Traders-

My last post discussed EUR and USD relative weaknesses. Specifically, it discussed the uncertainty regarding the recently approved bailout in Portugal, the needed extension of Greece’s bailout, and the U.S.’s debt ceiling being reached last Monday. I will continue this conversation in this post and focus on the EUR’s issues.

Greece is first up. The ECB is taking a strong and isolated stance against any type of Greek restructuring, whether it is a soft restructuring or reprofiling. According to Executive BOD member Jurgen Stark, the “continuation of liquidity provision would be impossible” if a restructuring-like action is pursued. This is in spite of Germany and other countries in the Eurogroup finance council suggesting they are at least open to any solution, even a restructuring. One has to follow the money in this situation to fully understand it. The ECB lent Greece $125 billion in March in short-term loans. Greece uses this funding to pay daily operating costs, such as wages and purchases. In turn, Greece posts government paper as collateral, albeit the majority of it rated junk status. In a restructuring scenario, the ECB would be forced to accept defaulted collateral, which its finds unacceptable. The ECB is already nervous to the fact it holds junk-rated collateral. So, what will happen? I think most investors believe the ECB will fund Greece even if a restructuring occurs. The wild-card is Spain and its hidden debt.

According to the Wall Street Journal, the end of the Socialist’s power in Spain could reveal “piles of undisclosed debt in local governments”. This situation occurred in Spain’s Catalonia region five months ago. Catalonia’s debt increased two fold after a political change in the semi-autonomous region. Apparently fiscally frail local governments in Spain force business transactions off the books. Economists estimate these transactions could add an additional EUR 20-30 billion of debt, which would certainly place Spain back into the same conversation as Portugal, Greece, and Ireland, but at a much more severe level. According to the World Bank, Spain is the World’s 9th largest country in terms of GDP ($1.4 trillion) and has two-times the amount of GDP vs. Portugal, Greece, and Ireland combined ($740 billion). On a positive note, shorter-term yields are not pointing to a default for Spain any time soon. Same goes for Italy, which was put on negative watch by S&P on Friday. Italy’s GDP is $2.0 trillion, which may put it in the too big too fail category.

Across the pond in the U.S., I am skeptical the U.S. Fed Reserve will move forward with its end of QE II as indicated by its latest minutes. The Fed’s minutes noted the first step would be to stop the reinvestment of principal payments on Fed’s securities, the next would be to increase the Fed-funds target rate, and the last would be to sell its securities portfolio of an estimated $2.5 trillion. All of this fiscal tightening amid slowing growth? Recent indicators point towards a decline in economic growth. It remains to be seen which way the Fed will move.

I currently have a five wave count up from 74.5 on the USD index. This could indicate a rally with more legs than the most recent push. All other rallies were three waves, which is only a correction in Elliott Wave. I will be keeping a close eye on the developments going-forward, and will communicate all trades to my clients.

Positions in currencies mentioned: None

About WeeklyFxTrade:

My trading system is built for part-time traders searching for convenient signals. I will post from one to two trades Sunday afternoon/evening and most will be held for the entire week, unless a stop-loss or limit is reached, or a significant news event has occurred. I may post trades during the week, but only with orders (non market) to give you ample time to setup the trade.

My system will use a combination of technical and fundamental analysis to form trade setups. I will always target trades that have a high risk / reward ratio, never draw down more than 10% of your account, and limit the number of concurrent lots to 2 (i.e. a 5% drawdown maximum per lot). Additionally, my system trades in every market and I will communicate the reasons for the trade and provide updates during the trade.

Specifically, it has increased vs. the EUR from 1.495 to 1.417 (as I write this post). The drop has been driven primarily by debt fears in Portugal, Ireland, Greece, and Spain (“PIGS”). European finance ministers recently approved a bailout for Portugal (individual countries still need approval from its respective parliaments) and are currently discussing an extension for Greece. While European finanace ministers have not determined an extension for Greece, I have read a “soft” restructuring or reprofiling has been contemplated. A soft restructuring would only extend the maturities of the debt, which is just kicking the can down the road further. At some point, the PIGS will need to face reality, which will be a complete restructuring or leaving the Euro.

Across the Atlantic, the U.S. has its own myriad of issues. The debt ceiling, whether real or not, was officially breached yesterday at just over $14.3 trillion (I struggle with the concept of a ceiling as it has increased 15 fold since 1981 and three fold since 1995). In a calculated move to avert financial disaster, Geitner borrowed from several government pension funds to extend the debt ceiling deadline to August 2011. This should make for an entertaining Summer of political banter. However, governments are rarely proactive and usually take action after debt markets blow up. Therefore, I full expect the U.S. government to screw this up.

So, which currency is the weakest? In the short-term, all signs point to the EUR. The USD should continue to strengthen as the European debt crisis unfolds (as its status as a risk off currency), but be aware of interest rate differentials, which truly drive foreign exchange markets. EUR news is lite this week, but the German CPI is released on Friday. The release may point to higher inflation, which would trigger more speculation on ECB rate hikes and strengthen the EUR. Also be cognizant of USD existing home sales released on Wednesday. In the long-term, the USD wins due to its current inability to recognize its debt and money printing press issues. One day the music of the Fed’s money printing press will end and its remains to be seen if the Fed has a chorus.

Positions in currencies mentioned: Short EURUSD

About WeeklyFxTrade:

My trading system is built for part-time traders searching for convenient signals. I will post from one to two trades Sunday afternoon/evening and most will be held for the entire week, unless a stop-loss or limit is reached, or a significant news event has occurred. I may post trades during the week, but only with orders (non market) to give you ample time to setup the trade.

My system will use a combination of technical and fundamental analysis to form trade setups. I will always target trades that have a high risk / reward ratio, never draw down more than 10% of your account, and limit the number of concurrent lots to 2 (i.e. a 5% drawdown maximum per lot). Additionally, my system trades in every market and I will communicate the reasons for the trade and provide updates during the trade.

Hi Traders-

My last post was on 4/23 and discussed a short EUR/CHF trade I managed for my clients last week and two weeks ago. At the end of the post I indicated that another short opportunity may present itself and it turned out to be correct. My primary Elliott Wave count showed that the pair was in a wave 4 consolidation. This wave 4 peaked at 1.29, and the pair declined to 1.275 over the next 48 hours. The pair closed Friday at 1.2815. I expect it to retrace part of this movement and will be looking for sell entries this week. Please see the graph below.

Another pair I focused on last week was AUD/USD. I set buy orders at 1.06 for my clients on 4/25 and missed the 4/26 dip by 70 pips. I still think there will be longer-term opportunities to buy this pair, but it may be overbought in the short-term. The longer-term trade is based on the continuing decline of USD and rise of hard commodity prices, which will directly benefit AUD. Below is a brief / summary rationale for a weak USD going-forward.

Weak USD Summary 

While QEII will officially end in June and the prospect of a QEIII has been denied by Bernanke (unless an adverse event occurs), the USD’s strength will be impacted by its increasing debt and China (and potentially others) dumping its USD currency reserves. The White House projects federal debt to reach $21.0 trillion in five years and $15.5 trillion by September 30th, 2011. At $15.5 trillion, the debt will be approximately 100% of GDP, the first time since WWII that this has been achieved. This is alarming, but not fatal. According to Kenneth Rogoff and Carmen Reinhart in their book This Time is Different, it is not the percentage of debt to GDP, but the credit history of the country that determines whether a default will occur (et al). In USD’s case, its credit history is very strong, which will allow it to continue its borrowing at relatively lower rates. The wild card is China. It may begin to dump its USD reserves as indicated by Zhou Xiaochuan, the governor of China’s central bank last week. Zhou stated that USD reserves “exceed our reasonable requirement”. Meanwhile, Xin Bin, a member of the monetary policy committee of the central bank of China, indicated that $1 trillion of USD reserves would be sufficient and that it should strategically focus on acquiring resources and technology needed for the real economy. China currently has over $3 trillion of USD reserves. If China dumps ~$2 trillion onto the market, it would increase the USD money supply by approximately the same amount as the US Government has increased it since 2007 (~$1.7 trillion), or greater than a 20% increase in the money supply. The consequences are obvious: higher inflation, higher commodities, and a deterioration of wealth and purchasing power of the largest economy in the world.

Traders-

The FOMC released its statement earlier today, and it was essentially unchanged and mainly dovish.  Bernanke took the podium shortly after and continued the dovish tone, and played down any continuation of QE2, or the possibility of a QE3.  Despite this, the USD plummeted, likely driven by the FOMC’s view of low medium- to long-term inflation expectations.

As stated in my post yesterday, I projected AUDUSD would reach 1.09 – 1.10, based on an Elliott Wave count and a continuation of a weak USD.  The pair is currently trading at 1.0930 and may reach 1.10.  I booked 147 pips of profit over the past two days and will be looking to buy corrections going-forward.

Below is an hourly chart that shows the 1.10 AUDUSD potential, which should be the end of minor wave 3 within major wave 3.  Higher levels should prevail over the next several weeks.

Traders-

In my previous post on 4/19, I posted two NZD/USD charts and alluded to a projected retracement of the pair’s recent increase.  This sequence seems to be playing out.  The attached graph shows that a breakout to the upside may have commenced based on the original Elliott Wave count I posted on 4/19.

Instead of buying NZD/USD, I decided to trade AUD/USD, a pair with a high correlation with NZD, greater relative strength vs. NZD, and a sound Elliott Wave count (see other attached graph).  Additionally, I believe hard commodity prices are not going to subside in the near-future, which should help AUD more than NZD.  I bought at 1.0686 and just missed a lower buy order at 1.065 for my clients.  The pair is currently at 1.0755 with limits of 1.08 – 1.09.

Upcoming news should help the final direction of this trade.  AUD’s CPI is due at 9:30 PM tonight, USD GDP is released Thursday AM, and most importantly, Bernanke is holding the Fed’s first ever press conference, which may shed light on the direction of USD monetary policy.

It should be an interesting end to April.  I will post a follow up at the end of the week.

Hi Traders-

I wanted to follow up on my 4/20 post.  As stated in it, my first sell order at 1.30 missed by 26 pips, and then the pair proceeded to decline by ~75 pips.  So, the trade was correct, I was just too conservative with my entry level.  My second entry at 1.292, a 38.2% retracement of the previously mentioned decline, was hit on 4/21.  The pair subsequently declined to 1.28.  I took profits at a higher level for my clients due to the price action.

I think the next few days will present another opportunity to sell.  The attached graph shows the pair either in a fourth wave correction or a beginning fifth wave.  I will closely monitor this pair for sell entries on Sunday / Monday and communicate it to my clients.

Aside from a technical standpoint, the fundamentals also support a decline in Euro strength.  As described in my previous post, the fundamentals include (1) Finland’s election that will likely limit future bailouts; (2) Greek 2-year yields reaching 20.62% Monday night; and (3) EUR finance ministers stating no bailout or restructuring is needed while Portugal, Greece, and Ireland suggest otherwise.  To sum up the yield issue, attached is a table from TradingEconomics.com that shows 10 year debt yields for major countries.  The highest measurable yield on the chart is Pakistan at 14.11% followed by Greece at 13.83%, Ireland at 9.71%, and Portugal at 9.00%.  The situation must be serious for the PIGs when yields are close to a country that is trying to fight off Al-Qaeda and has weekly drone strikes.

More to come early next week…

Hello everyone! I hope you liked my previous post. Funny things are also a necessary part of our life, and that doesn’t matter if you are a trader or someone else. So today I try to share you with some information concerning forex trading to be more precise I am going to tell you 15 golden rules of forex trading. I do not want to be banal so I just systematize and summarize all the information which is available for every experienced trader and of course for every beginner. So, I guess it’s time to let it roll!

1.You should always try to know more about forex trading and look over the financial market. It must be a regular procedure.

2.Discipline is a root of the success. Being a disciplined forex trader you undoubtedly achieve a success. If you are an undisciplined trader, I am not sure that your results will be positive. It is simple.

3.You should always lower your size of the trade when you have negative results. All good traders follow this rule. Don’t use 3 or 4 lots, because you can lose a lot of money. One lot would be enough. If your next trades are profitable you can move your trade sizes back

4.If you achieve some profit don not be greedy. You should be satisfied with even a small profit. Practically all traders very often try to get into trade and they hope to gain a bigger profit. But they just see the market moving against them.

5.Choose and work out the right trading strategy. And stick with it. And don not change strategies every day. Let your strategy reveal its potential, if you are not satisfied with it change it and begin again!

6.Try to trade with one lot! If you have 10 or 20 successful consecutive trades it means that you now you can operate 2 lots for 10-20 next successful consecutive trades. And if you have losses with one lot, what makes you think that you have right to trade with 4 lots?

7.Remember, you are not a looser if you have a losing trade, you are a looser if you do nothing to prevent it again. Don’t give up, we are all mistaken! Drive away at yourself and your trading will be good!

8.Be yourself. Do not be someone. Choose your own style and keep on it! Don’t change your habits and system considerably just because some guy has good profits with these or that parameters. Just BE YOURSELF!

9.Small loss is the best loss. Exit the market as soon as you realize that market has changed and something is wrong. There will be no miracle. It is not a fairytale it is a financial market!

10.Do not hope and pray. If you do you will undoubtedly lose. I have already mentioned that it is a financial market. And your prayers are just wasting your time. There are no benefits from it.

11.Don’t rely mainly on news. It is just a history. Forex market is developing and history remains history.

12.Do not speculate. Be a trader. I do not know trader who will be a successful speculator. It is a nonsense.

13.Accept the fact that you will lose some money during your trading. It help you to concentrate on more important things. Losses? It is a normal for forex trading.

14.Try to avoid big losses. These one can make you pessimistic and you can lose not only your money but yourself.

15.Don’t procrastinate. Don’t overanalyze. Place the trade then manage it. If something is wrong, get out. But you cannot be successful if you are not in the trade.

Take note that many traders read these rules every time they begin their trading. And it is really true! Repetition is the mother of learning! Mind this and your trading will be much better. All traders are equal in the eyes of the market. Everyone has an opportunity to win and make money. Everyone. Just mind this! Good luck and good profits, my friends!

It’s not a secret that Forex market is one of the most attractive and favorable ways for making money. All things that our service (GFSignals – Forex trading signals) does concerning Forex trading signals providing is only for your convenience and success. Every time we tell you about extremely successful and profitable Forex trading systems, so it makes you chances to increase your profits higher and higher. And I am happy to tell you about our best trading system suppliers again. They are ready to bring you high profits! Let me introduce them:

Stable trading

First trader I would like to mention is 68088680 and his forex trading system shows really stable results. Just look through his statistics – he has had positive results for 5 months! His win ratio is 86 %, he has a total profitability of +57.30 %. Subscribe, earn money and get rid of your worries!

Money-maker

The next forex trader I will tell you is Oleh81 whose forex trading system got +460 pips last week! And this week he has +178 pips by this moment. Win ratio is 94 %, total profitability is +43.34 %, profitability for 3 months. So, what are you waiting for? Subscribe right now, new profits are waiting for you!

Successful trading

And the last trader I am going to tell you is Kruz with forex strategy system which got +101 pips last week. Not bad, don’t you think? And its trading system has +53 pips by now. His win ratio is 78 %, total profitability is +51.20 %. And he operates only the 1 lot! Just subscribe and your earnings will undoubtedly increase!

Another thing I want to tell you is that one of our traders, who represents ForexSummit trading strategy wrote a post to our blog where he analysed NZD/USD and tell some words about himself. It is a good possibility clients to know more about a trader and to explain some details of your techniques and trading style. It is important for client when trader reveals his thoughts concerning trading, I think you will agree that all subscribers will be happy to know more about his trader. So, good job, ForexSummit and thank you!

That is all for today! Be prosperous!

Hi Traders-

My trading system is built for part-time traders searching for convenient signals. I will post from one to two trades Sunday afternoon/evening and most will be held for the entire week, unless a stop-loss or limit is reached, or a significant news event has occurred. If warranted, I will enter trades mid-week, but only with a buy/sell order, giving you enough time to setup the trade. My system will use a combination of technical and fundamental analysis to form trade setups.  Please visit my profile for more detail.

As my trial subscribers have witnessed over the past two days, I had sell orders for EUR/CHF at 1.30. The pair peaked at 1.2974 overnight and is currently at ~1.29. While we missed our entry by a small margin, I think there is another opportunity to enter this trade. I currently count five waves down, which in Elliott Wave indicates that three waves should retrace the down movement at least 38.2%.  This Fib retracement level will satisfy the count at 1.292, which is where I just set my next sell order.  Limits will likely change, but will be initially set at 1.2650.  Stops will be just above the previous high or 1.298, for a risk/reward ratio of ~3.3x.  Please reference the attached graph for more detail.

Fundamentally, this trade sets up well.  Three factors should take this pair lower: (1) Finland’s election that will likely limit future bailouts; (2) Greek yields reaching 20% Monday night; and (3) EUR finance ministers stating no bailout or restructuring is needed while Portugal and Greece suggest otherwise.  These factors should eventually take hold in this pair and send it lower.

Traders-

My trading name is ForexSummit and I employ a conservative mix of technical and fundamental analysis for trade setups.  The technical analysis will be a mix of Elliot Wave Theory, Fibonacci (extension, retracement, and time), regression channels, and various other forms of technical patterns.  The fundamental analysis will include relevant economic indicators, such as GDP growth, employment rates, consumer and producer price indexes, manufacturing-related reports, sentiment-related reports, et al.

Over the past two days, I have been long NZDUSD on two separate occasions.  I closed out of both and booked 93 pips across both trades.  I would remain long this pair, but the fundamental and technical properties are telling me otherwise.  Regarding fundamentals, the USD was put on negative watch by the S&P yesterday, Greece’s 2-year interest rates rallied to 20% overnight (citing imminent default), and China raised its target interest rate another 50 bps.  Overall, snap-backs like the one we saw yesterday from the USD negative watch tend to last longer than imagined.  On the technical side, I have two active Elliott Wave counts for NZDUSD on 4-hour and daily charts.  Both indicate a retracement is in the mix from the ~11% increase over the past month (see charts in media library).  Additionally, I have a potentially declining Elliott Wave count on the S&P 500, which indicates a strong USD, and reinforces this view.  If these scenarios play out, NZDUSD will represent an attractive longer-term buying opportunity, which I will communicate and manage for my subscribers.