Press review - page 69
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Sudden gold plunge has traders looking for answers
... " said Matthew Hoverman, senior trader at Grafite Capital. "There is a high likelihood that that's what happened today."
When traders buy gold (or any other futures contract) they often do so with a "stop-loss order," which limits the amount of money that can be lost by automatically selling out of a long position when gold trades down to certain level.
This can compound swift moves, because an initial sale executed poorly or in error sends the market lower, triggering stop losses, which generates more selling, and in turn triggers more stop losses.
This snowball effect explains why the gold market can drop some 2.5 percent in seconds, as it did on Monday morning.
Yellen Confirmed To Lead Federal Reserve
Janet Yellen, the current vice chairwoman of the Federal Reserve, will be the first woman to lead the central bank.
The Senate confirmed Yellen by a 56-26 vote Monday, with support from all 45 Democrats and 11 Republicans. Many senators missed the vote because of weather-related delays.
In a statement, President Obama said he is "confident that Janet will stand up for American workers, protect consumers, foster the stability of our financial system, and help keep our economy growing for years to come."
Yellen, a former academic who was thought to be President Barack Obama's second choice behind Larry Summers, is expected to carry on the ultra-easy monetary policy advocated by outgoing Chairman Ben S. Bernanke.
Dollar? Bull run ahead?
Gold Declines Before Fed Minutes as Job Data May Signal Recovery
2014-01-08 13:15 GMT (or 14:15 MQ MT5 time) | [USD - ADP Non-Farm Employment Change]
if actual > forecast = good for currency (for EUR in our case)
==========
U.S. Private Sector Adds More Jobs Than Expected In December
In an upbeat sign for the U.S. labor market, payroll processor Automatic Data Processing, Inc. (ADP) released a report on Wednesday showing that private sector employment increased by more than expected in the month of December.
ADP said the private sector added 238,000 jobs in December following an upwardly revised increase of 229,000 jobs in November.
2014-01-09 01:30 GMT (or 02:30 MQ MT5 time) | [CNY - CPI]
if actual > forecast = good for currency (for CNY in our case)
==========
China Inflation Eases Again; Producer Prices Extend Decline
China's consumer price inflation eased for a second consecutive month in December to reach its weakest level in seven months, the latest figures from the National Bureau of Statistics revealed Thursday.
Meanwhile, China's producer prices extended its decline to 22 months in December, fueling concerns about industrial overcapacity.
The annual consumer price inflation fell to 2.5 percent in December from 3 percent in November. Economists had forecast a slowdown to 2.7 percent. On a monthly basis, the consumer price index rose 0.3 percent.
In the whole of 2013, inflation was 2.6 percent, well below the government's target of 3.5 percent.
2014-01-08 19:00 GMT (or 20:00 MQ MT5 time) | [USD - FOMC Meeting]
==========
Fed Minutes: Shift From Employment To Inflation
The Federal Open Market Committee (FOMC) minutes were released today from the meeting that ended on December 18. While detailed, not a lot of it was exciting. The biggest point of contention seemed to be around the outlook for inflation: Is below 2% inflation temporary, or not? That will be hashed out at subsequent meetings, but it was pleasant to see consensus about the reduction in the pace of asset purchases. The Committee weighed the marginal costs and benefits, and the ledger seems to favor a gradual diminution in asset purchases.
2014-01-09 00:30 GMT (or 01:30 MQ MT5 time) | [AUD - Building Approvals]
if actual > forecast = good for currency (for AUD in our case)
==========
Australia Building Approvals Dip 1.5% In November
The total number of building approvals issued in Australia was down a seasonally adjusted 1.5 percent on month in November, the Australian Bureau of Statistics said on Thursday - coming in at 16,396.
That missed forecasts for a decline of 1.0 percent following the 1.8 percent contraction in October.
On a yearly basis, approvals surged 22.2 percent - topping expectations for a jump of 21.1 percent following the 23.1 percent spike in the previous month.
How to Trade the Double Bottom on Gold
The Forex double bottom pattern is widely popular among traders because it is easy to recognize, provides clear locations to place stops, and forecasts clear profit targets. Typically, the double bottom will take a familiar letter “W” pattern. This pattern is common on time frames as large as yearly and monthly charts and on smaller time frames like hourly, 5-minute, and even tick charts. We are going to discuss the method for trading this pattern and then look at a real-time example unfolding in gold.
Double bottom price patterns are usually found at the end of downtrends. The previous downtrend consisting of lower swing highs and lower swing lows begins to accelerate as sellers take full control. Next, price makes an extreme low as more and more sellers pile into the trade, however the extreme move is met with a combination of bargain hunters and sellers taking profits. The following rally creates the peak of the ‘W’ pattern that makes up the double bottom. The rally to the peak is what sellers, who missed the initial decline, were waiting for.
The Trade Setup for XAUUSD
After falling nearly $300/oz. on 6/28, Gold (XAUUSD) has just completed a retest of 6-month lows in the 1188 area on 12/20. On the chart above, you can clearly see the double pattern unfolding. Gold’s slow and steady rebound has led to three days above the previous downtrend line. RSI is a technical indicator that traders use to determine momentum.
Trading the News: European Central Bank Interest Rate Decision (adapted from dailyfx article)
The European Central Bank (ECB) may help to prop up the single currency as the Governing Council is widely expected to keep the benchmark interest rate on hold while preserving its forward-guidance for monetary policy.
What’s Expected:
Time of release: 01/09/2014 12:45 GMT, 7:45 EST
Primary Pair Impact: EURUSD
Expected: 0.25%
Previous: 0.25%
Forecast: 0.25%
Why Is This Event Important:
A further delay in the ECB’s easing cycle may instill a bullish outlook for the EURUSD as President Mario Draghi retains a wait-and-see approach, but the single currency may struggle to hold its ground should the central bank head highlight a greater risk for disinflation.
Bearish EUR Trade: ECB Provides More Detailed Monetary Easing Timeline
- Need red, five-minute candle following the decision/statement to consider a short Euro trade
- If market reaction favors a short trade, sell EURUSD with two separate position
- Set stop at the near-by swing high/reasonable distance from cost; at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is met, set reasonable limit
Bullish EUR Trade: Governing Council to Further Delay Easing Cycle