Top Market Moving Indicators
May 14, 2006
Like many Mondays, tomorrow probably won't be moved by the very latest economic release because there really aren't with 1 exception. At 9 a.m. tomorrow, the TIC report is released. This report measures demand for US assets and could be yet another nail in the dollar but I'll be watching just to see if this is a report that would move the market in the future. See Kathy Lien's study that puts TIC report at market mover #9 for first 20 minutes after release and #3 for the entire day.
I'm going to be releasing my Economic Release PDF again this week with comments. It looks like Wednesday (US CPI) and Thursday (Bernanke Speaks) are possible US session movers and there are a couple of other important non-US releases like the BOJ Interest Rate Statement on Friday (1 am EST.)
In much of my reading, I stumble upon useful bits of information. There was a study by Kathy Lien, an FXCM strategist, of the top market-moving economic indicators for the Dollar during the first 20 minutes following a release and for the rest of the day. These are ranked from highest average pip range and are only for the EUR/USD. Considering other pairs like the GBP/USD react more to these economic releases, the average pip range would be much higher.
First 20 minutes
- Unemployment (nonfarm payrolls) 124 p
- Interest rates(FOMC) 74 p
- Trade balance 64 p
- CPI 44 p
- Retail sales 43 p
- GDP 43 p
- Current account 43 p
- Durable Goods 39 p
- TIC data 33 p
Daily
- Unemployment 193 p
- Interest rates (FOMC) 140 p
- TIC data 132 p
- Trade balance 129 p
- Current account 127 p
- Durable goods 126 p
- Retail sales 125 p
- CPI 123 p
- GDP 110 p
It is interesting to note how the importance of economic reports actually changes over time. For instance, here is FX Dealer importance of Economic Data as of 1997 and as of 1992.
As of 1997
- Unemployment
- Interest rates
- Inflation
- Trade balance
- GDP
As of 1992
- Trade balance
- Interest rates
- Unemployment
- Inflation
- GDP
Popularity: 3%
My first trade in weeks
April 10, 2006
Just like that I'm back in the game. I made my first trade in weeks going short on the USD/JPY. Why did I decide to go short? Quite simply because of the strong resistance directly above my entry. Early in the Asian session today, we saw the pair push as high as 118.69 but it couldn't hold. I'm looking for the pair to come back down to the 116.75-118.00 range perhaps retracing to the .618 fibonacci from the 4/3/06 high of 118.80.
{mosimage}
Popularity: 2%
Missing in Action
March 31, 2006
I’ve been missing in action most of this week. I’ve been recovering from my stomach bug and been taking some time off due to a hectic schedule and other responsibilities. I haven’t dedicated nearly enough time to the currency market or the Forex Project this week.
It seems like my beginning of the week analysis of the EUR/USD was not too bad. For those of you that don’t remember, I was going to try to improve my technical analysis by "pretending" to be a Currency Strategist. I use the word pretend by if you really think about it, we are all our own best Currency Strategist. So though I was analyzing the market as if I was a Currency Strategist, the simple fact is that we are all Currency Strategists.
My prediction from beginning of week was the following:
Prediction
EUR/USD may remain in the 1.2000 - 1.2200 range. If the psychological important 1.2000 is broken, look for furthur downside to 1.1868.
Popularity: 3%
Week 15 performance
March 17, 2006
This week was my 4th straight losing week. I lost $1220 this week which drops my overall profit over 15 weeks to $1243. Even though my P/L isn’t looking good as of late, I really am not discouraged. I have the confidence and determination to continue onward and I have the belief that I will be successful. I am just going through the stages of learning and if it costs me money to learn, so be it.
This week I used my first self designed trading system and followed through on every signal it gave me. Unfortunately it is a range trading system and the EURO had some pretty nice gains against the dollar this week. Therefore, my trading system did not perform well. I will continue to use it. I will stick by my hours upon hours of work.
Popularity: 2%
Amibroker is great and cheap
March 16, 2006
As I’ve written in the past couple of weeks, I’ve been doing a lot of backtesting. I’ve used esignal (my data provider), metastock, and now amibroker to automate the backtesting process. If you ask any experienced and successful broker, they will say that you are absolutely crazy to not back test and forward test your system before going live with it. Here’s a quote from an experienced trader, chaffecomb:
I’ve absolutely no idea how some people can trade without first backtesting, however that’s just the way I’m wired! …
Check out his website. He tracks multiple trading systems that he developed and basically trades on autopilot. http://users.bigpond.com/morleym/index.htm
Out of the 3 systems I’ve used for backtesting, I really think that amibroker is the best and it’s the cheapest. Here are the pros and cons I’ve noticed for each:
Esignal
Pros: Nice reports and graphs post-backtest; the ability to backtest already written custom indicators with minor modifications
Cons: Expensive; no ability for optimization
Metastock
Pros: Full featured suite of already made trading systems
Cons: I found the entire product very confusing and I’m a programmer; Expensive
Amibroker
Pros: Intuitive user interface; fast; ability to optimize backtesting
Cons: they don’t provide data so you need to download free data or use your currency provider (esignal plugin)
The most important backtesting functionality is the ability to optimize your trading systems. For example, what if you wanted to backtest a moving average crossover. With esignal, you would have to manually change the moving average periods you want to test which would require an individual backtest for each moving average pair. With amibroker or metastock, you can use variables and have the program go through an entire range of moving averages all in one shot. It really is a powerful feature.
I’m using amibroker now and I don’t see how I would ever use anything else. In addition the full version was only about $250.
Popularity: 4%
DashboardFX: Forex Weekly Wrap-up
February 17, 2006
EUR/USD
A virile run mid-morning at the session close, as market participants drove the dollar down to near session lows of 1.1945. When all was said and done a tight range of 1.1845/1.1955 was fashioned in the major European counterpart and the benchmark currency.
What is interesting to note regarding this week’s price action relative to the previous is that we have two ranges with one large move lower separating them. That coupled with the cresting off the benchmark S (former R) in the 1.1860 area, which has stymied those bidding the dollar on many occasions in the life of the pair, implies perhaps a solid base pattern of an inverted H&S is in the process of developing with the head all but confirmed on today’s rally in the pair. The moment of truth for the pattern comes in on the break back into last week’s range followed by a failure to trade through it – thus drafting the second shoulder. We have cited the major R above as the top end of the shoulder range.
GBP/USD
Sterling dealers and traders alike have noted vehemently the significance of the MPC minutes slated for next Wednesday. A prominent reporter in the UK feels an admonishment of a 5-4 split in the minutes could strongly imply a 25bp hike is in the shoe.
As we noted yesterday, “…with such a wide swath these orders clearly have rather lofty targets or expect to average in with size on forays below 1.7340/50. Irrespective, the activity has garnered attention…” regarding some purported dealer’s activity and it turns out that our summation was incredibly predicative given the proceeding 24-hours of pricing.
USD/CHF
With no front page news regarding geopolitical unrest, it seems unlikely that the pair will style any type of meaning retracement of the overt trend. However, we know better to presume the two cannot take place simultaneously, perhaps exacerbating a strengthening in the Swiss franc and weakness in the dollar.
Some clear top patterns have emerged; but the pair continues to make new highs and the patterns are somewhat eschew. As we noted recently, “…The drop from the major R we noted in yesterday’s report was rather precipitous and could be ominous indication of more selling pressure to come. Yesterday daily low of 1.3040/45 will be the moment of truth for those attempting to break the overt trend…” and it seems this statement is rather accurate given the resulting price action.
USD/JPY
The pair continues to rally following our call on the significance of the 1700 figure. Session highs were recorded at 118.87 following Thursday’s rollover. It has come in a bit however, leaving a tall wick behind in the vicinity of macro R. this could be a tell tale sign of some virile selling as specs unwind what have now become very large positions.
Popularity: 3%
Loading ...