FXstreet.com Live Sessions Archives

FXCM Live Market Analysis

Expert: Richard Lee, Currency Analyst of FXCM
Start: March 31, 2006 - 14:00GMT 9EST
End: approx. 15:00GMT 10EST

Topics:

• Do not miss your opportunity to be updated in your trading needs this week.
• Richard Lee brings his view point of the forex market for coming week.
• Discuss market reaction to news.
• Enjoy his currency pairs predictions.
• Must have FXtrading information for a succesful trading week

Who is Richard Lee?

Richard Lee is a Currency Strategist at Forex Capital Markets. Employing both fundamental models and technical analysis applications, Richard contributes regularly to DailyFX, Yahoo Finance and Comtex. Prior to joining the research team, Richard was one of the senior instructors for the FX Power Course, teaching thousands of traders the basics of currency trading, technical analysis and how to implement trading strategies. He has extensive experience in trading the spot currency markets, options and futures. Richard previously traded FX, equity and equity derivatives for a private equity consortium prior to joining FXCM. He holds a BA in Economics as well as a BS in French with an emphasis in International Business from the Pennsylvania State University.

Speech Material:

NZDUSD
Technical Overextension Powers Kiwi
Coupled with a technical overextension, bidders returned for the New Zealand dollar buying up the underlying major right below the 0.6000 handle. The currency pair has lost over 700 pips over the course of the month as interest rate cut speculation mounted on a wider deficit and slower growth prospects. However, sparking a short term rally in the morning hours, business confidence was seen rising better than previous readings. According to the report by the National Bank of New Zealand, businesses may be looking forward to an upcoming interest rate cut in bolstering a near term pickup in consumer demand. The reduction in the overnight cash rate would additionally lower the cost of funds, potentially boosting the bottom line for most entities. As a result, carry trade initiation and speculative longs entered the session pushing the currency pair higher to post the highest percentage gain.

EURJPY
Next Up, Retail Sales
Higher new home sales data combined with technical buying propped up the underlying spot on the session. With interest rates a deep dynamic in the currency markets currently, it’s no surprise that the new home sales report lent to near term strength. February home sales rose 7.6 percent in the month. Adding to the buying momentum was speculation of a stay on rates when central bankers meet next week. Expected to keep rates at the current 5.5 percent, the housing sector data lends to the notion that consumer resurgence may be on the horizon. As a result, although potential remains tepid, inflationary pressures could build heading into the summer months. Next up for traders are the retail sales figures for the month of February. Rising 0.8 percent in the previous month, sales are expected to keep pace, although pulling back slightly. The positive figures should confirm the current sentiment that rates should be kept steady. However, any downside weakness could translate into a technical break below.

Rumorville
Stops on long initiatives are placed slightly below spot at 0.7135 as interest remain skeptical of potential upside as we enter the Asian session.

GBPJPY
Technical Bidding For Euro
Traders ignored the positive data and bid the euro higher in the overnight session. The move against the greenback was exacerbated by stop orders being tripped up over the 1.2100 figure, prompting any existing short to be squeezed. Currently riding higher at 1.2160, the pair looks to run into a barrier ahead of plenty of U.S. economic data tomorrow. Consumer confidence, factory orders and manufacturing data look to lend the dollar a hand after today’s debacle. The surveys look to offer plenty of event risk as they will be scrutinized for further in establishing directional bias interest rates. Expected to rise to a reading of 87, the consumer confidence figure will pose one of the biggest concerns with factory orders not to far behind. At this point, should economic data be negative for further hawkish actions, the 1.2200 handle poses as the near term barrier. Stops reside at the area making it opportune for volatility on the session.

Rumorville
Selling interest surrounds the 1.2155 and 1.2165 figures with tight stops behind at 1.2165/70. Further selling rests atop the 1.2200 resistance making it difficult for higher bidding above. Bids look for a bounce back to 1.2105 for reinitiation.

Title: Time and Trends: The State of the US Dollar

Expert:  Fernando Gonzalez, Forex Instructor of Online Trading Academy 
Start:    March 29, 2006 - 15:00GMT 10EST 
End:      approx. 16:00GMT 11EST 

• The current state of the US Dollar based upon its behavior across diverse Time Horizons of the US Dollar Index
• Establishing the connection between current short-term trends and larger designs
• What to expect out of the US Dollar’s value across the Short, Intermediate, and Long-Term time frames
• Classifying the trends into impulsive and corrective environment on the appropriate time-frames
• Measurement & explanation of Speed and Momentum as primary trend classification factors

Who is Fernando Gonzalez?

Fernando Gonzalez now enters his 10th year as an active trader, technical analyst and content contributor to a long list of popular financial media. In 1999 he authored the best-selling book Strategies for the Online Day Trader, one of only a handful of books on the topic that have ever reached the top 5 overall best sellers on Amazon.com. In 1998, he was one of the original founding members of the Online Trading Academy team, which has now grown to be the world’s leading trading school.

Don Wolanchuk, 17-time winner of the prized Timer Digest Timer of the Year award says of Fernando: “It is uncommon to find a highly trained and skilled trader that has the teaching skills to match… Fernando is among those few.” Best-selling author Toni Turner says: “If Fernando is speaking, I want to be there!”

Fernando continues today as a Newsletter author, content contributor and Instructor for Online Trading Academy, where he teaches his highly regarded “Broad Market Analysis” class.

Speech Material:

As a young boy my father stressed the importance of studying history in order to understand the present and prepare for the future. This piece of wisdom has never left me since then and as time passed, life has demonstrated its veracity in countless ways. Little did I know that it would also serve the foundation for this eternal state of discovery and understanding of the financial markets where I find myself today.

While there are many ways to discover and understand the markets using history, we have books, videos, pictures and all kinds of media, the key to the market we are seeking to understand lies on that market itself. The market itself is represented by its charts that reflect its behavior across different time horizons. With the exception of some very rare and significant changes in the underlying asset structure of the market, all other information is merely supplemental and momentary.

To use a major example, recall our individual reactions to the 9/11 event in 2001. As significant as it was to all of us and the financial markets at the time, it is just now merely a small portion of larger designs on the charts of the US currency, bond and equity markets. The same goes for nearly all other significant events of the past, including crashes, that have seemingly brought in the highest levels of systemic risk into our Financial Markets – they are all just pieces of an even larger, more important puzzle.

In today’s world of financial markets, we have the benefit of being able to study the history of financial instruments in incredible detail through our charts. Participants of the past could only dream about the extent of this voluminous information that is so easily available to us today. We must take advantage, as we have little or no excuse to claim a lesser understanding of money and all other financial instruments than our predecessors.

Since the US Dollar is the topic of our discussion today, our proper focus of information will be purely based upon the trends that prevail on the US Dollar Index. Join me in a session to gain a greater understanding of the state of the US Dollar today, regardless of trading style, on a discussion that extends a little further beyond “the trend is your friend.

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How to effectively combine mulitple timeframes to maximise your results

Expert:  Toni Juste, FX Advisor at FXstreet.com 
Start:    March 28, 2006 - 15:00GMT 10EST 
End:      approx. 16:00GMT 11EST 

   
Topics that will be covered for above session are: 

•    What is multiple timeframes combination?
•    What timeframes should I take into account?
•    Combining does not mean mixing (a common problem)
•    Trading examples

Who is Toni Juste?

Tony Juste serves as Foreign Exchange Advisor at FXstreet.com, where he contributes as both a technical commentator and advisor in currency-related topics. He is a graduate in business administration and has a specialization in technical analysis of the financial markets. Prior to joining the forex marketplace, he was involved with stocks trading, futures and options, and finally in 1999 he moved to the currency markets. In 2004, he also entered the CFD market.

Speech Material:

What is it?

It basically is a trading approach for those who like to finetune their entry/exit levels and that do not want to stick to only one timeframe. Some people consider this approach the optimal approach to trading any speculative market, because it tries to get the best possible point to trigger a trade and to bail out of it.

Multiple timeframe combination takes the best from  both the longer and shorter timeframe. It will prevent you from rushing in a trade. It will also help you not to get in too late. As for the closing level, it will provide you with hints that will alert you to bail out of the trade (almsot always) at better levels that you could’ve initially thought of.

Alright, I have told you about the basic (main) strengths of this kind of tradding approach, but what about the weaknesses? Well, in my opinion, ther are few weaknesses that would have to do with the approach itself or that could be linked to it. One could arguably say that combining 2 timeframes may make a trader to lose focus on the trade itself and feel unsure because at some point the shorter tiemframe (more noisy) is going to  go in longer timeframe’s opposite direction. Although that may be true from a theoretical point of view, the reality shows that when combining 2 timeframes, the shorter will not interfere in the global view once a trade is on, but rather it will help to spot a better closing level for that particular trade. And that I would say is the primary goal of combining timeframes: to explore the different opportunities the market offers us and lead us to trades we can rely on.

Then, why isn’t used by the majority of traders?   Well, I think that in a sense there is an important group of traders who are directly or indirectly using this trading approach. They won’t admit it, but I think that people trade using multiple timeframe combination more and more. People realize of the importance to draw out the “big picture”, at least an scenario to work out with, and then to have a timeframe of their choice to use with that scenario, to provide them with triggers to enter the trades. The key thing in working with multiple timeframes is to work a combination you feel comfortable with, not the one that “sounds better” or the one “my friend is using”. That won’t work. Every single trader is different (thankfully!) and therefore every trader will only feel comfortable with his/her own timeframe combination. Therefore, forget about works for others and just concentrate with what you feel really good with. As for me, I have to say that I feel very comfortable with 4hr/60m & 15m, which some people find (15m) too long as the short tiemframe. Usually people uses 10/5/3 minute timeframe as such; well, as you can see, you must stick to what makes you feel comfortable as otherwise you could end messed up.

When combining timeframes, you have to think that really nothing is changing in your trading. I mean, whatever the indicators you use, whatever the setup you are looking for prior to joining any trade, must remain the same. Your trading basics do not have to change. What you will be using is different timeframes to improve your entry and exit price, but that has no real effect on your decision-making process. It will, on the other hand, save you some pennies by filtering some troublesome//bad trades, and occasionally it will prevent you frome executing a good trade, but I think it is worth risking those missed-pips if we compare them to those that will be saved.

In the examples below you will see charts with my technical setups plotted in. They are for informational purposes only. Just think what it would look like with your OWN setup plotted in. The important thing here is that you get the grip on how to use the multiple timeframe trading approach.

What timeframes should I take into account?

As I said before “ use and combine the timeframes you feel more comfortable with”, but the truth is that some hints/tips can be provided to get a better handle to this multiple timeframe combination trading approach.

As a general rule, I would consider the “long timeframe “ anything between 1hr and daily and the “short tiemframe” anything between 15 and 5 minute. I will discard the 30-minute timeframe (that other authors love so much (sorry guys)) for practical purposes here. Also, and for the purposes of this session, we are going to focus on combinations that take intraday/short-term timeframes into account.

The basic rule would be (in text it may sound either a bit naive or nealry sky-rocket science, but I promise that you will see things clearer walking through the charts later) to set the scenario for any pair using, say, the 60-minute timeframe –assume long-, and to use the 10-minute chart to spot the exact entry price.  Therefore, you must assume the 10-minute chart will be pointing in the same direction than that of the 60-minute, giving the trade a bit of  “extra” momentum, finetuning the entry level and therefore offering a better risk/reward ratio.

The longer the timeframe used to set-up the trading scenario, the more reliable it is. BUT, also it will be more difficult to spot valid entry levels with the short timeframe, as daily momentum is very difficult to be meausred using 10-15 minute timeframes. 1 daily candle is 24 X 6 = 154 10-minute candles and 24 x 4 = 96 15-minute candles. That’s a big time gap, as you may well see a bullish/bearish flip intraday without that having any effect in the daily candle. The time gap is too wide here, and this combination (at least until you do not master this tradinga pporach) should definitely be discarded. Basically you should take into account timeframes that may have a better time gap, for example 60-minute & 10-minute or even the one that the people I know use most: 60-minute & 5 minute. 60-15 would be fine also, but in this case the time gap would be too narrow (just 4 candles) to consider it a true combination. For a 15-m short timeframe I’d rather use 4-hr charts or similar.

For the purposes of this session, I will stick to any possible combination that we can spot off the 60-minute chart being used as the “long timeframe”.

Combining does not mean mixing (a common problem)

Indeed. There is a common issue most novice traders face when they start working out this trading approach. At some point in time the short timeframe goes opposite to the long timeframe. They lose focus and just watch every single pip against them as the price they are paying for doing that “nonsense” of combining  timeframes. Then they just close the trade, reverse it (following the short timeframe signal), just to see, a few moments later, that the price resumes its previous direction. They then try to join the previous direction, now thinking it wasn’t that bad the plan they had earlier on, but they hesitate, not sure whether to jump in or not, maybe wait for a bit of a retracement ... and the price goes on and on .....

It may sound like a fairy tale, but this is the real story to many traders every single day. They do not work the multiple timeframe combination approach conciously, but I can assure you they “use” it, not to their benefit though. Here’s what happens to most of the novice traders at least once in their life:  the trader sets up a trade based on, say, 60 minute chart, and it goes long EUR/USD @ 1.2045. Then, seeing the trade is not going his direction or barely moving, decides to check other timeframes just to “see” if he has done anything wrong. He sees that 10-minute chart is showing a great opportunity for a short, and thinks that may be the cause for the price not to be moving in his direction. He closes and reverses the trade, and now he’s short @ 1.2039. Price keeps stagnated in a tight range, but our trader is some pips up. He checks the 60-minute setup and starts to think that setup is not worth using it anymore, and that he will change to that he found for the 10-minute, that looks promising and works well for choppy trading. 2 hours later the price is 1.2070. He gets stopped out, but decides not to go long at that price, better to wait for a retracement. The closing level pushes the pair up to 1.2115. I think that’s not too much of a fairy tale.

Do not mix timeframes, but rather combine them. Use the short to optimize entry & exit levels. Use the long to give you the trading direction. Practice and love it. It may well be worth the effort.

Trading Example

To show you how this works I think that the best is to show you an almost textbook case. This way you will be able to get the grip on what I just talked about. Take a look at charts 1&2. Chart 1 shows a recent EUR/USD 60 minute price action. Chart 2 shows the inside action on that price action off a 5 minute timeframe. Looking at the 60 minute chart, we clearly identify a downtrend channel and the price testing the upper line, in what it could turn out to be a great risk-to-reward short entry. But we do not know yet if the channel is going to hold or if the price is going to break it straight away. It is time to turn our eyes to the 5-minute chart, not before, not later, now. We divise the MACD about to trigger a bearish divergence, right in the moment the price is seriously testing the channel’s upper line. Once it is confirmed  (the divergence), we check what price is doing: it is ticking below the upper line. Time to join the short train. Thus we have maximized our expectation for this particular trade, and it would’ve been quite difficult to spot a better entry level.

What about the exit? Keep on reading the charts. As trade progresses and pair breaks the 1.2015 (tough static support/resistance) level, the MACD on the 5-minute chart starts to post a bullish divergence (can you spot it?). Well, there you have it. Once that bullish setup in the 5-minute chart is confirmed, trade is closed. Obviosuly this is a very basic scenario, but keep it simple all the time and you’ll see yourself being rewarded. So this simple exit strategy may work most of the time.

Sometimes the exit strategy (depending on the one you use) can take you out of the trade too early. Those who do not like thiss trading apporach will undoubtedly tell you this. This can also be improved but it would be the object of another session. But I can assure you that with this simple approach you will be making yourself fully available to around 80% of the trades.

Click each chart to enlarge:                      

Eliminating Five Basic Mistakes from Your Analysis

Expert:  Ian Copsey, Currency Strategist at FX-Strategy 
Start:    March 28, 2006 - 7:30GMT 02:30EST 
End:     approx. 8:30GMT 03:30EST 

   
Topics that will be covered for above session are: 

•    Even professionals do not apply logic to their trend lines this section will describe how to use them effectively
•    Double Tops and Bottoms learn when to trade them and when to wait
•    Heads and Shoulders avoid the common errors made
•     Momentum learn how overbought/oversold extremes can cause you pain if you don’t understand what they mean
•    Using signals unilaterally the pitfalls and dangers

Who is Ian Copsey?

an is one of the foremost FX technical analysts in the world, with over 20 years experience in financial markets. He began his career in Barclays Bank’s FX trading room in 1982 then moved to head their FX sales desk in Hong Kong in 1988 where he spent almost 5 years. It was in Hong Kong that he studied technical analysis and began to provide forecasts on a daily basis. In 1993 he moved to Tokyo with Dow Jones Telerate as a technical analysis specialist, later as regional manager of technical analysis products and continued to develop his unique blend of forecasting tools.
During his time in Tokyo he authored “Integrated Technical Analysis” (John Wiley & Sons, 1999) which covers his techniques in full. He is an expert indicator and system designer. Ian created the FXS group of indicators and writes the daily Pro Commentary for FX-Strategy utilizing a combination of Elliott Wave, cycles and momentum analysis to generate his daily commentary on the four major currencies, EURUSD, USDJPY, USDCHF and GBPUSD.

Speech material:

Download Ian.pps

Increasing your hit ratio by combining contrarian and trend following models

Expert:  Kristian Siggaard Jensen, FX market Strategist of Saxo Bank 
Start:    March 27, 2006 - 16:30GMT 11:30EST 
End:      approx. 17:30GMT 12:30EST 

   
Topics that will be covered for above session are: 

•    Using models to help remove the psychological aspect of trading.
•    Knowing when to switch systems to help grasp the trend
•    Stepping away from traditional indicators when trying to trade a contrarian view
•    Using true range to find more profitable breakout levels
•    Entering trades on retracement in strong trending currencies
•    Using both daily/hourly Fibonacci levels to help find stop levels
•    Applying risk management to a trade model.

Who is Kristian Siggaard Jensen?

Kristian Siggaard Jensen is currently working as a FX market strategist in Saxo Bank, bringing experience from Meridian Asset Management (subsidiary of Wachovia bank) as an analyst in the US. Before returning to Denmark I graduated from Old Dominion University in Norfolk, Va. with a BA in Economics and I am presently studying for the CFT certification.

Kristian Siggaard Jensen has spent considerable time the last 2 years in Saxo Bank, working on various technical trading models, to support our short to medium term views in various currency crosses

Kristian Siggaard Jensen thought process is in trying to create a model based approach, to the FX marketst, the market seems to move in shorter term cycles where some systems work well and others do not, depending on the trend and volatility. So to increase our hit ratio I have created 3 models, which concentrates on specific areas of the trend or lack thereof.

Speech Material:

The reason for creating these models was to help define the current market trend or lack off, to assist in getting an easy view of the FX market, while increasing the likelihood of a profitable trade following a short term market cycle. It also assist the trader’s psychological aspect of trading as the models is rigorously defined, which forces you to look at facts instead of market noise.

I have defined the short term FX cycle into 3 faces:

1 .trend model: A daily slope is used to catch the strength of the trend to help increase the probability of having a successful retracement entry point.

2. Contrarian model: When going against a trend, I have found that stepping away from traditional technical indicators that assist the trader in overbought/oversold scenario’s is needed because I have experienced to may short falls using these. Instead using a daily/weekly bar close along with decreasing volatility can be a good indicator to a possible reversal.

3. Breakout model: When currency pairs are trading sideways, with significant difference between daily short/longer term true ranges and there is no clear trend on hourly charts the likelihood of a successful breakout is greatly increased.

General note: while the strategies employed are rigorously defined, all decisions on whether to trade the signals and when to get out of the trade are discretionary based on market conditions and/or event risks. As a background note, an overlay of perceived market conditions based on further indicators and outright discretion is critical in determining whether to employ each system in any given case.

Derek Frey's FX Outlook

Expert:  Derek Frey, Head Trader of Odom & Frey Futures & Options 
Start:    March 27, 2006 - 15:00GMT 10EST 
End:      approx. 16:00GMT 11EST 

   
Topics that will be covered for above session are: 

•     Do not miss your opportunity to be updated in your trading needs this week.
•    Derek Frey brings his view point of the forex market for coming week.
•    Discuss market reaction to news.
•    Enjoy his currency pairs predictions.
•    Must have FXtrading information for a successful trading week

Who is Derek Frey?

Derek Frey has been a futures trader since 1989 and is Head Trader and partner at Odom & Frey Futures & Options, a firm that specializes in high probability, defined risk option spread trades for the futures markets. Derek is also co-author of O&F News & Views, a weekly newsletter that is published by several publications and over 20 financial websites including FXStreet.com

Speech Material:

EUR/USD: The Euro sold off as I expected this week though it did go further down and stayed there longer than I had expected. Look for a bounce this week with follow through into next week.

USD/CHF: Got stopped out of my short at 129.60 for roughly a 140 pip profit. I then went short late in the week as we spiked near 132. I am short from 131.83 now with a stop at 132.47. Target is the last weeks low or any move back to 129.

GBP/USD: After spending much of the week grinding lower the cable reversed and began to bounce. Look for this trend to continue this week. I expect a move back towards 176 near term and we may even break out above that this time.

USD/JPY: After a brief bounce early this week we could see this pair continue to trend lower. Support at 117 should be the next point of consolidation.

AUD/USD: Solid support lies just below 70 so look for that to hold at least in the near term. The recent breakdown could be the beginning of a real trend so keep alert. Any move below 6781 would signal a downside breakout.

USD/CAD: The Canadian has been on quite a run and is quickly edging up against resistance which lies at 1.1750. Any move above that would signal a breakout so here too stay alert. Derek Frey 03/24/2006

Stocks: Stocks continue to feel pressure from all sides. I do not expect 1300 on the S&P to hold. Look for a real slide in the indexes to begin this week. I know I have been saying this for weeks and sooner or later I will be right. That was not my plan though. We have been seeing bad signs for stocks for many weeks now and the market has been slow to react. Buy April S&P 1300 puts and hold.

Bonds: Bonds spent the week rallying mostly due to speculation that the Fed is nearing the end of it’s rate hiking cycle. Short term I see this recent rally as a selling opportunity for shorts. Any short trades put on near 112 should be fine with stops just above 113. Longer term however I expect mostly sideways range bound trading for much of this year unless Mr. Bernanke does something unexpected. Derek Frey 03/24/2006

Energies 

We finally began to see the effect of increasing demand and a couple of hiccups in the production of Crude by our friends in the Niger Delta and others abroad. As this past Wednesday’s DOE report was released, many of the Bulls could be heard in the background (and even a few on T.V.) with an ”I told you so”. No big surprise for many that the recent focus on seven year highs in inventory levels isn’t going to be enough to squash a rally on near record demand levels, terrorism, Iran, Nigeria, Iraq ad infinitum. The world is a different place today and as demand and geo-political concerns have blossomed over the past five years the balancing act between supply and demand has become more akin to the blind folded tight rope variety.

Fundamentally there are several other more quantifiable things taking place that should contribute to the recent rally. First I would point to the recent cold front moving through the Northeast just as refineries are in the middle of their seasonal change over and beginning to focus their efforts on Unleaded production ahead of the driving season instead of Heating Oil. Secondly I can’t discount the fact that Spring Break is upon us and demand for Unleaded seems to be very healthy, very early as refineries are struggling to keep pace during this transition period.

Now that we have some inventory concerns being raised by the DOE reports, I’m looking for a long awaited push through the top ($64.00) of Crude Oils recent range. Don’t be surprised to see a significant shake out to the downside just prior to this happening especially with the Bulls on the small spec side feeling quite bolstered by these recent turns of events. I am still holding our bullish call spread and Nat Gas spreads. Be on the lookout for an Unleaded trade in the middle of the week. Matt Odom 03/24/2006

Metals 

Metals spent the week climbing higher with silver leading the way. I have always paid close attention to the Gold Silver spread, and that spread is now wider than it has been in years. This spread is very closely watched by metals traders the world over and is not expected to remain as wide as it currently is for much longer. We already started to see this spread begin to come in late this week. The recent chatter about the new silver ETF has largely been the driver of this widening rather than some shift in fundamentals. With that said we feel that this spread could be one of the best spread trades in all of 2006. Copper continues to rally to new highs partly due to a landslide earlier in the week that affected some copper mines in Indonesia. Look for continued strength in copper as buying copper is not a want but a need for all developing nations. Derek Frey 03/24/2006

Grains 

Spent most of the week trending lower. I expect these markets to find support and stabilize themselves this coming week. Longer term I believe this should be a great week to buy long for the summer. Wheat should hold above 340, corn should hold 215 and soybeans should hold above 560. Derek Frey 03/24/2006

Softs 

For OJ all I can say is here we come 150. We should hit some resistance at 150 and consolidate the recent rally for a bit after that. My stop has been moved up from 135.25 to 139.75. Cocoa I am still short from 1501 with a stop still working at 1535, I plan to move my stop to my entry point on a close below 1475. Coffee is still not making any real attempts at turning around and I remain on the sidelines. Near term I continue to look for a bounce. Sugar looks like it has completed its slide and I am now recommending a bull call spread in sugar that is buying the July 1700 call while selling the 1900 call. Take a look at a weekly chart on sugar if you would like to see a text book example of a bull flag. Cotton continues to slide and near term support has not held. I do expect a sharp turn around soon but “the waiting is the hardest part” as Tom Petty put it. If any of you would like to see my recent sugar trade recommendation email me at derek@odomandfrey.com and I will be happy to forward you a copy. Derek Frey 03/24/2006

Meats 

We never made the bounce to 8400 last week for April Live Cattle so there was no entry point for us but nonetheless the market closed below support on Friday at 8247. I’m still calling for a significant bounce before the market continues any lower so we’ll keep our target entry for a short position at 8400 for this week. The Hogs broke down early in the week but managed to stage an impressive rally for Fridays close. 5500 is the support level the market needs to break through to continue to run to the downside. I think we may be a week or two away from breaking down all the buyers out there. Selling OTM April Calls (24 days to expiration) on rallies here is a good play for those in a position to do so. 

FXCM weekly Technical Analysis

Expert:  Boris Schlossberg, Currency Analyst of FXCM 
Start:    March 24, 2006 - 14:00GMT 9EST 
End:      approx. 15:00GMT 10EST 

   
Topics that will be covered for above session are: 

•    Do not miss your opportunity to be updated in your trading needs this week.
•    Boris Schlossberg brings his view point of the forex market for coming week.
•    Discuss market reaction to news.
•    Enjoy his currency pairs predictions.
•    Must have FXtrading information for a succesful trading week

Who is Boris Schlossberg?

Boris Schlossberg serves as Fundamental Analyst at Forex Capital Markets. He has been an independent trader since 2000. He is also a frequent contributor to SFO Magazine with articles focused on risk management.

Speech Material:

DailyFX Fundamentals
• Dollar Skyrockets on Strong Home Resales
• Euro SSI Flips to Negative, Signaling More Losses Possible
• Strong Dollar News and Politics Deals Double Blow to Yen

US Dollar
The US dollar soared against the majors, for the fourth straight day and is coming close to erasing all of the losses that it has incurred over the past two weeks. On what was suppose to be a quiet trading day, the dollar took off on after a report that existing home sales jumped 5.2 percent last month. For those including ourselves who have been predicting a slowdown in the housing market, the latest report shows that so far, the landing has been soft. The National Association of Realtors, the group that published the figure did note that the large rise in sales was most likely due to the warmer weather and lower mortgage rates in January. They expect home resales to have slowed once again this month. It is difficult to perceive how much longer this strength can continue with next week’s Federal Reserve interest rate hike only expected to drive the cost of borrowing higher. The labor market continues to remain relatively healthy with jobless claims falling 11k, to 302k. The market really needs the labor market to continue to hold up, otherwise the real estate sector will not. Tomorrow we are expecting durable goods for the month of February. Sales are expected to rebound about the sharp fall the previous month. With the market seemingly very bullish dollars going into next week’s interest rate decision, a disappointing durable goods number will probably generate much more volatility than a strong one.

Euro
With the dollar gaining strength so quickly, the Euro has naturally been on the losing end of the relationship. To the surprise of many, the region’s current account surplus shrank from –EUR4.4 billion to –EUR3.3 billion. The same month’s trade deficit widened sharply causing many to believe that the current account would suffer a similar fate. However, even though it didn’t, the Euro has not benefited from the improvement. Nor has it rallied based upon stronger Italian retail sales numbers and hawkish comments from ECB council member Mersch who said that the central bank is “vigilantly” watching developments on the inflation front. Price growth in Bavaria, Saxony and Brandenburg Germany, were mixed with flat growth in Bavaria and only mild price acceleration in Saxony and Brandenburg. Annualized price growth however slowed across the board in all 3 regions. This may be a precursor to next week’s CPI number for the region as a whole. Remember the ECB watches the country’s annualized inflation numbers very carefully. The forecasts are now for inflation in Germany, the region’s largest country to slow from 2.1 percent to possibly 1.9 percent. Should this be true in an environment where the market is focusing on higher interest rates in the US, the slide in the Euro could be deeper. This morning we published our weekly FXCM Speculative Sentiment Index. At the time of publication, the SSI was negative, but close to parity. Since then, the ratio has flipped deeply into positive territory which signals that the bias is now for further weakness in the EUR/USD. In addition the USD/CHF ratio is also confirming a possible extension move lower. This suggests that over the next few days, any retracements in the EUR/USD will probably be shallow and instead, the currency pair will aim for support at lower levels. On the French labor law strike front, the Prime Minister has agreed to engage in talks with trade unions to see if they can come to terms with a more satisfactory reform rule.

British Pound
The British pound lost ground against the dollar but gained strength against the Euro for the fourth consecutive day. The economic calendar was light with only the release of CBI industrial orders for the month of March. According to the report, the orders index increased to -16 from -18 with a mild recovery in export orders. The industrial sector is gradually showing signs of recovery which has been promising for the country as a whole. The economic calendar tomorrow is completely empty which means that there will probably be little to drive pound movements aside from dollar and Euro factors. However, sterling traders should bask in the quietness since starting Monday, we will have an extremely busy week. Not only is the US Federal Reserve meeting, but the UK will also be releasing a slew of house price reports, GDP numbers and mortgage lending figures. Bank of England members King, Lomax, Barker, Bean and Nickell are all scheduled to testify on Tuesday while UK Chancellor Gordon Brown is slated to deliver a testimony on the 2006 Budget on Wednesday.

Japanese Yen
After one day of respite, the dollar charged on forward against the Japanese Yen. In fact, USD/JPY was the day’s biggest mover, with the greenback rising 0.8% against the Yen. The Yen was dealt a double blow today but it wasn’t from economics. The trade surplus was the day’s solitary release and even though it came in slightly weaker than expected in February, the adjusted figure was stronger than expected. Instead, dovish comments from Bank of Japan Nakahara solidified to the market that even though the BoJ has dropped quantitative easing, they are far from willing to move away from zero interest rates. Nakahara said that deflation still exists, therefore the economy needs easier monetary policy. Also pressuring the Yen were comments from US Senator Schumer who expects the US government to label China a currency manipulator in their next report if China does not make any changes soon. Interestingly enough, it wasn’t too long ago that we reported rumors of the US government hiring analysts to run case studies on how the markets would react if China was truly labeled a currency manipulator. This goes to show that they may already be contemplating this possibility.

Seasonal Patterns for Grain Traders

Expert:   Carley Garner, Partner & Senior Analyst of Alaron's Las Vegas Division 
Start:     March 23, 2006 - 16:45GMT 11:30EST 
End:       approx. 17:45GMT 12:30EST 
   
   
Topics that will be covered for above session are: 

•   Corn, the soy bean complex and wheat all fluctuate with their harvest cycles
•    Wheat is on an opposite harvest cycle, and actually tends to be bearish during the spring     season
•    Most real commodities are dependent on annual cycles that have reoccurring effects on prices
•    Some of the most prominent cycles are found in the grain markets.

  Who is Carley Garner?

Carley Garner is a Magna Cum Laude graduate of the University of Las Vegas Nevada, from which she earned a B.S. in Finance & Accounting. At UNLV she was a Dean’s List scholar and was elected to the Golden Key International Honor Society. In 2003 she was one of only 1200 collegians nationwide named to the National Society of Collegiate Scholars. Long fascinated by money and the markets, she previously worked for a stock brokerage, honing her skills at technical analysis. Although relatively new to the industry, Carley has been featured in several national publications including Futures Magazine, Active Trader and Stocks and Commodities.

Speech Material:

Seasonal Patterns for Grain Traders

Most “real” commodities are dependent on annual cycles that have reoccurring effects on prices.   Some of the most prominent cycles are found in the grain markets.
Corn, the soy bean complex and wheat all fluctuate with their harvest cycles.
Corn and soy products tend to find a bottom somewhere between the later part of the year through February.  The rally typically extends through mid-June.
We execute the “same” trade every year, in the spring it is a bull call spread with a naked leg.  Going into the summer months, we put on a bear put spread with a naked leg.
For corn, because the options are cheaper, we do a synthetic call.  We buy the July futures and buy an at-the-money put.  This limits our risk to what we pay for the protective put and allows us to hold a futures position for several months.
Wheat is on an opposite harvest cycle, and actually tends to be bearish during the spring season.  The July contract normally finds a bottom in mid July.
Once again, it is the same trade every year…. In December we are doing a bull call spread with a naked leg, and then we reverse going into the spring. 
This year we chose to go with synthetic futures position. We sold a close-to-the-money call and bought an at-the-money-put.

Using Parabolic in trading systems

Expert:  Igor Belitsky, Currency Analyst of Fx Currency dealer.com 
Start:    March 22, 2006 - 15:00GMT 10EST 
End:     approx. 16:00GMT 11EST 

   
Topics that will be covered for above session are: 

•    Simple Parabolic system
•    Parabolic based trend filter
•    Apply Parabolic on other technical studies
•    Parabolic based trailing stop-loss

Who is Igor Belitsky?

Igor Belitsky is a specialist in applied mathematics and trading systems development. Since 1996 he has been working as a forex market analyst in a Moscow based financial company.

Speech Material:

1. Simple Parabolic SAR trading system

Parabolic SAR (Stop-And-Reverse) System is a complete trading system based on trailing stop-loss orders. Stop-loss (SL) orders are calculated by the formula :

SL (next) = SL (now) + AF (now) * (PricePick - SL (now) ) ,

where PricePick equals to High or Low ticker price for the current position and AF rises from the StartValue up to the MaxValue. Stop-loss order execution leads to opening reversed position.

Below is GBPUSD 240 min chart with Parabolic study, where Start Value=0, Step Value=0.005, Max value = 0.2. Stop-loss will be trailed from 5 up to maximum 20 pips in direction of the price.

Chart Click to enlarge:

Parabolic SAR system is useless without additional trading rules because during sideways market it looses all profits earned during trending market. For example, we can apply additional rule like MACD>Signal Line to define up-trend and use only buy signals from Parabolic system.

2. Parabolic based trend filter

Parabolic SAR as any other technical study can be used not only to generate entry/exit signals but also to define up and down trends. When Parabolic stays below Price it means up-trend; when Parabolic stays above Price it means down-trend.

Below is EURUSD Daily chart with Parabolic(0, 0.01, 0.2) and Bollinger Bands(10, 0.3) technical studies. Buy signal is triggered when price falls below Upper Bollinger Band; Sell signal is triggered when price rises above Lower Bollinger Band. Parabolic is used as trend filter. We use Bollinger Bands to add positions in the trend defined by Parabolic. We can use here Parabolic study not only as trend filter but also as trailing stop-loss instead of fixed stop-loss. It helps us to get more profit during the trend phase.

Chart Click to enlarge:



3. Apply Parabolic on other technical studies

Below is USDJPY 60 min chart with Parabolic being applied to RSI(22, simple). We can see that Parabolic here plays the same role as Moving Average to show RSI reversals

Click to enlarge:

With the Fed tightening cycle nearing its end, Will the inverted US yield curve become flat again?

Expert:  Ashraf Laidi, MG Financial Group, Chief Currency Analyst 
Start:    March 21, 2006 - 15:00GMT 10EST 
End:      approx. 16:00GMT 11EST 

   
Topics that will be covered for above session are: 

•    - Japan tightening and the emerging market currencies under pressure
•    - Is this just a technical move in the midst of directionless FX consolidation?
•    - How long can the Fed continue to tighten? With the ECB, BoJ, SNB and BoC on a tightneing bias, can the US dollar handle it?   

Who is Ashraf Laidi?

Ashraf Laidi is the chief currency analyst at MG Financial Group, one of the longest established FX trading firms in the world. He is also the creator of the 6-year old Forexnews.com, an award-winning website dedicated to FX research and analysis.
Prior to MG Financial, Ashraf evaluated currency risk for a multi-currency equity and bond portfolio at a United Nations' Fund. He also traded currencies and worked as a Fixed Income analyst for Reuters.

Mr. Laidi provides expert commentary on CNBC-TV, Bloomberg TV, and PBS' Nightly Business Report. His insights have also appeared in the Financial Times, the Wall Street Journal, Barron's, the New York Times, CBS Marketwatch, TheStreet.com, Futures Magazine and a host of other international publications.

Speech Material:

With the Fed tightening cycle nearing its end, the inverted US yield curve becoming flat again and Japan tightening and the emerging market currencies under pressure; will we see a violent unwindng of the Yen carry trade (vs the USD and the European FX) as we saw in that fateful October 1998?

Or, is this just a technical move in the midst of directionless FX consolidation?

How long can the Fed continue to tighten? With the ECB, BoJ, SNB and BoC on a tightneing bias, can the US dollar handle it?