Items Tagged With April 2006

I think I've now seen it all.  There is a guy that analyzes the potential for trades based on currency pair tendencies during certain times of the year.  This information is based all on historical information.  Here is an excerpt:

Directional considerations aside, April does tend to be quite volatile. Consider the following:

The table above outlines the average pip range for the major currency pairs during the month of April from 1999 to 2005.Even though the majors may not tend toward moving in one direction or another during the month, they certainly do move, so short-term traders can expect plenty of profit opportunities.

http://www.tradingmarkets.com/.site/Forex/Commentary/essentials/-50407.cfm

I post Steve Shenker's commentary now and again from his Trader's Corner column because it's pretty good.  His latest trader's corner contains the entire series that has been appearing on the front page of DailyFX.com's Daily Technicals report.  It's 14 pages in length but is worth a full read or a skim.  Some subjects he touches upon are:

Don't blame the market for your mistakes, blame yourself
Never trade without the stop loss
Never  trade just to be in the market
Never think that you are better than you actually are, nobody is that good, no one, not me, not you, no one

These are just a couple and it isn't just a list.  He elaborates on everything he states.

Complete Trader's Corner

This is John's Trade Methodology:

HIS ANALYSIS?

Trade Idea:

Long EUR/USD on a bullish candle reversal (1 hour or 2 hour bullish Harami) that fails to sustain a break below 1.2240

Stops below 1.2210

Target 1.2330

Dollar forecast for the next 24hrs: Bearish

Stronger EUR/USD, GBP USD & AUD/USD

Weaker USD/JPY, USD/CHF & USD/CAD

Market Dynamics:

Favored - Cyclical & Regression Models 

At Risk - Trend Models

PFI exited its long EUR/USD trade this morning for 221 pips. For all practical purposes I could have stayed with it given the model bias remains bearish on the dollar.  That said, with a major event risk on the horizon (NFP on Friday) I've decided to stand aside for the balance of the week.

Today's price action will probably look a lot like yesterdays and will remain choppy through the day. This makes the target of the trade idea (1.2330) a tough task in the short term and could push traders into Friday trying to achieve it; which I don't encourage.  1.2240 and 1.2210 are Bollinger Band and ma support levels (different time frames) with 1.2330 bringing in substantial Bollinger Band resistance.

Overall the dollar is finding some support at our lower channel; it would be unusual for the dollar to sustain a push deeper into this region after floating across the top for any length of time. If we don't see a substantial pull-back to a more neutral position tomorrow, I'd almost expect to see NFP come out stronger than expected or an overall muted reaction to poor numbers, which will leave the market in good shape for a technical reversal at the beginning of the week.

I've temporarily disabled auto-approval of comments due to some *$@!@!! spamming them constantly this afternoon.  You can leave comments, just don't get alarmed if you don't see them posted on the site right away.  I will approve them manually ASAP.

Thanks.

I've added a new feature to the site that allows you to submit content to the front page.  The link is called "Submit Content" and is also located on the left menu.

I get some great content from a lot of you via email that I think would be beneficial to all of us.  Feel free to continue sending me an email but if you want to share with everyone, submit it via the "Submit Content" link.  Once submitted, I will have to manually approve before it appears on the front page.  I wish it could automatically be published but due to spammers, this just isn't an option.  Overall, the approval process is simple and you could expect to see your content on the front page quickly.

While the last few months have witnessed rising talk of forex reserve diversification, China seems intent on preserving the status quo. Representatives from China's Central Bank recently announced that the nations foreign exchange reserves, which are already the largest in the world, would likely grow by at least $100 Billion in 2006. This is due both to the soaring current account surplus and the vast sums of foreign capital that continue to be invested in China. Further, the bulk of these new reserves will likely be held in USD-denominated assets, which are valued for their liquidity. Forbes reports:

Xinhua quoted Cao as saying that it would be unwise for China to sell off its dollar assets because they are still the most reliable assets in the world.

I've been on Instant Messenger more lately and figured if anyone wanted to chat about Forex, I'm available from time to time.  You can find my screen names from the "Contact Me" link in the left menu in the future.

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The sum total of all of the world’s foreign exchange reserves now exceeds $4 Trillion, according to the most recent economic data. 2/3 of these reserves are held in USD-denominated assets, which places the owners of these reserves in an especially precarious situation. Leaders of the G7 will soon meet to discuss this problem, with the goal of ensuring the stability of the global economy and capital markets. However, any ‘solution’ would invariably involve a diversification into a broader array of assets, via a shift out of the USD, which has Dollar bulls sweating. Reuters reports:

Another proposal is simply to prevent global market disruption by making composition of the reserves more transparent and encouraging more detailed and regular reporting of reserve totals and their breakdown.

Well, it’s official. Growth in the manufacturing sector slowed down last month. As a result the dollar saw losses against the euro on Monday. The manufacturing activity index which was pegged to touch 57.9 instead came down to 55.2 from 56.7 in February. The U S payrolls report is due this Friday.

The euro on the other hand saw significant gains against most major currencies. The euro’s run was mainly fueled by speculation the European Central Bank (ECB) will leave interest rates unchanged when it meets this week. The bank is also expected to indicate a possibility of interest rate hikes beginning May. But analysts are confident the dollar will emerge the leader yet again by the end of the week.

The sterling fared no better than the dollar on Tuesday. It touched an eight-month low against the euro on the same kind of diversification talk which handed a blow to the dollar. But the damage to the pound was not as severe as that suffered by the dollar and the yen. The currency was up 0.9 percent against the greenback.

The sterling also got some back-up from steady economic data. Signs of a recovering housing market seemed to be the reason many made mortgage equity withdrawals. The Bank of England, meanwhile, is expected to keep rates at 4.5 percent when it meets this week. This might be to its disadvantage since the euro zone is likely to see some interest rate hikes this year.