FOREXYARD: Forex News Blog | |
- Can we Expect Another Rally for Gold prices?
- AUD/USD – Trading on News Events
- USD/CHF Reversal Signal
- Bullish Correction Expected for the AUD
- Forex News: US Advance GDP on Tap Today
| Can we Expect Another Rally for Gold prices? Posted: 29 Oct 2010 03:08 AM PDT
After reaching a record high of $1,376.70 an ounce on Oct. 14th, Gold prices have been falling steadily ever since, stabilizing around the $1335 level. Can we expect another rally for Gold prices? The answer may come after next week's FOMC meeting minutes on Nov. 3rd. Gold has been gaining from the start of the recession. Investors often turn to the metal as an alternative investment in times of financial instability and more recently as a hedge against inflation. This became the main fear as central Banks around the world embarked on the path of quantitative easing, pumping money in to the ailing economy in order to spark growth. However, such extreme measures can often lead to an oversupply of currency in the market and therefore, inflation. With the U.S economic recovery struggling to take hold, the Federal Reserve is again facing the decision of whether or not to expand quantitative easing. News of such deliberations propelled Gold prices to record highs during October. Prices have since dropped 4% on profit taking, accelerated by reports from the WSJ this week that the second round of quantitative easing would happen at a moderate pace. Originally investors were expecting a much larger amount to be pumped into the economy. This anticipation weakened the USD, making commodities such as Gold cheaper. The value of the USD will again be behind Gold's levels heading to next week and beyond. Investors are predicting that monetary easing will lead to a sharp devaluation of the Dollar, which combined with inflationary fears will likely boost Gold prices. However, this scenario is based on the assumption the Federal Reserve indeed undertakes further quantitative easing measures at sufficient levels. The recent slew of positive economic data from the U.S puts some doubt to these expectations. Gold will likely see a sharp drop if the Federal Reserve decides to take small steps or no steps at all combating the stagnating growth. In such a case we may see gold prices recede back to around $1200 throughout November. Another major indicator to affect Gold prices next week will be the Non-Farm Payroll Data which will be released Friday, Nov. 5th. As unemployment remains the main concern for the Federal Reserve, the data will likely affect their assessment of the U.S economic recovery as well as provide expectations for their next meeting. While it is unlikely Gold prices will reach Oct. 15th levels as the hysteria over monetary easing subsided and investors believe Gold has become overbought, any negative data from the U.S will likely push Gold prices higher, possibly to levels around $1350 – $1360. |
| AUD/USD – Trading on News Events Posted: 29 Oct 2010 02:27 AM PDT
For traders interested in a "news trading" strategy, here is your guide. Looking at the AUD/USD over the past month, I noticed something interesting: this pair has actually been fluctuating sharply, and almost exclusively due to news events. Look at the chart below. I've noted the dates of each sharp movement to help make this a bit easier. Here is the timeline: Oct. 5: Australia's retail sales figures came out worse than forecasts; ANZ posted smaller growth in job advertisements; and the RBA held rates steady at 4.50% due to market pessimism. Result: AUD/USD dropped a whopping 104 pips over the span of a few hours, but rebounded once the US market opened following built-in short positions for the USD from an Oct. 4th announcement by Bernanke that the economy was in need of more easing. Oct. 7: At 00:30 GMT, Australia posted better-than-forecast employment change data. At 12:30 GMT, US posted better-than-forecast Unemployment Claims. Result: AUD/USD uptrend strengthened rapidly, peaking at 0.9916, followed (at 12:30 GMT) by a sharp correction due to American data. Oct. 8: At 12:30 GMT, US published worse-than-forecast Non-Farm Payroll data. Result: AUD/USD spiked upward 148 pips. Oct. 14: The entire week was filled with practically no relevant data for either currency. But on Oct. 14th, the US published worse-than-expected Trade Balance and Unemployment Claims figures. Result: AUD/USD almost reached parity, with a high price of 0.9996 on Oct. 15th. Oct. 18-19: By now the prospects of a quantitative easing move by the Fed had grown stronger, but traders were going long on the dollar due to a higher than expected TIC Long-Term Purchases report. The pair’s downward move came to a halt, however, when the US published a negative Building Permits report on the 19th. Oct. 25: At 00:30 GMT, Australia published stronger PPI figures than were expected. However, at 14:00 GMT, the US published much stronger housing data. Result: The AUD/USD spiked towards 0.9975 in early trading hours, but collapsed back downward after the US housing data was published. Positive US data published on Oct. 26th continued to strengthen this downward momentum all the way through to the 27th. Oct. 27: Aussie data came out worse than expected, driving the pair to its lowest point since Oct. 5, with a price of 0.9651. Oct. 28: Australia's RBA announces that more data established another decision to maintain rates where they are. Pessimism grew. Result: The minor upward correction seen prior then turned bearish. Oct. 29 (today): Anticipation of a positive reading from the US Advance GDP today is driving the pair lower as traders price-in a bullish USD. If the data disappoints, this pair will likely turn upward sharply like it has in the recent past. AUD/USD – 4-Hour Chart Conclusion: Basically, trading on news events over the past few years has been tricky due to the strange nature of the markets (See the final section of my In-Depth Analysis on “The Greek Crisis” for a better description of this bizarre behavior). However, the AUD/USD pair has recently returned to normal trading behavior, with news events having clear indications for direction. Forex traders would be wise to notice this and start designing trading strategies, with Entry Orders and pre-programmed Stops/Limits, to start capturing these 100-150 pip swings. Check the economic calendar for the next week's events from the US and Australia and start planning your strategy now. |
| Posted: 29 Oct 2010 02:15 AM PDT
Heading into the monthly close, the USD/CHF is showing a bullish reversal signal in the long term downtrend. Following last month's breach below the bearish pennant pattern on the monthly chart, the dollar has rallied creating a bullish hammer. This candlestick pattern is identified by a long lower shadow with a small real body at the top. The candlestick is found at the bottom of a downtrend and the appearance of the hammer signals a potential bullish reversal in the downtrend trend. The candlestick pattern is similar to its bearish counterpart the hanging man. Traders will need to wait for a close of the month to confirm the reversal signal. Initial resistance is found at this week's high at 0.9930. A potential target for any further appreciation in the pair may be found at the lower boundary of the pennant pattern at 1.0080. Traders should be aware that just as a support level turns into a resistance level; previously broken trend lines can serve as new resistance levels.
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| Bullish Correction Expected for the AUD Posted: 28 Oct 2010 11:41 PM PDT
Following a sharp decline over the past few days, the AUD seems to be headed for a bullish correction. Forex traders are advised to take advantage of this knowledge by going long on AUD/NZD now, and at a great entry price! Below is a 8 hour chart of AUD/NZD. The technical indicators are the RSI, Slow Stochastic and Williams Percent Range. - A breach of the lower Bollinger Band is evident on the chart (1), indicating an imminent upward correction may be expected. - A bullish cross is evident on the Slow Stochastic (2), signaling the next move may be an upward correction. - The RSI (3) signals that the price of this pair currently floats in the over-sold territory, suggesting upward pressure. - Williams Percent Range (4) further supports the upward direction.
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| Forex News: US Advance GDP on Tap Today Posted: 28 Oct 2010 10:33 PM PDT
The EUR strengthened against most of its major currencies yesterday as gains in stocks and commodities prompted investors to wade into riskier currency trades. The EUR made significant gains against many of its most traded currency pairs, such as the USD and CHF. Another developing trend is the recovery of Crude Oil. Since the Dollar began dropping against the EUR, oil has risen further and further. Currently trading around $82 a barrel, if the dollar will continue to drop, crude oil could reach $83 a barrel by the end of the day. Here is a round-up of today's major events: • It measures the change in the inflation adjusted value of all goods and services produced by the economy. 13:55 GMT- Revised UoM Consumer Sentiment • It measures the level of a composite index based on surveyed consumers. |
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