Something Interesting in Financial Video April 2014 - page 7

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Sergey Golubev
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newdigital, 2014.04.19 17:12

USD/JPY forecast for the week of April 21, 2014, Technical Analysis

The USD/JPY pair rose during the course of the week, continuing the consolidation that we’ve seen for some time now. Because of this, we feel that this market should continue to grind away sideways but we are heading towards a significant uptrend line that could get the market to go higher quickly. We believe that the 103 level is going to be resistance though, but if we can get above there we should go to the 105 level. Of all the 105 level, we believe that this market then heads to the 110 level.





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newdigital, 2014.04.19 17:13

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.





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newdigital, 2014.04.19 17:14

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.





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newdigital, 2014.04.19 17:16

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.





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newdigital, 2014.04.19 17:17

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.




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How To Use The RSI Indicator

Learn the basics of the Relative Strength Index in just about 6 minutes!

This RSI indicator is a widely-used momentum oscillator that measures the strength and speed of a market's price movement by comparing the current price of the security against its past performance. The RSI can be used to identify overbought and oversold areas, support and resistance levels, and potential entry and exit signals.

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Indicators: Relative Strength Index (RSI)

newdigital, 2013.08.07 12:55

RSI Indicator Forex Trading Strategy

Relative Strength Index or RSI is the most popular indicator used in Forex trading. It is an oscillator indicator which oscillates between 0 -100. The RSI is a trend following indicator. It indicates the strength of the trend, values above 50 indicate a bullish trend while values below 50 indicate bearish Forex trend.

The RSI measures momentum of a currency.

The centerline for the RSI is 50,crossover of the centerline indicate shifts from bullish to bearish and vice versa.

Above 50, the buyers have greater momentum than the sellers and price of a currency will keep going up as long as RSI stays above 50.

Below 50, the sellers have greater momentum than the buyers and price of a currency will keep going downwards as long as RSI stays below 50.



In the example above, when the RSI is below 50, the price kept moving in a downward trend. The price continues to move down as long as RSI was below 50. When the RSI moved above 50 it showed that the momentum had changed from sell to buy and that the downtrend had ended. 

When the RSI moved to above 50 the price started to move upwards and the trend changed from bearish to bullish. The price continued to move upwards and the RSI remained above 50 afterwards.

From the example above, when the trend was bullish sometimes the RSI would turn downwards but it would not go below 50, this shows that these temporary moves are just retracements because during all these time the price trend was generally upwards. As long as RSI does not move to below 50 the trend remains intact. This is the reason the 50 mark is used to demarcate the signal between bullish and bearish. 

The RSI uses 14 day period as the default RSI period, this is the period recommended by J Welles Wilders when he introduced the RSI. Other common periods used by forex trader is the 9 and 25 day moving average.

The RSI period used depends on the time frame you are using, if you are using day time frame the RSI 14 will represent 14 days, while if you use 1 hour the RSI 14 will represent 14 hours. For our example we shall use 14 day moving average, but for your trading you can substitute the day period with the time frame you are trading.

To Calculate RSI:
  • The number of days that a currency is up is compared to the number of days that the currency is down in a given time period.
  • The numerator in the basic formula is an average of all the sessions that finished with an upward price change.
  • The denominator is an average of all the down closes for that period.
  • The average for the down days are calculated as absolute numbers.
  • The Initial RS is then turned into an oscillator.
Sometimes very large up or down movement in price in a single price period may skew the calculation of the average and produce a false signal in the form of a spike.

Center-line: The center-line for RSI is 50. A value above 50 implies that a currency is in a bullish phase as average gains are greater than average losses. Values below 50 indicate a bearish phase.

Overbought and Oversold Levels:
Wilder set the levels at which currencies are overextended at 70 and 30

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Indicators: Relative Strength Index (RSI)

newdigital, 2013.08.07 13:03

RSI Indicator Overbought and Oversold Levels

RSI values of above 70 are considered to be overbought; traders consider points above the 70 level as market tops and good points for taking profits.

RSI values of below 30 are considered to be oversold; traders consider points below the 30 level as market bottoms and good points for taking profits. 

These levels should be confirmed by center line crossovers. If these regions give a market top or bottom, this signal should be confirmed with a center line crossover. This is because these levels are prone to giving whipsaws in the market.

In the example below, when the RSI hit 70, it showed that the currency was overbought, and this could be considered a signal that the currency could reverse. 

The currency then reversed after a short while and started to move downwards, until it got to the oversold levels. This was considered a market bottom after which the currency started to move upwards again.


Over extended RSI overbought and oversold

When the market is trending strongly upwards or downwards the RSI will stay at these levels for a long time. When this happens these regions cannot be used market tops and bottoms because the RSI will stay at these levels for an extended period of time. This is the reason why we say that RSI overbought and oversold regions are prone to whipsaws and it is best to confirm the signals using center-line crossovers.



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Indicators: Relative Strength Index (RSI)

newdigital, 2013.08.07 14:49

RSI Swing Failure Forex Trading Setup

RSI swing failure can be a very accurate method for trading short term currency moves. It can also be used for trading long term trends but it is best suited for short term trading especially for those traders that trade reversals.

The RSI failure swing is a confirmation of a pending market reversal. This setups a leading breakout signal, it warn that a support or resistance level in the market is going to be penetrated. This setup should occur at values above 70 for an upward trend and values below 30 in a downward trend.

RSI Failure Swing in an upward trend

If the RSI hits 79 then pulls back to 72, then rises to 76 and finally drops to below 72 this is considered a failure swing. Since the 72 level is an RSI support level and it has been penetrated it means that price will and follow and it will penetrate its support level.

In the example below, the RSI hits 73 then pulls back to 56, this is a support level. The RSI then rises to 68 and then drops to below 56, thus breaking the support level. The price then follows afterwards breaking it support level. The RSI swing failure is a leading signal and it is confirmed when price also breaks it support level. Some forex traders open trades once the swing failure is complete while others wait for price confirmation, either way it is for a trader to decide what work best for them.


RSI  Failure Swing in a downward trend

If the RSI hits 20 then pulls back to 28, then falls to 24 and finally penetrates above 28, this is considered a failure swing. Since the 28 level is an RSI resistance level and it has been penetrated it means that price will and follow and it will penetrate its resistance level.




Sergey Golubev
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Candlestick Indicators in Price Action Trading

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The basics of reading candles and charts:

Since candlestick and bar charts are the fundamental interface of the price action trader, the most basic unit is the candle or bar itself. Candles sum up the price action over a set period of time: on a 5 minute chart, each candle represents 5 minutes of price behavior, whereas on a daily chart, only one candle is produced per day. The body of the candle constitutes the range between the open price and close price, whereas the wicks or shadows of the candle indicate the high and low over that period of trading. Various color schemes are used to determine whether the price movement represented by the candle is bullish (increasing in price) or bearish (decreasing in price); bullish candles are usually white, blue, or green, whereas bearish candles are usually black or red.

Longer candle bodies demonstrate strong momentum and decisive market behavior in the movement from open to close; longer shadows, however, demonstrate increased volatility, since some prices were reached during the time period but ultimately excluded from the range between open and close.

Smaller candles can indicate the market's indecision, disinterest, or a balance between bullish and bearish forces

Similarly, a candle that is almost all wick implies that, regardless of the range of prices occurring in the time period, the open and close were extremely close; these candles are referred to by the Japanese term, doji

A doji or small candle with a very long wick in one direction is referred to as a pin bar, which is often interpreted as a sign of potential trend reversal

By contrast, a marabuzo candle has a large body, and almost no wick, implying that price action has been more definitive

There are two important, rudimentary patterns that play out over at least 2 candlesticks:

An outside bar is a bar with a higher high and a lower low than the previous candlestick, often with a body that also encompasses the price range of the previous bar's body; an alternative variation is the engulfing bar, which simply has a higher open and a higher close, regardless of the candle's shadows or wicks.

By contrast, an inside bar is a bar, or series of bars, with a high and low encompassed by the preceding candle; in this case, the variation is the harami, a bar or series of bars with an open and close within the range of the bar preceding it.



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newdigital, 2014.04.26 09:37

Strategy Video: Ranking the Best Breakout Potential

  • There are many breakout-based setups in the FX market ranging to imminent to stubborn
  • Breakouts of technical necessity are likely to cool quickly while the stubborn could develop serious trend
  • We look at the opportunity in GBPUSD, USDCAD, NZDUSD, the Yen crosses and EURUSD congestion

We have watched longingly this past week as a range of high-profile technical patterns further shaped their breakout potential without making the final move. Between markets running out of room, a docket full of major event risk and over-extended fundamental themes nearing a flip; the risk / potential of finally realizing these trades looks to be at hand. In the weekend Strategy Video, we look at the scope of breakout opportunity - from an imminent GBPUSD move to more resilient EURUSD pattern - and how these setups should be approached.




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newdigital, 2014.04.26 11:04

Nikkei forecast for the week of April 28, 2014, Technical Analysis

The Nikkei did very little over the course of the week, as we continue to hang about the ¥14,500 level. The market should be relatively well supported from the previous week’s gains though, so are looking for move above the ¥15,000 level in order to start buying. At that point time we would be convinced of the validity of the continued uptrend, inserting four ¥16,400 or so. Selling is not an option at this point, as we feel that there are far too many supportive areas between here and ¥13,000 to be bothered doing so.




Sergey Golubev
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newdigital, 2014.04.26 11:43

DAX forecast for the week of April 28, 2014, Technical Analysis

The DAX attempted to rally during the week, but found too much in the way of resistance at the 9700 level to continue. With this, we pulled back enough to form a shooting star, which of course is a bearish sign. This sign isn’t one we are willing to take as a selling opportunity, but rather a chance to buy at lower levels in the meantime. We are looking for supportive candles below, and then will be willing to get long at that point as this market has been trending higher for some time now.





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