below chart.

Here my EUR-GBP position which netted me a total of +40 pips:

Traders should maybe listen well to this line;
“The growth of bank loans to the domestic private sector has remained robust in recent months, which may suggest that the supply of credit has not been impacted so far”

The Markets are divided into two camps; one which believes sub-prime is spreading through Euro-land, and the other which say that Europe will flourish despite US speeding toward recession.

Since Trichet spoke only about Rate Hikes, Spiral Inflation, act pre-emptively (this was the most used phrase), Inflationist pressures and most importantly Euro-zone reaching its potential GDP rate in Q4, a lot of Traders switched camp.

This big shift was easily seen in charts moving higher, and what is as important is Institutional Trade Desk may be realigning their overall positions to Dollar short; the Aussie broke, and the Swissy broke on big volume.

Don’t get this wrong, there isn’t a big Party going on in Europe that the rest of the Globe wasn’t invited to; downside risks still exist, especially when someone as influential as Mr. Trichet says that uncertainly in the Markets are high, and the impact of financial turnover in the real economy is not fully known.

Traders should note that all except one EU Members that has a Free Currency Float increased rates in the last period and still, Trichet warns them about Inflation a couple of times.

Poland, Sweden, Czech Republic and Romania hiked, whilst Hungary cut Interest Rates. All these countries showed in the last months, increasing HICP numbers.

Does this look like a measure to reduce some Inflationist pressures? To us it does, but it’s probably a temporally method only. None the less, we have been Euro Bulls through all of 2007, set our stall out that we are not selling Euros to buy Dollars, and now await the test of 1.5000 and maybe a kiss of the 1.6000 if the Dollar Index breaks 75.00.

- Semar TheLFB Team’s Man in Europe

In other news, turns out the much anticipated rate cut from the Bank of England turned out to be a non-event with the consensus of leaving the rates unchanged despite looming growth in the housing and financial sector and concentrating on inflation.

On the ECB side and as predicted, no changes to the rates and remains the steady currency it is for the time being.

If you have been watching the news in the forex market lately, you have definitely heard about the “Carry Trade.” For many forex traders, however,—especially those just getting started—the Carry Trade can be confusing.

Have you ever asked yourself the following: Why has the Carry Trade has been so dominant for the past few years? What does it mean to unwind a Carry Trade? What is rollover?

S. Wade Hansen of PFXGlobal.com sat down for an interview with the founder of TraderInterviews.com, Tim Bourquin, to answer these questions. What the Carry Trade is, why so many big institutional investors and smaller retail traders like to use it and how you can take advantage of it in your own account will be further explored in the interview.

Click here for a link to the interview:

http://www.pfxglobal.com/index.php?option=com_content&task=view&id=1803

Analysis of real trades
Virtually all good traders agree that maintaining a log or diary of trades is one of the most valuable learning tools available to all traders – the best way to learn from our inevitable mistakes. Each month we dissect a trade, discussing the system, strategy or catalyst that triggered an entry. Risks are identified and defined. The trade’s outcome is analyzed. Finally, we gauge how well the trade plan was executed and what lessons the trade imparted.

Interviews with top traders
Learn from the top traders, analysts and market movers in our exclusive interviews.

Trading system analysis.
Detailed historical testing and research is the best way to find out if a trading idea has merit. Currency Trader includes rigorous historical back-testing of mechanical strategies, explores system design and provides complete analysis results.

Economic and industry news
Foreign exchange is a global by nature, so keeping tabs on markets and economies around the world is a top priority for currency traders. Currency Trader will help stay abreast of the most important issues and events shaping the global economy, the forex market and the trading industry.

Global Market Summary
This roundup of global currency, interest rate and stock index performance keeps the world markets at your fingertips each month. Markets are ranked by strength, liquidity and volatility. Also included are economic barometers such as international trade balance, GDP and employment numbers.

Reviews of Web sites, software and other technology and books.
Look before you leap! Get the latest on trading software, Web sites, books and other educational material before you pay good money for them.

New products, services and industry events.
Stay on top of the latest products and services geared to forex traders, as well as upcoming industry seminars and events.

Trading calendar
Because you’re watching more than one currency, country and economy, the lists upcoming economic report releases, government statistics and market holidays.

The expectations are that slump in the housing sector may continue thru 2008-therefore jobs will be the key indicator of whether the US consumer will continue to spend at a level which will prevent the economy from falling into recession. The problem is that job creation is been weakening over a long period of time and hence supporting a further rate cut in the next Fed meeting. Further evidence are seen in sectors that reported more job losses than job growth with the biggest contraction seen in manufacturing, construction, retail trade, information and financial sectors. The unemployment rate also increased from 4.7 to 5 percent, a 2 year high.

Since the headline number turned out disappointing, the Equity and Carry Trade markets are taking a big hit and could go into a downward trend that lasts for day and the bias against USD pairs will continue.

The new year brings us a chance to make some predictions so I thought it was a good idea to throw out some ideas for the first half of 2008. Feel free to post yours as well.

1. Currency

The trend for the dollar will be weakness vs. the Euro and Yen, but strength vs. the Pound in H1 2008. The Euro will appreciate and continue to replace the dollar’s reserve currency status as the U.S. economy continues to cool during this period. Market turmoil will also accelerate the dollar’s losses vs. the Yen as carry trade positions are further unwound. Two factors will lead to the dollar’s gain on the Pound; unwinding of carry trades and UK economic weakness leading to further BoE rate cuts.

2. Equities

A cascade of problems exist for consumers and therefore business and equity markets. Consumer spending has the potential to take a huge hit due to factors such as rising food and energy costs, falling home values, weaker job creation and higher rates of unemployment, to say nothing of stagnant wages in real terms.

Businesses have been facing rising material costs for many months now while core CPI and PCE have remained contained. The bump up for these readings in their last reports indicate pass-thru effects may be starting to take place. Exports have continued to stay strong but rising commodity prices may squeeze profit margins, which will lead to lay-offs. Q4 Profits in the S&P 500 are projected by Reuter’s to fall 6.1%, as opposed to the October estimate for an 11.5% gain in the period. Profits in Q1 and Q2 2008 have also been revised down from October’s 11.4% projected gain to 5.1% and 5% respectively. Q3 2007 profits in the S&P 500 are already down nearly 4.0% from Q2.

3. Housing

Demand and therefore prices will continue to fall at least thru the first half of 2008. One of the main drivers of this are new mortgage regulations for conforming Fannie and Freddie loans. Increased fees and increased mortgage insurance requirements along with their demands for higher credit scores for prime borrowers (680 from 620) and higher down payments will shrink the pool of available buyers significantly. Also, as prices continue to fall, sellers and buyers will be more reluctant to get into the the market. There’s also the huge inventory overhang to deal with, which means supply is outstripping demand and placing downward pressure on price.

4. Economy/Fed

There’s no question the economy will slow; the only remaining questions are the depth and length. Another question that will be crucial for market survival is what the Fed will be able to do about it. The TAF auction system is helping to ease the liquidity squeeze, but the overall effect on the real economy is limited. A far more serious concern for the Fed and the economy in general is that the period of slackening demand may be accompanied with rising inflation i.e. stagflation. So while the Fed is expected to ease towards 3.5% in the overnight rate, the pace of reduction may be slowed and will likely be accompanied by more hawkish rhetoric in their statements and minutes-also a negative to carry trades and the equity markets in general.

5. China/Oil/Commodities

The trend for China to allow the Yuan to appreciate faster vs. the dollar will be a main feature for the global economy going forward. What’s essentially happening is that China is looking to control its inflation by lowering the prices it pays for commodities (which are paid for in dollars)-hence the faster appreciation of the Yuan. China also lowered its import tariffs on oil, further cheapening its price for Chinese businesses. Demand from China for global commodities will increase, which will have the ultimate effect of increasing their prices here. Oil could easily head towards $125.00/bbl in six months time which will drive the stagflationary environment in the U.S. that some economists are predicting.

For more details in-depth analysis on fundamental issues, please visit thenewstraderfx.blogspot.com.

1. Oil surpassing the critical psychological mark of $100 a barrel due to violence in Nigeria, ongoing dispute between the U.S. and Iran and the shortfall of oil OPEC production projections.
2. Gold surpasses the vital $850 barrier topping out at $859.30 which represents a high not seen since January 1980 due to the rising of geopolitical tensions and a weaker dollar.

How does this affect the currency markets?

With the rise in oil, this will surely indicate an eventual slowdown in global growth due to rising energy costs and given the recent geopolitical tensions arising in Pakistan and Nigeria , this has given rise to exit of risky assets such as the carry trades and a flight to safe haven assets such as gold. As seen in today’s light trading, the Japanese Yen has gained in a major way in light of these events representing an unwinding in the carry trades and the uncertainty in the global markets. Judging from the charts, the daily trend lines for the majority of Yen crosses have been breached and the eventual decline of the DOW below the 13,000 mark stipulating further drops will continue in the near foreseeable future. Below is a USD-JPY daily chart:

I fully expect price to decline to the lower depths at 107.00 regions which was a previous 6-mos low for the pair given that the continual chaos in Nigeria/Pakistan and Gold possibly running up another $20-30.00 on momentum as the majority of market makers will be returning from their long holiday vacations to participate in the rapid decline.

Japanese housewives have ditched their traditional subservient image for the world of currency trading – influencing both international markets and Japan’s economy. Japanese women are finding better returns then their male counterparts in due to their emotional controls over the two evils that prevails: fear and greed.

Where the Government of Japan used to spend billions of dollars intervening in currency markets and fighting the prevailing tide to deflate the yen and help exporters, it now has thousands of Mrs Tanakas doing the same thing out of choice. It was this statement that shocked me from the article:

One of FXOnline’s customers is Yoshie Akai, a 70-year-old grandmother from Kobe who has been an avid trader of forex for three years. She woke last Friday morning to find that she had lost about 8 million yen (£33,000) overnight. With more sangfroid than the most ruthless Wall Street dealing-room shark, she was trading again by mid-morning. “I was depressed in the morning. But if I leave this as it is, I will just be a loser. I’ll recover from this disaster,” she says. “I used to know when to buy. Now I’ve learnt the hard way when you should sell. You get a different sense of reality and risk when it is just numbers on a computer, not a bundle of notes sitting in front of me.”

The article written by the London Times’ newspaper can be found here and I highly recommend a read.

Moreover, a further video provided by CNN depicts the traditional home-based Japanese housewives as the new power currency traders and are becoming a phenomenon in Japan’s foreign exchange market. The interesting video can be found here.

You can find several more useful widget tools on Oanda’s FXLabs site such as money managers, news notifiers, tickers, currency converters, etc. You can access their site by clicking here.

Time magazine named the loonie the Canadian Newsmaker of 2007, saying the dollar’s rapid rise was a sure sign that “something big was happening in Canada.”

The dollar, known as a chronic underperformer by an entire generation, made history on September 20th, hitting parity with the U.S. greenback for the first time since in thirty-one years. Boosted by soaring commodity prices and strong economic growth, the Canadian dollar rose even further, reaching a modern-day record high of $1.10 in November.

The Canadian dollar was one of the year’s star performers on the world stage, at one point surging as much as 25 per cent against the struggling U.S. buck. The gains, a source of much pride for some Canadians and much pain for others, made international headlines.

“So for the heights the loonie reached, for the economic upheaval (both good and bad) it brought, and for the rare bird’s-eye view that Canada got, looking down on its best friend and biggest rival in the world — where, let us not forget, people rarely fail to find the term loonie hilarious to begin with — the lofty loonie is Time’s Canadian Newsmaker of the Year,” the U.S. magazine said.

The Canadian dollar rose above parity for the first time since Dec. 4th at 6:30 a.m. EST Thursday morning. It had struggled in recent weeks amid an expected U.S. economic slowdown, continued turmoil in credit markets and interest rate cuts on both sides of the border.

Given the absence of any major economic or corporate news, strategists attributed Thursday’s strength to technical buying ahead of the holidays.

“There are no data releases today, but still some opportunities for last-minute cross-border shopping as the Canadian dollar broke back through parity for the first time in the past couple of weeks,” said Mark Chandler, a fixed-income strategist at RBC Dominion Securities Inc.

Benjamin Reitzes, an economic analyst with BMO Nesbitt Burns, said there did not appear to be any news fuelling the gains, which were more likely due to a big buyer.

ROMA LUCIW

Globeinvestor.com

EDIT: The Loonie has surpasses parity again on Dec. 20th at 6:30 a.m. EST Thursday

……………………

Neat video showing Forex’s popularity in Singapore, look at the suckers lining up to shell out $3k:

To view the stunning amount of computers and peoples packed into one room, click HERE.

Positions from last week:

CHF/JPY – Long position was stopped out with a -44 pip loss. All indicators pointed to a rise however all Yen pairs that day were down heavily.

Positions opened last night:

GBP/USD – Short position opened at 2.0837 and opened position upon its failed retracement of the weekend gap at 2.0857. Currently up +300 pips.

NZD/USD – Short position opened at 0.7574 and similar entrance to the GBP/USD with the weekend gap. Currently up +110 pips.

EUR/CAD – Long position using my experimental strategy #2 and similarly to the other two above, there was a weekend gap and I purchased after the 3rd failed retracement @ 1.3855. Currently up +246 pips.

My previous open position in EUR/CHF is still open and is up +175 pips and I am aiming for the 1.6345 (261.8 fibonacci) for an exit point which is still 164 pips away.

I also opened up a new position on the CHF/JPY and am currently up +38 pips and will be looking to exit at prior resistance level at 101.50 which is still 100 pips away.

Stay tuned.

Positions from yesterday:

CAD/JPY – trailing stop loss of 100 hit giving a profit of +186 pips.

NZD/USD – trailing stop loss of 80 pips hit gaving a profit of +91 pips.

EUR/JPY – stop loss of -34 pips hit after going up +35 pips.

Positions still open:

EUR/CHF – short at 1.6692, stop loss is at break even and up 81+ pips.

Long positions of CAD/JPY (opened on Sunday night) and NZD/USD (opened Monday night) are both still open with 220 pips and 120 pips gained respectively.

I stumbled upon a great site dealing with forex education as most of the commentary is video based which provides for great visual aid. Click here to access Profitting with Forex (PFX).

Here is a copy of the position and P/L statement as of 2:00 am EST on Monday, October 29, 2007:

Forex Brings Profit in Bear and Bull Markets, No Short Selling Restrictions
Forex trading always involves buying one currency and selling another, so traders can easily trade in a rising or falling market. There is no Zero Uptick rule or any other restriction against shorting a currency. Depending on short and long positions, a trader always has an opportunity to profit in a fluctuating market.

At $3.2 Trillion Per Day, Forex is the Most Traded Market in the World
The sheer volume of Forex helps to facilitates price stability in most market conditions. What’s more, almost 85% of all currency transactions involve the 7 major currency pairs.

Trade on Your Schedule
Forex is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday. With three distinct trading sessions in the US, Europe and Asia, you can trade on your own schedule and respond to breaking news.

Forex Provides up to 50 Times the Leverage of Stocks
With more buying power, you can increase your total return on investment with less cash outlay. Of course, increasing leverage increases risk. With $1,000 cash in a margin account that allows 200:1 leverage (.5%), you can trade up to $200,000 in notional value.

Commission Free Trading
Most Forex brokers charge no commission or additional transactions fees to trade currencies online or over the phone. Combined with the tight, consistent, and fully transparent spread, Forex trading costs are lower than those of any other market. The brokers are compensated for theirs services through the bid/ask prices.

Instantaneous Execution of Market Orders
Your trades are instantly executed under normal market conditions. You also have price certainty on every market order under normal market conditions. What you click is the price you get. You’re able to execute directly off real-time streaming prices. There’s no discrepancy between the displayed price shown on the platform and the execution price to enter your trade. Keep in mind that most brokers only guarantee stop, limit, and entry orders are only guaranteed under normal market conditions. Fills are instantaneous most of the time, but under extraordinarily volatile market conditions order execution may experience delays.

Analyze a Nation like a Corporation
Currencies are always traded in pairs one currency is purchased with holdings in another. As with stocks, better FX returns are provided by the currency of a country that demonstrates faster growth and is in a better economic condition that others. Currency pricing reflects the amount of available supply and demand. Interest rates and the relative strength of the economy are the two primary factors that determine the availability of a currency. Leading economic indicators reflect the economic health of a nation, and are in large part responsible for shifts. An overwhelming amount of data is available at regular intervals, the challenge is to determine what factors are more influential than others. Interest rates and international trade ratios are typically the most important.

No Middlemen
Centralized exchanges provide many advantages to the trader. However, one of the problems with any centralized exchange is the involvement of middlemen. Any party located in between the trader and the buyer or seller of the security or instrument traded will cost them money. The cost can be either in time or in fees. Spot currency trading does away with the middlemen and allows clients to interact directly with the market-maker responsible for the pricing on a particular currency pair. Forex traders get quicker access and cheaper costs.

Buy/Sell Programs Do Not Control the Market
How many times have you heard that “fund A” was selling “X” or buying “Z”? Rumor had it that the funds were taking profits because of the end of the financial year or because today is “triple witching day”, all as an explanation of why this stock is up or the market in general is down or positive on the session. The stock market is very susceptible to large fund buying and selling.

In spot trading, the liquidity of the Forex market makes the likelihood of any one fund or bank to control a particular currency very slim. Banks, hedge funds, governments, retail currency conversion houses and large net-worth individuals are just some of the participants in the spot currency markets where the liquidity is unprecedented.

Analysts and Brokerage Firms are Less Likely to Influence the Market
Have you watched TV lately? Heard about a certain Internet stock and an analyst of a prestigious brokerage firm accused of keeping its recommendations, such as “buy” when the stock was rapidly declining? It is the nature of these relationships. No matter what the government does to step in and discourage this type of activity, we have not heard the last of it. IPO’s are big business for both the companies going public and the brokerage houses. Relationships are mutually beneficial and analysts work for the brokerage houses that need the companies as clients. That catch-22 will never disappear. Foreign exchange, as the prime market, generates billions in revenue for the world’s banks and is a necessity of the global markets. Analysts in foreign exchange don’t drive the deal flow, they just analyze the forex market.

Makes Money on Interest & Macroeconomic News
Any significant news regarding interest rates directly impacts the international financial markets. In the past, when a country has raised its interest rate, its currency strengthens relative to other currencies as investors shift assets to gain better returns. The influence of stock markets has changed this equation since increasing interest rates are typically bad news for the stock markets. Investors transfer money out of the stock market when interest rates rise, which can cause the currency of the country to weaken on the broader markets.

Determining which effect will dominate can be difficult, but there is typically a consensus in the marketplace as to what a rate change will do. Rate changes are typically anticipated since they usually take place after regularly scheduled meetings of central banks. Indicators that typically have the biggest impact on interest rates are PPI, CPI, and GDP.

You Can Easily and Quickly Diversify Out of U.S. Dollars
The trade balance shows the net difference over a period of time between a nation’s exports and imports. When a country imports more than it exports, the trade balance will show a deficit, which is generally considered unfavorable to that nation’s currency. Many investors know that they should diversify some of their assets into foreign currencies, but to do so is difficult. Most U.S. banks, for example, do not offer foreign currency accounts. But by trading forex, you instantly control hundreds of thousands of dollars worth of foreign currencies. For every $1,000 margin deposit, you can control up to $100,000 worth of Euros or British Pounds or whatever currency you believe will rise in the future.

Perfect for Technical Traders
Currencies rarely spend time in tight trading ranges, and there is a tendency for strong trends to develop. Over 80% of trading volume is speculative in nature, so the market frequently overshoots before correcting itself. A technically trained trader can identify these breakouts, providing a range of opportunities for entering and exiting positions.

8,000 Stocks vs. 4 Major Currency Pairs
There are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. Which one will you trade? Got the time to stay on top of so many companies? In spot currency trading, there are dozens of currencies traded, but the majority of the market trades the 4 major pairs. Aren’t four pairs much easier to keep an eye on than thousands of stocks?

For those interested in learning more on how to trade, etc… make sure to visit BabyPips.com for all the information you could ever need.