Forex Trading News & Analysis - DailyFX

All Eyes on Greece Amid Hopes for Last-Minute Funding Deal

sepo — Mon, 22 Jun 2015 12:02:22 GMT

Talking Points:

Yen Drops, Aussie Dollar Higher as Greece Deal Hopes Boost Risk Appetite
All Eyes on Brussels as Eurozone Officials Meet for Last-Ditch Deal-Making
See Economic Releases Directly on Your Charts with the DailyFX News App

Tentative signs of progress toward an accord between Greece and its creditors fueled risk appetite at the start of the trading week. The Japanese Yen underperformed amid ebbing safe-haven demand while the sentiment-geared Australian Dollar pushed upward.

Athens submitted an updated set of proposed reforms to be carried out in exchange for unlocking the last tranche of funding in the country’s second bailout package, which is due to expire at the end of this month. The office of EU Commission President Jean-Claude Juncker called the overture “promising”, raising hopes that an 11th-hour compromise is taking shape.

All eyes now turn to a pair of emergency meetings in Brussels, the first among Eurozone finance ministers and the second among the currency bloc members’ heads of state. Traders await signs of a breakthrough paving the way for a deal or afinal breakdown without room to maneuver further.

Side-stepping “Grexit” is likely to boost the Euro and risk-geared FX (commodity currencies in particular) while weighing on the Yen and US Dollar. Needless to say, another disappointment stands to produce the opposite results.

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:00	NZD	Westpac Consumer Confidence (2Q)	113.0	-	117.4
22:45	NZD	Net Migration SA (MAY)	5140	-	4770
03:00	NZD	Credit Card Spending (MoM) (MAY)	1.9%	-	-0.4%
03:00	NZD	Credit Card Spending (YoY) (MAY)	7.1%	-	7.2%
05:00	JPY	Supermarket Sales (YoY) (MAY)	5.7%	-	6.4%
07:00	JPY	Convenience Store Sales (YoY) (MAY)	1.6%		4.0%

European Session

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
07:00	CHF	Money Supply M3 (YoY) (MAY)	1.5% (A)	1.5%	Low
10:30	EUR	Eurozone FinMins Hold Emergency Meeting	-	-	High
17:00	EUR	Eurozone Leaders Hold Emergency Meeting	-	-	High

Critical Levels

CCY	Supp 3	Supp 2	Supp 1	Pivot Point	Res 1	Res 2	Res 3
EURUSD	1.1135	1.1241	1.1297	1.1347	1.1403	1.1453	1.1559
GBPUSD	1.5750	1.5811	1.5847	1.5872	1.5908	1.5933	1.5994

--- Written by Ilya Spivak, Currency Strategist for DailyFX.su

Contact and follow Ilya on Twitter: @IlyaSpivak

Crude Oil Breaks 5-Month Trend Support, Hints Down Trend Returning

sepo — Mon, 22 Jun 2015 11:58:06 GMT

Talking Points:

US Dollar Marking Time After Pushing Through Range Floor
S&P 500 in Digestion Mode After Last Week’s Upside Break
Gold Stalls Above $1200/oz, Crude Oil Breaks Trend Support

US DOLLAR TECHNICAL ANALYSIS – Prices paused to consolidate after breaking range support following last week’s FOMC-inspired losses. Near-term support is at 11717, the 61.8% Fibonacci expansion, with a break below that on a daily closing basis exposing the 11634-40 zone (May 14 low, 76.4% level). Alternatively, a move above the 50% Fib at 11779 opens the door for a challenge of the 11834-41 area (horizontal pivot, 38.2% expansion).

** The Dow Jones FXCM US Dollar Index and the Mirror Trader USD basket are not the same product.

S&P 500 TECHNICAL ANALYSIS – Prices are in digestion mode after breaking down trend resistance set from mid-May last week. A break above the 2127.60-37.10 area (May 19, June 18 highs) exposes channel top resistance at 2153.80. Alternatively, a move back below trend line resistance-turned-support at 2101.90 targets the channel floor at 2084.00.

GOLD TECHNICAL ANALYSIS – Prices stalled after hitting a one-month high. A break below the 14.6% Fibonacci expansion at 1195.51 exposes the 23.6% level at 1189.24. Alternatively, a move above the 61.8% Fib retracement at 1205.69 targets the 76.4% threshold at 1215.86.

CRUDE OIL TECHNICAL ANALYSIS – Prices broke support guiding the recovery from mid-January, suggesting the longer-term down trend is resuming. From here, a break below the 38.2% Fibonacci retracement at 60.27 exposes the 50% level at 57.39. Alternatively, a move back above the trend line support-turned-resistance at 63.76 eyes the 23.6% Fib expansion at 66.69.

--- Written by Ilya Spivak, Currency Strategist for DailyFX.su

Contact and follow Ilya on Twitter: @IlyaSpivak

EUR/USD Set for Volatility as Greek Deadline Looms Large

sepo — Sun, 21 Jun 2015 22:30:16 GMT

Fundamental Forecast for Euro: Neutral

- FX markets have thus far seen very little day-to-day impact of the Greek negotiations.

- The initial reaction to the June FOMC statement was for a stronger EURUSD.

- Have a bullish (or bearish) bias on the Euro, but don’t know which pair to use? Use a Euro currency basket.

The Euro looks to close out June as the top overall performer among pairs covered by DailyFX Research after a mostly strong third week of the month. EURGBP dropped by -1.30% to £0.7148, resulting in the British Pound taking the crown of best performer in June from the Euro (EURGBP has depreciated by -0.33% overall in June). Elsewhere, EURJPY rallied by +0.21% to ¥139.28, and EURUSD gained +0.76% to $1.1352.

As was argued early last week, the day-to-day, interim headlines for Greece have not held major sway over price action. Instead, traders have thus far only given attention to a ‘final’ solution before heeding any semblance of care: a decision that results in the June 30 deadline for Greece to repay the IMF simply anothercheckpoint on the road to redemption for Greece by way of an expanded or new bailout program; or one that sees Greece enter default and lose full-fledged membership to the monetary union.

Neither bridge has been crossed yet, and therefore traders haven’t given Greece the time of day (besides the media, of course). As the June 30 deadline approaches, headlines are likely to ramp up in terms of sentiment, both positive and negative from both Greece and her creditors. Traders may want to pay more attention to Monday, when an emergency session will be held in Brussels to discuss the state of Greece’s finances.

Between the recent lack of movement on the dire headlines on Greece and the softer blush of optimism that the Federal Reserve boasted this week in its policy meeting, the upward move in EURUSD seems funky. Indeed, any upward thrust in EURUSD appears to be of the short covering variety: speculative net-short Euro positions shrunk from 138.0K contracts for the week ended June 9 to 89.4K contracts for the week ended June 16. This is the least short speculators have been since the week ended July 22, 2014 (88.8K contracts), when EURUSD was trading between $1.3466 and $1.3619.

Organically, for the Euro, not much good is brewing besides more short covering, leaving the 18-member currency (soon to be 17-member currency?) vulnerable to negative shocks out of Greece. The Citi Economic Surprise Index for the Euro-Zone, a broad gauge of economic data momentum, fell to -2.80 on June 19, down from +4.70 on June 12, and below the four-week average of -2.04. Similarly, the 5-year, 5-year inflation swaps eased to 1.783% on Friday from 1.800% a week earlier, reflecting the decline in the German 10-year bund yield: it traded at 0.752% on June 19, down from 0.834% on June 12, and down from its recent high of 0.981% on June 10.

As markets hone their focus in on Greece this week, beginning immediately with the emergency meeting on Monday to the June 30 deadline next Tuesday, traders at the minimum should expect volatility to appear more significantly in markets. It may be deemed best practice to reduce position size/lower leverage and review risk management principles in order to prevent a Greek tragedy from impacting trading capital too greatly. Likewise, any long-term solution to Greece’s June 30 IMF payment should ripple to markets beyond FX, putting a potential major event on the near-term horizon. –CV

USDollar Trend Retracement

sepo — Sun, 21 Jun 2015 22:27:33 GMT

Talking Points

The USDollar tests resistance at 11,792
Range support sits at 11,748
Bearish breakouts begin at 11,726

USDollar 30Minute Chart

(Created using Trading View Charts: Click on the chart below to zoom in; after zooming in, press the play button towards the right to set the market in motion)

The USDollar has started today’s trading testing resistance and trading back inside of its trading range. Today’s range begins at the R3 Camarilla pivot point found at 11,792. If price continues to trade under resistance, this morning’s move could be taken as a retracement against the USDollar's primary trend. A continued decline from this point would open the Index to test values of support which include the S3 support pivot found at 11,748. A further price decline to the S4 pivot would have larger bearish implications for the USDollar, as the index potentially would close this week’s trading printing a fresh lower low.

Alternatively, in the event of a bullish reversal, breakout traders will focus on the R4 pivot at 11,813. A move beyond this point would be significant and considered a counter trend move. It should be noted that price has not closed above a daily R4 pivot in the last 8 trading sessions. In this scenario, trend traders should consider adjusting their trading accordingly going into the weekly close.

Using Camarilla pivots is just one way to approach day trading. To help you get started in your trading pursuit, DailyFX hosts a variety of day trading webinars. To learn more and register for future events, see the webinar calendar listed.

---Written by Walker England, Trading Instructor

To contact Walker, email wengland@fxcm.com.

Contact and Follow Walker on Twitter @WEnglandFX.

How Using FX Sentiment Can Boost Your Trend Trading Strategy

sepo — Sun, 21 Jun 2015 22:25:16 GMT

Talking Points:

Identifying a Trend

Crowd Behavior

Watching the Crowd Turn

Identifying a Trend

There are multiple ways to identify a trend. The simplest, and many times most effective manner is to utilize a moving average, which is often the closing price of ‘n’ periods summed up and divided by ‘n’. The most common moving average is the 200 day Moving average encompassing roughly a year of price data.

Click on Chart For Detailed Levels and Sentiment Information on GBPUSD

There are other ways to effectively identify a trend. One historically popular method is the Ichimoku Cloud,where the cloud can act as support in an uptrend or resistance in a downtrend. Another simple tool is to look at historical pivots direction. If pivot points are moving higher week over week or day over day, then the average of the high +low + close of that trend is moving higher and should not be fought until the market as a whole begins to reverse at which point you can then begin following but it’s likely best not to lead.

Crowd Behavior

Sentiment is a fancy word for crowd behavior. It is easy to see that crowd belief often creates its own momentum. If you’ve heard of the term “safety in numbers”, then you understand the concept that the more that believe the concept, the easier it is for new people to believe the same concept. On an individual basis though, people tend to think they are smarter than the crowd as a whole and know things that the crowd doesn’t.

(Screen capture from DailyFXPlus.com)

While this can be true in certain instances from a trading perspective we are going to shine a different light on the subject crowd behavior. Surprisingly, as shown by the speculative sentiment Index, the trading crowd tends to prefer fighting the trend. If the trend is made up of larger and more aggressive number of buyersthan sellers, then it is odd at first glance to see how SSI works but that is exactly what we’re going to discuss.

It may be helpful to think of two crowds that are playing at the market at any one time. First, you have the institutions and the large money that are well-informed and with deep enough pockets to move the market and understand the market very well. Second, you have the retail crowd that is hoping for the big score yet have shallow pockets and is often trying to test a turn or lead the market in hopes of doubling or tripling their money. Sentiment reading can be found in DailyFX Plus. From a sentiment perspective, we will focus on joining the institutions and fading or trading against the retail crowd that are often wrong on big trends.

To see what the big players are doing like hedge funds and banks, one can look to the commitment of traders report from the CFTC. You can read here if you’re not familiar with how to use that report. To see what the second group is doing, we can look at the speculative sentiment Index published twice a day on daily FX plus and available live via daily FX on-demand.

Watching the Crowd Turn

We discussed how the crowd is split into two groups. First, the pros with deep pockets and second, the retail crowd with shallow pockets hoping to score big. The ideal set up for a trend follower is to find a clearly identified trend with technical indicators that the retail crowd is fighting and continuing to press that trend confidently until the retail crowd starts to follow it upon which we can use trailing stops or look for a reversal.

Sentiment Bars Show Retail Traders Predictably Bad at Trading Cable Direction

(Screen capture from DailyFXPlus.com)

Multiple trends in the FX market have shown a polar opposite effect of trend direction and crowd sentiment. In other words when the trend is lower, the retail crowd is buying and when the trend is higher, the retail crowd is selling. As you now know, the reason the trend is lower or higher is because of the big and smart money that were hoping to follow while avoiding the retail reversal mindset trend.

Summary

A clearly identified trend on the chart that the crowd is fighting has historically been an ideal scenario for trend continuation. As long as the retail crowd is fighting the trend and the technical signals hold for trend continuation, trend continuation should be favored. Only when trend indicators like a moving average start to change direction or price aggressively moves against the trend indicator and the retail crowd flips by fighting the new trend should a position adjustment be sought.

Happy trading!

---Written by Tyler Yell, Trading Instructor

To contact Tyler, email tyell@dailyfx.com

Tyler is available on Twitter @ForexYell

EURUSD Attempts a Fresh Daily Breakout

sepo — Sun, 21 Jun 2015 22:22:35 GMT

Talking Points

EURUSD attempts to breakout over 1.1420
Range resistance sits at 1.1377
A decline exposes support at 1.1252

EURUSD 30Minute Chart

(Created using Trading View Charts: Click on the chart below to zoom in; after zooming in, press the play button towards the right to set the market in motion )

The EURUSD has attempted to breakout higher this morning, testing resistance found at today’s R4 Camarilla pivot at 1.1420. Price has now attempted to breakout a total of 3 times, and has so far failed to break above resistance in each approach. In the event that the EURUSD does break higher, the pair has the potential to close higher for the third time in four trading sessions this week. Traders following the trend can take a potential breakout as a bullish continuation signal, and look for opportunities to position themselves accordingly.

In the event that prices fall, and the EURUSD trades back below its R3 pivot at 1.1377, this would temporarily stall any bullish scenario. A move to this point would open the market up to a potential reversal for the pair. This would include a move through today’s 84 pip pivot range towards the S3 pivot found at 1.1293. A broader reversal would be extend through the S4 pivot found at 1.1252. A move to this point would have further bearish implications, as prices would be trading back below the weekly open.

---Written by Walker England, Trading Instructor

To contact Walker, email wengland@fxcm.com.

Contact and Follow Walker on Twitter @WEnglandFX.

EUR/USD Wave Structure Points Towards Higher Levels

sepo — Sun, 21 Jun 2015 22:18:22 GMT

Talking Points

-Possible triangle is ending above 1.1150

-Possible expanded flat the works higher, then eventually lower to 1.09-1.10

-Both scenarios offer a trading opportunity using 1.1150 as risk

Fears of a Grexit is growing as the politicians continue their hardline negotiations. On top of that, we have the FOMC rate decision releasing in the news in the next 24 hours. Perhaps Fed Chairwoman Janet Yellen can can some fuel to the EURUSD smoldering fire. Between these two events, there is plenty of event risk for the EURUSD over the next few days.

Let’s walk through a couple of higher probability possibilities using Elliott Wave analysis. For those unfamiliar with Elliott Wave Theory, it is a form of technical analysis that assesses the characteristics of the waves without regard to the corresponding news. We will highlight two possible scenarios below. These are not the only two scenarios, but what we believe to be the higher probability scenarios.

Bullish Triangle

The first scenario to unpack is that the EURUSD is placing the finishing touches on a triangle masterpiece. This means the triangle is the ‘B’ wave of an A-B-C upward movement. If this is correct, then a ‘C’ wave would be a breakout to higher levels that begins from nearby levels.

(Click on the chart below to zoom in; after zooming in, press the play button towards the right to set the market in motion)

Created using TradingView Charts

The trading plan for the triangle view is quite simple. 1.1150 must hold under the current drawing and if correct, prices may reach 1.17. If 1.1150 breaks, then we’ll need to reassess if we are only in the red ‘c’ leg of the triangle, or if option #2 below is elevated.

Expanded Flat

The second higher probability scenario we’re watching is a smaller degree expanded flat correction that eventually works down towards 1.09-1.10.

Though this is a downward correction, wave relationships suggest prices could falsely break above 1.1375, but would likely hold below 1.1500. In essence, 1.1375-1.1500 becomes a false breakout zone. Under this scenario, an ensuing sell off drops to 1.09-1.10, but holds above 1.0815. Against the backdrop of a medium term up trend, 1.09-1.10 becomes a higher probability long entry.

So under this scenario, we would see a false breakout higher, followed by a false breakout lower. The market, on many occasions, will confuse the most amount of people most of the time and this pattern helps that cause.

In the market shot above, this alternative is noted with “Alt:” labels in the chart.

The image below shows an idealized pattern of the expanded flat and our current location.

Combining the Two Possibilities

One of the biggest challenges of the wave picture on the EURUSD is that until 1.1050 or 1.1500 is broken, the top two interpretations discussed above are still alive. Meaning, Elliott Wave uses deductive reasoning and that anything possible, though of low probability, is still possible. Once a wave count can be eliminated, then the picture cleans up.

However, with that being the case, we do have an interesting opportunity.

For example, it is possible under both interpretations above that prices could move to 1.13-1.15 with interpretations remain valid. Therefore, with a fairly small risk on the trade, one could consider a long position and a stop loss just below 1.1150.

Keep in mind risks associated with trading through news and the FOMC decision on Wednesday if you choose to do so. First, liquidity thins out so spreads will widen. It is imperative that you have enough margin in the account to weather the widening of spreads.

Secondly, as a result of thin liquidity, prices may jump and gap. That opens the door to getting slipped on stop losses.

As a result, any trading through news should be handled with very conservative or no leverage on the trades.

Other wave counts:

EURUSD Finishes Wave X (Daily Chart)

How Much Juice is Left in USDJPY Bulls? (Daily Chart)

EUR/AUD Suggests EUR Out Performance (4 Hour Chart)

Most Retail Traders are Positioned for a Kiwi Bounce (2 Hour Chart)

Make sure to join me Monday mornings at 9:30a ET inside the DailyFX Plus Live Classroom for the US Opening Bell webinar [free registration]. In this webinar, we analyze the major FX pairs using Elliott Wave technical analysis.

-Written by Jeremy Wagner, Head Trading Instructor, DailyFX.su

Want to follow the Elliott Wave analysis on the EURUSD beyond the news event? You have the ability to copy my charts above so they appear on your desktop exactly as shown above. Email me at jwagner@dailyfx.com if you wish to receive instructions on how to do so. Feel free to comment on the chart with your views.

Follow me on Twitter at @JWagnerFXTrader .

EURUSD Technical Observations Indicate Potential for Bullish Outcome

sepo — Sun, 21 Jun 2015 22:13:56 GMT

Talking points:

EURUSD headed to 1.20?
GBPUSD crosses above 52 week average
USDJPY may have made an important top

EUR/USD

Weekly