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2010 March

March 31st, 2010 @ 3:35 pm by The Geek

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Good day Koalas!

Mid week. Are you totally GREEN :)

We last bearish action yesterday as IMF said that should a loan be needed for Greece, it will be on IMF’s terms. We know that the European Union leaders want control over the process and hence this caused concerns. Furthermore Iceland suffered a cut to its local-currency ratings. Something we don’t need more of.

The price was testing 1.3400 and a break could spell more bearish trouble for the currency pair.

Looking at the EUR/USD, it turned out that the support of 1.3400 held. You may be wondering. Hey it went below 1.3400! Remember, resistance and support lines are never a single pip!

The S&P 500 is holding pretty well despite the US ADP Non-Farm Employment Change coming in worst than expected. Relatively locked in the region of 1160-1180 for now, the market may be holding it’s breath for Friday’s US Non Farm Payroll.

Oil is currently around $81+.

Gold is trading around $1113, urged by the weaken US Dollar.

***

Looking at the movements today, one may presume that the risk appetite is once again strong. I beg to differ.

Looking at the bearish stance of the S&P 500 and the dismay release of the US ADP Non-Farm Employment Change, the current Euro “strength” maybe one of the selling of US Dollar rather than demand for the Euro. Being in the middle of an unemployment crisis, employment data is extremely sensitive in the US.

I mentioned a few times that nowadays, it is not a comparison of whether the Euro Zone or US is performing better but rather, who is worst off. This current play of momentum seems to suggest this.

Remember the markets were all so relieved with regards to Greece days ago? A report came out today discussing on Greece’s plans to sell a global bond in US Dollars in the next two months to help raise 11.6 billion euros. The recent bond sales by Greece resulted in a loss of money for investors, something very negative in outlook. The Greece deficit crisis is really beyond a simple fix and as the deadline draws near for debt redemption, the pressure will be on.

Tomorrow brings us important data again, including German Retail Sales and US Unemployment Claims.

Bullish pressure may take us above 1.3550 to 1.3600.

Bearish comebacks may target 1.3455/400.

***

I am glad many of you folks like the new H4 charts. Sincerely, i only want the best for you koalas. Nothing less.

Trade Safely!

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Read more Forex Articles and Views by The Koala at www.thegeekknows.com

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March 31st, 2010 @ 12:37 pm by Matt "NewstraderFX" Carniol

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If the definition of insanity is doing the same thing and expecting a different result, one has to wonder why so many forex traders (and traders in general) tend to repeat the same mistakes.

For the majority of traders, the “holy grail” is finding a method that will produce a high percentage of winning trades. While the cause may be noble, the facts are that no one really ever has. What traders should really be looking for is a way to make a profit with the least amount of winning trades. The secret to trading, if there is one, is really in what’s called the reward to risk ratio.

When I trade, the goal is to have at least a 2 to 1 reward to risk ratio, but what I’m really after is 3 to 1. With that, I can turn a profit winning just 33.3% of my trades, and I can break out even by winning just 1 in 4.

For example, my last trade was for a 180 gain against a 60 pip loss. Hitting just 1 out of 3 trades like this results in a gain of 60 pips and if I lose 3 and hit 1 (a 25% winning average), I break out even. Compare that to what many traders do when they trade with a negative reward to risk ratio. If you use a stop of 50 for a gain of 25, you’ll only break out even if you hit 66.6% winners and you’ll be a loser if you go .500. That’s a terrible way to trade because the reality is that it’s a guaranteed way to lose.

Setting up your trades this way is a bit more involved than just setting your stops and targets. You must adhere to one of my cardinal rules, which is that for a long trade, you cannot allow yourself to be stopped out where recent buyers have been and for a short trade, you cannot get stopped out where recent sellers were.

Likewise for setting a target-for a long trade, you must have fairly recent evidence that buyers have taken price to the level you’re targeting, and the opposite is true for a short trade.

These are the types of concepts I stress over and over in my trade room. The goal is to be profitable with the least winning percentage because during the times when you get on a role, the profits can really soar.

Double Dip For Europe

I believe that Europe is at risk for a double dip recession, and I base this on what happened in the U.S. during the Great Depression of the 1930’s.

After the government initiated its various fiscal policies and the Federal Reserve expanded the money supply, the economy bounced back strongly in ’35 and ’36. But the government was running a large deficit and President Roosevelt bowed to political pressure and cut back on spending. The government also raised taxes and the Fed cut back on the money supply. The economy then went back into a recession by 1937, and it didn’t come out of it until the U.S. entered W.W. II.

Well, the same thing is happening now in Ireland, Spain, Greece and Portugal, and it’s probably going to happen in Italy as well. These governments, by necessity, are reigning in their spending in order to bring down huge deficits. All kinds of taxes and fees are being increased, and it’s happening just as Europe is one the cusp of a fragile recovery. It seems obvious that since these countries are repeating the actions of the U.S. during the 1930’s, they’re destined to sink into a second recession that will be worse than the one that’s just occurred because this time around, they won’t be able to implement the same types of stimulus programs.

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March 31st, 2010 @ 3:13 am by Setyo Wibowo

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EURUSD Forecast:
The EURUSD attempted to push higher yesterday, topped at 1.3535 but whipsawed to the downside, bottomed at 1.3395 and closed at 1.3412 after a better than expected US consumer confidence data. Technically this fact could end the bullish correction scenario testing 1.3250 and 1.3100 area. Today we will have unemployment and CPI numbers from the Euro zone. Good results may support the Euro and keep the bullish correction intact testing 1.3535 and 1.3600 region while bad results should trigger further significant drop. Immediate resistance at 1.3450/80 area. Break above that area could trigger further upside pressure but as long as price still move inside the bearish channel the main outlook remains bearish. Initial support at 1.3365 area. Break below that area could trigger further bearish momentum testing 1.3250.

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March 31st, 2010 @ 3:06 am by Setyo Wibowo

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EURJPY Forecast
Yesterday the EURJPY slipped above 125.15, topped at 125.45 but whipsawed to the downside and closed lower at 124.44. This fact lead us back into the range area of 125.15 – 124.00. The bias is neutral in nearest term. The bullish scenario remains intact as price still maintain bullish tone earlier today in Asian session, traded higher around 124.80 at the time I wrote this comment, but we need a consistent move above 125.15 to continue further bullish momentum targeting 126.96.

GBPJPY Forecast
The GBPJPY had a significant bullish momentum yesterday, break above 139.34, topped at 140.53 and keep moving higher earlier today in Asian session around 140.40 at the time I wrote this comment. The bias is bullish in nearest term targeting 142.00 area and may test the major trendline resistance. Only a movement back below 139.34 could lead us back into no trading zone.

AUDUSD Forecast
The AUDUSD failed to maintain its bullish momentum and traded lower earlier today in Asian session around 0.9160 at the time I wrote this comment. Price retreat back below the trendline indicating unclear direction as price forms a broadening formation. Expected range at 0.9090 – 0.9250. I prefer to stay away from this pair for now.

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March 31st, 2010 @ 2:55 am by Setyo Wibowo

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GBPUSD Forecast:
The GBPUSD attempted to push higher yesterday, topped at 1.5124 but closed lower at 1.5067. The bias is neutral in nearest term. We are still in upside correction phase with the upper line of the bearish channel to be tested but the main scenario remains bearish as long as price still move inside the bearish channel. Immediate resistance at 1.5124 (yesterday’s high). Consistent move above that area could be a serious threat to the bearish outlook. Initial support at 1.5000 – 1.4950. Break below that area could end the bullish correction testing 1.4876 and 1.4779 area.

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March 31st, 2010 @ 2:50 am by Setyo Wibowo

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USDJPY Forecast:
The USDJPY was able to maintain its bullish tone yesterday and keep moving higher earlier today in Asian session around 93.20 at the time I wrote this comment. The bias is bullish in nearest term targeting 93.75 area before aim for 95.50 region. Immediate support at 92.74 (current low). Break below that area should lead us into no trading zone testing 92.00 area.

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March 31st, 2010 @ 2:40 am by Setyo Wibowo

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USDCHF Forecast
The USDCHF attempted to push lower yesterday, bottomed at 1.0587 but as you can see on my h4 chart below, the minor trendline support did a good job preventing further bearish pressure and price closed higher at 1.0664. This fact should keep the bullish outlook intact. Immediate support at 1.0640. Break below that area should lead us into no trading zone as direction would become unclear. Initial resistance at 1.0750. Break above that area should trigger further bullish momentum testing 1.0888 region.

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March 30th, 2010 @ 4:30 pm by The Geek

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Hello Koalas.

Second day of the week. Remember the aim is to be GREEN.

Yesterday saw bullish action although it was evident that the momentum was slowing down. I reminded that we must consider both sides of the story and while the apparent agreement on the mode of aid for Greece gave the markets a relief, the crisis is complex and we must be ready for unexpected developments. Besides, other Euro Zone countries such as Portugal and Spain are not out of the hot soup yet.

Time for a look at the EUR/USD.

After a near test of the 1.3550 resistance, the currency pair did the unexpected and dives into the depths. A test of 1.3400 looks imminent.

No market stands alone. The S&P 500 is affected, displaying a bearish momentum. Nonetheless, the recent positive sentiments of the US seems to be sheltering the equity index from the main brunt of it.

Oil has fallen from it’s heights. However it remains above $80.

Gold seems to have fallen slightly. Trading now at $1103+, there may be demand due to risk aversion. Gold is usually a safe haven of choice when it comes to uncertainty.

***

WHO LET THE BEARS OUT ? BEAR BEAR BEAR

For starters, the managing director of the IMF said that should a loan be needed for Greece, it will be on IMF’s terms. Just like any other country. No special privileges.

This caused concerns as leaders of the European Union would want to maintain control over the process. Investors are worried of a possible fall out of opinions again and are taking evasive actions. The situation is of a fragile one. 12-year Greek bonds offerings obtained less than 50% take up rate.

Next brings us Iceland. Standard & Poor’s lowered its local-currency ratings on Iceland. The rating cut of the European nation came as a firm reminder that many financial markets are still struggling to snap out of the depression of 2008. European Union countries like Portugal and Spain may come into the picture.

On a technical note, a break of 1.3400 may open up space as low as 1.3285 again.

Tomorrow brings us important economic data to look out for. German Unemployment Change and US ADP Non-Farm Employment Change are among those.

Bullish relief may bring us to 1.3455 /1.3550.

A break of the support of 1.3400 may bring us to 1.3360/1.3285.

Read more Forex Articles and Views by The Koala at www.thegeekknows.com

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