In the spot forex market, all trades must be settled in 2 business days. A rollover refers to the process of closing open position for today’s value date, and the opening of the same position for the next day’s value date, at a price reflecting the difference in interest rates between the two currencies.

In accordance with international banking practices, Forex brokers automatically roll over all open positions to the next date at 5 PM EST for settlement.

Rollover involves exchanging the position being held for a position expiring the following settlement date. For example, for trades executed on Monday, the value date is Wednesday.

However, if a position is opened on Monday and held overnight, the value date is now Thursday. The exception is a position opened and held overnight on Wednesday. The normal value date would be Saturday; because banks are closed on Saturday the value date is actually the following Monday. Due to the weekend, positions held overnight on Wednesday incur or earn an extra two days of interest.

Trades with a value date that falls on a holiday will also incur or earn additional interest. Forex Traders can earn interest on rollovers, depending on the direction of their positions and interest rate differential between the two currencies involved.

For instance, the primary interest rates in Great Britain are much higher than in Japan, so if a trader buys GBP, he/she will earn interest at 5 PM EST time. on the other hand, if he/she sells GBP in this currency pair, he/she will pay interest at 5 PM EST time.

Overnight Interest/Rollover is automatically paid to a client’s account after buying a currency with greater Interest Rate in its country, and charged to a client’s account if the country issuing this currency has smaller Primary Interest Rates.

Bollinger Band Percent denotes where the price is in relation to the bands. %b = 100% at the upper band and =0% at the lower band. The calculation is as follows:
Bollinger Percent B = (Close – Bollinger Lower Bound) / (Bollinger Upper Bound – Bollinger Lower Bound).

We ran a report to give you a glance at all the Bollinger Band numbers.

GBPUSD is trading at its Bollinger Upper Band on both Daily and Weekly Charts

USDCAD is trading at its Bollinger Lower Band on Daily Charts

NZDUSD is trading at its Bollinger Lower Band on Daily Charts

Download the report here

This is what we encountered today on the oanda MT4 platform:

Notice how we have a weak Tenkan Sen / Kijun Sen cross on the EURUSD hourly chart, with prices already touching the bottom of the kumo.

However, if you are using forex.com, this is the picture you see on the same time frame and period:

Tenkan Sen only just crossd Kijun Sen, and prices are still above the kumo. We all know that these 2 pictures can paint a different story for Ichimoku traders so what is happening here?

The key difference lies in the fact that oanda allows trading on weekends, therefore plotting candles whenever there is a price change, throughout the weekend. On the other hand, Forex.com does not have weekend trading so on weekends you do not have any candles plotted. This explains the data points discrepancies when the indicators are plotted on Metatrader.

So which is better? On one hand oanda may be accurate since it factors in more data points through out the weekend. On the other hand, one can argue that the weekend prices are not liquid and therefore should be disregarded. Our take is that if you trade on weekdays, then only look at weekdays, and vice versa. Also, make sure that your charting broker platform is the same as your execution broker platform to prevent any confusion.

We prefer to only look at data excluding weekend trading, across our platforms and devices.

The Australia Dollar has been under selling pressure and looks to consolidate into a sideways movement in the near term.

The Kumo resistance region marked by the purple region above current prices suggests Australian Dollar has more tendency to trend lower following this consolidation.

Traders might want to initiate short positions when prices are near the upper bolinger band around 1.0436, at the time of writing.

The distinct kumo “cloud” you see painted across Ichimoku charts is a forward looking indicator, with current prices painting the cloud 26 periods forward. Put another way, today’s kumo cloud was painted by prices 26 periods ago. This mechanism allows the indicator to display future support and resistance, a very useful function for traders. We will see this in play in a bit.

This article analyses the daily EURUSD chart using the Ichimoku lens. Before that, this is what the chart looks like naked:

What you can probably tell is prices being locked in a range between 1.2993 and 1.3484, highlighted by red horizontal lines. This is happening after the strong down trend from October 2011 to mid of January 2011.  At this point, you probably do not have enough information to enter a trade. Let’s bring in the Ichimoku indicator for more price action insight:

We have confirmation of a ranging market from the following:

• The red horizontal line called the Kijun Sen is mostly flat. Since this is the 26 period 50% equilibrium line by definition, a flat Kijun Sen suggests that price is ranging. It is still flat.
• In addition, we see repeated kumo twists, whereby we see the could alternating between bullish and bearish signals, another sign of range-bound movements.

At this juncture, the question most traders are trying to answer will be, “are prices going up or down from here?”. And our conclusion is that a bearish move is more likely, here’s why:

What a pain searching for a solution, especially gmail users! We just tried an it’s crazy. If the search led you here, this will be your final stop. We found the best way, and we took under 5 minutes. Here you go, one universal free method for any and everyone to get that email alert:

Sign up for a free email account with GMX at http://www.gmx.com

Open up your MT4 -> Tools -> Options -> Email. At the screen, tick Enable then use the following info for the rest.

SMTP Server: mail.gmx.com:587
SMTP Login : yourusername@gmx.com
SMTP Passsword: your gmx email password
From: yourusername@gmx.com
To: email address you want the message to go to (should be the email you frequent)

RESTART your MT4 program for the changes to take effect.

This method worked for us on the first try. It should for you too.

Since you are here, why not check out some free EAs too!

Cheers,

Glenn & Jay

Founders, AsiaPacFinance.com

We all know Ichimoku was designed to be a trend following indicator, meaning you get rewarded on monster trends because it keeps you in them, but suffer whipsaws because there can be little differences between a start of a trend and a start of a whipsaw. Take the ideal bullish setup for example, where these are the criteria:

• Tenkan Sen crosses above Kijun Sen
• Price above Kumo and Kijun Sen
• Chikou above price and Kumo
• Span A above Span B
• Rising future cloud

The above is more likely to lead to a bull trend, but the same setup can also lead to a whipsaw. And since every disciplined trader sticks to his system, getting hit by whipsaws is the cost of the trend follower’s game.

This article is written after interacting and discussing with many of our clients. One of the most often asked questions is, “how to avoid whipsaws?” One method is to employ conservative take profit levels.

Ichimoku looks complicated on charts, with so many lines with different colors, but to a seasoned Ichimoku trader, the lines require no legend and since you guys have been following us for awhile now, we will not define the lines. You should be able to identify them just by looking . Now Ichimoku is a dynamic and comprehensive system, and the discussion below only touches on some elements. It is NOT everything you need to know, just a few good ideas we came up with, and which we use.

By keeping conservative take profit levels, we look to catch the earlier portion of a trend or whipsaw (before the whipsaw).

The chart above shows a weak TS/KS cross bearish trigger, and bearishness confirmed by a kumo break later, and bearish future cloud formation. By most accounts, this is a bearish setup in the green box. For a conservative take profit level, we can use the Kumo shadow floor/ceiling (flat portion), which in this instance played out perfectly because it was indeed a whipsaw, which reversed after hitting the kumo shadow level.

Same for this bullish example:

We have a medium TS/KS bullish cross, followed by a kumo break, and hitting the Kumo shadow ceiling line, before reversing into a whipsaw. Note that Kumo shadows do not always exist, and are formed from prior strong trends.

Notice how in the chart below, in the absence of Kumo shadows, and presence of repeatedly twisting clouds, price is whipsaw-ing. Again in the green box we see how price hits the Kumo ceiling profit target, before ranging violently.

The above is just one example of using conservative take profit levels, to avoid whipsaws. But some of you are probably wondering now, then won’t we be avoiding trends as well, with profit levels that conservative? That’s a very good question, and a trade-off for avoiding whipsaws. One way to “have your cake and eat it” will be to take profit on half the position, and let the other half ride into the potential trend. Alternatively, you can simply eat what you can, so long as you are profitable.

The above discusses conservative take profit levels. We previously discussed conservative entry levels from retracements. It will be ideal to balance these 2 factors into a high reward: risk trade. This means determining your conservative take profit level, and then waiting for the opportunity to enter at a conservative entry level (ie. you are not far from the point at which the trade is wrong and void), such that your reward to risk is high. Of course you will miss out on certain trades, but your basket will be full of high reward: risk trades, which is great.

Let’s tie in these 2 factors with one example which played out a few days back on EURUSD:

See first the Tenkan Sen /Kijun Sen cross, which is a strong bullish crossover above the Kumo. We notice too a flat kumo shadow ceiling, which is a possible profit target. We then wait for a better entry.

The lime green horizontal line at the low of 12th April, was also the monthly pivot support. Prices retraced to this level twice, with close prices bouncing off the ascending red trend line. With the added support from the Kumo, the trader entered long at 1.3110, the trend line intersection, 77 pips from the profit target. A tight stop loss was placed below the monthly support pivot, also the low of 12th April. This was at 1.3095 and 15 pips from entry price, giving the trade a potential reward:risk of over 5x. Such a reward to risk ratio is high even by trend following standards. And it was a good trade.

*the above trade was executed and shared by our friend FX Hilton.

Please share with us any other strategies you have on avoiding whipsaws!

We conceived this idea trying to answer the very same questions above. Here’ what you can do:

1. Depending on your strategy, wait for your trade trigger.
2. Once you have a trade trigger, enter a pending order 1 ATR (Average True Range) away. For example, if you had a buy trigger at 1.0020, and ATR was 20, then enter a pending buy at 1.0000.
3. Your take profit can be 2 ATRs. In the above example, that will be 1.0040. And your stop loss can be at 1 ATR, that’s 0.9980. This will be a 2:1 reward:risk system. Adjust the TP and SL according to your preference.

So here’s the broad logic. Technical analysis by nature is lagging. Patterns emerge after the prices that create them. Therefore it is likely you are a little late in your (perfect) trade setup because you had to wait for the trigger.  In tandem to this fact, we have all experienced the volatility of markets, whereby prices often go against us at some point in our trade. These 2 factors often give us the option to enter at a retracement.

The example below shows a breakout strategy called the Kumo break, where you trade  a price breakout from the Kumo clouds, shown by the green circles. Notice how prices tend to retrace after the trigger, shown by the red arrows, before playing out to your favor shown by the green arrows.

The next question you might ask is, a retracement entry by how much? Here’s where ATR comes in, measuring the volatility for the past 14 periods. A logical retracement entry level will be a multiple of ATR.

Such a trading style has strong psychological benefits, since you are getting a “bargain” on every trade, at a discount of the ATR. It’s like going shopping only when there is a 50% discount. The downside to this methodology is that the shop owner, Mr. Market, may not always give you the discount, therefore you will definitely miss out on trades that do not retrace. These are the trades whereby the moment you enter the trade, it goes in your favor straight towards your take profit, which is rare based on our experience.

We hope the above can get you thinking about other ways to improve your trading system. We threw it out here for discussion and idea creation purposes, and look forward to any of your comments.

To orientate you to the chart above, the buy signal was generated at the point where the arrow points “Retest of trendline”. This is identified as a strong point of support through multiple confirmations as follows:

• Price touches the trend line (red line drawn diagonally down from left to right).
• At this point, the Chikou Span (turquoise lagging line) is getting support from previous price candles.
• You also see the bollinger band enveloping prices, and price is getting support from the lower line of the bollinger band.
• We also have weekly support pivot @ 1.3048 and monthly support pivot @ 1.3036.
• Lastly, price is inside the kumo cloud, which is a support zone.

From the above, we have 5 confirmations of a strong support, taking into account multi-timeframe supports as well. As we enter a long position, we can place our stop loss at the monthly support pivot @ 1.3036, which is also just below the kumo cloud. A break below this level disqualifies the long position.

For the take profit levels, we can use the Kumo Shadow, which are the kumo clouds behind the current prices. Prices often face resistance going into these “shadows”. As you can see in the chart, the top of the Kumo Shadows are used as the first and second take profit levels.

This bullish trade went up over 300 pips as seen below. With a stop loss of 12 pips, that’s a 25:1 reward to risk ratio, a classic trend following success!

This trade idea was kindly contributed by one of our clients, FX Hilton.

Well, why do you want to make money? To buy a nicer home for my family. Now, why do you want that?

Stop here for a moment. Think about everything you are doing, every first thought you have when you get out of the bed. Human beings can do many things for many reasons but as the chart above shows, we ultimately want happiness.

Won’t it be great if we spend some time soul searching ourselves, and get straight to happiness? Or some shortcuts there?

So many people say things like “if I make a million I will be happy, if I can be the xxx position at the xxx job I will be happy.” Why should happiness be conditional upon some other factor? If you do not meet that criteria does that mean you are never really happy?

A lot of us spend our time learning the science of trading, for example trading strategies, trading systems, investing formulas. But until we are happy trading and investing, we will never be masters at it.

There are broadly 3 Types of Happiness

In the picture above, we see the smiley faces to the right – that indicates how long the happiness lasts once you take the activity away.

• Rockstars are people who go to the casino or make bets and gambles. They get high when they make money, but this happiness quickly fades away when they stop the activity.

• Flow happens when you are doing something and you lose track of time. This is when you are totally engaged and the happiness lasts longer. For us at AsiaPacFinance.com, Flow happens alot when we are researching and testing trading strategies, or when we are working out at the gym. The more time you spend in the flow, the happier you become.

• And the third and longest-lasting happiness effect is when you are doing something which means more than the result. This is the reason why many successful people donate a large chunk of their wealth to helping others, it gives their lives more meaning and purpose, and makes them happier. On one extreme, you see people giving up everything to serve a higher calling, because it makes them happy. Anything else will be shortchanging their happiness.

Trading is not a sprint, it is a marathon. If you knew you were running a marathon, won’t you want to understand the science of it, instead of running randomly around the parking lot?

The media enjoys worshiping market wizards who struck it big in the shortest period of time, because these stories excite people. But really, understand that your trading career is long term, and your approach to every individual trade will change. You will stick to your rules more, you will study your performance and find ways to systematically improve so you finally get to your destination. If you were running a marathon, you would pace yourself and not go all out at the start, the latter causes people to burn out or give up.

We have heard of so many people quit trading or investing. They say things like:

“I learnt nothing from the seminar” – these people wanted to be spoon-fed. They paid money expecting the Holy Grail which we have explained here, does not exist.

“I lost money” – these people give up too easily after a setback. They associate the period of loss with the activity of trading and investing. They wanted a quick fix.

What is your higher purpose in life and how does trading fit in? We hope we have led you on the path to happiness by planting these seeds in you. Feel free to share your answers below.

So long as the fund manager beats the index, he has done his job. Even if the index goes down, but he goes down by a lesser margin, he is successful. And what do financial advisers tell you when mutual funds go down in value? They ask you to purchase more or “average down”, which we think is silly. Catching a falling knife is never a good idea.

Recently we came across a platform which could very well be an absolute return option. Well, at least the idea is.

If you visit Zulu Trade, you will see a very interesting platform, which allows retail traders to follow “expert traders”. So traders are ranked based on how well they trade over time, and you have a table of top performers, which allows anyone to mirror their trades automatically. And the results have been good, much better than mutual funds:

The top 5 traders yielded over 37,000 pips in the past year. That’s over a 100 pips a day! And you know in forex, one pip can be anything from $1 to $10 to $100 depending on your account and position size. Which leaves us to wonder, isn’t it better to just invest in these top traders rather than lock our money into some mutual fund which aims to beat some index?

Perhaps you can select the top 10 or 20 traders for some diversification, and create your own little hedge fund with these traders trading for you. Perhaps you may even want some diversification from your own trading!

In many ways, investing in these top traders is similar to buying into a mutual fund. You rely on past performance, and have no control over the fund manager’s decision. But the results from the chart above is plain staggering.

Check it out and let us know what you think.

Source: http://thechartstore.com

Open forex trading broker account here.

For Stocks and News

We like the Bloomberg app for our iPhones, which is free and offers tonnes of useful information. For example you can select news feeds, look up prices of every listed stock, commodities and currencies, and also monitor your stock portfolio. Just one look and you can tell the dollar or percentage gain of every stock in your portfolio. It is great for keeping up to date with your portfolio, global news, as well as checking out new stocks.

Recently, it has even added Bloomberg TV within the app. So you can watch real time news streamed straight into your phone. Keeping up to date with markets can now be done easily on the move, just watch out for cars on the road while you are at it!

For Forex Charts & Trading

We like the MetaTrader 4 Mobile app. It allows you to overlay 30 different indicators onto your mobile forex chart. It even has our favorite Ichimoku Kinko Hyo Indicator. So you can monitor your trades on the go.

These are the 2 apps which are not only free, but we find extremely useful. There are probably other useful apps out there which we have not had a chance to discover. If you do, drop us a comment below and share the app!

We visit the EURUSD daily chart and noticed a head and shoulders pattern in the making.

A head and shoulders pattern looks like a human head with 2 shoulders on either side. The shoulders are lower than the head and are often of equal height to each other. The blue line extending horizontally across is the neckline, which connects the 2 low points.

This is a top reversal pattern, or a bearish signal. Of course, this trade setup is still in the making and is only confirmed if prices follow the direction of the red arrow, breaking below the neckline. The pattern is however void once prices break the high of 1.3484.

You can expect many traders to go short if prices break below the neckline level of around 1.3017.

We look at the USDCHF Daily charts using Ichimoku Kinko Hyo.

Kijun Sen (red line) has been horizontal for the past month, indicating a range bound price action that is consolidating. As Kijun Sen is the equilibrium line, we see price hovering close to it, especially when it is horizontal.

Next we notice strong resistance offered by a thick Kumo cloud extending all the way into April 2012. In addition, the top of the Kumo is flat, forming a kumo ceiling which is an indication of strong resistance as well. Therefore, it is unlikely for USDCHF to make a bullish break, as we see how prices failed to break resistance in early March. 0.9251 is a key resistance level.

We can expect prices to enter the Kumo cloud and test this key resistance level, but pressure is to the downside.

Open forex trading account here.

A good technical analyst is one with an arsenal of charting tools, but that in itself is quite useless. One needs to be able to identify patterns and using the appropriate tools. In this article, we explore triangles.

A triangle shows 2 converging trend lines, connecting at least 4 points, the price highs and lows. One line is sloping down, while the other is sloping up, because prices are making lower highs and higher lows. The longer this patterns takes to form, the stronger the breakout.

Prices can break out in either direction, up or down. In the chart above, we see prices making a bearish breakout. The price objective used is typically the height of the triangle “base”, indicated by the vertical arrows above. Stop loss levels can be placed at the other side of the triangle.

While triangles can prove effective, the challenge we face is that there is a certain level of redrawing of the triangle. Sometimes prices make new highs and lows, distorting your triangle such that you have to redraw your triangle. So what was initially a breakout by definition, was not a breakout.

It will be better to wait for a triangle which took a long time to form, that reduces the chances of having to redraw the triangle, as prices will be very close to the “apex” by then. This method of trading is also highly subjective and discretionary.

Open forex trading account here. 

Many traders do not trade systematically. Position sizes are random, based on gut feel, and often risk too much of trading capital. In this article, we teach you how to position size quickly and most importantly, effectively.

Assume the following:

• Trading System: (10,20) Moving average crossovers
• Trading Capital Balance: $10,000
• Risk Per Trade (Maximum Loss): 2% of account = $200
• Currency Pair Traded: EURUSD

*Each trade in this system risks only 2% of the trading account.

In the chart above, you see a bullish moving average crossover in the centre, which triggered a buy trade. As you are entering the trade, you ask yourself, how much should I buy such that I am risking only 2% of my account? This is an important question!

Let’s take a meaningful stop loss level – for example the last swing low, which is 48 pips away. If price were to break the last swing low, it voids the bullish trend which you are trading. So you decide that 48 pips and you are out of the trade.

Now proceed to this website. Key in as follows:

• In which currency is your trading account held? USD (your account currency)
• Account Balance: 10,000
• Percentage Risk of Account Balance: 2
• Stop Loss In Pips: 48
• Which currency pair are you trading?: EURUSD

HIT CALCULATE BUTTON and you get the following results:

Calculated Results

• Amount at Risk $ 200.00
• Position Size 41,667 units
• Standard Lots 0
• Mini Lots 4
• Micro Lots 41

There you have it. If you buy the above position sizes, you will be risking 2% of your trading account, which gives you perfect control over your losses.

For discussion purposes, assuming you took profit at 68 pips, your profit in percentage terms is as follows:

Percentage Profit = (Take profit pips)/(Stop Loss pips)* Stop Loss %

= 68/48 * 2% = 2.8%

So you will make 2.8% on this trade at a potential loss of 2%.

What’s your reward to risk ratio? 64/48 =1.4

You have learnt above, how to determine your position size based on a meaningful stop loss and pre-determined risk per trade.

Open forex trading account here. 

Forex Trading for retail traders is still in it’s infancy, at slightly over a decade old. However, brokers are gunning for market share, and customer service has also improved tremendously in recent years. One of the key considerations for us in selecting a forex broker is the methods of funding the forex account. There are the conventional ways of bank transfer and internet transfer, but our most preferred method is by credit card. Here’s why.

When you fund a forex account with your credit card, it is instant. Meaning you click the submit button and you can start trading almost immediately. So it is fast and convenient.

Secondly, you are trading on credit, meaning you are using the bank’s money to trade. Let’s say you end the month profitable, you actually made money with no money, or rather with the bank’s money.

Last but not least, you get all the credit card rewards, as if you made a huge purchase.

The other methods do not give you the above advantages. They are slower, require you to have cash upfront, and do not reward you with credit card points.

Therefore we like brokerages that allow for credit card funding.

Loansharks are known to charge ridiculously high interest rates to anyone willing to use his life as collateral. They will kill you if they don’t get their money back. This practice is of course illegal in most countries, but the lure of easy money breeds underground loansharks.

However, it seems as though anyone can be like a loanshark now, and openly so. Peer to Peer lending over the internet has flourished in recent years. Many of such services such as Prosper.com are funded heavily by venture capitalists, and this company has transacted $315m loans as I type. That’s $315m of money lent from person to person. And the average interest rate according to the website? Over 10%…… Not bad huh?

Such websites even encourage you to make such loans to diversify your portfolio. Everyone becomes a bank suddenly, earning interest on loans. And of course on the other end you have someone desperate for money and you can help them.

While this seems very interesting, and sure it does diversify your portfolio, we are not comfortable with this “asset class”. The biggest problem is that unlike loansharks, we cannot go after their lives if borrowers fail to pay up. There is no collateral! It is really a question of how much trust you have in the person which leads you to lend him or her money, over the internet.

And your risk appetite of course. At 10% interest rates, that’s $31.5m of profits distributed by this one company alone so far.

Is it not a life skill? With inflation rates so high, the money we earn is losing its value everyday. Saving cash may not be the wisest thing to do for retirement. Yet, millions of people around the world have no idea how to start, and deem investing to be risky. Well, doing nothing is riskier since you are doomed to suffer the effects of inflation.

This thought led us to recall what we learnt in school. Physics, biology, literature….sure the society needs to give everyone a chance at discovering their talents. But many of these talents do not help us survive! Do you even remember how to solve those physics questions today? Or when was the last time you picked up that musical instrument to play?

We are not against learning those subjects. We are just pondering why schools do not teach investing, which is essential for survival. Investing and trading should be in the rungs of swimming and languages. But of course, schools primarily groom individuals to be “rats”, training them to climb the corporate ladder well.

For this reason, there is a whole financial industry created, formed my financial advisors and relationship managers, to teach you what you did not have a chance to learn in school. Everyone should have an insurance policy, but few know how to scrutinize the terms of policies, and are often misled into overspending on recommendations from financial advisors.

In conclusion, we advice everyone out there to not only teach your children this life skill, but to learn as much as you can about finance and investing, everyday. The human race has gravitated towards money as a measure of value. It pays to understand the system inside out, and not be trampled upon because you lack the knowledge.

It is our goal to keep you up to speed in this area.

Retail investors and traders tend to seek the one get- rich- quick trading system, also known as a Holy Grail. We at AsiaPacFinance.com spent some time researching into this, and would like to announce that there is no such thing. If there is please tell us!

While a system may prove extremely profitable in a particular year or time-frame, it could fall flat on its face the next period. If you consider the many hedge funds in history that have outperformed the market, many of them also went bust soon after. The big brand names that survive do so because they have a team which constantly adapts their strategies and portfolio to market conditions.

There are numerous trend following strategies, just like there are mean reverting strategies. The “holy grail” mindset is to know when to use which. A trend following strategy suffers in a ranging market and a mean reversion strategy suffers in a trending market. Some of you may be wondering, why not combine both? That’s one way to diversify but you will probably get mixed results.

Therefore, you first need to select a trading system, and understand in what market conditions it will not work. Then find out about the market conditions so you know when to sit out of the market. For example if you are a surfer who rides waves. You need to know when the waves are coming, if not you might as well sit out by the beach. Staying out in the water only exposes you to sharks.

Most traders are impatient and want to be in the market all the time. There will be periods in the market where your trading system will fail to perform. Knowing when to stay out reduces your downside, while allowing your strategy to reap its profits. It is for this reason we do not recommend black boxes or blindly following other traders, because you will not be able to decide when to pause your trading, not knowing how the system is designed.

Most of these people selling trading black boxes will release new versions every now and then because they sell systems that back-fit historical performance. So they fine tune a system that would perform well on historical prices, and sell it to you for the coming year, and repeat the process every year. Chances are, they are as clueless as you are as to the future performance of their blackbox system.

In conclusion, we encourage you to understand the systems you choose or create. Then find out in what market conditions they do not work. You either sit out of the market or find another strategy which works in opposing market conditions to diversify. This will give you better control over what to expect from your system and more importantly, how to improve and adapt to market conditions.

As adults, we all wished we had started investing earlier. We grew up eating a Mcdonald’s happy meal. Today it’s share price is approaching $100, while 20 years ago it was only just above $10. Sure, hindsight is 20-20, but you have to agree that 20 years is a decent amount of time to overcome most recessions.

In the past, recessions normally occur every 7 years. In recent times, it seems to be getting shorter. This is because mankind has devised all sorts of financial instruments to speed up the economic cycles. So back to the earlier paragraph, 20 years is enough to recover from a few recessions.

Legendary investor Warren Buffet bought his first stock when he was 11 years old. Well obviously someone bought it on his behalf, since he was below the legal age to transact. He probably had the right environment to groom his interest in finance and investing.

So what can parents today do to give their kids a head start in the finance world? Of course you have to lead by example and demonstrate interest first. Not to mention be prepared to answer any questions the kid has. So here are the steps to growing a Warren Buffet Kid:

Step 1:

Get interested in investing and make it your lifestyle to be inquisitive and read up about the markets. If you demonstrate little interest or knowledge, it is likely your child will follow suit.

Step 2:

Forget toys and bicycles. Buy your child stocks for his birthday. You can pass him a notepad telling him each page is worth $1, while you keep the stock in your account, on his behalf. Be sure to return it to him when he’s old enough. (Don’t use it to cover your portfolio losses!) Of course explain to your child that this stock will increase in value over time, while his toys decrease in value over time etc. He will appreciate your efforts when he sees his stock appreciate over 10 years.

Step 3:

The stocks you buy for your child should pay out dividends. Make sure you pay him those dividends, and let him buy the things he likes with the cash. He will soon appreciate what the stock is doing for him – giving him dividends in cash!

Step 4:

Kids like to compete when they play games. Create a demo account for your child, be it stocks or forex. Challenge your child to outperform you in returns. If he wants to win you bad enough, he will learn what it takes to do so. You can throw in incentives if he wins. And if he loses even better, he gets to learn from his mistake and gain experience from a young age.

Step 5:

Encourage your child to start a small business such as a lemonade stall, or sell sandwiches to your neighbours. Explain his business strategy to him and guide him to think through ways to market and increase profits. He will quick’y hone his business acumen which will help him in choosing companies to invest in future.

The above definitely requires the parent to have some basic knowledge of investments and finance, and that’s what this website is for!

Many of us measure our investing and trading success based on the amount of dollars we put into our pocket. However, we often fail to consider the dimension of time.

Time, unlike money, depletes with certainty in our life time. Some people work really hard to earn big bucks, while at the same time shortening their life spans from the stress and lack of sleep.

Is money worth anything without time? We submit to you that the value of your money and how it benefits you, is a function of how much time you have in this world. The more time you have, the more valuable your money. For 2 reasons: Firstly you have more time to enjoy it, and secondly, your money has more time to compound.

Therefore, in addition to chasing returns on the market, let’s also consider having more “Return on Time”. Now, how is this relevant to trading and investing?

Let’s compare 2 traders. Trader A stares at his screen all day, and sometimes is not able to sleep because he has to watch his position.  His trading style is manual and discretionary, so as long as he’s not looking at the screen, he cannot trade.

Trader B has a systematic way of trading based on rules he has backtested and programmed into a system on his computer. The system execute trades automatically when certain rules are met. Trader B does not like to look at the charts because he feels his emotions affect his decision making. His time is spent fine-tuning his system and managing risks. With the spare time on his hands, Trader B hits the gym and starts an internet business.

In the above example, Trader B is having a higher Return on Time. By outsourcing his trading to a system and choosing a systematic trading style, he can get healthier at the gym, and even create another source of income in his free time.

We encourage you to not only seek ways to increase your dollar returns, but think out of the box and create time for yourself. With this additional time, you can explore new investment opportunities or develop new trading systems. As you get healthier and more stress-free, you think better and become alert to changes in investment trends.

For newbie traders and investors, do not be penny wise pound foolish. Some newbies try to save money by reading years of books and websites, in search of the holy grail. They end up going no where and losing a lot of time.

If you find a structured and reliable program, do not be afraid to spend some money for the knowledge. It can accelerate your learning curve and save you much time.

This is a question that has probably crossed everyone’s mind at some point in their lives.

For those of us fortunate enough to attend school, society encourages a culture of getting the highest paid job, for example working for an investment bank, or management consulting. We also have the risk averse culture of encouraging kids to be doctors or lawyers. These are the traditional methods of getting your first million. For those people who are fortunate enough, we are happy for them.

But really, what happens to the 99% of people who “did not make it” to the above million dollar jobs? How can they make their first million?

There is hope for everyone. The 2 other categories where people most commonly make their first million is in Sales, and Investments. And very often, they continue to make even more compared to traditional high-paying jobs. Let’s explore each of these 2 categories.

Sales

Sales is a skill which can be mastered by anyone with a desire to. Some people are natural salesmen, but others can easily learn and master this skill. Sales in itself is a large industry, you could be selling for an MNC, you could be an independent real estate agent, or you could be an entrepreneur etc. The key element of sales is that there is no ceiling on the upside, and rewards are proportional to results. Unlike regular employment where your salary and bonus is decided by your boss, you have complete control over how much you can make. The critical factor is in offering value to prospective customers. Give people enough value and you will be compensated for it.

Investments

Investments is another large industry and most people carry out some form of investment in their lives. This involves buying something, and later selling it at a higher price, pocketing the difference. Common investments are shares in companies, art, wine, small businesses, commodities and real estate. You are probably thinking you need money for this and you are correct. Many investors like real estate because they can borrow money from the bank to invest in the asset. At the end of the day, Investors make money with money.

The wealthiest people in the world often perform a combination of Sales and Investments. Even the highest paid doctors and lawyers own their own practice, meaning they invested in their own business as a professional, and sell their services to clients.

In conclusion, anyone can make their first million by mastering a combination of sales and investments. If that is your dream, start learning all you can about these 2 skills and practice as much as you can.

Physical bookstores are shutting down all over the world, being replaced by Kindles, iPads and the e-books they carry. Not only is digital content more convenient, it is also a lot cheaper. Traders and investors used to browse and purchase physical books to learn strategies, but they are increasingly ditching physical books for digital ones ones.

A sub-trend of the above are websites and blogs which provide tonnes of trading and investing knowledge, just like this one you are reading from. Much of this content is free, but what they often lack are credibility, quality and structure. Same for forums and other user contributed content.

So far we have only discussed learning from reading. However, as Founders of AsiaPacFinance.com, we ourselves are discovering much better ways to learn, and that is through videos. Videos engage your ears and eyes concurrently, allowing you to absorb information much more efficiently. We also find watching a video less tiring compared to reading, and allows you to multi task on less interesting parts. In addition, humans learn better from pictures. While most books are 80% words, videos are 80% pictures and visuals, which allows our minds to better absorb concepts.

The next dimension we explore in terms of learning is technology. 5 years ago, the laptop was amazing. You can carry learning with you everywhere you go. Now it’s even better – Surfing and learning is possible with smart phones. With high speed mobile internet streaming high definition videos right into your palm, so people can learn trading and investing in between meetings, on the commute home, and even over lunch. Technology has solved the convenience factor.

Without even considering expensive $3,000 weekend physical seminars, the fast sweeping trend is that traders and investors are improving their finance knowledge through videos/ online courses, and many are receiving this content across platforms. So they may learn on their mobile while on commute home, and resume on their desktop at home.

Physical libraries and seminars may be history soon.

• Gann HiLo Activator (GHA)
• 10 Period Exponential Moving Average

The area enclosed by the above 2 lines is known as the “Poison River”.

Enter Long Condition: When EMA(10) crosses above GHA

Exit Long Condition: When price touches Poison River

Enter Short Condition: When EMA(10) crosses below GHA

Exit Short Condition: When price touches Poison River

This system has no take profit because we want ride trends as far as they run. Stop loss can be placed in the Poison River.

Price touches the Poison River in 2 common scenarios:

1. The trend is ending and a reversal is coming up
2. Price is starting to enter a range and a whipsaw is coming up

Therefore, whenever price touches the Poison River, look for an opportunity to exit. If you are in the money, take profit. If you are in a paper loss position, look for a break-even opportunity and exit. If not, exit when an opposite buy/sell signal is triggered.

If prices are lingering in the Poison River, stay out of the market. This system aims to be conservative in capital protection, yet rides strong trends to the maximum.

Let us know how this system works for you, especially if you know of any ways to increase the win ratio.

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In Berlin June 1922, Alia Schmidt paid 3 German Marks for a really nice loaf of bread. A very quick six months later, the same loaf of bread cost her 700 German Marks. The German decision to print money caused inflation to skyrocket. No one was happy and Mrs. Schmidt had to stop eating bread.

In Tokyo 1994, Makishi Satou paid a whopping 217 Japanese Yen for a delicious McDonalds hamburger. A very long 18 years later, Mr. Satou is still enjoying hamburgers, yet he is only paying 216 Japanese Yen for this very same delicacy.

The Japanese decision to print money resulted in zero inflation. Yet, despite a full belly, Mr. Satou and others are not at all happy with their money printing experience and the subsequent -77% decline in their stock market and the -90% fall in their property market.

Today, future economic historians are lucky enough to both see and experience what will happen as Europe (lead by Germany), Japan, Great Britain and the United States fully engage in the biggest, coordinated, money printing experiment in the history of the Universe. In its simplest form, only three scenarios are possible:

1) Money printing has absolutely no impact on prices rising or falling
2) Money printing results in a return to the 1922 German experience
3) Money printing results in a return to the modern day Japan experience

The elimination of scenario 1, naturally leaves us with a tug of war between a hyper-inflationary World or a deflationary World . Both outcomes are certainly extreme, yet what else could you expect when we have the World’s biggest central banks implementing extreme monetary policies in the form of money printing?

Like 1922 Germany, today inflation may ultimately be caused in an individual country as a result of a severe decline in a single country’scurrency. We could also see a severe global rout of inflation precipitated by the collective and excessive money printing ways of the World’s 4 major central banks in the US, Europe, Britain and Japan.

In both of these scenarios, we expect gold bullion to do very well. In addition, stocks and commodities will undoubtedly return better than cash and bonds.

Alternatively, investors must understand that people and countries are de-leveraging as they are starting to pay down their debt, and banks are not allowing their excess money to re-enter the economy. This combination is creating slower growth which could make the World a little closer to 1990 Japan.

In this situation, bonds and cash will perform significantly better than stocks and commodities. However, should this occur you should also be prepared for a continuation of additional money printing which inour opinion only further increases the likelihood of a financial blunder. This key risk supports a position in gold bullion in the portfolio as well.

This is an excerpt from IceCap Asset Management’s February 2012 Newsletter.

The strategy is designed to catch corrections in markets that have shown evidence of increased momentum, with the average directional movement index (ADX) and a 20-day exponential moving average (EMA) providing the setup.

The indicators you need for this strategy are:

3-10 oscillator. It is the difference between a 3-day simple moving average and a 10-day simple moving average. Plus, there’s a second line which is a 16-period simple moving average of the 3-10 line. You can simply alter the settings for an MACD (moving average convergence-divergence indicator), changing the moving average type from exponential to simple and the moving average lengths to 3, 10 and 16. For forex traders, we provide the MACD-SMA indicator here.

14-period ADX (average directional movement index). This indicator is used to gauge trend strength.

20-period Exponential Moving Average

This diagram shows an example of a long trade

Her rules for going long are as follows: 

1. Wait for the ADX to rise above 30

2. Buy the first retracement to the 20-period EMA

3. Look to exit on the push to new highs

The best setups also have confirming factors such as the 3-10 oscillator making new momentum highs.

Her rules for going short are as follows: 

1. Wait for the ADX to rise above 30

2. Buy the first retracement to the 20-period EMA

3. Look to exit on the push to new lows

The best setups also have confirming factors such as the 3-10 oscillator making new momentum lows.

This strategy is definitely interesting to us. With the clear take profit level of the last high/low respectively if you buy/sell, you can consider setting a stop loss level of the same absolute magnitude, for a 1:1 reward to risk ratio. With such a reward to risk ratio, you will require a higher win ratio.

Let us know how this system works for you, especially if you know of any ways to increase the win ratio.

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Finance is a large topic on it’s own. You have the traders who want to master charts, you have investors who want to fish for undervalued stocks, you have the economists who study chunks of data to draw macro conclusions, and you also have the venture capital investors who finance ideas based on projected growth. With so much information to digest, how is a retail investor going to improve his finance knowledge? Where does one start?

Learning Finance is akin to Learning a language. In other words, you learn from listening, reading, writing, and practicing. The idea is to just start anywhere, and progressively the dots of information will link up. On some days you can read about financial ratios, on others you can listen to news about oil prices, or you may discuss with friends about company growth and dividends. All these factors are linked in multiple ways, as the global investment universe is related. There will be many questions along the way, so we offer you 3 suggestions:

1. Ask us/ discuss on our Facebook discussion page

2. Type in terms that you do not understand into Investopedia

3. Type in terms that you do not understand into Wikipedia

Through exposing yourself to finance, frequent discussion and Q&A, you will be able to solidify your knowledge of finance. Just like a rolling stone, you will start to gather speed and seek more information. Now, reading can be a boring and intimidating task for many, so we recommend videos from famous sources:

1. CNBC

2. Bloomberg TV

The news anchors normally feature prominent investors and you can learn from listening to them speak.

Last but not least, follow us because we are committed to making you a better trader and investor. In addition to our online trading courses, subscribe to our newsletter as we keep you updated on global financial markets.

The key is to get started on any topic. Invest in knowledge before markets!

The Gann Hilo Activator looked interesting to us based on our review here. However, a trader will not know when to take profit in real time just trading the Gann Hilo alone.

A reactive indicator which highlights trend exhaustion will be useful for both taking profit, as well as a warning for whipsaws. We experimented with the Heiken Ashi and it seems to get the job done.

Legend for the Video above:

• White Line: Price
• Blue Line: Gann hiLo Activator
• Green and Red Candles: Heiken Ashi

How we trade this Long:

Conditions for Long:

• White Line above Blue Line
• Green Heiken Ashi

Conditions for Exit Long: Appearance of single Red Heiken Ashi bar, or you can wait for 2 consecutive Red Bars. This is a sign of bull trend exhaustion.

How we trade this Short:

Conditions for Short:

• White Line below Blue Line
• Red Heiken Ashi

Conditions for Exit Short: Appearance of single Green Heiken Ashi bar, or you can wait for 2 consecutive Green Bars. This is a sign of bear trend exhaustion.

If you see Green and Red bars alternating repeatedly, it is Christmas and time to relax, and stay out of a whipsawing market. This is indicated by the red rectangular range box in the video.

Get Gann Hilo indicator here and Heiken Ashi here.

Please comment below and let us know what other indicators can work together with this strategy.

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Get this indicator – smoothed version here (.ex4)

Get this indicator – normal version here (.mq4) - the normal version is more reactive to price with bars changing colors more frequently.

In the Video above, the silver moving line is the price. The blue and red indicators are the Heiken Ashi bars. Blue indicates bullish momentum, while red indicates bearish momentum.

This indicator will probably work well in combination with another indicator. It reduces “fake-outs” and fake reversals while keeping you in trends with momentum indicated by the color of the bars.

Heikin Ashi is a type of trading chart that originated in Japan (heikin ashi translates as average bar). Heikin Ashi charts are similar to candlestick and bar charts in that they show similar information (the open, high, low, and close of the time frame), but Heikin Ashi charts calculate the information differently.

Heikin Ashi charts calculate their own open (HAO), high (HAH), low (HAL), and close (HAC), using the actual open (O), high (H), low (L), and close (C), of the time frame (e.g. the open, high, low, and close, of each five minutes).

Calculation:
HAO = (HAO-1 + HAC-1) / 2
HAC = (O + H + L + C) / 4
HAH = Highest(H, HAO, HAC)
HAL = Lowest(L, HAO, HAC)

Heikin Ashi charts are used in trading in the same manner as standard candlestick or bar charts (i.e. chart patterns are used to indicate price movements). However, Heikin Ashi charts have an additional aspect in that the direction of the bar (i.e. its color for candlesticks) is supposed to indicate the overall direction of the market, while ignoring the intermediate direction (e.g. false changes of direction).

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.ex4)

This indicator in our view is a great replacement for the traditional moving average. It significantly reduces whipsaws compared to a standalone moving average line, and some traders actually trade this line “naked”.

They go long when price breaks and closes above the line, and go short when price breaks and closes below the line, effectively a trend following system that always takes on a position. While this looks good, another indicator should be employed for locking in profit.

We believe this indicator can help traders in the following:

• Serve as a short term support and resistance line
• Can be used for scalping breakouts of this indicator line
• Can serve as a filter for other trend following systems

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.mq4)

The moving average crossover is one of the most common and famous trend following systems. The logic is that a trend forms when a faster moving average crosses the slower moving average.

A cross above is bullish, a cross below is bearish. This indicator makes it even easier to understand as arrows are drawn to indicate an uptrend or downtrend forming.

As with all trend following systems, you will probably have to add in a trend filter to minimize whipsaws. Nonetheless, the arrows are a lot neater and prettier compared to the constant 2 lines of moving averages.

In the video above, we used 5 period and 20 period exponential moving averages. You can change the periods and type of moving average.

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.mq4)

We all know the mysterious behavior of nature and mass psychology according to the Fibonacci numbers and ratios. Fibonacci Retracements are most commonly used by traders to identify retracement levels, which become significant support and resistance zones. Here’s one indicator that draws these lines for you automatically.

This MT4 indicator automatically updates fibo levels using lowest low and the highest high in the currently visible portion of your chart.

This indicator also draws two trendlines, 1) resistance (from the highest high to the high that creates the trend-line with the highest slope), and the corresponding opposite for the  2) support line.

So you get Fibo retracement lines and trend lines all drawn automatically for you.

A beige rectangle shows the amount of the move not yet retraced. Certainly a convenient tool for Fibo lovers.

Please comment below and let us know what other indicators can work together with this one.

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A gap is a change in price levels between the close and open of two consecutive days. Gaps are identified as blue circles in the following charts.

Break away gaps often appear at the completion of an important price pattern. When it appears, it signals the beginning of a significant market move. Such moves should ideally appear on heavy volume. Upside gaps usually act as support area on subsequent market corrections.

Run away gaps are a sign of market strength, and usually appear after a trend has been established for a while, and suddenly prices jump up further. This is a situation where the market is moving effortlessly on moderate volume. Run away gaps also act as support on subsequent corrections.

Exhaustion gaps happen when a trend has been around for a long time and it is near the end of a market move, then prices jump forward in a tired attempt to push forward. This quickly fades and prices turn lower within a couple of days.

One reversal pattern which is interesting is the Island Reversal. This is identified when prices gap up, and the next few days trading is in a narrow range, and this is quickly followed by a gap to the downside. This is an indication of a market reversal.

Get this indicator here (.mq4)

ATR Ratio is the ratio between fast Average True Range (ATR) and slow ATR.

ATR ratio often reaches high values after quick and strong price movements. Low indicator values often correspond with long flat periods that can be observed on the market tops, and during consolidation. It can be intepreted according to same rules as other volatility indicators.

In case the indicator value climbs above the silver horizontal line, it is time to buy or sell. Significant price movements occur when the ATR ratio is above this horizontal line of value 1.

High ATR ratio price levels often correlate with high volatility. Low ATR ratio price correlates with low volatility, as the prices stabilize or move along the channel flat movement up to the possible breakout point.

We feel that this indicator should not be used as the only or primary criteria for entering trades, but it is very useful as a filter to keep you out of consolidating or ranging markets. If you have a trend following system, try adding on the ATR ratio indicator as a filter.

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.mq4)

This indicator reminds us of the Parabolic SAR but it is different in design and purpose. The primary aim of this indicator is to signal whenever trends alternate.

A green dot indicates the start of a bull trend, while a red dot indicators the start of a bear trend. This indicator is a killer when trends happen, but as with most trend following indicators, you do have instances of whipsaws. Therefore, it will be better to add on an additional trend filter for double confirmation.

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.mq4)

For those of you who love candlesticks, this indicator is a gem. You no longer have to spend time and effort memorizing and interpreting patterns bar by bar. This indicator shows us what we need to know: up arrow for bullish candlestick patterns, and down arrows for bearish candlestick patterns.

This indicator seems to indicate the following patterns:

• Bullish Engulfing
• Bearish Engulfing
• Dark Cloud Cover
• Hanging Man
• Hammer
• Inverted Hammer Up
• Inverted Hammer Down
• Shooting Star Up
• Shooting Star Down

Due to the nature of candlesticks, we find this indicator more useful for the understanding of short term (in terms of bars) price action.

Please comment below and let us know what other indicators can work together with this one.

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This indicator is pretty intuitive. It displays a histogram below the price chart.

Buy – when the histogram is green.
Sell – when the histogram is red.

When Long, the trading ideas are:

• As long as each new green histogram bar keeps rising, stay in a trade, no worries there.
• Once the green histogram bar fails to make a new high – tighten you stop / or place a trailing stop while holding on to a trade.
• Once the green has changed to red – exit. Also you’ll exit earlier if the Stop Loss is hit.

When Short, the trading ideas are:

• As long as each new red histogram bar rises, stay in a Short trade.
• Once the red histogram bar fails to make a new high – tighten you stop / or place a trailing stop while holding on to a trade.
• Once the red has changed to green – exit. Also you’ll exit earlier if the Stop Loss is hit.

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.mq4)

These arrows provide early signs of price exhaustion after a strong run. After a strong bullish run up, red downward arrows provide early signs of bulls exhaustion. Conversely, after a strong bearish run, blue upward arrows provide early signs of bears exhaustion.

From the name of the indicator, we deduce that the cluster of arrows indicate price exhaustion through overbought (red arrows) and oversold (blue arrows)  regions.

While we do not find this indicator helpful for entering trades, they do provide price action information which is helpful when we are already in the trade – telling us prices are going to consolidate in the near term.

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.mq4)

If we had a choice, we would name this indicator “Traffic Lights”. Even without a driving licence, you know how to navigate this indicator. Buy on green, Sell on red, and for amber – it depends what kind of driver you are.

As with most trend following indicators, the challenge here will be to avoid whipsaws. Nonetheless, we like the simplicity of this indicator as it does it’s job with one line, plus clear visuals.

Please comment below and let us know what other indicators can work together with this one.

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Get this indicator here (.mq4)

The name of this indicator seems to suggest the indicator lines go round prices. The default colors are cyan for bullish, and red for bearish.

We would go long on cyan, short on red. It resembles many trend following indicators we have come across, which also means this system might be prone to whipsaws.

Feel free to download this unique indicator onto your MT4 platform.

And share with us below how you would improve the accuracy of this indicator – i-Round Price.

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Get this indicator here (.mq4)

This indicator paints Demark’s version of pivot lines, drawn based on previous price highs and lows.

Each colored line represents support and resistance levels. We noticed that when prices cross the middle blue line, they tend to reach the next levels: yellow line for buys and red line for sells.

In addition, similar to a bollinger band breakout, we also noticed that strong breakouts occur when prices break past the extreme green lines on both sides; on top and below.

Feel free to download this unique indicator onto your MT4 platform.

And share with us below how you would improve the accuracy of this indicator – Demarker Pivots.

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Singapore – 8 February 2012 – The average cost of “formal trading seminars” anywhere around the world is US$3,000 for a number of lessons. And the industry has created Superstar- Traders- turned- Millionaire- Coaches, painting the dream of easy riches to literally anyone out there. One company, Chart Nexus, even goes to the extent of having local celebrities Apple Hong and Nat Ho advertising their status as trading alumni from Chart Nexus.

Another Company, AsiaPacFinance.com, sees a flaw in the way the retail trading industry has portrayed itself. “Trading is not for everyone, and there is no one size fits all trading system. It is a disciplined process of self discovery, and finding a trading method that works for you. We believe that is why most people give up after attending weekend courses, hoping for a quick solution,” says the Founders.

In addition to shattering the industry with over 150 online trading courses for a mere US$25, AsiaPacFinance.com realizes the limitations which physical seminars bring. Indeed, many aspiring traders live in parts of the world where trading education is simply not accessible, nor affordable. The Founders add on, “Having a comprehensive library of online trading  courses and tools is the only way to break down barriers between traders and trading education, and we want to give everyone access to world-class content that is constantly increased and updated. After all, markets are ever changing but a library of knowledge will stand the test of time.”

About AsiaPacFinance.com

AsiaPacFinance.com’s goal is to be the primary independent source of reliable and actionable trading ideas. They provide online trading courses and trading tools for a growing audience of self-directed traders. AsiaPacFinance.com covers the Asia Pacific markets from its regional headquarters in Singapore.

For more information, visit www.asiapacfinance.com.

When you enter a trading position, you will ask yourself where to place the stop loss level. And when the trade works in your favor, you will ask yourself how to meaningfully trail your stop loss to protect profits.

Fortunately for us, there are numerous stop loss strategies to help us with these 2 questions. We will discuss the Parabolic SAR stop loss method.

The Parabolic SAR is a technical indicator that is used by many traders to determine the direction of an asset’s momentum and the point in time when this momentum has a higher-than-normal probability of switching directions. Sometimes known as the “stop and reversal system”, the parabolic SAR was developed by the famous technician Welles Wilder, creator of the relative strength index, and it is shown as a series of dots placed either above or below an asset’s price on a chart.

In the chart above, we see this indicator as the purple dots trailing prices. In a bull trend, the dots appear below prices; and above prices in a bear trend. As such, it is very useful as a stop loss indicator.

Upon entering a long position, a trader would move up his stop loss level to the dots, which follows prices closer over time. The 2 horizontal black lines you see are the levels which were “taken out”, after trailing the respective dots.

You can see how the Parabolic Stop Loss can serve as a convenient indicator to place stop loss levels. Note that this stop loss indicator works best in trending markets, as it can “whipsaw” as well.

To construct the commodity channel index (CCI), compare the current price with a moving average over a specific period. Next, normalize the oscillator values by using a divisor, based on mean deviation. The CCI fluctuates, in a constant range, from positive 100, to negative 100.

>Positive 100 represents overbought situations, and <negative 100 represents oversold situations. 100 and -100 are represented by the dotted lines in at the bottom of this EURUSD Chart. The CCI line is in turquoise, oscillating between 100 and -100.

Trend lines (in black diagonally) can be drawn on the CCI. Notice that divergence happens, when the CCI makes lower highs, while prices are still making higher highs. This is an indication of a potential reversal, and we see CCI turning before prices did. This is useful for traders timing the markets.

The moving average convergence divergence (MACD), shows 2 lines.

• The faster (blue) line, called the MACD line, is the difference, between 2 exponentially smoothed moving averages of closing prices
• The slower (red) line, called the signal line, is usually a 9 period exponentially smoothed average of the MACD line.
• The default values are 12, 26 and 9
• A crossing by the faster MACD line below/above the slower signal line is a sell/buy signal. This is indicated by the vertical blue line periods in the S&P 500 chart below.

• An overbought/oversold condition is present when the lines are too far above/below the zero line. See rectangular boxes below.

Crossing above, and below, the zero line, is another way, to generate buy and sell signals.

Divergences appear between the trend of the MACD lines, and the price lines.

A negative, or bearish divergence (see blue arrows below), exists when the MACD lines, are well above the zero line and start to weaken, while prices continue to trend higher. This is often, a warning of a market top.

A positive, or bullish divergence, exists when the MACD lines, are well below the zero line, and start to move up ahead, of the price line. This is often, an early sign of a market bottom.

The histogram, consists of vertical bars, that show the difference, between the two MACD lines. The histogram, has a zero line, of its own.

When the MACD lines, are in positive alignment, meaning the faster line over the slower, the histogram is above its zero line. Crossings by the histogram above and below its zero line coincide with actual MACD crossover buy, and sell signals.

Another use of the histogram, is spotting when the spread, between the two lines, is widening, or narrowing. When the histogram is over its zero line, but starts to fall toward the zero line, the uptrend is weakening.

Conversely, when the histogram is below its zeroline, and starts to move upward toward the zero line, the downtrend is losing its momentum. The histogram turns provide earlier warnings that the current trend is losing momentum.

Turns in the histogram back towards the zero line always precede the actual crossover signals. Histograms turns are best used, for spotting early exit signals, from existing positions.

In general, when the oscillator reaches an extreme value in either the upper or lower end of the band, this suggests that the current price move may have gone too far, too fast, and is due for a correction or consolidation.

Traders should be buying when the oscillator line is in the lower end of the band, and selling in the upper end. When it’s value reaches an extreme reading, near the upper or lower end of its boundaries, it implies that the Market is being oversold, or overbought.

Divergence, between the oscillator, and the price action, when the oscillator is in an extreme position, also helps the trader time the market.

Traders also use the Crossing of the midpoint line. This can give important trading signals in the direction of the price trend. Some traders ascertain the overall trend, and use oscillators, on smaller time frames, to time their entry better.

During trading ranges, oscillators work well, until such time when the market breaks upside on overbought conditions, and breaks downside on oversold conditions. It is generally well regarded to place less emphasis on oscillators at the beginning of trends, and place greater emphasis at tails ends of trends.

We will start by discussing, the “Momentum”. It measures, the velocity of price changes, as opposed to the actual price levels themselves. It is measured by continually taking price differences for a fixed time interval.

The commonly used 10 day momentum is shown here on EURUSD, as the blue side way moving line:

Traders like to use the mid horizontal green line, to generate buy and sell signals:

• A crossing above the mid line, would be a buy signal
• A crossing below the mid line would be a sell signal

We indicated such opportunities with the purple vertical lines above.

When the closing price, is greater than that 10 days ago, meaning prices moved higher, then a positive value is plotted above the green horizontal line.

Momentum is measuring the rate of change. If prices are rising, and the momentum line is above the mid line (green), and rising, this means the uptrend is accelerating. The logic is the same as momentum in physics.

If the up sloping momentum line flatten out, this means that the new gains being achieved by the latest prices, are the same as the gains 10 days earlier. Prices still advance, but the rate of ascent, has leveled off.

When the momentum drops towards zero, the uptrend in prices, is still in force, but at a decelerating rate. Momentum line leads price action.

The rate of change is a ratio of the most recent closing price, to a price a certain number of days in the past. If the latest price, is higher than the price 10 days ago, resulting rate of change value will be above 100. If the last close is below 10 days ago, the ratio would be below 100.

Construction

Two trading bands, are placed around a moving average, 2 standard deviations, above and below the moving average, forming the trading band.

In the chart below, we see the bollinger band plotted on the S&P 500. The solid brown line in the center of the channel is the 20 period moving average. 2 standard deviations from this line you see the 2 brown dotted lines. These 3 lines together form the Bollinger Band.

The common period, to use for the moving average, is 20 periods. 95% of the price data, will fall between the two trading bands.

Price Targets

Prices are considered to be over bought, when they touch the upper band. And oversold, when they touch the lower band. Traders Use the upper, and lower bands, as price targets.

If prices bounces off the lower band, and cross above the 20 day average, the upper band becomes the price target.

If prices bounces off the upper band and cross below the 20 day average, the lower band becomes the price target.

Volatility

The width of bollinger band expands, and contracts, based on the last 20 days volatility. When price volatility is high, the distance between the 2 bands will widen. There is a tendency for the bands to alternate between expansion, and contraction. When the bands are far apart, it is often a sign, that the current trend, may be ending.

Moving averages, and its variations, are some of the most commonly used technical analysis tools. It is a trend following indicator, and as such, never anticipates, it only reacts. Some traders, see the moving average, as a curving trend line.

The above chart is the EURUSD daily chart with the 20 SMA (Green) and 55 SMA SMA (Green) plotted onto candlesticks. You will notice that the Shorter term averages, Green in this example, are more sensitive to the price action, while longer term averages are less sensitive. Shorter term averages follow prices much more closely.

Using 2 moving averages, a buy or sell signal is produced when the shorter average crosses above or below the longer average, respectively. In the chart above, we see a sell signal where the purple vertical line is, and the green 20 SMA crosses below the red 55 SMA. As of this writing, this simple strategy is up over 500 pips.

The popular combinations are the 5 and 20 periods averages, 10 and 50 periods averages, 20 and 55 period averages.

Moving averages should be used in conjunction with other confirmation indicators to reduce whipsaws. Also, with the important trend following rule, always let winners run, and cut losers short.

The red sloping line is a resistance lines which told us to sell. As every trading textbook will tell you, multiple confirmations increase your probability, so we entered a short position when the blue line below crossed below zero. The vertical red line is a very clear instruction to sell.

Just one trade, and 2 months later the strategy is up over 900 pips. Easy to use and powerful, you can get this strategy, all the indicators you see, and more online trading videos here.

Invest in your knowledge before you invest in the markets, watch these trading videos online.

• In 5 out of the last 11 decades, the US market has set an important long-term bottom in a year ending in “2″
• Since 1900, 19 out of 30 presidential election years ended bullish with an average performance of 18.3% in the DJI
• The Decennial Cycle, one of the most stable and solid cycles for equities, signals a market bottom nearing.

Since 1886 the market has followed a natural cycle with a fair degree of accuracy every 10 years – commonly referred to as the decennial cycle.

The decennial cycle has had an amazing track record in forecasting recessions, share market crashes and periods of abundant growth. Essentially the decennial cycle looks at the market in 10-year blocks such as from 1900-1909, 1910-1919, 1920-1929 and so on until you reach the current year 2011.

Once the 10-year block has been formed it will then look at each year in isolation. So for example, it can then reveal what has been the average performance of year “7” in each set of 10 years – i.e. 1907… 1987… 2007 and so on.

The decennial cycle is only interested in one year’s performance, so was the year “7” on average a positive year or a negative year since 1886?  What is interesting about the decennial cycle is that it tells us about the past and how can we apply this to the future. So what does a decennial cycle look like?

On average, years 0, 1 and 7 are generally the worst periods to an investor if you are trying to go long in the market via an index exposure, but far more beneficial if you are trying to short the market or profit from a falling market. You only have to think about years such as 2007, 1987, 1907 for prime examples of fallen markets or crashes.

Did you also know that in most cases recessions on average occur around the start of the decades like 1930, 1981, 1990, 2001? This make sense then that the share market performance during these periods of times tends to be flat to poor for an upwards or bull market orientated investor. In these instances, one needs to be far more nibble in which assets they hold in the pockets of opportunity as opposed to the total market.

So how would one make money out of this period of time? Well from a traders perspective range trading would possibly by an ideal strategy during this particularly time period for 0 and 1 year. Possibly also looking at short or taking advantage for falling markets will also need to be a strong focus in ones kit bag of tricks. For long only investors focused only on the upside, one would need to be in pockets of opportunities rather than just an index exposure to maximise potential upside opportunities.

The safest periods of time to invest for an investor focused only on the upside would be from years 2 to 6. In fact, between 2002-2006 this held very true with strong upwards movement up year after year.

Singapore – 22 July 2011 -AsiaPacFinance.com has maintained a high student satisfaction rate of 98% after educating students in stocks and forex trading. This satisfaction rate is measured based on the number of customers asking for  refunds, or replacement products and services.

AsiaPacFinance.com Founders attribute their success to personalized teachings, both online and offline. Their online trading courses are designed for individual self learning, while their physical seminars are one to one, because the company believes every individual’s investment goals and background are unique.

The results illustrate that AsiaPacFinance.com has consistently delivered high quality educational content to its global community of students and graduates. Not only that, our survey of customers indicated a high level of satisfaction in their customer service. With Live Chat, lifetime email and forum support, traders have always received a quick response whenever they require assistance.

AsiaPacFinance.com prides themselves on their personalized educational methods. They also have a team of research analysts who cover forex, commodities, indices and Asia Pacific stocks. Following up with clients has been a key focus with the company, and they also get in touch with clients and supporters through social media platforms such as Facebook and Twitter.

The multi pronged approach to customer service has reaped rewards for the company. For more information, visit www.asiapacfinance.com.

About AsiaPacFinance.com

AsiaPacFinance.com’s goal is to be the primary independent source of reliable and actionable trading ideas. They provide trading courses and trading tools for a growing audience of self-directed traders. AsiaPacFinance.com covers the Asia Pacific markets from its regional headquarters in Singapore.

For more information, visit www.asiapacfinance.com.

Singapore – 6 February 2011 - Fundamental Analysis has had a stronghold on Wall Street on these years, with universities teaching fundamentals, and research analysts churning out fundamental reports. In the past decade, there has been a growing movement in the investment community: Technical Analysis.

Some call it witchcraft, others call it pattern recognition. This mysterious form of trading has created numerous legendary traders such as the Turtle Traders. Not surprisingly, retail investors have jumped on the bandwagon and are thirsty for knowledge in this realm of investing. Question is, where can they learn this art?

Much like how we have the Chartered Financial Analyst (CFA) program which teaches largely fundamentals and portfolio management, the trading community realised a need for an associate for Technical Analysts. The two official associations are the International Federation of Technical Analysts (IFTA), and the Market Technician Association (MTA), and they have qualifications called Certified Financial Technician Program and Chartered Market Technician respectively. Similar to the CFA, these are exams you can take which qualify you as a professional technical analyst.

While the exams and qualifications are structured, the exam preparation is not. Candidates and traders are given a long list of books and resources to read, which usually takes them three years to complete the program.

A Singapore-based company, AsiaPacFinance.com, realises a need for an efficient way for traders to efficiently absorb the contents of technical analysis. They have created and are offering globally, a suite of online trading courses based on the IFTA and MTA syllabus.

AsiaPacFinance.com Founders have stated that this is the most structured, comprehensive and credible program, in the education of technical analysis. The interactive online trading causes are full of charts and quizzes, which go deep into the contents, ensuring an understanding and appreciation of this art of investing.

About AsiaPacFinance.com

AsiaPacFinance.com’s goal is to be the primary independent source of reliable and actionable trading ideas. They provide trading courses and trading tools for a growing audience of self-directed traders. AsiaPacFinance.com covers the Asia Pacific markets from its regional headquarters in Singapore.

For more information, visit www.asiapacfinance.com.

The US dollar rallied to its strongest in nine months against the Swiss Franc as falling stock prices spurred the demand for perceived haven of US currency.

According to Bloomberg, SNB policy makers, led by Philipp Hildebrand, will keep the franc’s minimum exchange rate at 1.20 per euro when they meet in Zurich tomorrow

Referring to the daily chart on USDCHF above, prices are currently trading above the Kumo. This suggests to traders that the market is feeling bullish about USDCHF. However we note that the Kumo is thin. Typically the thickness of the Kumo cloud suggests the strength of the support or resistance. The thin Kumo therefore suggest to traders that the current support zone represented by the Kumo is weak. This is a factor to consider when trading the pair.

USDCHF has a neutral Tenkan Sen Kijun Sen crossover. This is subsequently followed by prices breaking above the Kumo, further skewing the odds towards a bull trend in USDCHF.

Multi time frame analysis is always important in technical analysis. We examine the weekly chart to give us more information on the bigger trend direction.

Following a weak Tenkan Sen Kijun Sen crossover, USDCHF is testing a thick Kumo resistance. As indicated earlier, a thick Kumo suggests the resistance is strong. Thus it is more difficult for bulls to penetrate the strong resistance zone. That said, if the strong resistance is broken through, traders must pay attention to this strong bullish momentum. As of writing, USDCHF is trading above the 50% retracement key level from the last high made during Apr 2010 and the last low made during July 2011, as shown on the chart above.

In conclusion, traders need to pay close attention in the coming weeks for a break above or failure to break above the Kumo resistance on the weekly chart. This needs to be combined with the observation on daily chart that prices are in a bull trend with a weak support. While it is more prudent to buy dips than to sell rallies, traders should navigate with caution until the weekly Kumo resistance is broken through.

Very clearly the red line signalled a sell on 31st October 2011 but we waited for a double confirmation from the blue line crossing below zero (in green circle) on 8th November and we entered a convicted short position. As of this typing, our strategy is up 600 pips.

Get your hands on this powerful forex system now.

Both traders and investors should periodically study the Volatility Index to assess how the global market participants’ risk appetite.

The CBOE Volatility Index is a simple and good proxy to gauge risk appetite of assets in general. In general, Volatility Index is negatively correlated with risky assets, such as equities.

The chart above is the daily chart of CBOE Volatility Index. Recently it tested the 200D Simple moving average and bounced off it. The 200D Simple moving average line shown above continues to be a key support level for the index.

The picture is clear. Green is buy, red is sell. AUD/USD has a green support line at the moment on the daily charts, indicating a bullish trend formation.

This is double confirmed with a positive EMA ROC (Exponential Moving Average Rate of Change), adding on to the bullish momentum.

The final confirmation we are seeking is a break above the kumo cloud, a bullish sign based in Ichimoku analysis.

This simple trading strategy is available here.

Which is the best forex trading platform? Most currency traders will tell you it is Meta Trader 4, more commonly known as MT4.

While MT4 is great when you have a computer, what happens when you need to monitor your trade when you are away from your desk?

Sure, you can enter and exit trades on your mobile trading platforms, but you will not be able to see your personal trading indicators on charts when you are on the go.

No worries, we have a free method to see your MT4 charts on the go.

Step 1: On your desktop, display your charts and indicators as you would like to see them on your mobile.

Step 2: Sign up for a free account on http://www.livestream.com/ This website provides you a url which broadcasts your desktop.

Step 3: Access the unique broadcast url from your mobile. You will be able to see your desktop (MT4) on your mobile and monitor your forex trades.

We have tested this on the iPhone and it works like a charm. You will need to leave your computer on as long as you want to view your desktop from your mobile.

Do check out the powerful APF Drift Strategy which you can monitor from your mobile.

The yen may weaken to levels against the dollar last seen during Bank of Japan intervention, according to a Royal Bank of Canada, citing technical analysis.

The break above 76.90 yen per dollar, the top of so-called cloud of the ichimoku chart, means the chances the Japanese currency will weaken against the greenback have increased, said George Davis, chief technical analyst for fixed income and currency strategy in Toronto at RBC. The yen tumbled to 79.53 as the central bank sold the currency Oct. 31 and has failed to retrace its losses, signaling a deviation from previous interventions, he said.

A close above 78.30, a level last reached three days after the October sale, would underpin recent dollar strength against the Japanese currency, Davis said. A close below 77.24 would shift the upward momentum of the pair to neutral and an ending below 76.72, the bottom of the ichimoku cloud, would signal downside risks outweigh topside risks.

“The market isn’t as eager to push dollar-yen down to the lows we were trading at in late October and challenge the BOJ,” Davis said in a telephone interview. “It does look like, technically, based on that breakout last month, that there are top-side risks that we can’t ignore in dollar-yen.”

The previous time the Bank of Japan intervened, on Aug. 4, it sold a record 4.51 trillion yen ($60 billion). The currency retraced all of its losses in four trading sessions.

Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The baseline plots the sum of the highest high and lowest low in the preceding 26 trading days. The cloud refers to the area between the first and second leading-span lines on the chart and is used to show an area where buy orders may be clustered.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

There are a few indicators such as Ichimoku and Elliot Waves which can give you an indication of price action in the future. When an analyst makes a right call, he becomes a superstar overnight. If he makes a wrong call, the public tosses him aside.

However, being wrong in forecasting a market does not mean you have “made a mistake”. This is a probability business; if your principles are sound, you will be right a certain percentage of the time, which means you must be wrong a certain percentage of the time. So being wrong is a consequence of doing the right thing, not “making a mistake”.

The best analysts are till wrong a lot. Now you can see why the public always loses. It still thinks that being right means always being right and being wrong is a “mistake.”

The trend in the industry now is to blend the two approaches.

Price action is the leading indicator of the fundamentals; if you are not following price action, you are really not doing fundamental analysis. We often hear people say that a particular analyst may be very bullish on a stock, despite the charts looking very bad. They say technicals are bad, but fundamentals are good. That can’t be.

Technicals and Fundamentals are not divorced from each other. If the technicals are bad, then the fundamentals are bad. There is a big problem with fundamental analysts. If they issue a bullish forecast on a particular industry, what do they do if it start to collapse? The fundamentals have not changed, so they still issue buy recommendations all the way down – they have no stop loss. Whereas in technical work, if a bullish forecast starts to break down, we get out.

There are 2 ways to combine fundamentals and technicals.

If you are a fundamental person, you should first form your fundamental judgement as to whether you like something or not, then look at the chart to see if it is on an uptrend or downtrend. If it is on a downtrend. you may want to wait a little while – just use it to help you abit with the timing.

The second way is to use technical analysis as an alert. If you are a fundamental analyst and see something unusual – maybe a lot of volume coming into a particular security – it should alert you that something is obviously changing.

Technical Analysis is a skill set every investor should have.

This is a question clients often ask us. And it is not a simple question to answer. The following components all contribute to the Return on Investment of your trading system, be it stocks, forex or commodities.

• Trading Capital $ Size
• Risk % per trade
• Average Reward: Risk per trade
• Average Win Ratio
• Number of Trade Opportunities

Winnings = (Number of Trade Opportunities)*(Average Win Ratio)*(Average Reward: Risk per trade)*(Risk % per trade)*(Trading Capital $ Size)

Losses = (Number of Trade Opportunities)*(1 – (Average Win Ratio))*(Risk % per trade)*(Trading Capital $ Size)

ROI = (Winnings – Losses) / (Trading Capital $ Size)

If you purchase a blackbox system or attend a seminar which promises X% of ROI, make sure you run through the above 5 components. If the system is risking 10% per trade for example, it is easy to bump up the ROI, but it only takes a few wrong trades to wipe out your account.

Click here to download an excel sheet calculator to aid you in your ROI calculation.

Here are some of the common reasons:

1. Your strategy aims to catch reversals, so it’s normal for you to suffer a few pips before the price reverses in your favour.

2. Your strategy is based on a breakout of support/resistance. Again, not all breakouts are perfect. Just like kicking a door down, it may take a few more kicks for the hinges to give way.

3. Your trades were an attempt to catch a falling knife, or some say jumping to face an oncoming train. Unwilling to suffer a loss, you continue to enter trades the more the trade goes against you.

4. You were applying a strategy for the wrong market. For example, a mean reversion strategy in a trending market, or vice versa.

5. You were not stocking to your strategy and are instead making random bets based on gut feel.

Professional traders who move large amounts of capital work at banks or trading firms. They keep regular hours, just like any other employee. They may have a family, spouse and children. This means they report to work, make some trades, then go home to their families.

So while the forex market is 24hrs, do keep an eye on the clock. Pay attention to the London open (6am – 8am London Time), the New York open (6 to 8am New York time) and the London close (5 to 6pm London time). Markets move when traders open and close trades for the day.

The UK remains the single largest centre of foreign exchange activity with around 35% of global turnover in 2007. Therefore you will want to trade during the London trading session, because many traders around the world also prefer to trade during this time. Because technical analysis is arguably a self fulfilling prophecy which works best in liquid markets, most traders regard the London hours as the best time to trade forex.

For forex traders in Singapore, this will be between 2pm to 1am Singapore Time, which is great because we are awake during this time.

Italy’s 10-year sovereign yields have reached new highs near 6.65%, and are at levels that Barclays Capital considers clearly unsustainable, it says in note.

• Market conditions are increasing pressure on Berlusconi’s govt to comply with promised reforms, EFSF isn’t adequate safety net while IMF can provide cash although not hold credit risk: Barclays Capital

• Sustained high yields would increase downside risk to its 0.4% growth forecast for euro area in 2012: Barclays Capital

• Market stress is already denting activity, with Barclays Capital now seeing downside risk to its 4Q growth forecast of -0.1% q/q

• France has tightened its fiscal policy by EUR7b, adding downside risks to its growth forecasts for 2012 and beyond: Barclays Capital

• Elevated uncertainty and growth concerns in euro area makes Barclays Capital bearish on EUR in medium term; favors USD among haven currencies and believes CNY offers a good alternative to USD, given easing hard-landing concerns

Newspapers reported that Silvio Berlusconi will resign soon, perhaps in the next few hours. This has been denied by Mr Berlusconi himself (after all it would be in contrast with his repeated determination not to step down as long as he is proved to have a majority). However, the situation is fluid and might evolve throughout today.

Irrespective of whether he steps down spontaneously or not, we think the clock is ticking for him and the option of a change of guard followed by a technical government is becoming the only way forward. In the coming weeks there are two key events to watch out for, which might be decisive for Berlusconi‟s government:

-    Tomorrow at the latest, the government will vote in the Lower House on the so- called “Rendiconto di Stato” (Article 1 of the 2010 budget account, over which the government lost a parliamentary vote on 12 October 2011). It will be a tough test, given that Mr Berlusconi‟s majority is getting thinner. It currently stands at around 314, 2 votes below the 316 necessary to pass the bill. However, there are around 15 MPs who have not yet decided how they will vote, so the vote hinges upon them.

-    Between today and tomorrow the so-called maxi-amendment (that will be attached to the 2012 Budget Law and that will contain the agenda to implement the structural reforms included in the letter sent to the EU on 26/27 October) will be presented in the Senate. More work seems to be needed, given that after last week‟s cabinet meeting no official document has yet been published, and details are missing on two key reforms: the pension and the labour market reforms. The “Commissione di Bilancio” of the Senate will have until Tuesday 15 November to scrutinise the proposal. On 15 November the Senate will vote on both the 2012 Budget Law and the amendment, and a confidence vote will be attached.

What could happen tomorrow?

-    If the government does not get a majority tomorrow, it may call a confidence vote. If it then loses the confidence vote, Mr Berlusconi will need to convene with the President, Giorgio Napolitano, on the next steps. It would then be up to President Napolitano to dissolve parliament, if he judges that the government is not backed by a majority, and form an interim government.

-    However, even if the government survives tomorrow‟s vote, Mr Berlusconi will likely meet with President Napolitano to discuss the next steps, give the fragility of the political situation at this stage. Mr Berlusconi will likely reiterate his unwillingness to step down and his wish to continue to govern, but at this stage he will probably support early elections once the Stability Law (the 2012 budget law) is approved.
We believe that at this stage the only possibility is to form a new unity government headed by a “super-partes” personality, who should be able to give credibility back to Italy and press ahead with reforms. A technical government, headed by Mario Monti, looks the main possibility. Mr Monti would be highly supported by both the main oppositions parties, UdC and PD, and likely by many of Mr. Berlusconi‟s Popolo delle Liberta‟ MPs (who would support him only once the Berlusconi government had collapsed). A technical government headed by Mr Monti and supported by a large majority would be a positive step forward, in our view.

This week’s FX intervention prompted a sharp sell-off in JPY to benefit of both USD and EUR, based on technical analysis, Barclays Capital says in note.
• Risk is for further USD/JPY strength in coming sessions toward 80.25-80.60 resistance area: Barclays Capital
• For now, Barclays Capital would look to fade strength against multi-year descending channel top near 80.65
• For EUR/JPY, Barclays Capital expects rise toward 112.70, although would look for a top to form ahead of weekly ichimoku cloud near 115.00
• USD/JPY little changed at 78.13
• EUR/JPY declines 0.4% to 107.86 yen

In line with its underweight short-term FX rating on EUR, Standard Chartered recommends short EUR/USD positions via options as market conditions remain
choppy, it says in note.
• Risks from European peripheral-debt headlines and the cyclical slowdown remain firmly skewed to downside: Standard Chartered
• With dire warnings of euro-area economy sliding into recession toward year-end, it’s unlikely that yesterday’s ECB rate cut will be last one and Standard Chartered expects further easing in 2012
• With its year-end target of 1.28, investors should buy 2- month EUR/USD put spreads with strikes at 1.30 and 1.25 for 75bps EUR: Standard Chartered

Was just wondering how the market can cheer a Euro debt crisis plan one week, and turn completely bearish the next, when really, nothing much has changed except some written documents. If we knew any of these Euro leaders, we could have made a killing in the forex market. Whoever gets the news first on major economic decisions stands to profit massively from the currency markets.

Likewise, terrorists also have the power to make such profits. Before Osama pulled the trigger on the September 11 attacks, he could have shorted equities, long gold etc. And profit from the disaster he created. Talk about reloading your ammunition!

Such economic news and information is out of reach to the man on the street. To predict fundamental decisions is a 50-50 game, you are either right or wrong, and fair no better than in a casino. Traders on the other hand, may miss out on the icing, but can potentially eat the profit cake. When such economic news disseminates throughout the market and media, price action will show. React (not predict) fast enough and you can join the profit game.

Bloomberg publishes a quarterly survey of global investors. The most recent one was published on the 26th September. The results reveal an astonishing amount of gloom directed at Europe:

• 88% say the eurozone economy is deteriorating while 75% expect it to fall into recession within the next 12 months.

• 40% predict the eurozone will lose at least one member in the next year and 72% expect at least one country to abandon the eurozone within 2-5 years.

• 51% say the euro zone will collapse eventually but only 8% expect it to happen within a year.

• 93% say Greece will eventually default while 56% expect Portugal to face the same fate.

• 67% believe US officials have handled their economic challenges the best; only 11% believe European officials have done the best job.

• Less than 20% expect the EU’s markets to offer the best investment opportunities over the next 12 months whereas 53% suggest that they actually offer the worst opportunities in the world.

On a seperate note, Warren Buffet’s famous quote is to buy when fear is the greatest, and when there is “blood on the streets”. Now, do you have the courage and belief to long equities today?

As sentiment in global markets is normalizing, Goldman Sachs would tactically look to take advantage of “dislocations” in FX space, it says in note yesterday.

• SGD and MYR trade-weighted-index underperformance is among these market “dislocations,” and both currencies have underperformed in absolute performance and also adjusted for their sensitivity to risk sentiment: GS

• SGD and MYR have undershot their potential relative to other factors that have driven relative FX performance in small, open economies: GS

• Both currencies are trading at low levels relative to broader policy targets of local authorities, and long positions in these two have been notably reduced, according to anecdotal evidence: GS

• Recommends going long equally weighted basket of SGD and MYR vs EUR and USD at 100, with target of 104 and stop-loss order at 98

Morgan Stanley ended a trade recommendation to buy the euro against the dollar after the 17- nation currency weakened below the level its strategists set to protect against losses on the wager yesterday. “Tuesday’s volatility triggered the stop on our long euro- dollar strategy,” Ian Stannard, head of European currency strategy in London, said today in an e-mailed note. “While we still believe that there is potential for a final spike higher for euro-dollar, we would now look to use any gains into the $1.4060 area to establish bearish positions.”

Dollar remains in a structural downtrend, Goldman Sachs’s chief currency strategist Thomas Stolper writes in note yesterday.

• U.S.’s broad balance of payments deficit of 8.2% of GDP in 2Q was largest on record: GS
• Last week’s TIC data showed once again that, apart from foreign activity in Treasuries, there’s virtually no capital inflow into the U.S.: GS
• U.S. investors continued to buy foreign stocks even in the face of sharply rising risk aversion: GS
• Latest FOMC minutes and communication keep door open for further QE, adding to dollar downside pressures: GS

In this analysis, we look at the monthly charts on the Gold Spot prices.

The last buy signal zone on the monthly chart dates back as far as end 2002. With a confluence of Kumo break, Chikou Span breaking above Kumo, bullish Kumo twist and upward sloping Tenkan Sen, Kijun Sen and Kumo, its is poised for a bull trend. Gold has been the darling trade of many trend followers since then. 9 years on and it has not tested the Kumo for once. The bull trend is intact with prices above the Tenkan sen and Kijun Sen. It is also well supported by the strong Kumo. Tenkan Sen and Kijun Sen still slopes upwards. The near term support is at Kijun Sen (1425.74).

This analysis is long term in nature as we are examining the monthly charts. Support and resistance levels are also wide due to the long term nature of this particular analysis.

When trading shorter term (weekly or daily charts) it stands to reason that buying dips would be more profitable than selling rallies, in consideration of the intact bull trend on the long term monthly chart.

The Australian dollar may rise versus the yen through the so-called cloud of its ichimoku chart to a one-month high, according to Ueda Harlow Ltd. The currency, known as the Aussie, has stayed above its 21- day moving average and the baseline of the ichimoku chart since surpassing the key levels on Oct. 12. Ichimoku charts are used to predict a currency’s direction by analyzing the midpoints of historical highs and lows. The chart’s baseline plots the sum of the highest high and lowest low in the preceding 26 trading days. “Because the Aussie is holding up above these lines, it will have more upside as long as the currency is supported” by the baseline and 21-day moving average, said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow. The lower end of the ichimoku cloud is the next target, he said. The lower end was 80.75 yen today. Should the Australian dollar break above that level, it is likely to rise to 82.83 yen, which is above the upper end of the cloud, Yamauchi said. Australia’s dollar fell 0.3 percent to 78.18 yen at 11:27 a.m. Tokyo time. There may be a “correction” in the Aussie’s level as the currency’s nine-day stochastic oscillator of 91 signals that its recent gains were excessive, Yamauchi said.

On the daily charts of spot EurUsd, current price trading above prices 26 days ago as represented by the Chikou Span (green line) above prices 26 days ago. The Tenkan Sen (red) has also crossed above the Kijun Sen (blue) and both are sloping upwards. These bullish signals are showing us the strength of the bulls as evident from the rally for the past 11 days.

However prices have rallied strong and this took the Eur far from the equilibrium (Kijun Sen). A common observation is for prices to retrace closer to the equilibrium (Kijun Sen) around 1.3532

Eur is also testing the Kumo resistance area. We expect prices to stall within the resistance region in the near term. A breakaway above the Kumo around 1.4030 would set the pair for greater upward momentum.

The euro  may extend its decline against the yen beyond the decade low reached today as momentum indicators suggest its downward path is intact, according to Forecast Pte. The trend for the euro’s weekly moving average convergence/divergence, or MACD, “is definitely still down,” said Forecast technical analyst Pak Lai Ng . The currency’s MACD was at minus 1.8267 versus the yen today, less than the signal line of negative 1.6881, Bloomberg data showed. A reading below the signal line signals weakness.

The euro  traded at 101.25 yen as of 12:07 p.m. in Tokyo from 100.97 in New York yesterday, after earlier falling to 100.76, the least since June 2001. It may slide to as low as 96.84 yen, a level last seen on Dec. 11, 2000, Ng said. “Euro-yen still looks very weak,” Singapore-based Ng said. “The first target will be at the 100 level. After that, it may drop to around the 99 level, and then to the Dec. 11, 2000 low.”

Successive, weekly lows reached by the euro are further evidence that it will depreciate further, Ng said. The shared currency slid for a fifth-straight week in the five days ending Sept. 30, finishing at 103.12 yen.

MACD is calculated by subtracting the 26-day exponential moving average from the 12-day average. The signal line is a nine-day exponential moving average of the MACD, and provides buy and sell signals. In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

• Dollar Index rose for 3rd straight day; +0.3% to 78.24

• USD/JPY -0.1% to 76.75; 50-DMA at 77.02 provides strong resistance

• Immediate need to prop up USD/JPY ends with fiscal half- yr today but those looking for quick move down may get less encouraging message today from Finance Minister Azumi: BNP note

• Finance Minister Azumi was very clear that current yen levels could “throw cold water on the Japanese economy’s recovery trend,” Derek Halpenny, strategist at BOTM-UFJ, writes in note

• Data on BOJ September intervention due today; no overt intervention though some suspicious of USD/JPY’s stability: BOTM-UFJ

• Recommend short USD/JPY around 77.40: BNP

• EUR/USD -0.6% to $1.3522; 50-DMA threatens to cross lower onto 200-DMA to signal bearishness while 100-DMA also heading down

• Euro zone inflation data is important today in context of ECB’s meeting next week: BNP

• With some 32bps cuts already priced in, it would take a 50bps cut to inflict any great harm on EUR: BNP

• GBP/USD -0.3% to $1.5579; 50-DMA crosses down on 200-DMA to signal bearish outlook; 100-DMA may do likewise soon

• SNB’s announcement of desire to buy more sterling assets led to a sterling rally yesterday even though SNB said it would only occur in a yr’s time, BNP note says

• BOE policy accomodation will result in GBP weakness in short-term: BNP

• AUD/USD -0.4% to 0.9740; -8.8% this month, worst month since October 2008

• NZD/USD -1% to 0.7637%; hit 0.7628, lowest since April 1 after S&P and Fitch downgrade ratings

• EUR/CHF steady at 1.2193; SNB warns ready to use “all measures” to protect CHF cap

Chinese yuan is “absolutely” a sell after being the only currency to outperform dollar in 3Q, Sebastien Galy, strategist at SocGen, writes in note.

• “Clear tipping point for global growth where China doesn’t want or need an appreciating currency”: SocGen

• CNY +0.2% to 6.3859 per dollar; still weaker than 6.3705 record high reached on Aug. 30

• PBOC fixed daily reference rate +0.2% at 6.3549, strongest since at least 2005 when currency was revalued

• CNY -0.1% on the month vs. dollar, first monthly loss since August 2010

• CNY +1.2% vs dollar 6th straight quarterly gain

• 1-yr CNY NDF +0.2% vs USD to 6.4135, implying 0.4% depreciation from spot in a year; broke above 200-DMA of 6.3857 after several false breaks in past week

• 6-mo CNY NDF +0.2% to 6.4030, implying 0.3% decline in 6 months

• Buy USD/CNY 6-mo NDF for target of 6.70 with stop-loss at 6.30, Wee-Khoon Chong, strategist at SocGen, writes in note

• Current negative headlines and sentiment on China is unlikely to go away and yuan has been the most resilient emerging Asian currency on all accounts in the FX space: SocGen

 MAS, Singapore’s central bank, has a 60% chance of shifting its strong currency policy bias to a neutral stance next month, Leong Sook-Mei, strategist at BOTM- UFJ, writes in note.

• 40% chance it will adopt weaker bias with declining slope for currency band: BOTM-UFJ

• Main reason is heightened risk from euro-zone sovereign crisis which is unlikely to abate in next 6 month at very least: BOTM

• Have turned bearish on Singapore dollar, departing from longstanding SGD upside call: BOTM-UFJ

• USD demand will rise on asset liquidation and repatriation

• SGD will not resume long-term structural appreciation agst USD until European risk stabilizes

• MAS may opt to secure next yr’s growth by tolerating higher inflation

• SGD -7.6% this month to S$1.2993, biggest monthly loss since at least 1981

• USD/SGD broke above 200-DMA on Sept. 19 for first time since July 2010

     hit S$1.1992 record high on July 27

• USD/SGD forecasts for 1-mo, 3-mo, 6-mo and 12-mo are S$1.30, S$1.32, S$1.33, S$1.27

• MAS is scheduled to hold its next biannual monetary policy review between Oct. 12-14

 Oversea-Chinese Banking Corp. says in note that it’s looking toward further potential USD strength across board, given that investor risk appetite remains “skeptical” in early Asian trading today.

• With passing of month and quarter, and still supported USD environment, OCBC looks to a long USD/JPY bias (spot: 76.84), with target of 79.00 and stop-loss order at 75.60

• OCBC says negative EM sentiment on Sept. 30 should spill into Asian trading today, with USD/SGD expected to trade in 1.3030-1.3130 range

• USD/JPY down 0.1% at 77.00

• USD/SGD up 0.3% at 1.3117

• MSCI Asia Pacific Index of shares slide 2.6%

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• Says next key resistance for AUD/NZD is at 100-DMA of 1.2790, and sees 1.30 as achievable

• AUD/NZD rises 0.1% in early Asian trading today

• New Zealand’s Rating Reduced by Fitch on High Debt Level

Goldman Sachs’s bear-market scenario, which assumes Kospi at 1,370 at end-November and massive capital outflows similar to global financial crisis in 2008, points to heavy pressure on KRW, writes Goohoon Kwon, an economist, in note today.

• “The pressure could push up the USD/KRW as much as in late-2008 to 1,430 if not countered by central bank intervention,’’ Kwon writes

• GS also says more plausible development under bear-market scenario would be stable KRW amid strong interventions, supported by enhanced reserve coverage of short-term debts, more stable bond investor base and government’s focus on market and macro stability; says USD/KRW likely to end November at 1,130 in this case

• GS says maintains USD/KRW forecasts of 1,080, 1,050 and 1,030 on 3-, 6- and 12-month views

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Euro has typically been a trending currency and attracts attention on a global front especially when investors worry over European sovereign debt problems.

On the technical the Eurusd 40 day simple moving average crossed below the 200 day moving average suggesting further down trend going ahead.

See comments on the chart below to see how the pair looks on Ichimoku Kinko Hyo.

Traders might want to consider positioning themselves strategically on shorts.

Bank of Montreal cut its forecasts for the Canadian dollar and for the timing of Bank of Canada interest-rate increases, saying concern over Europe’s debit crisis will “weigh heavily” on the global economy. Canada’s dollar will weaken to C$1.075 against the U.S. dollar by year-end, down from a previous forecast of 99 cents, Benjamin Reitzes, a Bank of Montreal senior economist and foreign-exchange strategist wrote in a note to clients today. The Bank of Canada won’t raise interest rates until January 2013 and the “most-likely near-term move would be an ease,” Reitzes wrote in the note.

Bets that Japanese  officials will intervene to weaken their currency against the dollar are “likely misplaced,” according to Citigroup Inc. A narrow trading range over the past eight days indicates markets are anticipating action to depreciate the yen, Todd Elmer, Singapore-based head of Group-of-10 currency strategy for Asia excluding Japan, wrote today in a note to clients. “This exceptionally narrow range belies continued market nervousness on potential intervention,” Elmer wrote. This is unlikely as “international opposition presents a barrier to Japanese intervention and domestic conditions look less conducive to action than was the case earlier this year.” The new administration of Prime Minister Yoshihiko Noda  is more popular than that of Naoto Kan , meaning it is less likely to resort to currency intervention to gain support, Elmer wrote. 

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The euro may fall toward parity with the dollar in a worst-case scenario for the region’s debt crisis, where countries leave and the European Central Bank steps up action to boost the economy, according to Barclays Plc. “The risk premium attached to European assets would be even bigger and the policy response by the ECB would even be more aggressive and you would run the risk of banking crises, and a big financial crisis,” Guillermo Felices , the head of European foreign exchange research, said in an interview yesterday in London. “Euro-dollar  could go almost to $1. But we take those scenarios with a pinch of salt because there are a lot of assumptions behind the scenes,” and the break-up scenario is highly unlikely, he said. The euro weakened  to an eight-month low of $1.3363 two days ago amid concern policy makers aren’t doing enough to avoid a Greek default. The 17-nation currency was 0.7 percent stronger today at $1.3675 as of 11:31 a.m. in London. Barclays Capital’s base-case scenario is for the debt crisis to escalate further, pushing the euro to $1.25 over the next three months, Felices said. “The euro-zone crisis can escalate further and the problem we see is that potentially politicians might not take the necessary actions soon enough to deal with the crisis,” he said. Were policy makers to agree on measures that brought the crisis to an end, the euro would “snap back” to as high as $1.45, Felices said in a briefing with reporters prior to the interview.

USD/JPY, which now down 0.4% at 76.46, may fall to wedge base at 74.58 should it post daily close below March 2011 low of 76.53, says George Davis, chief technical analyst at RBC Capital Markets, in note.

• Says such daily close would add to bearish sentiment on USDJPY

• Says secondary support at 73.42 and 70.75

• Descending channel pattern has been guiding USD/JPY lower since June 2007: RBC Capital Markets

• USD/JPY has continued to move lower even though monthly studies show currency oversold: RBC Capital Markets

Possibility of intervention from Sept. 28 until 9:55am Tokyo time on Sept. 30 higher than usual,

JPM says in e-mail.

• Speculation in Tokyo FX market that MOF/BOJ will try to push up USD/JPY for exporters to sell USD at higher levels, given Japan’s fiscal half year ends Sept. 30: JPM
• “Specifically, they may want to push up the level of USD/JPY at the Tokyo fixing on Sept. 30,’’ writes Tohru Sasaki, head of Japan rates and foreign-exchange research
• Says such speculation will make USD/JPY vulnerable to downside after 9:55am Tokyo time on Sept. 30
•  If intervention conducted, causing USD/JPY to spike 2 yen to 3 yen, massive USD/JPY selling from short-term accounts and exporters likely: JPM
• If no intervention, USD/JPY will simply fall: JPM
• JPM says will look to re-enter short EUR/JPY, GBP/JPY positions it took profit on last week if there’s yen-selling intervention

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• While AUD/JPY’s carry is good, mark-to-market losses are getting large: ANZ
• Since Sept. 1, AUD/JPY has dropped 7% to 76.7, and over that time, “Mrs. Watanabe” has increased her net long exposure in this cross by 80,000 contracts, or nearly 40%, so positioning is now extreme: ANZ
• Says there’s real risk of “Mrs. Watanabe” capitulating on this trade, and/or margin trading stops getting triggered in AUD/JPY, which could lead to a sharp drop, similar to March when cross fell from 78.2 to sub-75
• Should this occur, ANZ would favor buying into dips, as AUD/JPY has tended to recover quickly
• AUD/JPY is up 0.3% at 76.97 in early Asian trading

BNP Paribas expects euro-area’s manufacturing PMI to fall further into contraction territory, while the composite PMI will likely drop to 49.6 from 50.7.

• “The deterioration in the PMI data is indicative of a weaker H2 given escalated concern about the periphery and uncertainty over the economic outlook,’’ BNP Paribas’s analysts write in the note
• EUR/USD has dropped below the 1.3600 level and support is now at 1.3500: BNP Paribas
• EUR/USD is down 0.1% at 1.3562 in early Asian trading
• NOTE: Euro-area’s September manufacturing PMI, due out later today, will probably fall to 48.5 from 49.0 in August, according to a Bloomberg News survey of economists; September composite PMI will likely drop to 49.8 from 50.7 in August

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• Recommends buying 3-month at-the-money-forward (ATMF) EUR put with a JPY104.37 strike and selling same-expiry 25D EUR put with a JPY96.88 strike and a RKI at JPY92; says this strategy costs 2.62% and has maximum upside of 11.85%

• Even if this option’s barrier is triggered, option still earns 7.2% and maximum risk is loss of premium if, contrary to Morgan Stanley’s expectations, EUR rallies through the top strike Sept.

Barclays Capital cut forecasts for the euro versus the dollar on prospects Europe’s debt crisis will worsen before stabilizing. The 17-nation euro will trade at $1.33 in one month and $1.25 in three months, Paul Robinson, global head of foreign- exchange research at Barclays Capital, wrote in an e-mailed report dated today. The report did not include previous monthly forecasts. The shared currency traded at $1.3703 as of 7:13 a.m. in London. The liklihood of an interest-rate cut by the European Central Bank has increased significantly, and the dollar has become more a more attractive hedge against the euro since the Swiss National Bank imposed controls on the euro-franc rate, according to the note.

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Investors have “no place to hide” in the currency markets as traditional havens such as the yen and Swiss franc are closed off and alternatives fail to convince, according to HSBC Holdings Plc. The appeal of the yen has been reduced after Japanese officials said they will intervene to curb their currency’s strength. The Swiss National Bank imposed a ceiling on the franc against the euro earlier this month. Canada’s dollar is the “next best option” based on inflation control, public finances and current-account performance, David Bloom, global head of currency strategy, wrote today in a note to clients. “The Canadian dollar does appear to come out on top but only because of the issues facing the other currencies,” Bloom wrote in the note. “The case for it is far from overwhelming. The conclusion has to be that, in the foreign-exchange market, there is no place to hide, and there will probably be further upward pressure on the price of gold.” The so-called loonie weakened 1.3 percent to 99.05 cents per U.S. dollar at 5.18 p.m. in London. Canada’s dollar has strengthened 4.1 percent in the past month among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen has risen 4.1 percent, and the franc has weakened 8.7 percent.

The pound may fall to $1.5489, its lowest level in more than eight months, after sustaining losses below its 200-day moving average, said Pak Lai Ng, a technical analyst at Forecast Pte, citing trading patterns. The $1.5489 level is the 50 percent Fibonacci retracement of the pound’s advance from a low of $1.4231 reached on May 20, 2010 to a high of $1.6747 seen on April 28 this year, according to data compiled by Bloomberg. The currency’s moving average convergence/divergence, or MACD, “is still negative” and suggests it may weaken, Ng said yesterday. MACD is an indicator of daily momentum. “The resistance is at $1.5870,” Singapore-based Ng said, referring to the high reached on Sept. 13. “Even if there’s a bounce, it will only be corrective. The downtrend is quite strong.” The pound traded at $1.5665 as of 9:23 a.m. in Tokyo from $1.5705 in New York yesterday. It last touched $1.5489 on Jan. 10, when it dropped to as low as $1.5475. The currency declined below its 200-day moving average of $1.6129 on Sept. 5, when it fell to a low of $1.6062. The MACD for the pound was -0.0158 today, below the signal line of -0.012, Bloomberg data show. 

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No change in the bigger picture view in the Dollar index, as the market is seen at a “pivotal” in regards to whether or not a more major bottom is in place. On the bullish side is potentially sharply lower prices in risk markets over the next month (would be $ positive), while offset by lower seasonals into the end of the year, and lack of confirmation of a more important bottom “pattern-wise” (at least so far). Also note this week’s reversal from the Sept 12th high at 77.80 , another negative. So from a position standpoint, would have a bearish bias below this key resistance area. But the downside (if it does indeed occur), may be more of an extended period of ranging with slight downward, and versus significantly lower prices. Support is seen at the recent 76.00/10 and 75.20/30 (50% retracement from the 72.70).

Dollar Swiss is likely to hold for at least a few days or week, but the magnitude of any bigger picture declines remains a question. Please note that the 0.8925 either completed wave C in the upmove from the Aug 10th low at 0.7185 (and would suggest new lows), or wave 3 (would suggest another few days of consolidating before resuming the bigger picture uptrend).

So for now, we would stay with the strategy of being short against the bear trendline from the high (currently at .8840/55). Resistance before there is seen at the earlier broken ceiling of the bull channel since the Aug low (currently at .8740/55, close back below would be near term negative), nearby support is seen at the broken rising trendline from Aug (cur at .8555/65).

RBS Securities lowered its forecast for the euro for the next six months to a range of $1.35 to $1.40, down from $1.40 to $1.45. Robert Sinche, global head of currency strategy, revised the forecast in a note.

Morgan Stanley reduced its year-end forecast for the euro to $1.30. The shared currency will trade at $1.25 by the end of the first quarter of 2012 before stabilizing in the second half of the year, the firm said in a research note.

Investors should sell the euro against the yen, betting the 17-nation currency will extend losses after sliding to a 10-year low yesterday, according to Standard Bank Plc. The bank recommends selling the euro at 104.90 yen with an initial target of 103.50 followed by 100.40, Steven Barrow, head of Group of 10 currency strategy, wrote today in a note to clients. Investors should exit the trade if the euro strengthens to 108.10 yen, he said. “Our indicators of euro-yen remain weak and we will add a short position here,” London-based Barrow wrote in the note. The common currency fell 0.5 percent to 105.10 yen at 11:09 a.m. in London, after sliding to 103.90 yesterday, the lowest level since June 2001. The euro has slumped 9.2 percent against the yen in the past three months.

New Zealand’s dollar may climb against the U.S. dollar and test parity with the greenback in 2012 as rebuilding from quakes and rising commodity exports spur economic growth, Nomura International Plc said in a note to clients.

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• Monetary policy in U.S. and Europe is now likely to be even looser than previously expected; if policy is eased further in G-4, more capital will flow to countries with high- yielding currencies, such as AUD: Barclays Capital

• Ongoing global slowdown isn’t as deep a downturn as in 2008, and while Asia isn’t immune to slowdown, it seems to be in better shape and inflationary pressures remain: Barclays Capital’s strategists Paul Robinson and Guillermo Felices write in the note

• Combination of ongoing global growth and supply issues means commodity prices are likely to rise further, and Barclays still expects RBA to tighten policy as its next move

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The euro may decline as much as 1.4 percent to $1.3410 after it closed below major support levels last week, Commerzbank AG said, citing trading patterns. The currency closed below “the 2010-2011 uptrend, the 55- week moving average, the July low, the 200-week moving average and the 200-day moving average,” wrote Karen Jones, head of fixed-income, commodity and currency technical analysis at Commerzbank in London. The euro’s decline has also exceeded initial support at $1.3770, she said, referring to a 38 percent Fibonacci retracement of its advance from June 2010 to May 2011. “The euro had a fairly disastrous week last week,” Jones wrote today in an e-mailed report. “We have a confirmed sell signal on the directional movement indicator, and would allow for further losses this week,” The euro depreciated 0.4 percent to $1.3597 at 10:16 a.m. in London, after falling to $1.3495, the lowest since Feb. 16. The currency has slumped 5.2 percent in the last three months. The initial target for the currency is now $1.3428, which is the February low and a 50 percent Fibonacci retracement of the 2010-2011 rally, she said. “Our long-term target is $1.20 over six months,” Jones said today in a telephone interview, confirming the report. 

Morgan Stanley said it may lower its year-end forecast for the euro after the currency declined to less than the bank’s $1.36 prediction, as the European Central Bank damped the outlook for interest rate increases. The Frankfurt-based central bank is likely to suffer from “reputational issues” after Juergen Stark quit its executive board last week and this will likely be “unhelpful” for the single currency, analysts including Hans Redeker, head of foreign-exchange strategy, wrote in a client note today. Europe’s common currency may slump to about $1.3055 if it weakens to less than a “support level” at $1.3440, the analysts wrote. A support level is a price where bids may be clustered. The euro lost 0.4 percent to $1.3603 as of 10:12 a.m. in London, after falling to $1.3495, the weakest since Feb. 16. It slumped 3.9 percent last week, the biggest drop since the five days through Aug. 13, 2010.

Cable performing relatively well, still supported by its recent lows at 1.5900/25 (also the bearish trendline from Dec, and despite the broader US$ firmness (especially versus euro, eur/$ lower).  Though a positive sign for cable, tough to get to bullish/long right here given the scope for at least some further downside in eur/$ (see below).  So for now, would be hesitant to be long and instead would be a bit more patient, potentially looking to buy if these area holds as the downside pattern in eur/$ ”completes” ahead, or would sell on a break of this support as it could trigger a bit of downside “catch up” for cable.  Further support below 1.5900/25 is seen at 1.5780/95 (Jul 12th low, 38% from the May 2010 low at 1.4235).  Nearby resistance is seen at 1.5990/00 and 1.6040/50.

USDCAD a bit firmer within the broader consolidation from the Aug 9th high at 1.0010.  Seen as a correction, likely completed on the Aug 31st low at .9725 and suggests a resumption (potentially sharp) of the gains ahead.  Note that a break/close above the year long bearish trendline (cur at .9550/60) could be the trigger.  But the inability to resume the upmove over the next day or 2 would start to increase the likelihood that the extended period of ranging is not yet complete.  So for now, would stay long above the bullish trendline from late July (currently at .9795/05).

EurUsd is taking out the recent lows.

On a near term basis, the downside pattern from the Sept 7th high at 1.4145 is not yet “complete” (currently within wave 3), never mind the larger downside pattern from the Sept 6th high at 1.4245 or even the larger Aug 29th high at 1.5945.

Finally, still favor a potentially sharp resumption of the ”risk” markets which would in turn help to support the broader US$ (negative for eur/$).  Point being is that the market has further to go on the downside (at least another few days of more).  So for now, would be favouring shorts but some risk is rising for a 100 tick bounce on the way lower.  Next support is seen at 1.3830/45 (both the July low and the base of the multi-week bearish channel), nearby resistance is seen at the earlier broken 1.3970/80.

The dollar may undergo a “major reversal” in its downtrend against the Swiss franc should it surpass 88.51 centimes, said Tim Riddell, Singapore-based head of global markets research for Asia at ANZ Banking Group Ltd.

The 88.51 level is the 38.2 percent Fibonacci retracement of the dollar’s decline from a high of 1.1731 francs reached on June 1, 2010, to the low of 70.71 centimes seen on Aug. 9 this year, according to Bloomberg data. The 94.01 level, which is the 50 percent retracement in the same period, is also a “critical area” for the dollar, Riddell said.

Daily momentum indicators such as the moving average convergence/divergence, or MACD, are also an indication of a change in trend, Riddell said. Further strength could send the dollar back up to as high as 1.15 francs, a level last seen on June 14, 2010, he said. The dollar’s MACD was 0.0171 today, above the signal line of 0.0075, according to data compiled by Bloomberg. A reading above the signal line indicates the dollar may strengthen.

Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break above resistance, or below support, indicates it may move to the next level. Support refers to an areas where buy orders may clustered. Resistance is where there may be orders to sell. MACD is a gauge of momentum and is calculated by subtracting the 26-day exponential moving average from the 12-day average. The signal line is a nine-day exponential moving average of the MACD, and provides buy and sell signals.

The euro is set to slide as low as $1.30 in the coming weeks, a level unseen since January, as European banks suffer from falling values in their holdings of government debt, according to SLJ Macro Partners LLP. “The European Debt Crisis has metastasized to infect the European banks,” Stephen Jen, a managing partner of SLJ Macro Partners in London and former head of currency research at Morgan Stanley, wrote in an e-mailed note yesterday. Many banks would be considered insolvent if forced to mark their sovereign debt to market, he said

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Citigroup advised clients to add bets that the franc will appreciate and the euro will weaken, saying a flare-up of Europe’s debt crisis may test Switzerland’s plan to create a price-ceiling for its currency.

The company’s analysts added a “small overweight” franc recommendation to their so-called overlay portfolio, a team led by Steven Englander, head of Group of 10 currency strategy in New York, wrote in an investor report yesterday. “Over time, we see concerns about euro-zone sovereign debt rising, and renewed efforts by euro-zone residents to obtain the safety of the franc,” the strategists wrote. “The impact effect of the Swiss National Bank’s euro-franc floor has been powerful, and we may be early to the euro-franc short, but we expect that the cost will increase over time. If it was that easy to peg your currency, many others would do it.”

We take a look at the technicals of the EurChf pair:

On the monthly Ichimoku chart, the overall picture is bearish on EURCHF, which has been the case since mid 2009. The pair could see a retracement back to the Kijun Sen at 1.2720 in the few months ahead. We have yet to see any signs of trend changes in the long term (monthly charts) and maintain that the long bear trend is still in play.

The issue of Europe has completely dominated financial markets and news flow over the last 3 months. No single event, summit or meeting can determine the trend for any length of time. Until we have clear direction from politicians on the US, Eurozone and the UK, we should expect the news flow to cause us to flip from one idea to the other.

Let us imagine either a currency or an economy that is on a simple upward trend depicted by the grey line in chart 1. Around the trend is the economic cycle, shown by the red line. Of course, since the cycle moves up and down, the trend line is never obvious.

On top of this simple picture, one needs to super-impose events or news flow. These events normally obscure where we are in the cycle. Of course major news events can impact the cycle and particularly extreme events can even impact the trend. Chart 2 illustrates this “normal” picture of the world. This view was prevalent in the pre-2007 period.

News is by nature both random and haphazard. So when the news flow disappoints we suddenly think we are on the downward path, and as the news improve, we equally think we are out of the woods. Clearly it is impossible for one piece of news to decisively determine the path. However, the market often acts as though it is the case.

It will take overwhelming one-way news flow to break free from this RoRo paradigm. Another way to break out of this paradigm is for the economic data to become crystal clear. Therefore, trading and reacting to news is a risky strategy.

Article adapted from HSBC Currency Weekly Report.

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We are not wired to live alone. In his book The Neuroscience of Human Relations, professor Louis Cozolino says that “without mutually stimulating interactions, people and neurons wither and die.”

Relationships gives us perspective on our unique strengths, on which trading ideas are likely to gain traction, and helps us understand how we can get moving on, and devote our best effort to, the work that really matters.

Finding fellow traders in your city may be no easy feat, despite the internet offering numerous online trading forums and twitter groups. Many of the greatest trading ideas are gathered in small groups, and the practise continues to benefit those who go to the effort to instill it.

These small group meetings can curb the loneliness which traders often face trading alone at home, and serve as a source of encouragement during periods of draw-downs. The size of the ideal circle varies. Some people prefer a smaller circle for the increased level of intimacy it provides, while others prefer to have a large group in order to leverage greater diversity of thought and experience. While the composition of your trading circle can vary, you want to invite people whom you believe you will have the ability to connect with in a meaningful way.

Having a circle of fellow traders can make your trading journey more enjoyable and fruitful.

The McKinsey Global Institute’s (MGI) recent analysis finds that by 2030, the world’s supply of capital—that is, its willingness to save—will fall short of its demand for capital, or the desired level of investment needed to finance projetcs such as new homes, transport systems, water systems, factories, offices, hospitals and schools.

Historically, as countries grow wealthier their household saving rates decline.

Indeed, household saving rates have generally declined in mature economies for nearly three decades, and an aging population seems unlikely to reverse that trend. China’s efforts to rebalance its economy toward increased consumption will reduce global saving as well.

The gap between the world’s supply of, and demand for, capital to invest could put upward pressure on real interest rates, crowd out some investment, and potentially act as a drag on growth. Moreover, as patterns of global saving and investment shift, capital flows between countries will likely change course, requiring new channels of financial intermediation and policy intervention. These findings have important implications for investors.

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Everyone is looking for the same thing in choppy or dangerous markets: a change in character that opens the door to a great buying opportunity or the most profitable short sale in decades. However, traders forget that cash is a position too.

Instead, we think of Buy, Sell or Hold most of the time. The average retirement fund lost over 35% in 2008. If they had taken the position of cash, they would have easily outperformed.

Survive first and the rest will follow. Your first job in a tough market is to avoid losing money. The next time you feel useless sitting on the sidelines, pat yourself on the back for taking on the 4th position – cash.

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The Turtle Traders experiment proved to the world that one trading concept can be taught to many individuals, and replicated successfully. This is very similar to franchising a successful business, which in essence, is the founders’ purpose of outsourcing growth and expansion to other entrepreneurs – his franchisees.

Can trading be outsourced then? Say you have your own strategy and you would like someone to trade it for you, and free up more of your time? You bet. Trading systems can be programmed based on your strategies so they execute trades automatically.

These algorithms lack the singular force of nature we could always count on throughout our years of flipping stocks, futures, and currencies: they operate without the twin emotions of greed or fear.

That’s right, trading bots won’t panic when they find themselves on the wrong side of the market and won’t get euphoric after good news delivers a windfall profit. In other words, they don’t act or react to the financial markets like you and I, our neighbours, or those suits on Wall Street.

Most market players will fail due to a lack of discipline rather than a lack of knowledge. Despite that great truth, most of us are uncomfortable with the subject matter because we have deluded ourselves into thinking we are discplined individuals when we are not.

By outsourcing our trading to systems, we eliminate the discipline hurdle – assuming you do not override your own system!

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“We earn a living when other people put on their dumb hats and buy too high or sell too low. No, folks like us don’t build bridges, sell suits, or lead their flocks to salvation. To be realistic, we contribute absolutely nothing to society except pure liquidity and an aggressive attitude.” – Excerpt from The Master Swing Trader Toolkit

While most Entrepreneurs earn their income by creating value to society, traders don’t really do that. In terms of control, no other career can match trading. Without a boss, every research, decision and execution is at the trader’s disposal. Likewise, the upside and downside of the trader’s account is also at his fingertips.

Trading allows you to develop a skill set based on research, and tests your emotional and psychological limits very often. It is unlikely for a trader to get bored in his job. While it may get monotonous following trading rules month in month out, traders are free to take breaks, and pursue other interests such as philanthropy whenever they have the time and capacity/capital.

In essence, trading as a career gives you complete freedom without compromising your earning potential.

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Awakening of the sleeping giants? Perhaps.

Metals have bounced off their lows and are testing resistance levels.

Year to date we see Gold outperforming all metals, and of course equities markets as a whole. 18% return is a clear winner for 2011. Not too bad for those hiding gold bars in their closets, but imagine funds that hold Gold on leverage!

Silver, the underdog for 2011 is struggling to hold on to gains, after an impressive run up earlier this year.

A huge risk event can drive Gold shooting up.

How many times have we read a book, attended a seminar, watched an online video, learnt a strategy from a friend – tested the strategy for a few days – then give up on it? What are we really after? A quick fix and fast money?

Some of the metaphors used by traders to describe the market are a woman, war, and a game, to name a few of the more common ones. As an example of the game or puzzle-solving metaphors, Richard Dennis says, “It’s like playing a hundred chess games at once.” Pete Steidlmayer says he’s “solving the markets.” Paul Tudor Jones sums it up with, “It’s a game, and money is a way to keep score.” These professional traders do not trade for fun, they take trading seriously and treat it like a business.

After years of studying traders, the best predictor of success is simply whether the person is improving with time and experience. Many traders unconsciously acknowledge their lack of progress by continually jumping from one system or methodology to another, never gaining true proficiency in any. As a result, these people end up with one year of experience six times instead of six years of experience.

In contrast, the superior traders gravitate to a single approach-the specific approach is actually not important-and become extremely adept at it.

Learn a sound and robust trading strategy and most importantly, stick to it. Money management and position sizing make sure you stay in the game so when opportunity comes, you will be rewarded.

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USD/JPY’s long-term downtrend resumed last week when it broke down out of a 2-month range and touched postwar low at 75.77, Barclays Capital says in note yesterday, based on technical analysis.

• Provided USD/JPY stays below 77.80, Barclays Capital’s bias is to stay with the trend, targeting 73.60
• On the crosses, JPY also appears strong: Barclays Capital
• Provided EUR/JPY remains below 108, Barclays Capital continues to target 100 as momentum rolls bearish ahead of daily cloud resistance, which Bloomberg data show is at 107.19 today
• USD/JPY little changed at 76.09, and EUR/JPY is down 0.2% at 105.84 in Asian trading today

With a 24 hour market, there’s no better asset class to trade than foreign exchange (forex). But how do you trade forex if you have a job, a family and other hobbies to attend to?

The key is to identify which part of the day you are free to trade, and develop a strategy to suit your trading time zone. European market hours are common for breakouts and volatile markets, while Asian hours are known to be quieter – a haven for swing trading.

Of course, there is also the dimension of timeframe. If daily charts are too “slow” for you and missing trading signals is a concern, you can trade the smaller timeframes such as the hourly or 30 minute charts. Just take note that many indicators are more effective on longer timeframes because there is lesser noise in the market from rapid fluctuations in smaller timeframes.

An easy way to trade forex part time is to utilise forex signals. These services send you an email when a trade signal is initiated, and all you have to do is whip our your mobile or laptop, and execute the trade based on the instructions in the email. Easy as that. Be sure to exercise position sizing and risk management so that your account can weather short term drawdowns and live long enough to realise the full potential of the trading system. Last but not least, make sure that the forex signals provider is credible.

It has been written over and over again that 90% of forex traders lose money. What if you had taken the opposite positions of these traders? That’s what some brokers do. And they make up the 10% that are profitable.

In forex, it is possible for the broker to take the opposite positions of clients. Upon account opening, you most likely would have indicated your trading experience. From this information, brokers can consolidate the newbie forex traders, and take the opposite trading positions. This stacks the odds in their favour.

Of course, this practise is not without risk. But like casinos and insurance companies, the risks can be measured and managed. If a newbie trader turns out to be a profitable trader, you simply stop trading opposite him. If a newbie trader takes on a position size you cannot “fight with”, avoid taking that opposite trade.

So, how can you be a forex broker? Round up your friends who only just started trading, and get them to share their trades with you. You can then take the opposite position and yes, profit like a broker.

The vast majority of those who opt to enter the world of currency trading – or forex as it is better known – end up failing, not because of a lack of knowledge, but more frequently a lack of a trading system, or strategy as it can also be known.

Dipping into forex rather than trading it professionally full-time is possible but the market is vast and can move far quicker than conventional stocks and shares. This is why even those who only wish to trade as a hobby need to be certain of the ins and outs of how they want to trade or else risk a wipeout within minutes.

There is a vast array of trading systems out there in the market and many so-called experts will attempt to peddle their version to you, usually at an inflated cost. Some will add value and assist, but the majority will be no more than repackaged information available for free elsewhere on the internet.

One of the biggest hurdles to trading is the human psyche; we are not designed to cast aside all emotion and make fact-based decisions at speed. One of the biggest risks to the success of a trader is getting carried away with a deal which has either gone badly, or conversely, one that has gone too well.

Having a position which has lost money can feel like a failure and it takes a strong person to cut their losses and move on. However, in order to be successful this is exactly what needs to be done because losses are an integral part of trading, even the most experienced traders get some things wrong. The trick to being successful is knowing how to minimise losses and recognise a losing position as soon as possible.

However, the natural instinct is to plough on in the desperate hope that there will be a shift in the market to recoup the money lost. This can result in utter bankruptcy. At the opposite end of the spectrum, a winning streak can lead to over-confidence and taking up overly aggressive or poorly thought-out positions, which once again will lead to a financial wipe-out.

Having a trading system removes the emotion from trading and with pre-planned entry and exit positions, including stop losses, there is no risk of getting carried away in the heat of the moment. A good tip is to never open a position without having a trading system already in place.

Traders can be split into two main schools of thought – fundamental and technical.

Fundamental traders try and predict the movement of the market based upon political and economic indicators and current affairs. Technical traders believe this all has no relevance and base their strategy upon past market performances, believing that there is a looping pattern of currency movement and that any political impact is already priced in.

In reality, the best traders take a pinch from both approaches and combine them to come up with their own trading system, using a variety of tools such as Japanese candlesticks and Bollinger bands.

It is possible to trade via an automated trading tool, also known as a robot. There are many in the market and some traders swear by the freedom they provide, meaning it is possible to take a break without fearing missing a market movement.

However, the downside of trading via a robot is that the system rules must be programmed in impeccably as the system will implement exactly what it is told to do, regardless of how foolish a trade may be. There have been many stories of successful traders who have lost significant sums of money using robots because they failed to take proper care setting their system up.

A good forex trading system can lead to significant gains, with a full-time income easily possible from a trader who is committed and disciplined enough. It is recommended that anyone considering this should first trade for an extended period of time to perfect their system and establish a regular income stream before leaving their paid employment.

Earning an income from forex can be unstable and viewed dimly by lenders. It is therefore essential that financial affairs are in order before switching careers as it is unlikely that a substantial mortgage or loan will be approved for some time after changing. For those already paying for credit, it may be worthwhile using an online loan or mortgage calculator to check to see if it would be better to change to a different deal to offer more flexibility in the future.

The first time a merchant sold his goods across a national border the need for a foreign exchange rate became suddenly apparent. International commerce cannot be conducted without these rates, but the market mechanics of determining what is a fair and equitable rate for two separate trading countries is a complex process that happens daily with oversight from each country’s respective central bank. Currencies come in pairs, and their relative value represents an overall comparison of the economic health of each country.

Fundamental economic data weighs heavily in this valuation process. Central banks, along with large international banks and hedge funds, have elaborate financial models that incorporate various factors to suggest an appropriate exchange rate for their proprietary use. However, it is the forex market and its many varied participants, including you and your forex broker, that set ongoing price levels on a minute-by minute basis. There are many variables that can impact these daily valuations, but a few key factors have the most influence. Here are the major market movers from a fundamental perspective:

• Interest rates: Global capital is always seeking higher returns, and the measure of a currency’s “yield” is often seen as the prevailing interest rate posture of a nation’s economy. The general rule is that higher interest rates attract foreign capital and thereby strengthen a currency, but forex traders usually focus more on the interest rate differential between two currencies;
• Inflation: Inflation, or the expectation of its influences on prices, is the factor that drives a central bank’s actions relative to interest rate changes. Slight inflation can be good in that it may indicate a growing and strong economy, something that would suggest a stronger currency. However, if price inflation is high, it erodes the purchasing power of the currency, thereby weakening it;
• Money Supply: The actions of the central bank are watched closely, even those that do not concern interest rates. Expanding the money supply in any fashion dilutes the purchasing power of a currency, thereby weakening it;
• Employment Data: High unemployment warns of an unhealthy economy, but improvements suggest job growth and an improving economic picture. At present, signs of real recovery will strengthen the Dollar versus its competitors in the marketplace;
• Domestic Production: Signs of increased production in the manufacturing sector of the economy is always a positive influence. More activity accompanies growth and a return to financial health;
• Retail Sales: Consumer activity is closely watched, especially in an advanced economy, since it reflects consumer confidence in the future and expanding disposable income. Consumer demand can drive a domestic economy, but its effect on imports, it not managed correctly, can lead to trade imbalances, which are a negative factor;
• International Trade: Imports and exports are significant since their “net” figure will cause either increased debt, a negative effect, or an increase in foreign reserves, a positive effect.
• Foreign Currency Reserves: If a country exports more than it imports, it will naturally accumulate foreign currency reserves. For example, China has over $2 trillion in these reserves at present. These funds will often be used to make infrastructure improvements within a country, thereby offsetting the positive influence of this factor on the currency’s value;
• Investment Capital Flows: Capital flows can also impact a country’s balance of payments in a similar manner to trade. Investment opportunities and higher rates of interest attract foreign capital. In times of crisis, capital usually seek “safe havens”, which have traditionally been U.S. Treasury securities. Positive capital flows increase demand for a currency, thereby strengthening it.

Risk Warning: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.

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quote

“July 1 (Bloomberg) — The euro may climb to almost a two- month high against the yen next week after rising above key technical levels, Ueda Harlow Ltd. said, citing trading patterns.

The 17-nation currency broke above its 21-day moving average and the so-called cloud this week in a daily ichimoku chart, said Toshiya Yamauchi, a senior currency analyst in Tokyo at Ueda Harlow, which provides foreign-exchange margin-trading services.

The chart also shows the first and second leading span lines are set to converge, compressing the cloud at around the 116.60 yen level on around July 4. Should the euro enter the cloud and stay inside after the cloud flips to above the first span line, the next target will be 118.38 yen, according to Yamauchi.

“There’s a bit of room for an upside move for the euro,” said Yamauchi. “If the currency breaches the top of the cloud after the flip, the euro may advance to 120 yen next week at the earliest.”

The euro was at 116.82 yen at 7:33 a.m. in Tokyo from 116.84 yen in New York yesterday. It last traded at 120 yen on May 4.

Ichimoku analysis is used to predict a currency’s direction through analyzing the midpoints of historical highs and lows. The cloud refers to the area between the first and second leading span lines on the ichimoku gauge and is used to show an area where buy orders may be clustered.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net Kazumi Miura in Tokyo at Kmiura1@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net .” Unquote

My comments:

This is the chart of Daily EURJPY as described above.

Chikou Span breaking above the cloud would be further confirmation of the bullish momentum as shown below

However looking at the weekly charts below, EURJPY is moving sideways, being stuck inside the cloud with no clear signs of directions.

The Tenkan, Kijun and Chikou Span are all inside the cloud as well. Not a setup that we like to take a position on at the moment.

The twisting of future Kumo is bullish though. And we would be watching for further developments and confluence of the various elements.

It’s been a month since the Tenkan sen / Kijun Sen medium bullish crossover occurred. Prices has also broken out of the Kumo Cloud. We would like the Chikou Span to break out of the Kumo in the coming months for additional bullish momentum. Our view is for the Eurusd to be bias towards the upside, with support at 1.3833.

Great bull run on the Aussie dollar above the Kumo cloud. We maintain the view that the Aussie has more legs to run with support at 1.0058 and 0.9976.

Following the weak Tenkan Sen Kijun Sen crossover in Jan 2011, prices faced resistance from the Kumo and failed to break above Kumo. This resulted in the recent strong bearish Tenkan Sen Kijun Sen crossover.

We expect the US dollar to remain weak against the Taiwan Dollar.

We had a strong bullish Tenkan Sen/Kijun Sen crossover 1 month ago

Chikou Span had broken upside of the Kumo

Senkou Span A is above Senkou Span B and the Kumo is thickening

Tenkan Sen, Kijun Sen, Senkou Span A and Senkou Span B are all sloping upwards

We think it is a good time to accumulate the Sterling against the Dollar with stop loss at the Kijun Sen

US Dollars had a good bounce off the TD Sequential Risk level at 29.39. At present, the Tenkan Sen crossed above the Kijun Sen. This is a weak bullish cross over as the Kumo above is still providing good resistance.

We await confirmation from the Chikou crossing above prices to lend any extra hand to the bulls.

Shorts would find it a good time to take profits off the table after a long down trend since June 2009.

Bear trend intact with Ichimoku Indicators.

However both TD Combo and Sequential showing market exhaustion on Monthly Charts. Watch for a price flip and initiation of sell setup to go long USDJPY with a stop around the risk level 76.70

Will revisit in coming months.

Strong Singapore Dollar has been taking out every risk level on a qualified basis (solid magenta line).

Market exhaustion is once again indicated by the TD Combo completion 3 weeks ago with the next risk level stands at 1.2561.

The cloud is however still providing good resistance for the USDSGD pair and the chikou also suggests bearishness. Watch for any signs of trend reversal around the next risk level at 1.2561

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Kumo cloud is thinning out, reducing the resistance it offers. at the same time the Tenkan Sen is converging towards the Kijun Sen, looking for a weak bullish crossover from below the Kumo. Price are howering around Kijun Sen. Chikou is however still below prices. We would watch this pair closely for near term price action developments.