Press review - page 398

[Sergey Golubev]

And as we see from the chart below (I used Correlation_njel indicator from CodeBase) - Dollar Index is having negative correlation with Brent Crude Oil for now (same as EUR and CHF for example):

[Sergey Golubev]

EUR/USD Intra-Day Fundamentals: U.S. Advance Retail Sales and 35 pips price movement

2016-05-13 12:30 GMT | [USD - Advance Retail Sales]

• past data is -0.4%
• forecast data is 0.8%
• actual data is 1.3% according to the latest press release

if actual > forecast (or previous one) = good for currency (for USD in our case)

[USD - Advance Retail Sales] = Change in the total value of sales at the retail level.

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EUR/USD M5: 35 pips price movement by U.S. Advance Retail Sales news event :

[Sergey Golubev]

Forex Weekly Outlook May 16-20 (the source)

The US dollar had another positive week, enjoying some good data. UK and US inflation data, housing figures and most importantly the FOMC Meeting Minutes stand out. These are the highlights of this week.

1. UK inflation data: Tuesday, 8:30. CPI in the UK is expected to rise by 0.5% in April.
2. US Building Permits: Tuesday, 12:30. The number of building permits is expected to rise to 1.13 million-unit pace.
3. US inflation data: Tuesday, 12:30. CPI is forecasted to rise 0.4% while core prices are estimated to climb 0.2% this time.
4. UK employment data: Wednesday, 8:30. The amount of people receiving jobless benefits is expected to rise by 4,100 in April.
5. US Crude Oil Inventories: Wednesday, 14:30. The EIA expects Brent to trade at $76 a barrel in the next year on continued increase in demand.
6. US FOMC Meeting Minutes: Wednesday, 18:00. These are the meeting minutes from the April decision, in which the Fed left policy unchanged, acknowledged some improvement but did provide any hike hints. The chances for a rate hike in June dropped after that meeting but since then, data has improved. So, this is an opportunity for the Fed to hint about raising rates in June, if this is indeed the case, and it’s quite unclear that this a real option for the doves that control the Fed. It is important to remember that the minutes are edited until the last moment, allowing the Fed to sharpen any message.
7. Australian employment data: Thursday, 1:30. Australia’s job market is expected to register 12,300 jobs addition, while the unemployment rate is expected to rise to 5.8% this time.
8. US Philly Fed Manufacturing Index: Friday, 12:30. The ndex is expected to improve to 3.2 in May.
9. US Unemployment Claims: Thursday, 12:30. Jobless claims are estimated to reach 276,000 this week.
10. US Existing Home Sales: Friday, 14:00.

[Sergey Golubev]

Japan PM Abe To Postpone Planned Sales Tax Hike (based on the article)

Over the past few months Japan PM Abe insisted that he would not delay the consumption tax increase for a second time explaining that the increase would go ahead "unless a global economic contraction or a Lehman-style market shock jolted Japan's economy." But Nikkei Business Daily reported what many had expected: "Japanese Prime Minister Shinzo Abe has decided to postpone a consumption tax increase set for next April, judging it to threaten efforts to pull the world's third-largest economy out of deflation."

[Sergey Golubev]

Fundamental Weekly Forecasts for Dollar Index, GBP/USD, USD/CNH, AUD/USD and GOLD (based on the article)

Dollar Index - "The three-month rally in risk-oriented assets has started to falter, and a deepening of that slide could certainly agitate some haven appeal for the Greenback. However, full-scale risk aversion is the thousand point weight swinging above the market and what would most effectively leverage the depth of haven appeal that would activate the currency’s haven status. That said, we may not need such an extreme. With fears of currency wars growing, FX volatility could make for a more ready driver. Watch this week’s G-7 meeting for FX mentions."

GBP/USD - "GBP/USD stands at risk of facing range-bound conditions next week as market participants weigh the outlook for monetary policy, but the pair may continue to mark fresh monthly lows over the coming days should the exchange rate fail to hold above near-term support around 1.4290 (78.6% Fib retracement) to 1.4330 (23.6% Fib expansion)."

USD/CNH - "Chinese commodities rode roller coasters this week. Major commodities plunged to the daily limit-downs on Monday. Then they diverged on Thursday: black commodities extended losses while crops jumped higher with soybean and rapeseed hitting the daily limit-ups. However, on Friday, soybean oil, palm oil as well as five black commodities, dropped to the daily limit-downs again. China’s commodity market is less developed than in US or other major developed countries; it is also less regulated compared to Chinese equity market. Such dramatic moves in the commodity market could lead to a meltdown in the near term. If it happens, the panic may drive capitals rushing out of the country, similar as it was seen early this year cause by the tumbling equities. This is a potential risk for the Chinese Yuan as a significant increase in capital outflows often drives the currency lower."

AUD/USD - "The prospect of a more hawkish US central bank bodes ill for risk appetite at a time when investors seem increasingly concerned about a broad-based slowdown in global economic growth. As such, news-flow to that effect may send the sentiment-sensitive Aussie lower alongside share prices."

GOLD (XAU/USD) - "Retail Sales released on Friday topped expectations and while the print alleviates some concerns over the health of the consumer, the print does little to move the needle on central bank policy moving forward. If anything, it does leave the door open with the focus now shifting towards more significant data next week. Traders will be closely eyeing the release of the April U.S. Consumer Price Index (CPI) and minutes from April 27th policy meeting where we hope to get a more detailed picture of where the committee members stand as it pertains to the appropriate timing of future interest rate hikes. Keep in mind that of the Fed’s dual mandate, inflation remains the laggard; lending added significance to the current pace of price growth."

[Sergey Golubev]

Trading on Sentiment: The Power of Minds Over Markets

From Forbes:

"Investor sentiment and analysis of media coverage are new frontiers to explore in understanding stock market gyrations. The news unconsciously affects investor behavior, which in turn moves the stock market. Thus analyzing investor behavior could potentially reap enormous profits, says behavioral finance expert Richard Peterson , a board-certified psychiatrist and CEO of MarketPsych in San Luis Obispo, Calif. Peterson’s new book, Trading on Sentiment: The Power of Minds Over the Markets, explains how to potentially “time turns in the stock market using media sentiment at the bottoms and tops of the business cycle.” The book was published by Wiley Finance in March."

"Peterson’s behavioral finance research firm provides data and consults hedge funds, traders and investment banks on economics, investments and trading strategies. His two other books are MarketPsych: How to Manage Fear and Build Your Investor Identity (Wiley, 2010) and Inside the Investor’s Brain: The Power of Mind Over Money (Wiley, 2007)."

Richard Peterson:

• "I started investing at a young age using a brokerage account provided by my father (a finance professor at that time).  My first investments were based on recommendations from popular investing magazines.  Those investments, based on buying stocks identified as the “Top 10 Fastest Growing Companies” of the year, ended up in large losses again and again.  I wondered how I, and the financial magazines I was reading, could be so incredibly wrong, so often."
• "Later I obtained a degree in electrical engineering from the University of Texas.  As part of my senior project, I wrote code for artificial neural networks to learn patterns in stock index prices.  This stock market prediction model was better than random, and I started to use it in live trading.  However, at times, I disagreed with the system’s recommendation."

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2014.06.06 09:25

3 Steps to Trade Major News Events (based on dailyfx article)

Talking Points:

• News releases can be stressful on traders
• Develop a plan before the event arrives

Major news releases can be stressful on traders. That stress can show up for a variety of trading styles.
Perhaps you are already in a good position with a good entry and you are afraid the news release may take a bite out of your good entry.

Perhaps you want to enter into a new position as prices are near a technically sound entry point, but you are uncertain if the technical picture will hold up through the volatile release. Therefore, you agonize over the decision of whether to enter now or after the news event.

Maybe, you like to be in the action and initiating new positions during the release. The fast paced volatility during the news release still gets makes your palms sweat as you place trades.

As you can see, news events stress traders in a variety of ways.

Today, we are going to cover three steps to trade news events.

Step 1 - Have a Strategy

It sounds simple, yet the emotion of the release can easily draw us off course. We see prices moving quickly in a straight line and are afraid to miss out or afraid to lose the gains we have been sitting on. Therefore, we make an emotional decision and act.

Having a strategy doesn’t have to be complicated. Remember, staying out of the market during news and doing nothing is a strategy.

A strategy for the trader with a floating profit entering the news event could be as simple as “I am going to close off half my position and move my stop loss to better than break even.”

For the trader wanting to initiate a new position that is technically based, they may decide to wait until at least 15 minutes after the release, then decide if the set-up is still valid.

The active news trader may realize they need a plan of buy and sell rules because they trade based on what ‘feels good.’

Step 2 - Use Conservative Leverage

If you are in the market when the news is released, make sure you are implementing conservative amounts of leverage. We don’t know where the prices may go and during releases, prices tend to move fast. Therefore, de-emphasize the influence of each trade on your account equity by using low amounts of leverage.

Our Traits of Successful Traders research found that traders who implement less than ten times effective leverage tend to be more profitable on average.

3 - Don’t Deviate from the Strategy

If you have taken the time to think about a strategy from step number one and if you have realized the importance of being conservatively levered, then you are 90% of the way there! However, this last 10% can arguably be the most difficult. Whatever your plan is, stick to it!

If I put together a plan to lose 20 pounds of body weight that includes eating healthier and exercising, but I continue to eat high fat and sugar foods with limited exercise, then I am only setting myself up for frustration.

You don’t have to be stressed or frustrated through fundamental news releases.

[Sergey Golubev]

Technical Targets for EUR/USD by United Overseas Bank (based on the article)

EUR/USD: intra-day bearish, daily correction

H4 price is located below 200 period SMA (200 SMA) for the ranging market condition within the following key reversal support/resistance levels:

• 1.1361 resistance level located near 200 SMA on the border between the primary bearish and the primary bullish trend on the chart, and
• 1.1282 support level located below 200 SMA in the primary bearish area.

If the price breaks 1.1361 level to above so the intra-day bullish reversal will be started, and if the price breaks 1.1282 level to below so the bearish trend will be continuing.

Daily price is located above 200 SMA for the bullish market condition: price is testing 1.1282 support level for the secondary correction to be continuing.

United Overseas Bank is considering the EUR/USD price to be on downtrend with 1.1215 target:

"The unexpected breach of 1.1350 and 1.1300 last Friday has shifted the risk to the downside. While the outlook for EUR is bearish from here, the downside potential appears to be limited to a test of April’s low of 1.1210/15. Downward momentum is only beginning to improve and a break back above 1.1400 is enough to indicate that a short-term low is in place."

• If daily price will break 1.1215 support on close bar so the secondary correction within the primary daily bullish trend will be continuing.
  
• If not so the price will be ranging within the levels.

[Sergey Golubev]

Technical Targets for AUD/USD by United Overseas Bank (based on the article)

AUD/USD: daily bearish reversal by 0.7253 support level to be broken by the daily close bar

Daily price is on breakdown by breaking 30-day low at 0.7253 and 200 SMA level to below for the reversal of the price movement from the primary bullish to the primary bearish market condition.

UOB is considering the price to be reversed to the bearish market condition with the secondary ranging, for example:

"Downward momentum is not strong and we expected a slow drift lower to 0.7240 (low of 0.7236 during early Sydney hours). From here, further extension lower to 0.7200 is not ruled but the current price action suggests that AUD is trying to form a short-term base for a recovery. However, confirmation that the bearish phase has ended is only upon a move back above 0.7355 (adjusted from 0.7410)."

• If price will break 0.7253 support on close daily bar so the reversal of the price movement from the primary bullish to the primary bearish market condition will be started.
  
• If not so the price will be ranging within the levels.

• Recommendation to go short: watch the price to break 0.7253 support level for possible sell trade
• Recommendation to go long: N/A
• Trading Summary: bearish reversal
  

[Sergey Golubev]

AUD/USD Intra-Day Fundamentals: Reserve Bank of Australia (RBA) May Meeting Minutes and 80 pips price movement

2016-05-17 01:30 GMT | [AUD - Monetary Policy Meeting Minutes]

• past data is n/a
  
• forecast data is n/a
  
• actual data is n/a according to the latest press release

[AUD - Monetary Policy Meeting Minutes] = It's a record of the RBA Reserve Bank Board's most recent meeting, providing in-depth insights into the economic conditions that influenced their decision on where to set interest rates.

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• Some members of the Reserve Bank of Australia's monetary policy board were not initially sold on the idea of raising the country's benchmark lending rate, minutes from the bank's May 3 meeting revealed on Tuesday.
• "Although the March quarter outcome for the CPI reflected some temporary factors, the broad-based softness in prices and labor costs signaled less momentum in domestic inflationary pressures than had previously been expected. As a result, there had been a downward revision to the inflation outlook and the profile for wage growth. Underlying inflation was expected to remain around 1-2 percent over 2016 and to pick up to 11/2-21/2 percent by mid-2018."
• "GDP growth overall had been a bit stronger than expected over 2015, but appeared to have been sustained at a more moderate pace since then. Growth was forecast to pick up gradually to be above estimates of potential growth later in the forecast period. Accordingly, the unemployment rate was expected to remain around current levels for a time before declining gradually as GDP growth picked up."

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AUD/USD M5: 80 pips price movement by Reserve Bank of Australia (RBA) May Meeting Minutes news event :