Something Interesting in Financial Video April 2014 - page 3
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Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2014.04.05 18:14
GBP/USD forecast for the week of April 7, 2014, Technical AnalysisThe GBP/USD pair fell during the week, but really didn’t have that wide of the range. The 1.65 level below is still support as far as we can tell, and as a result we think that this market will offer a buying opportunity soon. Any supportive candle in that general vicinity has us buying, but the question then remains whether or not we would even get there? After all, the Friday candle was in fact a hammer, which of course is a nice buying opportunity and signal as it were.
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newdigital, 2014.04.05 18:15
EUR/USD forecast for the week of April 7, 2014, Technical AnalysisThe EUR/USD pair ended up forming a shooting star for the week, but as you can see on the daily charts, we formed a hammer for the Friday session. The 1.37 level has offered support in the past, and it appears that it’s doing so now. However, if you only look at the weekly chart, you will not see that there is in fact underlying support at the moment. With that in mind, it’s a bit difficult to get involved in the long side, simply because the longer-term chart looks a bit on the soft side right now, even though the daily chart tells you the exact opposite. Nonetheless, we certainly wouldn’t sell this market, because there is so much support shown not only on the daily chart, but the fact that there is a cluster that goes all the way down to the 1.3450 level.
With this, we believe that this market may continue to have a slightly positive bias, but quite frankly it’s a difficult one to be concerned about for a longer-term trader, as it will more than likely simply offer headaches had, and not necessarily profits.
Even if we broke down here, is going to be difficult to hang onto the trade to the downside Sibley because there is so much in the way of noise below and the volatility would be a bit much for us to be interested in being involved in. There are easier markets out there to trade, and the EUR/USD pair will more than likely continue to be one that is preferred buying short-term traders, especially once the trade very short timeframe charts.
On the other hand, if we broke above the top of the shooting star from either this week or last week, we believe at that point in time the market would break out to the upside eventually, and clear the 1.40 level would be a longer-term buy-and-hold type of situation in the making
Weekly Forex Outlook & Review for the 7th to 11th of April
Developed in the 1980s by John Bollinger, this oscillator is a technical indicator that incorporates the idea that volatility is dynamic, so the bands adapt as volatility increases and decreases. The tool uses a moving average with volatility bands placed above and below it. This provides the trader with a relative definition of high and low.
What Are Bollinger Bands?
Bollinger Bands can be used to identify W-Bottoms and M-Tops and help determine the strength of a trend. They can also help traders easily recognize highs and lows and can be used to find overbought and oversold areas. Since they are dynamic, they can be used on different securities with the standard settings.
Bollinger Bands are made up of a set of three bands that are plotted in relation to the security’s price action. The middle band is typically a simple moving average set at 20 periods. The outer bands are normally set two standard deviations above and below the middle band. If the price action becomes more volatile, the bands will widen. If volatility decreases, the bands will contract and move closer to the average.
W-Bottoms And M-Tops
Arthur Merrill, author of Behaviors of Prices on Wall Street, identified 16 classic chart patterns with a basic W shape and 16 classic chart patterns with a basic M shape. Bollinger Bands can be used to help spot these patterns. If the Bollinger Bands confirm a W-Bottom or M-Top, it could signify a potential breakout and possible trend reversal.
Overbought And Oversold
According to Bollinger, the bands should contain a majority of the price action, which means that a move outside of the bands should be considered significant. Generally, as the prices move closer to or break through the upper band, the market could be considered overbought and as the prices move down to or break through the lower band, the market could be considered oversold.
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Indicators: Bollinger Bands ®
newdigital, 2013.08.06 13:51
How Bollinger Bands Indicator Works
Bollinger Bands calculations uses standard deviation to plot the bands, the default value used is 2.
Calculation
Bollinger considered the best default for his indicator to be 20 periods moving average and the the bands are then overlaid on the price action.
Standard Deviation is a statistics concept. It originates from the notion of normal distribution. One standard deviation away from the mean either plus or minus, will enclose 67.5 % of all price action movement. Two standard deviations away from the mean either plus or minus, will enclose 95 % of all price action movement.
This is why the Bollinger Bands indicator uses the standard deviation of 2 which will enclose 95 % of all price action. Only 5 % of price action will be outside the bands, this is why traders open or close trades when price hits one of the outer Bands.
The Bollinger Bands indicator main function is to measure volatility. What the Bollinger Bands upper and lower limits try to do is to confine price action of up to 95 percent of the possible closing prices
This indicator compares the current closing price with the moving average of the closing price. The difference between them is the volatility of the current price compared to the moving average. The volatility will increase or decrease the standard deviation.
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Indicators: Bollinger Bands ®
newdigital, 2013.08.06 13:54
Bollinger Bands and Volatility
When volatility is high; prices close far away from the moving average, the Bands width increases to accommodate more possible price action movement that can fall within 95% of the mean.
Bollinger bands will widen as volatility widens. This will show as bulges around the price. When bollinger bands widen like this it is a continuation pattern and price will continue moving in this direction. This is normally a continuation signal.
The example below illustrates the Bollinger bulge.
High Volatility and Low Volatility
When volatility is low; prices close closer towards the moving average, the width decreases to reduce the possible price action movement that can fall within 95% of the mean.
When volatility is low price will start to consolidate waiting for price to breakout. When the bollinger bands is moving sideways it is best to stay on the sidelines and not to place any trades.
The example is shown below when the bands narrowed.
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Indicators: Bollinger Bands ®
newdigital, 2013.08.06 13:57
Bollinger Bands Indicator Bulge and Squeeze Technical Analysis
The Bollinger Bands are self adjusting which means the bands widen and narrow depending on volatility.
Standard Deviation is the statistical measure of the volatility used to calculate the widening or narrowing of the bands. Standard deviation will be higher when prices are changing significantly and lower when markets are calmer.
The Bollinger Squeeze
Narrowing of Bands is a sign of consolidation and is known as the Bollinger band squeeze.
When the Bollinger Bands display narrow standard deviation it is usually a time of consolidation, and it is a signal that there will be a price breakout and it shows people are adjusting their positions for a new move. Also, the longer the prices stay within the narrow bands the greater the chance of a breakou
The Bollinger Bulge
The widening of Bands is a sign of a breakout and is known as the Bulge.
Bollinger Bands that are far apart can serve as a signal that a trend reversal is approaching. In the example below, the bands get very wide as a result of high volatility on the down swing. The trend reverses as prices reach an extreme level according to statistics and the theory of normal distribution. The "bulge" predicts the change to downtrend.
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Indicators: Bollinger Bands ®
newdigital, 2013.08.06 14:04
Bollinger Bands Trend Reversals- Double Tops and Double Bottoms
A Forex trader should wait for the price to turn in the opposite direction after touching one of the bands before considering that a reversal is happening.
Even better one should see the price cross over the moving average.
Double Bottoms Trend Reversals
A double bottom is a buy setup/signal. It occurs when price action penetrates the lower bollinger band then rebounds forming the first low. then after a while another low is formed, and this time it is above the lower band.
The second low must not be lower than the first one and it important is that the second low does not touch or penetrate the lower band. This bullish Forex trading setup is confirmed when the price action moves and closes above the middle band (simple moving average).
Double Tops Trend Reversals
A double top is a sell setup/signal. It occurs when price action penetrates the upper bollinger band then rebounds down forming the first high. then after a while another high is formed, and this time it is below the upper band.
The second high must not be higher than the first one and it important is that the second high does not touch or penetrate the upper band. This bearish Forex trading setup is confirmed when the price action moves and closes below the middle band (simple moving average).
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Press review
newdigital, 2014.04.08 17:41
AUDUSD Technical Analysis (based on dailyfx article)
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Press review
newdigital, 2014.04.10 06:55
AUDUSD Technical Analysis 10.04.2014 morning (based on dailyfx article)
Trading the News - David Song in FXCM Expo 2011
Major economic events and fundamental developments are monitored by currency traders as it reflects the strength of a country's economy. Trading the News is often difficult as it producers sharp movements in the exchange rate, but can be used to generate trading opportunities. David Song will go through a basic strategy that will provide tools to help manage the risk of loss, along with a few trading tips that can assist currency traders to avoid being on the wrong side of the market.
Forex News - How to Trade News Announcements
"Use the Forex News"
One of the reasons so many forex traders come to the Forex market is because of the potential to make fast money. With huge amounts of leverage, and extremely volatile price movements, many traders look to focus on trading forex news since this can produce some of the fastest movements that the forex market might see.
Unfortunately, a lot of these types of traders will fail. Forex news can be notoriously difficult to trade as price movements can be so wild and volatile. Not only can these movements be unpredictable, but forex traders will often employ sloppy risk management and end up turning a short-term trade into a long-term problem.
There has to be a better way to do this.
Some traders choose to just avoid trading forex news, or those trading longer-term strategies often try to 'trade around them.' But there are a few different ways to try to "use the forex news".
For one, since these price movements can be so wild and volatile, it may offer longer-term forex traders the opportunity to get a better entry price than they would have initially anticipated.
Let's say that the EURUSD is trading at 1.3000, and a trader wants to go long with a 100 pip stop and a 300 pip profit target; but NFP is 30 minutes away and our traders doesn't want to take the risk of losing 100 pips so shortly after placing a trade designed to be open for a few days. So our trader waits...
Once NFP comes out, the trader sees price hurry down to 1.2950 before finding support shortly after the data was announced. Our trader can then buy, keeping their stop at 1.2900, and now can look for a 350 pip profit target. Their original risk-reward was going to be 1-to-3. Now, it can be 1-to-7, and they were able to get long the EURUSD at a much better price.
The other way to use the forex news is to trade the volatility that can come from news announcements. This involves placing an entry order to go long above resistance, and an entry order to go short below support. This way, if the volatility from the news release creates a price movement that could go on for days, forex traders could potentially enter at the early portion of the move as prices initially move on to make new highs or lows.
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Press review
newdigital, 2014.04.11 07:38
2014-04-10 22:45 GMT (or 00:45 MQ MT5 time) | [NZD - Food Price Index (FPI)]
if actual > forecast/actual = good for currency (for NZD in our case)
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New Zealand March Food Prices Dip 0.3%
Food prices in New Zealand eased 0.3 percent on month in March, Statistics New Zealand said on Friday.
That follows the 1.0 percent decline in February and the 1.2 percent gain in January.
On a yearly basis, food prices climbed 1.2 percent after adding 0.2 percent in February and 0.9 percent in January.
The 1.6 percent fall for grocery food was influenced by price falls across most of the subgroups.
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NZD/USD Forecast April 11, 2014, Technical Analysis
The NZD/USD pair fell after initially trying to rally during the session, showing that perhaps we are going to pull back slightly. The area between here and the 0.85 level should offer plenty of support, and as a result we are willing to buy a supportive candle between the two levels. We believe that a supportive daily candle would be reason enough to serve buying as is market would be going higher eventually as the upward momentum is ready to continue. We ultimately believe that the 0.90 level is the target, and that the New Zealand dollar will eventually head to that area.
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NZD/USD Fundamental Analysis April 14, 2014 ForecastThe NZD/USD fell to trade at 0.8642 on more lackluster Chinese economic data. Data this morning showed that Chinese inflation eased to 2.4% and the producer’s price index also printed lower than expected. Last month the Reserve Bank embarked on a tightening cycle, lifting interest rates 25 basis points to 2.75 percent as it tries to stem inflationary pressure in the economy. Food prices make up almost 19 percent of the consumer price index, the inflation measure used by the central bank. First-quarter CPI is due for release next week.
REINZ, the most up to date source of real estate data in New Zealand, announced today that there were 7,315 dwelling sales in the month of March, down 10.0% on March last year, but up 19.4% compared to February. The national median price reached a new record high of $440,000, which was an increase of $44,000 compared to March 2013, and an increase of $25,000 from February. Auckland and Canterbury/Westland both recorded new high median prices of $637,000 and $401,000, respectively.
The food price index fell 0.3 percent in March following a 1 percent fall in February, according to Statistics New Zealand. Food prices rose 1.2 percent on an annual basis, the first time all five components of the index increased since September 2011.
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Press review
newdigital, 2014.04.12 18:28
Nikkei forecast for the week of April 14, 2014, Technical AnalysisThe Nikkei as you can see fell during the totality of the week, closing below the ¥14,000 level. However, there is a significant amount of support below this level as well, and therefore we are not quite ready to start selling. This area could produce a supportive candle, and we would be willing to take a supportive candle on either the daily or weekly chart, as we believe ultimately this market will test the ¥16,000 level yet again as the uptrend should continue. Selling is not an option at this moment.