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This is a discussion on FXCM/DailyFX Signals and Strategies within the Forex forums, part of the Markets category; Hi Everyone, All eyes remain on Europe as a key summit will be held in Brussels on Thursday and Friday. ...

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Old Jun 25, 2012, 3:34pm   #421
 
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All Eyes on EU Summit this Thursday and Friday

Jason Rogers started this thread Hi Everyone,

All eyes remain on Europe as a key summit will be held in Brussels on Thursday and Friday. Early trading this week shows that the markets are selling into the meeting as the Euro and stocks have fallen.

The euro fell broadly on Monday as concerns about stuttering global growth and low expectations of progress in tackling the debt crisis at a European summit later in the week weighed on demand for riskier currencies. - Reuters

World stocks fell Monday amid concern that a critical European summit later this week will not yield a deal that might restore confidence in the future of the 17-country euro currency.AP

For contrarian traders, this could present an opportunity if the EU Summit goes better than expected. SSI for the Euro flipped from positive to negative last Friday, which means that more FXCM traders were short the Euro than long going into the weekend.

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Joel Kruger, Technical Strategist at DailyFX.com has provided some key prices to watch this week:

EUR/USD: While our overall outlook remains grossly bearish, from here we still see room for short-term upside before a fresh lower top is sought out. Despite the latest pullback, the market still looks constructive in the short-term while above 1.2440. A closer look at the weekly chart still shows the pair putting in yet another weekly higher high and higher low. Nevertheless, a break back above 1.2750 will now be required to accelerate gains. Below 1.2440 negates. Click here to read the complete technical analysis at DailyFX.com

Jason
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Old Jun 27, 2012, 5:50pm   #422
 
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European Summit May Yield Unexpected Boost to Risk-Driven Currencies

Jason Rogers started this thread Major Currencies vs. US Dollar (% change week-to-date)
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Talking Points

- EU Leaders Summit Unlikely to Yield Major Progress on Fiscal Reform Efforts
- Delivering Results on Boosting EU Growth More Likely, Lifting Stocks-Linked FX
- Japanese Yen Tracking US Treasuries, Hinting Pro-Growth EU Stance May Weigh
- Euro to Underperform as ECB Rate Cut Bets, Structural Instability Remain Intact


Most major currencies remain closely anchored to risk sentiment trends, reflected in close correlations with the MSCI World Stock Index. That puts the spotlighton the two-day EU leaders’ summit beginning on Thursday. Global leaders put heavy pressure on their European counterparts to step effortsto contain the debt crisis and boost regional growth at last week’s G20 sit-down and traders will be keen to get a glimpse of how policymakers intend to respond.

Speculation ahead of the summit has focused on dealing with lingering sovereign instability and bank undercapitalization plaguing the Eurozone. In particular, much has been made of possible plans to lay the foundation for shared debt liability regional bloc. This would allow sickly periphery countries to “import” investors’ confidence in the likes of Germany, bringing down borrowing costs and deflating funding concerns.

With Berlin rejecting outright the creation of jointly issued debt (so-called “Eurobonds”), markets hope that an intermediate step such as a region-wide bank deposit insurance scheme will have better chances. Allowing the EFSF and ESM bailout funds – which are able raise funds by issuing debt effectively underwritten by the Eurozone’s healthiest members – to directly recapitalize banks without funneling the funds through sovereigns (thereby compounding their debt burden) is another hopeful idea.

The markets appear skeptical, questioning whether something concrete and actionable on debt crisis management can indeed emerge. That seems reasonable. A report released yesterday by European Council President Herman Van Rompuy outlined in vague terms the “building blocks” for deeper Eurozone fiscal integration and argued that a detailed plan on this basis can be completed by December, with a preliminary draft version possibly to emerge in October. That’s hardly the kind of speedy action that would mollify financial markets.

While that seems to set the stage for disappointment, that need not be the case considering the bar for a successful outcome has been set relatively low. Indeed, the lack of meaningful progress on fiscal reform is unlikely to shock the financial markets. Meanwhile, growth-boosting initiatives are a far less controversial topic, suggesting significant progress on this front may be easier to come by. Indeed, markets have already learned of a new €125 billion initiative after a meeting of French, German, Italian and Spanish heads of state last Friday (although details are murky).

A recession in the Eurozone and its consequences for performance in other economies (notably China, and by extension Asia in general) represents the most significant headwind facing global economic growth this year. Consequently, a convincing set of pro-growth measures – like easing of austerity requirements in bailout countries and boosting funding to the EIB for infrastructure projects – that helps soften the downturn ought to prove supportive for risk appetite.

Such an outcome points the way higher for sentiment-linked currencies, with the consistently stocks-linked Australian, Canadian and New Zealand Dollars poised to outperform. The British Pound has likewise rebuilt its correlation with share prices and so is likewise poised to capitalize if investors’ disposition improves. The Japanese Yen continues to track US Treasuries, so a risk-supportive outcome is likely to drive USDJPY higher as haven-seeking inflows dry up and bond prices decline while yields advance.

As for the Euro itself, correlation studies point to the primacy of rates over sentiment trends as the leading driver of price action. Efforts to boost Eurozone growth are likely to dull recession fears but not dismiss them, meaning ECB rate cut expectations still have scope to build. Needless to say, structural sovereign risk concerns would remain as well. That suggests the single currency is likely to underperform.

EURO
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Source: Bloomberg


BRITISH POUND
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Source: Bloomberg

JAPANESE YEN
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Source: Bloomberg

CANADIAN DOLLAR
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Source: Bloomberg

AUSTRALIAN DOLLAR
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Source: Bloomberg

NEW ZEALAND DOLLAR
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Source: Bloomberg

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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Old Jun 28, 2012, 9:56pm   #423
 
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US Dollar Targets Fresh Highs versus Euro Through End of June, July

Jason Rogers started this thread Click the image to open in full size.

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Retail forex trading crowds have aggressively sold into US Dollar (ticker: USDOLLAR) strength, and our proprietary sentiment-based strategies have bought the USD against the Euro, British Pound, and Australian Dollar—calling for further Greenback gains.

The US Dollar initially looked as though it could continue to consolidate and correct lower against the Euro (EURUSD higher) through the end of June. Yet current event risk remains critical on the European summit and developments in Euro Zone fiscal crises. We see scope for further EURUSD declines.

Limited forex options market volatility expectations dampens optimism for explosive US Dollar breakouts, but the Greenback looks as though it could continue to trade quietly higher through the end of June. It will be critical to watch moves in the Dow Jones FXCM Dollar Index at important support, but a hold of significant lows would clearly bolster our calls for further Dollar strength.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

Last edited by Jason Rogers; Jun 28, 2012 at 10:01pm.
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Old Jun 29, 2012, 6:56pm   #424
 
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Today's gains in Euro present opportunity to establish short positions

Jason Rogers started this thread The low expectations in place the past few days surrounding the Euro-zone Summit were tossed aside with ease on Friday, as new measures proposed prompted a massive short-covering rally in the Euro. The AUDUSD and EURUSD have had their two best days all year as a result.

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Taking a step back from the charts for a second, we should take into consideration the parameters of the measures disclosed at the Summit in order to determine whether or not today’s near-2 percent move in the Australian Dollar and the Euro are going to be long-lasting, or whether or not we’re seeing some additional volatility due to the end of the month and the quarter.

There are four glaring holes in the Summit’s announcements... You can read the complete article at DailyFX.com

EURUSD: Small New Short Position Triggered

Prices appeared to complete an upward correction with a break of rising channel support on June 21 and have now rebounded to improve risk/reward parameters for re-entry. We will try a small new short position here, initially targeting 1.2442. A stop-loss will be activated on a daily close above 1.2746... You can read the complete strategy at DailyFX.com
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Old Jul 5, 2012, 7:54pm   #425
 
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EURUSD Bearish Objective is 1.2150

Jason Rogers started this thread Written by Jamie Saettele of DailyFX.com

Today’s price action is confirming the wave iii of 5 interpretation in EURUSD. Focus is lower towards the June low of 12287 and the June 2010 low at 12150 (161.8% extension of decline from June high is at 12141 as well). To be sure, a relief rally may materialize from nearby levels, which is defined by a short term channel (downward sloping) and 100% extension of the decline from the June high (12350). 12420/50 is now resistance. Risk on shorts can be moved down to 12500 (from 12630).

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Old Jul 11, 2012, 12:59am   #426
 
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Australian Dollar Speculators Flip to Net Long

Jason Rogers started this thread Latest CFTC Release dated July 3, 2012:

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The COT Index is the difference between net speculative positioning and net commercial positioning measured. A light blue colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bullish) with speculators selling and commercials buying. A light red colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bearish) with speculators buying and commercials selling. Crosses above and below 0 are in bold. Non commercials tend to be on the wrong side at the turn and commercials the correct side.

Chart Key
Non Commercials (speculators) – Red
Commercials – Blue
Small Speculators – Black
COTDiff – Black
Volume on bottom

Australian Dollar
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Chart prepared by Jamie Saettele, CMT

--- Written by Jamie Saettele, CMT, Senior Technical Strategist for DailyFX.com
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Old Jul 11, 2012, 8:27pm   #427
 
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AUDUSD Poised for Employment Data

Jason Rogers started this thread One of the most awaited events on the economic calendar this week is the release of the unemployment numbers in Australia. While the event is not traditionally as volatile as NFP, these numbers are significant, and can give a trader insight into the strength of the Australian economy. As well, policy makers at the Reserve Bank of Australia (RBA) will be using this information to make future policy decisions.

Below you will see a chart displaying the historic unemployment rate out of Australia. This month, expectations are set for the creation of no net new jobs with the economy displaying an unemployment rate of 5.2%.

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Below we can see another chart, this time graphing Australia’s benchmark interest rates. This rate is set by the central monetary authority and can be used to heat up or slow down the Aussie economy. Through 2012 the RBA has taken expansionary measures lowering this rate down to its current levels at 3.50%. If unemployment increases more than expected, this may signal another potential round of rate decreases through the RBA.

Ultimately with expectations of a rate cut, it would be expected that the Aussie currency would decrease in value. To learn more, let’s take a look at how this policy has affected price for 2012.

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Below we can see current price action on an AUDUSD daily chart and can better see the pairs decline. Since the RBA began lowering rates the pair has decreased as much as 1275 pips from its 2012 high residing at 1.0855. Over the past month however price has been rallying, with a line of support being held near 1.0150. Upon a negative outcome of employment numbers, traders should watch this point for a potential breakout. With the formation of lower lows, it is expected that the AUDUSD downtrend may begin again with the potential to challenge previous lows set at .9580 on June 1st.

Click the image to open in full size.

My preference is to set an entry to sell the AUDUSD under 1.0150. Stops should be placed above resistance near 1.0250. Using a minimum 1:2 Risk/Reward ratio primary limits can be set at .9950 or better.

Alternative scenarios include price bouncing off support to a higher high.

--- Written by Walker England, Trading Instructor at DailyFX.com
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