Currency Outlook - 11th October 2009

Salam,

It's been a while since my last weekly analysis. Hopefully I can continue to consistently update my blog with the weekly analysis and improve on my performance.

Fundamental Analysis

USD
Greenback strengthened drastically on Friday while at the same time stock markets rose.

Usually, they would move on the opposite way round due to risk appetite with USD considered as a safe haven currency. So now what does it mean?
Has the currency reached a bottom and decoupled as a carry trades’ currency?

I would think it would be too soon to say that USD has decoupled as a carry trade and safe haven currency. The reason the sudden surge on Friday apart from strong data i.e lesser unemployment claims and improving trade balance, was the strong denial from oil-producing nations as well as Japan, Russia about the rumor circulated earlier in the week that they plan to phase the USD out as the primary payment for oil deals.

This week, key data for USD: Retail sales and University of Michigan sentiment reports, CPI statistics and FOMC minutes will tune more directly into interest rate speculation.

An excerpt from www.fx360.com:

“According to the latest CFTC report, forex positioning in the futures market is nearing extreme levels. For example, net short positions in the British pound rose against the dollar to the highest level ever while long positions in the euro rose to the highest since January 2008. Long positions in the Canadian dollar also doubled while long Australian dollar positions remained near 1 year highs.

The only currency that traders trimmed their positions in was USD/JPY, but even then short USD/JPY positions remained near 1 year highs.

This confirms our belief that the short dollar trade has become very overcrowded and because of that, the dollar is setting up for a rally. Next week’s economic reports could provide the necessary catalyst.”

Could we see a continuation of a strong USD next week?

Euro
Signs of a potential double top?
On the daily chart, the price is looking to make a double top but this depends on the performance in the coming week. If the USD continues its Friday’s performance into the coming week, there is an outside chance for this to happen.

European Central Bank’s neutral stance during their recent monthly policy meeting could potentially creates some downside risks for the currency in the near term. ECB President Trichet seems to be somewhat concerned about the appreciation of the euro, as he said that “excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.”

Still, we must look at the fundamental which support the movement. Looking next week’s data, among the highly-impacted data includes:

On Tuesday, the German ZEW survey – a gauge of investor confidence – is projected to edge up to 58.8 for the month of October, the highest since April 2006, from 57.7.

On Wednesday, the August reading of Euro-zone industrial production is forecasted to rise by 1.2 percent, which would be the first increase in 3 months and the largest rise since January 2008

On Thursday, the final reading of Euro-zone CPI is anticipated to confirm that the annual rate fell to -0.3 percent in September from -0.2 percent.

On Friday, the Euro-zone trade balance is projected to narrow to 2.5 billion euros for the month of August, which would likely reflect a drop in exports but run counter to expectations for a rise in industrial output.

Cable
Signs are still mixed for the UK economy. Industrial output tumbled 2.5 percent in the month of August—far worse than the consensus forecast for a 0.2 percent gain. The figures overshadowed bullish housing data and an effectively GBP-bullish Bank of England rate decision.

This week, highly-impact data includes inflation (Tues) and jobless claims (Wed). Initial concensus estimates are showing that inflation maybe is slowing down (exp. 1.3% y/y compared to 1.6%y/y last mth) while claims and unemployment rate are both expected to increase. With such weak data were to materialize, it would keep pressure on the BoE to maintain record-low interest rates and quantitative easing measures.

Aussie
Australia became the 1st nation among the major countries to raise its interest rates. RBA decided to raise int. rate by 25bps to 3.25%.

Analysts expects that following the bullish statement from RBA, there’ll be another rate hike in the next meeting in Nov. and the benchmark rate could be as high as 5% in mid-2010.

The currency, to me, seems to be the best place to park money for very longer term horizon (3-6months).

Kiwi
Kiwi has been strengthening relentlessly against USD this year, almost following the same pattern as Aussie. However, while RBA unexpectedly raised their rates last week (followed with strong economic data), RBNZ Governor Bollard has explicitly expressed his intentions to keep his nation’s benchmark lending rate unchanged at 2.50 percent until “late” next year. These are glaring discrepancies and they will not hold out forever.

Now, when it will finally correct? Or will it correct?

Looking at the economic data coming out this week: Retail sales, business activity and housing sales will offer a relatively complete picture of the economy.And only then we can see a clearer picture of the economy.


Technical Analysis - Trade what you see..not what you want to see..

Aussie
Possible retracement ahead should it fail to break the channel trendlines (colored light blue).

My preference would be for a possible buy when the price does make a correction as at current level, it would be risky for me to enter any positions.

Cable
Currently is finding its support around the 1.5840 levels, which is almost near my 38.2 Fibo level. Should the price breach this level, I would place a sell order, with a target profit of around 100-200pips. Hopefully bear is still in this pair.

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September Trading Result

Salam,

It has been quite sometime since I really update my blog with my weekly analysis as well as trading results.

Actually my last trade for the month was on the 16th which was about 2 weeks ago. This month's performance did not turn out as what I had expected. All my trades went completely the other way. Some of the trades were actually on the green at first but I did not or was slow to move my SL to breakeven. This is one of my weaknesses..something which needs to be improved.

Hence for this month, I made a total loss of 626pips. Quite a huge number..huhuh. Next month would be a real challenge for me to recover the losses before I can start thinking of withdrawing profits.

Here's a screenshot of all the trades for September, a total of 14 trades. Compared to the previous 2 months (which I gained positive results), total trades in each month averaged less than 10. This shows that I am chasing losing trades and adding to the losing trades, with the hope of recovering the earlier losses..which in the end resulted more losses...something which I also need to improved. Come on October, please give back my pips and more!!

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Salam Lebaran

Salam my friends,

Lama jugak da tk update blog nih..huhuh..disebabkan mood puase and hari raya..selain trades yg tk menjadi bulan ni.

Sekarang ni tgh mencari mood balik utk update blog ni. FYI sekarang ni sy tgh membaca 2 buah buku berkenaan dgn FOREX yg sy harap akan dapat membantu sy improve lg trading. Nanti kalau ade peluang, sy akan ceritakan psl buku2 tersebut.

Okla..cukup setakat sini dl..just tknk biarkan blog ni bersawang..heheh

Wait for my weekly update soon! Till then..Selamat Hari Raya Aidil Fitri dan Maaf Zahir dan Batin!!

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Just follow the market laaa...

Salam friends,

Last week was something for me to forget. But it is also for me to learn and correct my mistake. Let’s hope this week I can recover the losses from last week. Must continue to be disciplined and maintain my MM.

Okay, for the week ahead we could see potential significant breakout of major pairs as liquidity is expected to return after a range-bound summer period.

There are important news and data this week that could chart the movement and potential breakouts. To start with, there’ll be 3 rate announcement this week; RBNZ on Wed (9/9), BoE and BoC (Canada) on Thu (10/9).

It seems that it is almost certain that they’ll all maintain their current int. rates. However, the market-moving news would be coming from their policy statement. If their statement sounded bearish just like BoE did last month when they announce additional quantitative easing, then the pair could take a plunge.

Fundamental Analysis

Cable - Neutral
GBP still holding strong against the USD. What is surprising is that the economy is clearly far worst than other developed countries. Data has confirmed a deepening recession, policy groups have projected a significant lag in its recovery relative to its peers and ballooning asset purchases by the central bank means rate hikes are the furthest thing from their mind.

The only reason can only be risk appetite. The pair can possibly break 1.66 level even when their current economy is at the current state. However, to me, this upward movement is seriously in need of new reason to support it. Perhaps further stock market rally and investors’ improving risk appetite.

Fibre - Neutral
Although early of the last week saw EUR weakened against USD, towards the end it recovered as investors seems not ready to break from the trading ranges.

Should an equity market correction occur this month (which many economists had argued based on the ‘September Effect’), EUR could see some pullback but this scenario still remains an IF.

This week’s data should not be that market moving. German’s IP is expected to post 1.6% rise vs -0.1% last mth. CPI, meanwhile is expected to be flat m/m.

Aussie – Neutral
AUD were the clear winner among other majors against the USD last week. The pair went up by 1% last week alone.

The RBA held the benchmark interest rate at the 49-year low of 3.00% for the fifth consecutive month in September, and the central bank is widely anticipated to hold a neutral policy stance throughout the second-half of the year as the board forecasts economic activity to expand at an annual rate of 0.5% this year.

Yet, they could possibly raised the interest rates as early as October this year according to data provided by Credit Suisse.

Data for this week however could bring volatility to the market. Labor market expected to weakened further to 5.9% from 5.8% in July.On the other hand, retail spending is forecasted to rise 0.5% in July as the government commits more than AUD20bil in public projects to stimulate domestic demands.

Kiwi – Neutral
Key to the movement of this pair is the movement of the stock market especially the S&P 500 (SPX). Earlier last week we saw the pair dropped sharply when SPX plunged. However, the move shortlived and kiwi is now back to where it was at the start of last week.

Apart from the rate announcement by RBNZ this week, SPX’s movement should be watched closely to determine which trade to place for this pair.

Technical Analysis

Cable
Ermm this pair is interesting la..economy is not that nice but still looking at the technical, we could see it has already break the downward trend line (red) and potentially reached 1.66 levels.

My indicators are also showing that this pair is at the oversold level. Hence this represent a good setup for buy trade.

Fibre
Currently the price is within an ascending triangle. Fibre could possibly heads further north should it break the resistance line (red).

Indicators are still at the mid range, meaning that the upward movement still have some legs.

Aussie
On Friday, it shoot up like a rocket after beating the resistance 0.8459 which is the 61.8 Fibo level between 0.9850 and 0.6200.

However, this sharp movement to the north means that RSI for longer TFs such as 1H,4H and daily are all at the overbought level. Hence to enter buy trades at current level would not be a wise decision coupled with uncertainty on the movement of the stock market.

Waiting for some pullback before entering buy trade on this pair is safer should the trend still intact.

Kiwi
It is approaching the 61.8 fibo level (refer to chart) which is about 70pips away. After that we could possibly see retracement as indicators giving an overbought signal. Current setups looks more likely that the price will went up instead of going down.

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Not a sweet early September!

Salam,

This week I made a total loss of -195pips..ermm the first week in nearly 2 months I closed in the negative territory.

Stock markets has been holding up steadily and my projection of continuing correction in this week has been proven wrong. Higher yielding currencies such as GBP and EUR continues to held up gains against USD.

What a start to the month. Now I must recoup my losses first before I can even think of improving August's performance. Sigh!

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August trading performance

Salam,

For the month of August, I placed a total of 9 trades and made a profit of 319pips. Below is a summary of all the trades:

Could have done better I think..but maybe because it is the first month I'm trading with a standard account and being extra cautious.

Looking forward to September..where hopefully I could get more pips and some 'duit raya'..heheh

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My first withdrawal - RM700

Salam,

Remember that earlier this month, in one of my posts, I said that new month, new ball game. Well, this month is the 1st month I am trading using standard account. What this means is that for every 1pip, it is equivalent to USD1 for 0.1 standard lot.

So far for this month, I've earned 387pips. I'd decided to withdraw 200pips which is equivalent to USD200 and retained the rest as I build up my capital. Through local bank, the money was transacted into my account this morning and as the current exchange rate set up by my forex broker at USD1=RM3.50, RM700 was credited into my bank account :) Alhamdulillah..

Hopefully this would be the start of consistent performance from me and that I can withdraw regularly on a monthly basis. Let's hope that the month of Ramadhan would bring more rezeki for me and my family.

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Technical Analysis for last week of August

Salam friends,

Here's my technical analysis for this week:

Cable
If the trendline holds, we could potentially see cable moving up possibly to 1.6600-1.6620 as the nearest resistance level, provided that stock markets rally holds. However, if the stock market continue further correction and the trendline is broken, we could potential see cable dropped to 1.62 -1.63 levels.
My indicators (RSI and deMarker) are at the half way line while stochastic is at the oversold level.

Fibre
This pair could break the red line and go beyond 1.44 levels, with next strong resistance is 1.4687, which is the 61.8 Fibo level of 1.2501 and 1.6038.

Aussie
Similarly, Aussie could also reach the 61.8 Fibo level (0.6229-0.9850) at 0.8467, if supported by favorable risk sentiment trend in the week ahead.

Kiwi
Could also reach 61.8 fibo level at 0.6945 however my indicators are all showing that this pair is at the overbought level and poise for some corrections.

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Analysis for the last week of August

Salam,

First of all, I would like to wish all my dear muslim friends - 'Selamat Berpuasa dan beribadat di sepanjang bulan Ramadhan'.

Review of last week
At the start of the week, we saw USD strengthened against other currencies as questions on recovery arose from weak US consumer confidence, driving up risk everse sentiment. However towards the end, stock markets recovered helped by several factors that included oil reserve shock in the US which spurred EUR due to its high correlation with crude oil. EUR also gained on the back of strong PMI data. German services PMI surged to a 16-month high of 54.1 while French manufacturing PMI hit a 15-month high of 50.2, signaling an expansion in activity after growth had contracted for more than a year.

Finally, the strong rebound was also due to Bernanke’s remark at the end of the week that “the prospects for the return to growth appear good” – signaling growth is on its way. He also took pride in the fact that the Fed has spared no effort and that things would have been much worse if they did not act the way they did.

Fundamental Analysis

Outlook for this week: While we have seen investor sentiment steadily rise over the months, with the S&P 500 just recently hit new highs for the year; there are signs that optimism is flagging. Taking a look at the volume data that accompanies the steady trend in equities, there is a clearly diminishing trend in conviction behind this move. I would go for sell orders on corrections opportunities this week. Stock markets needs to feed on positives news to support its rally between now and the 4Q09 where we’ll see investors coming in (after summer holiday) with more liquidity.

Cable – slightly bearish
The primary driver for cable this week would be risk sentiment instead of economic data due out this week. Revised 2Q GDP is due out on Wed – barring any meaningful shock revision, the impact on cable is expected to be alredy priced in. CBI Realized Sales (Thu) is expected to report a better figure although it would be still negative (-11) – this data is a leading indicator for consumer spending. A lower figure indicates low level of sales volume.

Fibre – bullish
After impressive results from PMI data last week, our attention would be on German’s Ifo business climate data out on Wed – it’s a leading indicator of business condition such as spending, employment and investment, where 7,000 companes were surveyed for the data. Economists are expecting an improvement to 89.1 vs 87.3 last month.

On Thursday, the German GfK survey of consumer confidence is projected to rise to a more than 1-year high of 3.6 in September from 3.5 and on Friday, Euro-zone economic confidence is anticipated to increase to a 10-month high of 78.0 in August from 76.0. Overall, a steady stream of positive news could be the impetus to drive fibre to fresh 2009 highs.

Aussie – bullish
Key macro data for AUD this week includes Construction Work Done (Tue) – expected -2.7% vs -3.7% last mth and Private Capital Expenditure (Wed) – improvement to -4.7% vs -8.9% last mth. Both data are important as it indicates the health of the economic and if the actual data came out as expected, we could see Aussie making new highs for 2009.

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It's just a healthy consolidation

Salam,

What did I tell ya'? Market is now on consolidation mode. After last Friday's University of Michigan's consumer confidence data reported dismal result, market took cue and come yesterday, we saw market took a huge tumble after four weeks of rally (supported by earnings season).

I don't know if there is anyone following my blog, but this week if you guys noticed I didn't update my research for the week due to time constraint - however my view still remains the same from the previous week - looking at selling opportunities as the market corrects.

Hence, yesterday I placed 2 sell orders on kiwi and cable and managed to took +201pips in a matters of hours as the stock markets plunges worldwide and investors became risk averse, dumping riskier,higher-yielding currencies.

Looking ahead for the rest of the week, I will look for further opportunities to short the major currencies against USD as I firmly believe that we are in a consolidation period and 2% drop (on average) in the stock market on Monday is just a start to a healthy correction.

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Correction is underway

Salam,

Today I managed to secure another +94pips. Kiwi gave me 101pips gain but I gave back 7pips thru cable..

I think I entered the sell order for cable late, after it had fell more than 200pips on Monday when it had break the UTL support. The price ranges around the 1.6440-1.6500 level yesterday, suggesting bearish might have exhausted..before I decided to manually close the trade..

It turns out that the bear has some fuel in the tank (boleh ker ckp camni? belasah jer la..hehe) If I had waited longer, I could gain as much as 80pips. Well, need to improve on my confidence level as well as my patience..huhu

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Potential Correction Ahead?

Salam,

Last Friday, we saw volatile movement in the currency market after the announcement of Non-farm Payroll (NFP). The data was actually better than analyst estimated. -247k against -320k. Normally what we would expected is USD would take a hit and other currencies benefited due to risk appetite sentiment. And that’s what happened briefly, Cable, Fibre all went up by 60-100pips, but before u knew it, the pairs went down crashing by more than 100-200pips. Luckily, I didn’t trade last Friday because I don’t like the volatility caused by NFP.

Could it be a sign that positive US fundamental data now would trigger a dollar rally instead of further risk appetite? This is because US is expected to recover 1st from the current economic turmoil than UK, Japan and the Euro Zone (which will be confirmed with this week’s GDP numbers). But such expectation is too early to tell and better yet, difficult to muster, as USD is considered as the world’s reserve currency and would be hard to shake off its safe haven currency tag.

Looking ahead to this week, here’s my fundamental analysis based on my favorite pairs:

Fundamental Analysis

Cable – The decision by BoE to increase Quantitative Easing further by GBP50bil to GBP175bil caused a sharp fall in the pair last week. This just further proves that the UK economy is recovering slower than the US.

Recent UK economic data has broadly shown relative improvement in domestic activity and said trend will be put to the test by upcoming Jobless Claims results. Consensus forecasts call for a 28.0k increase in Jobless insurance claims and a marginal increase to the national jobless rate at 4.9 percent. The result would represent the worst unemployment since 1997, but as recent market reaction to US Nonfarm Payrolls data clearly shows, financial markets are mostly interested in the rate of deterioration.

Short-term Cable momentum points to further losses, but it will be important to monitor financial market follow-through and key UK and US economic event risk.

Fibre – Sharp sell-off on Friday from macro perspective, shows that US is more bullish with their market and interest rate increment may be just down the line sooner rather than later. This is a sharp contrast to the neutral tone from ECB’s announcement last week.

Fibre could continue to fell this week if the 2Q GDP fell more than expected. It’s forecasted to show a 0.5% decline in 2Q compared to -2.5% in 1Q.

Aussie – Last week, the pair ended higher than previous week, helped by a bullish tone set by RBA, boosting growth forecasts and pointing an improved economic activity. They indicated that current rate is suffice to boost the economy and even said that they might increase rate later.

Currently, commitment of traders on the pair is at the extreme bullish. It’s hard to say whether the top has been reached but any negative data coming out this week could potentially see some corrections.

Kiwi – I am adding kiwi (NZD/USD) for this week’s analysis as I noticed that there’s some potential trading for this week based on technical. On the fundamental side, with stock market could potentially correct this week, we might see some unwind in the risk appetite for this pair.

Futhermore, retail sales will be announced on Thursday and it is expected to decline to -0.3% m/m compared to the previous mth’s 0.8% increase. If the data came out as expected, it shows that consumer spending which is a reflection of the overall economic activity, is still weak and does not bodes well for the pair.

Technical Analysis

Cable – Looking at the daily chart, Cable has almost reached the Upward trend line (UTL) for its support. At this level I am not looking to place any trade after considering last week’s huge swings, daily average movement now has surge to 214pips and there is no worthy risk/reward potential to take.

Fibre – Similarly, this pair has also reached it support at the UTL, which is also within an upward channel. Again, at this level, I am not taking any trade on this pair. However if it does break through the support level, I could possibly reconsider taking a short position.

Aussie – The pair could potentially have reached a top, and possibly completing a wave 5 of Elliot Wave, which in theory, this would follow with correction wave. I could take a calculated risk and place a sell trade at current price, with a target pips of around 100-150pips for a risk/reward ratio of 1:1.2 (23.6 fib level) or 1.5 (38.2 fib level).

Kiwi – The last candlestick on Daily TF is forming a shooting star. This is a sign of reversal. While in terms of Elliot Wave, we could be seeing the starting of a consolidation wave (a) – refer to chart. If these analysis holds true, we could see correction in this pair. I would take a sell trade on this pair, with a SL of 50-60 pips and a minimum of 100pips profit target, until it reached the UTL.

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Nice and slow start to the month

Salam Friends,

This month went off with a good start. I bagged +92 pips, shorting GBP against the USD, as the stock markets finally consolidates this week.

Could have added more pips but since I am working within a new money management condition, my SL is pretty tight..hence my low return this week..still Alhamdulillah, positive returns that's what counts.

I would also like to take the opportunity to congratulate my friend who had just won his 1st property auction today! Finally after several attempts, you won! :) This is a big step for him to become a successful property investor and achieve financial freedom. Just imagine from 1 property you can earn RM200-300 positive cashflow each month. What if you have 10 or 20 properties? It would provide you with a stream of passive income while at the same time maintaining your current work. Imagine buying new car or a new house using other people's money, isn't that great!! Wowowww..

Congrats bro on your winning!!..Now u can join the TT session! Hehehe..

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A new month, a new ball game – bring it on!

Salam friends,

What a month it was last month. Now let’s look to the future and target more pips..huhuh

Fundamental

Currently, higher-yielding currencies are buoyed by the rally in the stock market. This gave confidence to investors to invest in riskier assets as can be seen by the Commitment of Traders (pls refer to fx websites and just type the phrase in its search tool) whereby net shorts of USD has been at the extremes. It is a matter of ‘when’ rather than ‘if’ the USD will post a correction. And it would take a single (given the significance) or strings of bad economic data like the ones that are coming out this week to see investors unloaded their short position of the Uncle Sam’s currency.

Having said that, my bias for the week is to follow the market but cautiously; i.e by putting tight SL for fear of any strong reversal. It could be volatile this week looking at hordes of important data coming out.

The most important and anticipated data is coming out this Friday, the non other than the Non Farm Payroll (NFP). As usual, economist are targeting good numbers but what we did learn from last time? Expect the unexpected. Last month, the number came out worst by more than 107k than estimated.

Last week, advanced 2Q GDP result shows that the economy contracted less than expected. However, the revised 1Q GDP shows that the US economy suffered its worst q/q performance in 27 years. Personal consumption is still heavily subdued, so I am personally think that current strong rally in both the stock and currency markets are overly done and some correction looms.

Other important data coming out: ISM Manufacturing PMI (improve 46.4 vs. last mth’s 44.8), Pending Home Sales m/m (0.6% vs 0.1%), ISM Non-Manufacturing PMI (48.1 vs 47)

Sorry but this week I was pretty tight on time so I didn't update views on each of my favorite currencies.

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Visualize My Dreams

Salam,

Dah lama rasanye sy tk post blog dlm BM, sll dlm english je, bukan ape utk bg analysis,byk term2 teknikal yg lebih sesuai utk ditulis dalam english..Tp utk post kali ni, sy bukan nak bercakap pasal forex tp sebaliknya impian sy. Dan utk mencapai impian sy ini, forex adalah salah satu sumber nya lah..huhuh.. Semua ade impian masing2 kan..mcm2 impian..ape impian sy? :)

Dalam salah satu blog yg sy selalu ikuti, ade diberitahu yg kita ni pasang impian hanyalah di dalam kepala..kita tak visualise impian tu..bila tk visualize tak jadi spesifik dan sukar utk kite mencapai impian tersebut. Lalu langkah sebaiknya adalah kite visualize kan impian tersebut dan kite letak impian yg sudah divisualize itu di tempat yg akan kite tgk hari2 agar memudahkan kita membuat tindakan bg mencapai impian tersebut.

So ape impian saya?

1) Impian pertama sy adalah utk memiliki sebuah rumah idaman type banglo dengan size keluasan >5000 sq ft. Dgn keluasan sebegini nanti, dapatla sy membina sebuah rumah yg luas demi keselesaan keluarga sy. Amacam..Lawa tak rumah impian sy ni?

2) Impian kedua sy adalah untuk memiliki sebuah kenderaan yg sesuai dgn jumlah ahli keluarga sy. Buat masa ni, br 5 org kami anak beranak..anak2 masih kecil lg so kereta sekarang ok la..tp kena fikir gak kl2 ade rezeki lg and bilangan bertambah..so kereta sedan dh tk praktikal. So impian sy adalah utk memiliki sebuah kereta MPV..Alphard looks nice inside tp kat luar kotak sgt la..so buat masa sekarang sy prefer Toyota Wish..7 seater..sporty gak.

3) Impian yg terakhir ni, payah sikit la nak visualise..actually nak simpan duit penuhkan ASB me and me wife, set-up Education fund for the kids and then wat investment in properties and gold..target by the time we reach 35, boleh retire from our current job and boleh sara hidup through passive income and doing anything we like for the rest of our life!! Tp right now, kena la work hard and aim for all these. InsyaAllah!

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July Trading Performance

Salam,

What a way to end the month! I managed to record another +235pips gain this week. This means for the month of July, I had recorded +724pips. I am going to set up a new column in my blog where I will record my performance every month. Hopefully by doing this, I can track and improve my performances as I go along..

Here's a screenshot of all my trades for the month. I placed a total of 16 trades for the whole month or roughly 4 trades every week. By trading less, I am actually minimizing my risk i.e placing wrong trades at the wrong time, and most importantly making more pips and the results have so far been encouraging.

I am not going to place anymore trade for the week, instead I am going to focus on the outlook for next month. Right now my heart is saying that the market should already take a correction by now but investors are still bullish and are supporting the rally in the stock markets..this is a liquidity-driven bull run!!

Let's watch and see....

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Outlook for the last week of July - Technical

Salam,

OK here's the technical part:

Technical

Cable – Last closing price were actually just above the 20-day SMA of 1.6369 on the daily time frame. Meanwhile on the 1H and 4H time frame, momentum indicators are showing that the pair is already oversold.

If the price breaks below the 20-day SMA and fundamental data giving negative signal, I am going to take a sell position on this pair. My target would be the support level of 1.6238 (purple horizontal line) – around 150-200pips target.

Fibre – On the daily time frame, momentum indicators showing the price had already reached overbought level. If price breaks below 1.4200, strong support would be on 1.4140-1.4160 level. Price have been ranging between 1.38-1.43 levels for 2 months now and could possibly stay within the channel for some time if no strong news or data supporting breakout.

Aussie – Last week saw Aussie break the downtrend channel but 0.8200-0.8225 becoming the new resistance level. Stochastic and RSI are showing that price at current level are overbought. If corporate earnings and fundamental does not support the AUD, we can see Aussie dropping back into the channel.

T.A.Y.O.R
Trade At Your Own Risk!!

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Outlook for the last week of July - Fundamental

Salam Friends,

This week's outlook is quite long..so as usual I am going to break it into 2 parts; Fundamental and Technical.

Fundamental

Over the past 2 weeks, strong earnings results by corporates have fired up the bullish sentiment in the stock markets. This in turn have given investors the confidence to invest in higher yielding currencies.

However, with most blue chip companies had already reported their earnings and even last Friday saw disappointing figures by Microsoft and American Express, there will be less reason to spur risk appetite further.

Going forward, fundamental data would take over as guidance to the movement in the currency market. One important data to come out this week that could provide the single most important clue to growth would be US 2Q09 GDP. It is due to be announced on Friday. Economists are expecting an improvement; -1.3% compared to -5.5% last quarter.

Other important data to come out in the week includes New Home Sales (Monday) – expected to be better than last mth, Consumer Confidence (Tuesday) – expect a decline, Core Durable Goods Order (Wed) - decline, Unemployment Claims (Thu) – rising.

Just by looking at US fundamental data coming out this week, it seems that recovery would be very slow and investors could potentially buy back USD this week provided that corporate earnings are also worse than expected.

Cable - The pair actually ended higher last week even as 2Q GDP preliminary reading showed a deeper than expected contraction of 0.8% against expectations of 0.3%. Economic growth on the year dropped by a 5.6% which was the most since record keeping began in 1955. Rally in the equity market helped spur the pound buying.

Data out this week would give further insight on the British economy; Realized Sales (Tue) – improving (-12 vs -17), net lending to individuals (0.9bil vs 0.6bil) and Mortgage Approvals (48k vs 43k) (Wed) – improving, Housing Price Index (Thu) – decline (0.3% vs 0.9%).

Cable could be trading on the sideways this week looking at the mixed outlook on the data.

Fibre – Recent strong data had provided support for Euro currency. The Euro Zone and German PMI indicators for manufacturing and service sector activity extended their recovery to hit 10-month highs. Covering a significant portion of the economy, these indicators are essentially leading indicators for broader growth. However, it is notable that they are all still under 50.0.

This week, important data from the Euro Zone is pretty light; German Consumer Climate (Monday) – stabil (2.9), German CPI (Wed) – decline (0.2% vs 0.4%), German Unemployment (Thu) – rise (44k vs 31k).

The single European currency looks bearish for this week, with German’s inflation turns to –ve the 1st time in 23 years. This put more pressure on ECB to cut down rates further. Right now they are resisting, preferring to provide money support to the region’s banks totalling about EUR442bil, while also buying bonds up to EUR60bil.

Aussie – Important data out this week; Leading index and quarterly business confidence (Mon), New Home Sales (Tue), Building Approvals (Wed) – improve, and Private sector credit (Thu) – improve.

If these positive expectation were to materialized, we could see the pair move higher this week, provided that results from corporate earnings also remain positive.

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Just barely made it...

Salam Friends,

This week's trading has been really quite a something..Overall I placed 6 trades which resulted in -4pips for the whole week..hehehe

The first 2 trades were made early in the week, and it was too soon to made sell trades as stock markets were all still in bullish mood..and I realised the mistake and closed the trades for a total of 132pips loss!

Then followed by 2 trades the following day..and the day after..all resulting in 128pips gain

Hence my -4pips loss for the week..huhuhu



I noticed that I am willing to take more risks when the trades are moving against me than when I am in winning positions. I need to improve on this, be more discipline and take my Stop Loss more seriously! and also to take positions only when there is a clear cut risk-reward ratio and good candlestick formations.

Be patient and maintain your Money Management!

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Could the momentum sustained??

Salam Friends,

Last week’s rally in the equity markets saw safe haven currencies i.e USD and JPY weakened against higher yielding currencies. I’m not too confident that the momentum could be sustained for this week. We would need another strong earnings results from major companies plus positive economic data coming out this week.

Fundamental Analysis

Cable – Minutes from the July 9th’s BoE meeting will be out on Wednesday – recent reading of Q1 GDP was unexpectedly revised down to an annual rate of -4.9%, the lowest since recordkeeping began in 1956, from -4.1%.

The figure is at the bottom of the BOE’s previous range of forecasts, which has left speculation that the central bank will expand their quantitative easing (QE) program to fester growth. As a result, if there are signs within the minutes that this is occurring, the British pound could take a hit.

Fibre – Last week, Germany’s ZEW economic sentiment fell when economists had expected it to recover. It recorded 39.5 compared to the expected figure of 48.0. Industrial Production also produced abysmal result; rose 0.5% m/m, missing the predicted 1.5% figure. Still, Fibre traded higher during the week as stock markets rallied.

This week, European companies will start announcing their 2Q09 earnings. This could support futher rally for the Euro currency should the results were better than estimates.

Aussie – Important data from last week, NAB business confidence survey turned positive for the first time since December 2007. This week, minutes from the RBA policy meeting could provide hints on the outlook of the economy.

Credit Suisse overnight index swaps rose to 68 bps from 37 bps last week on expectations that RBA would raise rates over the next twelve months. Dailyfx thinks that inflation should fall to 1% before RBA could consider another rate cut.

Technical Analysis

Cable – This pair is quite volatile. I don’t see any clear signals for me to trade this pair. Will stay aside first and see what happened in the coming 1-2days before deciding on any trade for this pair.

Fibre – Last week’s bull run saw Fibre trading back within the range 1.38 – 1.43 level. This range has been in place since early June. Currently I am bias towards selling the Euro. Why? 1) Candlestick pattern on daily timeframe is showing a bearish engulfing pattern which is a trend reversal signal. 2) Momentum indicators on the 4H timeframe are showing that the recent rally is exhausted.

However trading against the current trend which is uptrend is quite a risk. Therefore I would wait for further confirmation on Monday before I make my decision to trade. Remember that positive earnings results is more than enough to support the momentum to the upside.

Aussie – I’m seeing a similar trade setup with Fibre. Currently the pair is trading within a downtrend channel. The risk is that it could possibly break the channel to the upside, supported by strong rally in the market as well as positive economic data.

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My result so far for the week

Salam,

Alhamdulillah so far for the week, I've made 201pips.



Both trades were sell orders. These were actually completed on Monday but I only had the chance to update the result today. I gained 200pips from cable but only 1pip for fibre. I actually manual close the fibre trade as I felt that on Monday night bull was gaining over the bear. And actually it turned out to be a correct decision as that night US market jumped more than 2%.

This bullish sentiment came after influential financial analyst, Meredith Whitney predicted that Goldman Sachs would beat their forecasted earnings and that Bank of America is of good value at its current price level. She was the one that had predicted Lehman to fall into bancrupty.

Since then stock markets are finding their feet and gaining momentum as corporate earnings continues to support the economic recovery story.

Right now, I'm staying aside first. Not quite sure what to do now. Most probably will wait for next week to post new trades.

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Forex Outlook for the week

Salam Friends,

Some minor changes to my blog. I have added several new information on candlestick patterns and stock market news. I have also added non-forex info such as prayer time and qiblat finder for my easy reference and I hope that you all will find it useful as well. If you guys have any comments or suggestion on the additional info or layout of my blog, please do so. I would really appreciate it!

Ok, now let’s go on and take a look at what’s the Fundamental and Technical outlook for this week:

Fundamental
Last week USD saw little movement against other major pairs such as EUR, GBP and AUD. Altough the first 3 days saw USD gain momentum as investors seek more reason to buy into the rally that is becoming exhaustive, on Thursday we saw that USD gave back some of its gain. And on Friday, market seems incline towards more USD bull.

In the G8 meeting, leaders agreed that there were early signs of economic stabilization and they are not ready yet to pull back their stimulus plan.

Cable – CPI is expected to decline to 1.8% y/y vs. 2.2% last mth while Claimant Count Change is expected to rise from a mth ago. Both shows the state of consumer in UK are still weak but is slowly recovering.

Fibre - Look out for the German ZEW Economic Sentiment and Eurozone Industrial Production figures. Both are expected to be announced on Tuesday and expected to show improvement. Failure to do so could potentially see the Fibre go south further.

Aussie – RBA maintained its rate at 3% but they did see a scope for further easing if conditions deteriorated which is a scenario that traders are starting to gravitate toward. Although Credit Suisse overnight index swaps are still pricing in 39 bps of a rate increase, it has actually fallen from 78 in early May and 58 a week ago.

Technical

Cable – I can see a chart pattern known as Three Line Strike Pattern - three long black candlesticks with consecutively lower closes followed by a long candlestick on the 4th day which closes above the open of the pattern’s 1st day. This indicates a continuation of downtrend.

I’ve already placed a short position near the top of the 4th candlestick and have since move my SL to a slight profit. Now let’s see if the journey to the south materializes.

Fibre – No clear indication to where the pair is heading to.

Aussie – Still trading within the downtrend channel (purple lines). Price could bounced back up supported by the trendline and indicators such as RSI,Stoch and Demarker are more inclined towards the uptrend. However Aussie could break that channel to the downside if carry trade unwinds.

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Let's keep on pipping!!

Salam my friends,

My result so far for the week: +169pips



Profit resulted from early Monday sell-offs as investors becoming more risk-averse as the equity market trying to find its foothold amid the recent rally. Most probably that will come from better earnings results.

Right now I'm trying to look at other opportunities to enter the market. GBP seems weakening further and further. Its fundamental does not support a strong currency. Only today, both manufacturing production and IP recorded negative figures while concensus had forecasted a slight increase. This will put even more pressure on BoE to address the issue. Hmmmm..

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What I'm seeing this week...

Salam my friends,

Last week, currency markets were largely seen moving in the same sideway direction since early June. Volatility is still high with economic data giving mixed indication towards recovery. Economists kept on mentioning a new term called 'green shoots' - positive economic data that indicates that the economy is recovering, slowly.. Interesting to see this term picked up across the globe..they like to create catchy phrases which people could remember.. just like 'decoupling' some time ago..hehe

Ok, now let's see what is the fundamental and technical analysis for this week (I'll try to be short and concise this time..no promise..hehe ):

Fundamental

This week, the key economic data would be the rate announcement by RBA and BOE. Both are expected to maintain their respective current rate. This follows the same decision by FOMC made during its last meeting. Analysts are expecting FOMC to maintain the rates at 0.25% at least by the end of the year. The same thing goes to other major countries.

I think markets has already pricing-in the rate decision but what is more important is to hear what RBA and BOE say about the future outlook of the economy.

There would be no major economic data from the US this week except for ISM non-manufacturing index which is forecasted to improve. Following the negative result from NFP on Thursday, any further negative news could potentially see the bear taking control.

However, strong earnings result from Alcoa who will kick-start the earning season as well as positive outcome from the G8 summit could prevent the slide.

In the Euro zone, key economic data would include UK manufacturing production, German IP and revised 1Q09 GDP. Any surprises from these results could have an impact to the market.

Based on the expected mixed data, I am thinking that the currency markets would remain sideways at best, and possibly heads down further as investors become more risk-averse if more bad economic data came out.

Technical

Cable - My bias would be towards sell. My LT upward TL has been broken and price could find its next support level at around 1.6220-1.6240. This represents 100pips return based on the closing price on Friday. If the price breaks that level, we could see potential retracement towards the 1.60 level( Fib 23.6) . Risk: +ve ISM Non-manufacturing index on Monday.



Fibre - I am not too sure about this pair. Although the upward TL has already been broken, the last daily candlestick formation on Friday is a 'hammer', which could indicate a reversal of trend, i.e price could went up. As the reversal signal is of low reliability, I will wait for the next price action to decide on my strategy.



Aussie - Same as Fibre, I don't see any clear signs. Again, the upward trendline is still intact (red line) but I can also see that it is trading in a downward channel (purple lines). If the price breaks below the trendline, we could potentially see the price reach 0.77-0.78 levels. My indicators are also pointing a decline.



P/s: This is a summary of what my analysis is telling me based on my readings. It is intended for my own record. Forex is a risky business so pls don't follow blindly! TAYOR!

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Successful start to the month..

Salam,

Here's my trading result for the week:+123 pips.



Alhamdulillah..I waited for the price to correct after it rallied on Monday and Tuesday..I thought that I've missed the boat but the price did retrace back to the LT trendline and I took the opportunity to enter my trades. I entered long position on cable and fibre. Today the price slowly climbed back and I managed to close my position with profits :)

As I am updating this blog, I am seeing that both pairs are still climbing against the USD. Ermm well, I don't see that as a misopportunity for me to gain more profit..there will be plenty more opportunities to come..Right now, I noticed that analysts on top FX sites are giving contrasting view on the pairs on the ST. On Medium Term and Long Term, they all agreed that USD would weakened further...but on shorter terms..still mixed view. So because of that, I closed my position early and practically I think this would be my only trades for the week. Heheh..

Hopefully next week, we can see some clarity on the FX outlook. It has been almost a month now that GBP/USD, EUR/USD and AUD/USD trading on the sideways. Personally, as this month would be earnings results season, I would think that USD would weakened further as companies reported better than expected results signalling that the economy is on its way towards recovery and investors go for more riskier assets. We will see....

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Outlook for next week - part 2

Ok here’s the second part…

Technical

Looking at the daily charts of my favorite pairs (Cable, Fibre, and Aussie), long term uptrend is still intact. My bias is towards the buy side. However there’s no clear indication for me to enter the market right now and I am looking at possible retracement and price action to enter my position. Momentum indicators (Momentum and DeMarker) are showing that bull is losing its strength. This could be an opportunity for me to take my position if price retraces back to the trendline.

GBP seems to be holding strong above 1.6200 level. If it continues to hold this level, I could enter position as the price (currently at 1.6523) retraced back to this level and hold. GBP has been ranging between 1.62 and 1.66 levels since early June.




EUR’s ascending trendline is still intact. Looking to enter when price retrace back towards the trendline if it fails to break the triangle. Right now, price is holding up above 20-day SMA and 1.4000 level and looking to break the triangle.




AUD on the other hand, seems hard to break the 0.8050 level. Since mid-June, it has been trying to break this resistance level 3 times (on the 4H chart) but failed. Right now, it is holding up at 0.8068. Let’s see next week whether it can break the resistance.

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Outlook for next week - part 1

Salam guys n gals,

OK here’s my perspective on both fundamental and technical (Since it is quite long, I’ll break it up into 2 parts – fundamental and technical):

Fundamental

1. Round-up from last week:

1.1 Outcome of the FOMC meeting:

On Wednesday, the Fed decided to hold the fund rate at range between 0.00%-0.25% at least by the end of this year. They’ve also decided to keep on purchasing Treasuries worth $300bil. Bernanke believed that they can still able to contain inflation even as they continue spending.

1.2 SNB Intervention

Also, last week saw intervention by the Swiss central bank, SNB. They sold CHF to enhance quantitative easing. This caused EUR/CHF and USD/CHF to shoot up and thus helped EUR/USD to trade between 1.38 and 1.41 range. The SNB could decide to intervene again in the market. So watch out!

EUR appears to be volatile as ECB is being pressured by OECD to cut interest rates to zero and keep it low well into 2010. Credit Suisse’s overnight index swap index reveals traders are now pricing in a 56.5% chance of a 25 basis rate cut. Trichet says that current rate is ‘appropriate’. Hmmm that’s vague…

1.3 China’s call for a super sovereign reserve currency

USD’s future as THE currency is being questioned yet again by China on Friday while World Bank economist Timmer says the global financial crisis may reduce the USD role as a global reserve currency and hasten the search for an alternative to the USD.

2. Expectation of Upcoming Important Data for next week:

Consumer confidence - to improve to 56 from 54.9 last month.

ISM manufacturing index - to improve to 44 from 42.8 in May.

Pending Home Sales Index - to rise to 92.5 from 90.3 last month.

Nonfarm payrolls - to increase (bad) -368k from -345k

Unemployment - to rise (also bad) to 9.6% from 9.4% last mth.

German Retail Sales – to drop (bad) for the 4th consecutive time

German Unemployment – to increase (bad) to 8.3% (16-mth high).

Overall, looking at all fundamental news and data, in my opinion, it is pointing towards a bearish sentiment against the USD, as investors continue selling the USD for the foreseeable future, as a funding for carry trades. US consumers needs to spend to boost the economy.

However bear in mind that other countries/currencies have their own problems as well, GBP for e.g is not out of the woods yet! BOE's King warns UK economic outlook remains uncertain. King also expressed support for weaker GBP to help boost UK growth.

AUD, eventhough being supported by expectation that RBA would hold up their 3% interest rate and possibly tighten up the policy in the next 12 months amid expectations of economic recovery, IMF called on the RBA to lower the cash rate further as the economic outlook ‘remains weak and highly uncertain’.

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My trading result for the week

Salam,

My result for the week: +338 pips.

Took sell positions on AUD/USD and EUR/USD pair based on the analysis from the weekend. Higher yielding currencies did actually pulled back some of their gains against USD from last week and I managed to join in the sell off early in this week.

Instead of letting the price reached my TP, I closed manually today after seeing the pairs gaining some momentum back. Seems that the upward trendline is still intact. Quite risky trading against the trend... Huhuhu...

Will wait to see other opportunities to trade again. Anyway here's the screenshot of my result:



P/s: On my wayback from Gleneagles just now, I noticed an advert by a well-known forex broker - it read something like..." Penumpuan sepenuhnya harus diberikan kepada pair GBP/JPY"..heheh that's true!! It seems that Forex trading is gaining more public interest but a lot needs to be done first before one can jump into this business. High return but at a higher risk!

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My analysis for next week

Fundamental

(analysis sourced from dailyfx.com)

Last week, GBP finished higher against the USD on the back of strong economic data such as Jobless Claims which rose less than expected (39k vs. 60k) and CPI which was 0.2% above BoE’s expected inflation level of 2.0%.

However, with UK economic calendar almost empty next week, GBP/USD movement will be dictate by news in the US. Key economic data from US in the week ahead are; existing home sales (forecasted to stabilize), US 1Q09 GDP (expected to be market moving if it miss estimates), and outcome of FOMC (expected to leave the rate unchanged at 0.25%).

AUD is also set to face selling pressure as an uneventful economic calendar yields to a reversal in risk appetite across financial markets. Short-term studies reveal that a trade-weighted average of the Aussie’s value against a basket of top currencies is now 97.8% correlated with the MSCI World Stock Index.( whoaa I’ve just knew this..heheh). But what is so important about this almost perfect correlation? Well, the MSCI index is looking to make a double top to the previous high in Nov 2008 from the rally since mid-March 2009. This suggests that continued weakness in risk appetite looms ahead, threatening to bring the AUD along for the ride.

Technical

From my technical indicators, several pairs such as GBP/USD, GBP/JPY, and AUD/USD are looking toppish and are due for some corrections. However bear in mind that LT upward trendline is still intact. My inclination is towards the sell side, with a tight stop loss slightly above the peak while my TP is either 1.5 or 2 times the SL. My entry point would be based on the price action i.e formation of the candlesticks. A break of the trendline would push the pairs even lower.

These are some screenshots of the pairs mentioned:

P/s: Please bear in mind that these are my own analysis and intended for me only and it does not tend to be any recommendation whatsoever. Please do your own analysis first before placing any trades.

T.A.Y.O.R – Trade at your own risk!!!

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Pound got pounded!!

I know..hehhe lama da tk update this blog. No more excuses, I'm going back into Forex trading now. Seperti yg aku mention dlm previous entry dl, aku sekarang Long Term (LT) trader. Time frame aku adalah 1D.

Latest trade was GBP/USD pair. Aku amik sell position on 3/6/09 on the basis of momentum indicators giving indication that Pound had been overbought and could potentially consolidates. Indicators yg aku pakai adalah common indicators yg terdapat dlm metatrader4..RSI, Stochastic and Demarker...all pointed out that Pound was overbought.

..and here's the result:



Aku gain 412 pips..alhamdulillah..huhuh.. apart from the technical analysis, fundamental also played apart in the selling off of the cable. Britain's PM Gordon Brown is being pressured to step down by the opposition after scandals of MPs misuse public funding for their own personal interest. Aku closed position manually on 5/6/09..cukupla 400++ pips for 2 days..kire okay la dr biarkan terus floating..huhuhu

Hopefully this will be the start of many more successful trades. InsyaAllah...

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