This blog is where I record all my forex analysis,trades and results. From it, I hope to learn from any mistake and improve on my performance. This is the start where I hope to achieve my target - Financial Freedom!!!
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.
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 pointingtowards abearish 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’.
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!
Last week, GBP finished higher against the USD on the back of strongeconomic 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.
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...
