Forex Weekly Outlook – August 2-6

1. US ISM Manufacturing PMI: Published on Monday at 14:00 GMT. Manufacturing in the US pushed the economy forward, being positive (above 50) in the past 11 months. But also here, a warning sign was seen last month, as this survey of 400 purchasing managers unexpectedly dropped to 56.2 points. Another drop is expected – to 54.3 points.
2. Ben Bernanke talks: Starts speaking in Charleston on Monday at 14:15 GMT. In a speech about the the challenges of the economy, the chairman of the Federal Reserve might release an updated opinion about the economy and about the interest rate. Any small hint may rock the markets.
3. Australian rate decision: Published on Tuesday at 4:30 GMT. If there were any forecasts for more rate hikes, they were erased as quarterly CPI, published last week, showed that inflation is very tame – no rate hike is necessary in Australia. So, Glenn Stevens is expected to leave the Cash Rate unchanged at 4.5%. The Aussie will rock by the wording of the accompanying rate statement.
4. US Personal Spending: Published on Tuesday at 12:30 GMT. Consumer spending could fall for the first time in 9 months. After it rose by only 0.2% last month, and the CB Consumer Confidence was weak, this important gauge will probably rise by only 0.1%, hurting the dollar.
5. US Pending Home Sales: Published on Tuesday at 14:00 GMT. The number of homes that were sold but are still awaiting the final transaction dropped by a whopping 30% last month, after a homebuyer tax credit expired. The housing sector is very vulnerable and still very dependent on government support. This time, a correction is expected – this should boost the dollar.
6. US ADP Non-Farm Employment Change: Published on Wednesday at 12:15 GMT. The importance of this report for the private sector rose in the past few months, as the decennial census caused big jumps in the Non-Farm Payrolls, and the focus was on the private sector. While this isn’t always a good indicator for the NFP, it always rocks the markets. Last month’s small and disappointing gain of 13K will probably be followed by a higher gain this time – 36K.
7. US ISM Non-Manufacturing PMI: Published on Wednesday at 14:00 GMT. Similar to the manufacturing PMI, also the services sector is already “over the hill”. Last month’s disappointing drop to 53.8 points is likely to be followed by another drop to 53.3 points, but the score is expected to be above 50 – still showing economic expansion.
8. New Zealand employment data: Published on Wednesday at 22:45 GMT. Employment figures always rock currencies. In New Zealand, the effect is stronger, as these numbers are released only once per quarter. The last release was superb – unemployment change jumped by 1%, and the unemployment rate made a steep drop from 7.1% to 6%, boosting both the kiwi and the Aussie. But this quarter won’t be that good – employment is expected to rise by only 0.5% and the unemployment rate is predicted to rise from 6% to 6.2% – still OK..
9. British rate decision: Published on Thursday at 11:00 GMT. There’s a chance of a rate hike in Britain. Mervyn King joined other economists by expressing concern about the rising inflation. Britain now enjoys a nice growth rate, and improving unemployment situation. One member wants a hike from 0.50% to 0.75%. Will the rest follow? Even if not, the accompanying MPC Rate Statement will definitely shake the Pound.
10. European rate decision: Published on Thursday at 11:45 GMT. In Europe, things aren’t so good. The unemployment rate is still very high, and while Germany is doing well, the rest of the continent is still struggling. Jean-Claude Trichet is expected to leave the European Minimum Bid Rate at 1%. His words regarding growth, employment and the unwinding debt crisis in the ECB Press Conference will rock the Euro.
11. US Unemployment Claims: Published on Thursday at 12:30 GMT. As the last hint before the Non-Farm Payrolls, jobless claims will porbably remain similar to last week’s number of 457K. This gauge remained in a narrow range between 440K to 480K in recent months. When it dropped to 429K three weeks ago, this was merely a wrong calculation. Only a big drop will boost the US dollar.
12. Canadian employment data: Published on Friday at 11:00 GMT. Contrary to its neighbor from the south, Canada’s job market is steaming hot. A huge gain of 93.2K was reported last month, far better than expected. Also the unemployment rate provided a very pleasant surprise, dropping below 8%. This time, a small gain in jobs is expected, and the unemployment rate is expected to remain unchanged.
13. US Non-Farm Payrolls: Published on Friday at 12:30 GMT. The monthly circus in forex trading saw a big hangover last month – a drop of 125K jobs. This followed a huge gain in the previous month – related to the census. A loss of 75,000 jobs is expected at the moment. The unemployment rate dropped to 9.5% – this good news is likely to be erased with a return to 9.6% this time. A special preview for this event will be posted later in the week.

D20P Forex Signal 30 JULY 2010 released 00.09 GMT

D20P SELL A GBP/USD 1.5596

take profit 1.5576

stoploss 1.5626

DAILY20PIP.COM ADVICE : SIDEWAY MARKET AHEAD

SIGNAL VALID FROM 5.00 GMT - 17.00 GMT

RESULT WIN

Eurozone economic confidence index exceeded forecasts for July

Eurozone economic confidence index (Euro-Zone Economic Confidence) amounted to 101.3 points in July compared with 99.0 points a month earlier, according to the European Commission. The value index has surpassed expectations of analysts, forecast increase to 99.1 points.

At the same time, an indicator of confidence in the business environment (Business Climate Indicator) for July rose to 0.40 points to 0.66 points for the prognosis of 0,39 points, said portal.

Eurozone consumer confidence indicator rose in July from -17 to -14 points. The value index corresponds to analysts.
Index of confidence in the industrial sector amounted to -4 points in July against -6 points in the previous month. Predicted improvement in the rate of -5 points.

The unemployment rate in Germany at the forecast level for July

Seasonally adjusted number of unemployed fell by 20,000 in July of this year, according to the Federal Bureau of Statistics of Germany. However analysts predicted decline of 18 000. The previous month the index fell by 20 000. It is worth noting that the number of unemployed people in Germany steadily declining since July 2009, notes the website about forex FxTeam.

Unemployment rate seasonally adjusted was 7.6% in July compared with 7.7% a month earlier. The value index corresponds to analysts' forecasts.

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D20P Forex Signal 30 JULY 2010 released 00.09 GMT

D20P SELL A GBP/USD 1.5596

take profit 1.5576

stoploss 1.5626

DAILY20PIP.COM ADVICE : SIDEWAY MARKET AHEAD

SIGNAL VALID FROM 5.00 GMT - 17.00 GMT

FOREX-A BASIC SYSTEM

Any system need to have a very good basic to stand on. Once the basic is sort out, then all the accessories can be add on. Just remember not to add too much to it. Today I am going to give a basic system. It consist of only 2 indicators. Being simple, it is able to generate good signal. Just remember to put SL properly.


Indicators:
1. LWMA 55
2. MACD standard setting

Time frame: 30m

Stop Loss : 35 pips

Take Profit : 35 pips or more.

Currencies : EurUsd, GbpUsd, EurJpy, GbpJpy

Trading System:
LWMA act as a thin trend line. If the price is above it, its uptrend. If the price is below it, its downtrend. So you buy or sell according to trend. Never reverse trade. MACD also shows the trend. If MACD is above 0, its uptrend and the other way around.

I have put 3 vertical lines in the chart where MACD cross 0. Once MACD cross 0, you should only trade according to trend. You entry should be on the LWMA 55 or close. At the moment MACD has cross 0 and is heading down. From now on only consider short position. Try to enter as close as possible to LWMA 55.

Caution has to be taken, even though MACD has cross the trend is not yet full down actually. There is another indicator that I use to show trend and its not full down yet. Unfortunately that indicator is no where in the chart because it is not on GbpUsd chart. It is somewhere else.

Now you wonder why its not there. The truth is most people fail because what they are looking for is not there. That is what I meant with looking at the wrong direction. The trend indicator for GbpUsd is not on GbpUsd chart. Weird isnt it?

You can take this basic system and try to add on what ever system you have. Hopefully it is useful. Good Luck

FOREX IS AN ART

When you say trading, people will say trading is an art. Look at all the books that has been published on the subject. They will say the art of trading forex.

In that sense, we must take forex as an art and not a science. I know, some people may not agree with me and all the post that is in this blog. I don't blame them coz I was actually in the same place as they were when I started trading. Trying to find the answer to forex using every logical explanation.

This is the answer that you have been looking for. I am going to give it to you straight away. Let see if your mind can accept it.

Forex is not a science. There is not a single mathematical equation that can explain it. Do not forecast, do not predict, do not anticipate. All you need to do to make profit is to follow the market. If the price is going up, you buy. If the price is going down, u sell. You may not win all the time but if you follow the market, in the end you will be in profit. Make profit and build up your capital up to a point where a few winning trades per month will bring huge profit.

Can you accept it? Can you mind admit it? Is your logical mind challenged? Do you feel helpless? Welcome to the real world :)
courtesy:http://forex-king.blogspot.com/

Forex Market Overview

Introduction

The following facts and figures relate to the foreign exchange market. Much of the information is drawn from the 2007 Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2007. 54 central banks and monetary authorities participated in the survey, collecting information from approximately 1280 market participants.

Excerpt from the BIS:

"The 2007 survey shows an unprecedented rise in activity in traditional foreign exchange markets compared to 2004. Average daily turnover rose to $3.2 trillion in April 2007, an increase of 71% at current exchange rates and 65% at constant exchange rates...Against the background of low levels of financial market volatility and risk aversion, market participants point to a significant expansion in the activity of investor groups including hedge funds, which was partly facilitated by substantial growth in the use of prime brokerage, and retail investors...A marked increase in the levels of technical trading – most notably algorithmic trading – is also likely to have boosted turnover in the spot market...Transactions between reporting dealers and non-reporting financial institutions, such as hedge funds, mutual funds, pension funds and insurance companies, more than doubled between April 2004 and April 2007 and contributed more than half of the increase in aggregate turnover." - BIS

Structure

• Decentralised 'interbank' market
• Main participants: Central Banks, commercial and investment banks, hedge funds, corporations & private speculators
• The free-floating currency system arose from the collapse of the Bretton Woods agreement in 1971
• Online trading began in the mid to late 1990's

Source: BIS Triennial Survey 2007

Trading Hours

• 24 hour market
• Sunday 5pm EST through Friday 4pm EST.
• Trading begins in the Asia-Pacific region followed by the Middle East, Europe, and America

Size

• One of the largest financial markets in the world
• $3.2 trillion average daily turnover, equivalent to:
  
• More than 10 times the average daily turnover of global equity markets¹
• More than 35 times the average daily turnover of the NYSE²
• Nearly $500 a day for every man, woman, and child on earth³
• An annual turnover more than 10 times world GDP⁴
  
  
• The spot market accounts for just under one-third of daily turnover

1. About $280 billion - World Federation of Exchanges aggregate 2006
2. About $87 billion - World Federation of Exchanges 2006
3. Based on world population of 6.6 billion - US Census Bureau
4. About $48 trillion - World Bank 2006.

Source: BIS Triennial Survey 2007

Major Markets

• The US & UK markets account for just over 50% of turnover
• Major markets: London, New York, Tokyo
• Trading activity is heaviest when major markets overlap⁵
• Nearly two-thirds of NY activity occurs in the morning hours while European markets are open⁶

5. The Foreign Exchange Market in the United States - NY Federal Reserve
6. The Foreign Exchange Market in the United States - NY Federal Reserve

Average Daily Turnover by Geographic Location

Source: BIS Triennial Survey 2007

Concentration in the Banking Industry

• 12 banks account for 75% of turnover in the U.K.
• 10 banks account for 75% of turnover in the U.S.
• 3 banks account for 75% of turnover in Switzerland
• 9 banks account for 75% of turnover in Japan

Source: BIS Triennial Survey 2007

Technical Analysis

Commonly used technical indicators:

• Moving averages
• RSI
• Fibonacci retracements
• Stochastics
• MACD
• Momentum
• Bollinger bands
• Pivot point
• Elliott Wave

Currencies

• The US dollar is involved in over 80% of all foreign exchange transactions, equivalent to over US$2.7 trillion per day

Currency Codes

• USD = US Dollar
• EUR = Euro
• JPY = Japanese Yen
• GBP = British Pound
• CHF = Swiss Franc
• CAD = Canadian Dollar (Sometimes referred to as the "Loonie")
• AUD = Australian Dollar
• NZD = New Zealand Dollar

Average Daily Turnover by Currency

N.B. Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%.

Source: BIS Triennial Survey 2007

Currency Pairs

• Majors: EUR/USD (Euro-Dollar), USD/JPY, GBP/USD - (commonly referred to as the "Cable"), USD/CHF
• Dollar bloc: USD/CAD, AUD/USD, NZD/USD - (commonly referred to as the "Kiwi")
• Major crosses: EUR/JPY, EUR/GBP, EUR/CHF

Average Daily Turnover by Currency Pair

Source: BIS Triennial Survey 2007

Related Links

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