Press review - page 496

[Sergey Golubev]

Intra-Day Fundamentals - EUR/USD, NZD/USD and Dollar Index: U.S. Jobless Claims

2017-03-09 13:30 GMT | [USD - Unemployment Claims]

• past data is 223K
• forecast data is 239K
• actual data is 243K according to the latest press release

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

[USD - Unemployment Claims] = The number of individuals who filed for unemployment insurance for the first time during the past week.

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From business-standard article:

• "The number of Americans filing for unemployment benefits last week rebounded from a near 44-year low, but the labor market continues to tighten amid a sharp drop in job cuts in February."
• "Initial claims for state unemployment benefits rose 20,000 to a seasonally adjusted 243,000 for the week ended March 4, the Labor Department said on Thursday. Claims for the prior week were unrevised at 223,000, the lowest level since March 1973."

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Dollar Index M5: range price movement by U.S. Jobless Claims news events

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USD/JPY M5: 44 pips range price movement by U.S. Jobless Claims news events

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[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Indicators: MACD Histogram, multi-color

Sergey Golubev, 2014.06.19 12:01

Moving Average Convergence Divergence (MACD)

MACD stands for Moving Average Convergence Divergence and was first developed by Gerald Appel in the late 1970s. It is an Absolute Price Oscillator (APO) and can be used in an attempt to identify changes in market direction, strength and momentum.

It calculates the convergence and divergence between a ‘fast’ and a ‘slow’ Exponential Moving Average (EMA) known as the MACD Line. A signal EMA is then plotted over the MACD Line to show buy/sell opportunities. Appel specified the MA lengths as the following percentages:

• Slow EMA = 7.5% (25.67 period EMA)
• Fast EMA = 15% (12.33 period EMA)
• Signal EMA = 20% (9 period EMA)

Usually however these are rounded to EMAs of 26, 12 and 9 respectively. Many charting packages will also plot the difference between the Signal Line and MACD Line as a Histogram.

One of the biggest challenges when dealing with financial data is noise or erratic movements that cause false signals. By smoothing data out you can reduce the number of false signals. But this comes at a cost, and causes an increase in the lag of your signals. The genius of the MACD is that it begins by smoothing data (thus causing lag) and then speeds up the signals from the smoothed data. This combination helps to reduce false signals while minimising the lag.

By comparing EMAs of different lengths the MACD can help to identify subtle changes in the trend and momentum of a security. It is a great visual representation of the acceleration or rate of change in a trend.

How to Calculate a MACD

MACD Formula:

• MACD Line = EMA,12 – EMA,26
• Signal Line = EMA[MACD,9]
• MACD Histogram = MACD – Signal Line
• Histogram Trigger = EMA[MACD Histo,5]

Obviously you can change the parameters to any value of your choice.

MACD Excel File

We have put together an Excel Spreadsheet that will automatically adjust to the MACD settings you desire. Find it at the following link near the bottom of the page under Downloads – Technical Indicators: Moving Average Convergence Divergence (MACD)

Test Results

Is the MACD an effective indicator? We are putting it into the ring for the Technical Indicator Fight for Supremacy. It will be tested through 300 years of data across 16 global markets to discover which settings produce the best results and how it performs compared to other indicators:

1. Moving Average Crossovers – Completed - Golden Cross – Which is the best?
2. Moving Average Convergence Divergence (MACD) – Completed – Results
3. ZeroLag MACD (ZL-MACD)
4. MACD Z Score (MAC-Z)

[Sergey Golubev]

Forum on trading, automated trading systems and testing trading strategies

Indicators: MACD Divergence

Sergey Golubev, 2014.01.28 07:59

What is the MACD Indicator? How do I use it? (based on dailyforex article)

One of the most common technical indicators that is used by day traders in the financial markets can be seen in the Moving Average Convergence Divergence -- more commonly referred to as the MACD. But one mistake that many new traders make is that they will simply start using this indicator without really understanding how it functions or makes its calculations. This can lead to costly mistakes that should have been completely avoidable. So, it makes sense to study the logic and calculations behind the MACD (and all other indicators) in order to more accurately configure your day trading positions and generate gains on a consistent basis.

The Moving Average Convergence Divergence (MACD) Defined

Anyone with any experience in the forex markets and in technical analysis strategies has likely heard a great deal about the Moving Average Convergence Divergence (MACD). But what exactly does the MACD tell us -- and how is it calculated? Without an understanding of these areas, it can be difficult to see trading signals as they emerge. Here, will deconstruct the MACD indicator and explain how and why it is commonly used.

“In its most basic form,” said Haris Constantinou, markets analyst, “the MACD is a momentum indicator that is designed to follow existing trends and find new ones.” The MACD does this by showing the differences and relationships between a two-level combination of moving averages and price activity itself.

MACD Calculations

To determine and calculate the MACD, we must subtract a 26 period Exponential Moving Average (EMA) from a 12 period EMA. Then, a 9 period EMA of the MACD is plotted, and this becomes the Signal Line for the indicator. The Signal Line is plotted over the MACD and this will be used as the trigger reading for trading signals (both buy signals and sell signals). These elements form the basis of the MACD construction, and it is important to have a strong understanding of these elements if you plan on using the indicator in your daily trading.

Three Common Approaches to the MACD

Now that we understand the basics of how the MACD is calculated, it is a good idea to look at some of the common ways that the MACD is viewed by traders so that we can get a sense of how exactly the indicator is used to identify trading opportunities. There are a few different ways the indicator can be interpreted, and the three of the most common methods proven to be the most effective for traders include

• Crossovers,
• Divergences,
• and in identifying Overbought / Oversold conditions

Since the indicator has become a major part of the technical trading community, it is a good idea to look at some of these approaches in greater depth. But before you can do this, it is essential you understand the basics. Failure to do this is what leads to a large number of losses for many traders that are just getting started.

[Sergey Golubev]

Dollar Index Ahead of NFP (adapted from the article)

Dollar Index H4 chart. The price is located above 200 SMA in the bullish area for the ranging within 102.24/101.70 support/resistance levels waiting for the bullish trend to be resuned or for the secondary correction to be started. Stoch indicator/s value is showing overbought market condition so we are forecasting 2 main scenarios for the intra-day price movement during/after NPF:

• breakout: the price will break resistance level to above on quick sudden movement  for the bullish trend to be resumed, or
• c‌orrection: the price will breaks 101.70 support level to below on usual slowly way for the correctional trend to be started.

• "The Dollar Index is the simplified approach to judging the strength of the world’s reserve currency. However, looking simply at the DXY to analyze USD strength would be a short-sighted given the recent dynamics in the market. Over the last week we’ve seen the USD swing into strength most notably against currency pairs that do not make up large weights in the DXY."
• "The DXY is weighted heavily in favor of Euro (57.6%), followed by Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%). The most dominant strength in March has been seen in a handful of these components of DXY, such as the Canadian Dollar. The real strength can be seen in other commodity currencies, hence the drop in Oil like the Australian and New Zealand Dollar, Norwegian Krone, and a handful of Emerging Market Currencies."
• "This week, a strong bump at the front-end of the UST yield curve, notably 2’s has aligned with the view that the Fed has the engine started and the gas tank filled in anticipation of a long cycle of hiking rates toward normalization. Friday’s Non-Farm Payroll is only expected to add to the conviction of multiple rate hikes to come starting with one at the March 15 FOMC. The stronger USD may continue to build pressure against commodities linked to the price of Oil, which recently settled below $50/bbl for the first time in 2017."

[Sergey Golubev]

Dax Index - ranging with the bullish trend to be resumed (adapted from the article)

Daily price is located above Ichimoku cloud in the bullish area of the price: symmetric triangle pattern was crossed by the price to above for the bullish trend to be continuing with 12,099 resistance level.

• "This week the DAX put the December trend-line to the test, teetering on the brink of breaking it over the course of the past two sessions. But so far, so good. The outcome from yesterday’s ECB meeting was relatively benign and thus had limited impact on financial markets – namely the euro and European equity indices."
• "For now, we are running with support acting as, well, support. It is until it isn’t. But the DAX will soon be facing off with resistance in the form of the Feb high of 12082 and then the top of the rising wedge/2016 trend-lines. As far as the rising wedge goes, we will go with which ever direction it breaks – a pattern to react to, not predict."

[Sergey Golubev]

Intra-Day Fundamentals - EUR/USD, GBP/USD, BTC/USD and Brent Crude Oil: Non-Farm Payrolls

2017-03-10 13:30 GMT | [USD - Non-Farm Employment Change]

• past data is 238K
• forecast data is 196K
• actual data is 235K according to the latest press release

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

[USD - Non-Farm Employment Change] = Change in the number of employed people during the previous month, excluding the farming industry.

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From official report:

• "Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in construction, private educational services, manufacturing, health care, and mining."
• "The change in total nonfarm payroll employment for December was revised down from +157,000 to +155,000, and the change for January was revised up from +227,000 to +238,000. With these revisions, employment gains in December and January combined were 9,000 more than previously reported. Monthly revisions result from additional reports received from businesses since the last published estimates and from the recalculation of seasonal factors. Over the past 3 months, job gains have averaged 209,000 per month."

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EUR/USD M5: 45 pips range price movement by Non-Farm Payrolls news events

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GBP/USD M5: 42 pips range price movement by Non-Farm Payrolls news events

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BTC/USD M5: range price movement by Non-Farm Payrolls news events

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Brent Crude Oil M5: range price movement by Non-Farm Payrolls news events

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[Sergey Golubev]

Dow Jones Industrial Average - Trading Strategies For The 5 Best Performing Dow Stocks (based on the article)

Daily price is located above Ichimku cloud for the bullish ranging within 21,169 resistance level and 20,777 support level for the waiting for the bullish trend to be resumed or to the secondary correction to be started.

• "There are 24 components of the Dow Jones Industrial Average that were members of the Dow 30 when the average traded as low as 6,470 back on March 6, 2009. From this low to the all-time intraday high of 21,169.11 set on March 1, 2017, the Dow is up 227%."
• "Among the 24 components still in the average, 12 underperformed. But five gained by more than 500%, led by Home Depot (up 738%), American Express (up 716%), Disney (up 633%), Boeing (up 521%) and JPMorgan Chase (up 516%)."
• "Most on Wall Street say that the stock market rally can continue. In my opinion, investors should reduce holdings by 50% to lock in gains. From the Dow all-time high of 21,169 to my highest risky level of 22,148, the additional upside is just 4.6%, not worth the bet for long-term investors."

[Sergey Golubev]

Weekly Outlook: 2017, March 12 - March 19 (based on the article)

The US dollar ended the week on the back foot despite the upcoming rate hike. Apart from the Fed decision, we have rate decisions also in the UK and Japan, US consumer confidence and housing data, and lots more. These are the main events on forex calendar for this week.

1. US Producer Prices: Tuesday, 12:30. Producer prices are expected to rise 0.1% this time.
2. UK jobs report: Wednesday, 9:30. The number of new unemployed in the UK is expected to rise by 3,200 in February.
3. US Inflation data: Wednesday, 13:30. US Consumer prices are estimated to remain unchanged while core inflation is expected to gain 0.2% in February.
4. US Retail sales: Wednesday, 13:30. Retail sales are expected to increase by 0.2% and core sales are predicted to rise 0.1%.
5. US Crude Oil Inventories: Wednesday, 14:30.
6. US FOMC Economic Projections and rate decision: Wednesday, 18:00. The FOMC sees three rate hikes in 2017, instead of the two from September’s projections. But beyond 2017, the assessments are the same as in September. Regarding growth projections, the Fed sees a 2% rise, falling to 1.8% in the longer run. The unemployment rate is estimated to reach 4.5% between 2017 and 2019 before rising to 4.8 percent in the longer term.
7. New Zealand GDP data: Wednesday, 21:45. Economists expect a growth rate of 0.7% in the fourth quarter of 2016.
8. Japan rate decision: Thursday.
9. UK rate decision: Thursday, 12:00. The bank predicts the economy will grow 2% this year and the unemployment would be much lower than previously projected. Growth has remained resilient since the Brexit vote and policymakers expect growth to continue in the coming months.
10. US Building Permits: Thursday, 12:30. The number of building permits is expected to reach1.26 million this time.
11. US Philly Fed Manufacturing Index: Thursday, 12:30. Manufacturing activity in the Philly area is expected to reach 30.2 in March.
12. US Unemployment Claims: Thursday, 12:30. The number of jobless claims is expected to rise to 245,000.
13. US Prelim UoM Consumer Sentiment: Friday, 15:00. Consumer moral is expected to increase to 97.1 this time.

[Sergey Golubev]

Weekly EUR/USD Outlook: 2017, March 12 - March 19 (based on the article)

EUR/USD managed to edge up as the ECB expressed some cautious optimism. Another appearance by Draghi as well as inflation and trade figures stand out in the upcoming week. 

1. Mario Draghi talks: Monday, 13:30. The President of the ECB has another opportunity to move the euro.
2. German CPI (final): Tuesday, 7:00.
3. German ZEW Economic Sentiment: Tuesday, 10:00. The all-European figure stood at 17.1 points last time and is expected to hit 19.3 now.
4. Industrial output: Tuesday, 10:00.
5. French CPI (final): Wednesday, 7:45. According to the flash read for February, prices increased by 0.1% in the eurozone’s second-largest economy. The figure will probably be confirmed.
6. Employment Change: Wednesday, 10:00.
7. CPI (final): Thursday, 10:00.
8. Trade Balance: Friday, 10:00. The euro-zone enjoys a wide trade surplus, driven by Germany’s export machine. After a positive 24.5 billion in December, a narrower surplus is on the cards now: 22.3 billion.

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[Sergey Golubev]

Weekly Fundamental Forecast for Dollar Index (based on the article)

Dollar Index - "Markets are forward looking and speculatively motivated. This is where the ‘buy the rumor, sell the news’ saying originates. We should consider this heavy skew heading into the new trading week. We may consider the Fed decision a far more influential event relative to the NFPs, but financial media prominence does not change the interpretation the market will make of the news. A rate hike alone is already expected. Furthermore, we can tell from rates markets that there is considerable speculation of a further two to three hikes through the rest of the year. While it is possible to further shift expectations towards four hikes in 2017 – which is not fully appreciated – the need for conviction is high and the traction it would offer is comparably marginal. Where the Dollar still has the advantage on growth and yield potential, its premium doesn’t seem to be growing. It may in fact be shrinking. Unless full-scale risk aversion revives the USD’s appeal as an absolute haven, its unchallenged bull trend may be challenged."