Press review - page 137

Sergey Golubev
Sergey Golubev  
USD/CAD forecast for the week of April 21, 2014, Technical Analysis

The USD/CAD pair rose during the course of the week, breaking the top of the hammer that we had form the previous week. This is a classic positive sign as far as technical analysis is concerned, and we believe that this market is going to reach towards the top of the recent consolidation area which we see as the 1.13 level. Nonetheless, we think that it could be a bit of a choppy move, which of course is very common for the USD/CAD pair. The two economies are completely interconnected so it makes sense that the market will go back and forth and micro-movements most the time, with the occasional impulsive movement giving the actual profits.

We feel that selling is impossible until we get down below the bottom of the hammer from last week, which would signify that we could get down to the 1.07 handle immediately, and then perhaps look for real supports or closer to the 1.06 handle. We doubt that’s going to happen though, because quite frankly the Canadian dollar has been beat up even while the oil markets have gotten a bit stronger over time. With that, we are looking to start buying this market now, and will continue to buy as we serve to grind higher, probably heading to the 1.15 level given enough time. We do like the US dollar in general, because after all the US dollar index is starting to look very positive, and on top of that the Federal Reserve is much closer to tightening monetary policy than the Bank of Canada is. After all, the Canadians have stated recently that the market shouldn’t be expecting any type of monetary tightening anytime soon. They were pretty explicit in that, so it appears the Canadians will continue to keep a very loose monetary policy, which of course will continue to affect the value of the Canadian dollar in a negative way. It doesn’t mean they were going to break out right away, but we most certainly think that it’s coming fairly soon.

Sergey Golubev
Sergey Golubev  
NZD/USD forecast for the week of April 21, 2014, Technical Analysis

The NZD/USD pair fell during the balance of the week, but has still not found the supportive level at the 0.85 level that we are looking for. Because of this, we are going to stay on the sidelines for the time being, but would love to see some type a supportive candle, perhaps a hammer near the 0.85 handle as we would like to see that level that was once a massive resistance area become supportive. That would be classic as far as technical analysis is concerned, and therefore be an easy trade to take.

Sergey Golubev
Sergey Golubev  
GBP/USD forecast for the week of April 21, 2014, Technical Analysis

The GBP/USD pair initially fell early in the week, but as you can see bounced enough to form a positive candle. With that, the market looks like it’s supported and we are going to continue to go higher. If we break the top of the weekly candle, we feel that this market could go to the 1.07 level, and possibly even higher given enough time. We have no interest in selling, and we believe that the 1.65 level is the “floor” in this market at the moment. Selling can’t be done until we get below the 1.64 level, something that isn’t going to happen right away.

Sergey Golubev
Sergey Golubev  
EUR/USD forecast for the week of April 21, 2014, Technical Analysis

The EUR/USD pair had a negative week over the last five sessions, but did find the 1.38 level as supportive. Because of this, it feels of the market is going to possibly drop from here, but not very much. With that, we feel that the market should continue to go higher over the longer term though, as it certainly has an uptrend feel to it. Nonetheless, is going to be very difficult to the average trader to hang onto a trade. We feel that this market is going to be difficult as it is so choppy.

Sergey Golubev
Sergey Golubev  
Forex - Weekly outlook: April 21 - 25

The dollar ended the week higher against the yen on Friday as market sentiment was boosted by easing tensions over Ukraine, while upbeat U.S. economic reports also supported the dollar.

USD/JPY touched highs of 102.57 on Friday, before ending the session at 102.40, rising 0.49% for the week. Trade volumes remained thin on Friday, with most markets closed for the Easter weekend, although markets in Tokyo were open.

Concerns over the crisis in eastern Ukraine eased on Thursday after Russia, Ukraine, the U.S. and the European Union said an agreement on steps to "de-escalate" the crisis had been reached.

The dollar also received a boost after upbeat U.S. data on manufacturing and employment on Thursday pointed to underlying strength in the economy.

The Labor Department reported the number of people filing for unemployment benefits edged up to 304,000, below analysts’ forecasts and not far from the six-and-a-half year low of 300,000 touched the previous week.

GBP/USD edged up 0.06% to 1.6798 at Friday’s close, and ended the week 0.45% higher. The pair rose to highs of 1.6840 on Thursday, the strongest since November 18 2009. Sterling strengthened broadly after data earlier in the week showed that the U.K. unemployment rate fell to a five year low of 6.9% in the three months to February.

The upbeat data bolstered expectations that the Bank of England could raise interest rates as soon as the first quarter of 2015.

The euro was little changed against the dollar on Friday, with EUR/USD settling at 1.3810.

The euro’s gains were held in check after recent comments by European Central Bank officials flagged concerns over the impact of the strong currency on the inflation outlook.

On Thursday, ECB Executive Board member Yves Mersch said that if foreign exchange developments with an impact on inflation continue it would trigger a reaction by the central bank.

Elsewhere, the New Zealand dollar posted its largest weekly decline against the greenback since January, with NZD/USD ending the week down 1.24% to 0.8576, ahead of the Reserve Bank’s rate review on Thursday.

In the week ahead, market watchers will be focusing on U.S. data on housing and manufacturing activity, while manufacturing data from China will also be closely watched. The euro zone is to release data on private sector activity, while the U.K. is to produce a report on retail sales.

Ahead of the coming week, has compiled a list of these and other significant events likely to affect the markets.

Monday, April 21
  • Markets in Australia, New Zealand, the U.K. and the euro zone are to remain closed for Easter Monday. Meanwhile, Japan is to release data on the trade balance.
Tuesday, April 22
  • Australia is to publish an index of leading economic indicators.
  • Canada is to produce data on wholesale sales.
  • The U.S. is to release private sector data on existing home sales.
Wednesday, April 23
  • Australia is to publish data on consumer price inflation, which accounts for the majority of overall inflation.
  • China is to release the preliminary estimate of the HSBC manufacturing index, a leading indicator of economic health.
  • The euro zone is to release preliminary data on manufacturing and service sector activity, a leading indicator of economic health. Germany and France are also to release individual reports.
  • The U.K. is to release data on public sector borrowing, while the BoE is to publish the minutes of its April meeting. The nation is also to publish private sector data on industrial order expectations.
  • Canada is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
  • The U.S. is to publish reports on new home sales and manufacturing activity.
Thursday, April 24
  • The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
  • In the euro zone, Germany is to release the Ifo report on business climate.
  • ECB President Mario Draghi is to speak at an event in Amsterdam; his comments will be closely watched.
  • The U.S. is to publish data on durable goods orders and the weekly report on initial jobless claims.
Friday, April 25
  • Markets in Australia and New Zealand will be closed for the Anzac Day holiday.
  • Japan is to release data on consumer inflation.
  • The U.K. is to produce data on retail sales.
  • The U.S. is to round up the week with revised data on consumer sentiment.
Sergey Golubev
Sergey Golubev  

Finalizing FTA Deal will See Trade Volumes between Aussie Dollar and Yuan Go up

Australia Prime Minister Tony Abbott is expected to sign the final terms to a trade agreement between China and Australia that will see transactions volumes between yuan and Australian dollar soar and lower the cost of business between the two countries.

Presently, the Aussie is one of the four currencies that can be fully converted into the Chinese yuan. The Chinese government is currently considering turning the renminbi into an international currency, reported the Australian.

The deal to convert the two currencies was signed a year ago though the trading volumes between the yuan and the Aussie dollar have started to stabilize after initially surging. Currency flows are estimated to be worth $US2.5 billion per month, up from around US$300 million before former prime minister Julia Gillard signed the convertibility deal in Beijing.

Analysts had expected the turnover to increase every month as more Australian firms scaled up their Chinese exports. Currently, China is Australia’s No. 1 trading partner, with volumes valued at more than US$130 billion per year.

Other currencies that convert directly to the yuan include the New Zealand dollar, the Japanese yen and the US dollar. The deal between Australia and China ensures Australian export firms can receive payments in the Aussie dollar. The full convertibility lowers the transaction costs involved in using other currencies to settle the payments. Certain exporters say that the agreement cut the transaction costs by 10 percent.

“The trading between the dollar and the renminbi has flatlined over the past couple of months but it will take off again, the next obvious step is to see Sydney become a renminbi hub,” said Andrew Whitford, the head of Westpac in China. “I’m a very strong advocate for Sydney to become that hub. There is certainly a need for that to happen.”

Currently, commodity agreements from Australia to China are paid in US dollars, though the trend points towards increasing use of the yuan to settle them.
Sergey Golubev
Sergey Golubev  

Avoiding Psychological Traps That Ruin Your Trading (based on dailyforex article)

The mantra that 90% of the struggle to become a profitable trader is fought and decided within the trader’s own head has become a persistent cliché within Forex educational literature. Is it true, or is it just a convenient excuse to sell warmed-up, content-free New Age psychobabble at a huge mark-up? More importantly, does it mask a more sinister fact that the market is in fact random and cannot be beaten by any kind of analysis? The answers are mixed, and more complex than you might think.

There is no doubt that there is money to be made in the field of Forex education. A quick search of the net will produce a lot of material that is high on opinion and low on data. It is cheap and cost-effective to produce a little feel-good material for that section of the public that is ready to be talked out of the idea that it is gambling on short-term time frames without clear ideas of any realistic parameters. However, this in itself is not proof that the market is random and cannot be beaten by analysis.

The Illusion of Randomness

The idea that the market is random, when properly considered, is ridiculous. In fact, randomness in any context is wholly an illusion. It is just a word we ascribe to situations we feel that we cannot predict. In science, the apogee of randomness is the “Brownian Motion” experiment, where particles are observed moving randomly as they are buffeted by other unseen particles. However, if we knew the speed, mass and position of all the particles within the experiment, we would be able to predict the exact position and timing of every movement! It is exactly the same with financial markets. Price movements are caused by the value and timing of buy and sell transactions, and if we knew the intentions of every market participant we would be able to predict every tick of the market! So markets are not random, just effectively random to us on smaller time frames as we cannot possibly determine all the information required to accurately predict market movements.

The truth about technical analysis on smaller time frames is that it can provide a statistical edge, albeit a very small one. For example, certain technical formations, over large samples, might show a 53% probability that the price will reach 20 pips in one direction before the other. So the market can be beaten, even by technical analysis. It can be beaten even more easily by traders who realize that the same technical formations that show a 53% probability of 20 pips might also show a far more profitable 35% probability of 80 pips. All speculative markets can be beaten, in the long run, by strategies which cut losers short and allow winning trades to run in an unlimited fashion. This is because speculative financial markets consistently produce improbably excessive returns far more often than they would if they were efficient.

Why Do We Fear the Market?

Now we have established that it is possible to beat the market, why are so many traders, who understand and agree with my previous points, having problems with profitably exploiting the market?

This is where the New Age psychobabble comes in useful. In this context, it is not nonsense, but an accurate diagnosis. The short answer is: lack of belief, or faith. The trader is still frightened that they cannot beat the market, because the market has changed, or because the trade they are looking at taking right now looks terrible, etc. There is a long list of psychological issues that can be identified, but the lack of faith/belief is at the root of it all.

How to Believe You Can “Beat” the Market

How can this be challenged? It should be challenged on two levels: factual, and spiritual. The factual level is easier to prove. Simply construct a strategy that follows a trend on a longer time frame, uses a shorter time frame for entry, and seeks to hold positions until the longer time frame’s trend has changed while employing fairly tight stop losses on initial entries. It is best to try to trade instruments that are showing the most powerful trends also. Then test the strategy over a number of years. If the strategy is reasonably built and not over-curve fitted, you should like what you see. Note that there are losing periods, and remember these will test you far more as they play out in real time than they do as you click through a mountain of historical data over a period of a few hours of research.

The factual challenge was the easier part. What about the spiritual challenge? Deep down, most of us believe that “there is no such thing as a free lunch”. When this inner belief is combined with the fact that you have to risk money on the market in order to gain a return, we can feel foolish and guilty, like an arrogant child that is likely to harm themselves by not heeding the wise advice of their parents. This is what leads us to fail to take a trade, or close it out too early.

The first step in confronting this is to admit that the feeling exists within you. Understand why it exists. The final and most difficult step lies in persuading oneself that it is not true. Isn’t your life itself a “free lunch”? Did you have to work hard to be born? Were you born with some natural talents and positive attributes, and did you have to do any work to achieve them? Most of us are born with and continue to enjoy the unconditional love of our parents: did we have to earn that, or did it come free? Does the earth produce enough food, water and air to sustain us all, and before our ancestors took up farming, did they have to work very hard at hunting and gathering?

When you can truly accept that life itself is a free lunch, you will find that most of the battle to become a profitable trader has been won. Of course, you do need to do some work building and testing a strategy too, but that is the easier part.

Sergey Golubev
Sergey Golubev  

Japan’s Annual Export Growth Falls Steeply In March amidst Fewer China Shipments

Japan’s growth in annual exports fell in March owing to weaker deliveries to China, causing investors to speculate that rising external demand may not help the local economy weather the effects of the April 1 hike in sales tax.
Data compiled by the Ministry of Finance indicated that exports grew 1.8 percent last month from a year ago, after surging 9.8 percent on a year-on-year basis last month. This lagged the median estimate of a 6.3 percent advance in a Reuters survey of economists.

The country’s trade deficit widened to a record 13.75 trillion yen ($134.45 billion) in the year ended in March due to the weaker exports.

After earlier advancing faster than most of its peers, Japanese economy has gradually slowed down as the boost provided by the central bank’s stimulus package waned. However, expectations are high that the Bank of Japan will roll out another fresh stimulus this summer following recent economic figures that point to a weakening economy.

Nonetheless, the central bank has insisted there are no such plans, saying that the economy will still meet its target inflation rate of 2 percent, though the onus is on the government to try to bolster private investment.

"Exports are weak because Japanese products are not as competitive as they used to be," Yasuo Yamamoto, a senior economist at Mizuho Research Institute, told Reuters. "This suggests the economy will struggle to recover after the sales tax hike. The government needs to do more with its growth strategy to make companies more competitive."

Japan’s exports to China grew 4.3 percent year-on-year in March, down from a growth of 27.6 percent the previous month. Japan has struggled to increase its exports amidst a weak yen which makes imports more expensive compared to exports.

Japan’s trade deficit stood at a shortfall (deficit) of 1.446 trillion yen last month, which is still less than the January’s record trade deficit of 2.79 trillion yen.

Japan export growth slows in warning about overseas demand
Japan export growth slows in warning about overseas demand
Reuters) - Japan's annual export growth slowed sharply in March due to weaker shipments to China, casting doubt that a recovery in external demand could help offset the impact of the April 1 sales tax hike. Ministry of Finance data showed that exports rose 1.8 percent in March from a year earlier, following a 9.8 percent annual gain in the...
Sergey Golubev
Sergey Golubev  
Market Condition - With Forex Volatility So Low, How Might we Trade?
  • US Dollar trades at potentially important resistance, Euro at key support
  • Forex volatility prices trade near record-lows, setting up for slow moves ahead
  • We’re focusing on range trading opportunities in all except the JPY pairs
The US Dollar continues to stick to tight ranges versus the Euro, Japanese Yen, and other counterparts. How might we trade if forex volatility continues to drop?

Watch the video above and updated automated strategy outlook below. What happens when volatility inevitably surges?


Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past 90 days of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.

Trend – This indicator measures trend intensity by telling us where price stands in relation to its 90 trading-day range. A very low number tells us that price is currently at or near 90-day lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s 90-day range.

Range High – 90-day closing high.

Range Low – 90-day closing low.

Last – Current market price.

Sergey Golubev
Sergey Golubev  

The 10 Names Retail Investors Traded Most In 2013

Apple was the most actively traded stock every month of 2013.

1. Apple (AAPL)
2013 Total Return: 2.2%

2. SPDR S&P 500 (SPY)
2013 Total Return: 32%

3. Facebook (FB)
2013 Total Return: 105%

4. Tesla (TSLA)
2013 Total Retun: 344%

5. Netflix (NFLX)
2013 Total Return: 298%

6. SPX
2013 Total Return: 30%

7. Google (GOOG)
2013 Total Return:58%

8. Russell 2000 (RUT)
2013 Total Return: 37%

9. Bank of America (BAC)
2013 Total Return: 35%

10. (AMZN)

2013 Total Return: 59%