Sunday, May 7, 2017

[FOREX NEWS] Early indicators: EUR/USD tops 1.10 on President Macron

EUR/USD grinds above 1.10 in the wake of the trading week, amid very thin trading volume. The victory of Emmanuel Macron was mostly priced in. 1.1010 is the high so far, in a relatively muted response. Real votes are being counted in France but the result is clear: Macron won by a landslide. Exit polls showed 65% and [...]

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[FOREX NEWS] President Macron – exit polls show 65% – EUR/USD set to rise

As foreseen by the opinion polls, Emmanuel Macron is the next French president. The exit polls show a very wide gap and they were very accurate in the first round when the vote was more complicated. Exit polls show 65.1% for Macron and only 34.9% for Le Pen. The turnout is estimated at around 74%, lower than [...]

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[FOREX NEWS] Report: Macron leads with 62% to 67% according to initial exit poll data

According to the Belgian television station RTBF, centrist Macron is set to sweep into the presidency by a wide margin of 62-67% for him against 33-38% for Le Pen. The station has seen results of four opinion polls and surveys leaked to the station. The publication of such figures is forbidden in France before voting ends at [...]

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[FOREX NEWS] French elections: turnout at 65.3% at 15:00 GMT – worrying for Macron

At 17:00 local time, turnout in the French elections is 65.3%. This is 4% under the turnout seen in the first round which was 69.42. Back in 2012, the second round turnout yielded nearly 72% turnout. There are still three more hours until all voting closes. Centrist Emmanuel Macron needs a high turnout in the second [...]

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[FOREX NEWS] Preview: French echoes and a focus on the US consumer [Video]

The trading calendar is light on Monday but the echoes of the French elections as well as the NFP will undoubtedly fill the void. The week warms up and culminates with top-tier US figures: inflation, retail sales, and consumer confidence. The lack of big benchmarks will allow a better reflection on the path forward for [...]

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[FOREX TIP] Bitcoin Hits Record Highs With Rising Demand and Institutional Investors

Bitcoin is hitting all-time highs. The cryptocurrency reached $1,567 on Thursday, the highest price ever for bitcoin, making it more expensive than an ounce of gold.

Recently, bitcoin gained 20% in the beginning of 2017 before crashing 35% on fears China would restrict trading. Bitcoins mostly trade on US and Japanese bitcoin exchange markets, which have a combined daily trading volume of more than $245 million and represent 66% of the global bitcoin exchange market.

Bitcoin Hits Record Highs With Rising Demand and Institutional Investors

The strong rise in price is mostly attributed to recent developments in Japan, where to country deemed the digital currency as a legal means of payment. “The Japanese have recently warmed their approach towards bitcoin by treating it legally as a form of payment – a ratification and bringing into the regulatory fold,” said Charles Hayter of Cryptocompare, webiste about digital currencies.

The website also said that almost 50% of all trading volume during the past 24 hours has been achieved on the Japanese market, namely on the BTC/JPY pair. In the Chinese market, bitcoin trades at around $1,250, as Chinese authorities tightened regulations over concerns that the digital currency could be used for money laundering. Since then, Chinese traders moved away from regulated exchanges and trade now on over-the-counter markets, which produced a decline in demand and price of bitcoins.

Even with the under-performance in China, bitcoin managed to hit record-prices several times over the last few days, and gained almost 5.6% in the past 24 hours.

Brian Kelly, founder of Brian Kelly Capital, attributed much of the move to greater interest from long-term investors. “The biggest driver right now is you’re starting to see institutional investors take a keen interest in the entire sector. I don’t think this is hot money. This is real money that’s going to sit around and build the new internet,” said Kelly to CNBC.

With the recent rally in price, the total value of all bitcoins in circulation reached a record $25 billion, making it comparable to a large-cap company in terms of market capitalization.

Analysts tracking the digital currency believe the price of bitcoin could reach as high as $2,000, and with market-cap increasing, more and more large investors will become interested in the currency. Large corporations in Japan and South Korea are already showing interest in bitcoin, with multi-billion companies like SBI Holdings and GMO Internet already involved in establishing a digital currency exchange for local traders.

Analysts said that the boost in price can also be attributed to the recent request by the BATS exchange to the U.S. SEC to review its March decision not to approve a bitcoin-tracking ETF on the U.S. market.

Price of Bitcoin is on the Uptrend

A technical analysis of the bitcoin chart shows that the price is moving above a positive trendline on shorter time frames. As the buying momentum is still intact, a possible strategy could be entering long positions as the price bounces of trendline. The 100-SMA is also above the 200-SMA, which gives additional upside confirmation.

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[FOREX TIP] Key Points of the May 2017 FOMC Meeting

Key Points of the May 2017 FOMC Meeting

The Fed decided to keep rates unchanged despite a slowdown in growth, explaining the slowdown as „transitory“. The Federal Reserve stuck to its outlook for gradual monetary tightening this year, and showed no concerns over recent economic weakness. Following a two-day meeting in Washington, Fed officials said in their statement that the slower growth in the first quarter wouldn’t change their decision to stick to two more rate hikes later this year.

The statement showed that „the labor market has continued to strengthen even as growth in economic activity slowed down.“ Job gains were solid and the unemployment rate declined, according to the statement. Year over year inflation rate has been close to the Committee’s 2% objective. “On the whole, the statement was slightly more hawkish than we expected. On balance, we still think that the Fed will hike again in June,” agreed Paul Ashworth, chief U.S. economist at Capital Economics.

The Fed officials also said that „consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee views the slowing in growth during the first quarter as likely to be transitory and continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, labor market conditions will strengthen somewhat further, and inflation will stabilize around 2 percent over the medium term. Near-term risks to the economic outlook appear roughly balanced. The Committee continues to closely monitor inflation indicators and global economic and financial developments.“

Following the hawkish U.S. Fed statement, Asian markets were mostly lower on Thursday.

Australia’s S&P/ASX 200 closed down 0.27 percent, or 15.942 points, at 5876.40, Hong Kong’s Hang Seng Index ended down 0.05 percent, or 12.25 points, at 24,683.88. The Shanghai Composite fell 0.26 percent, or 8.056 points, to 3127.29.

In South Korea, the Kospi ended up 0.93 percent, or 20.59 points, at a record close of 2240.26 after being closed on Wednesday.

Singapore’s Straits Times Index fell 0.21 percent by Thursday afternoon. Taiwan’s Taiex ended up 0.12 percent, or 12.31 points, at 9967.64.

U.S. hitting a full-employment level?

Indeed, the newest NFP data by the US Bureau of Labor Statistics showed that the world’s largest economy added 211K new jobs vs. 197K expected, which is a significant gain compared with the previous month’s figure of 79K. The unemployment rate fell to 4.5% from last month’s 4.6%, while the expected rate was 4.5%. The explicit tone of the Fed’s statement has already given a hint that the reported NFP figures could be better than expected.

Average hourly earnings met the expectations of a 0.3% rise, compared to previous 0.1%.

We could discuss if the US economy is near a full employment level – with unemployment rates falling last month, average earnings rising (as less workforce meets an increasing demand), and inflation rate rising towards the Fed’s target level of 2%.

Thanks to the seminal work of economist A.W.Phillips, we know that the unemployment rate has a negative correlation with the inflation rate. Generally speaking, people tend to earn more with a falling unemployment rate as workforce demand exceed supply, creating inflationary pressure. The newest NFP data shows exactly that.

The Dollar Reaction

Following the NFP release the EUR/USD made a sharp upmove of almost 40 pips, although good employment numbers. Why? It’s hard to tell. The market probably already anticipated good numbers from the Fed statement released on Tuesday, and the year over year average hourly earnings increase fell short of expectations. Markets are also focused on the coming French election this Sunday, with the pro-European independent Macron extending his chances to win against Le Pen, placing the EUR/USD on a steady uptrend.


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[FOREX TIP] Top 5 Chart Patterns For Consistent Trading Results

Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.

Chart patterns are specific price formations on a chart that predict future price movements. As technical analysis is based on the assumption that history repeats itself, popular chart patterns have shown that a specific price movement is following a particular formation of price (chart pattern) with high probability. Therefore, chart pattners are grouped into (1) continuation patterns – that signal a continuation in the underlying trend, and (2) reversal patterns – that signal reversal of the underlying trend.

In this strategy post, we will show the top 5 chart patterns that traders should know about….

Reversal Chart Patterns – Head and Shoulders

Reversal Patterns – Head and Shoulder

Head and Shoulders is a reversal chart pattern, that indicates the underlying trend is about to change. It consists of three swing highs, with the middle swing high being the highest (red lines on the chart). After the middle swing high, a lower high occurs which signals that buyers didn’t have enough strength to pull the price higher. The pattern looks like a head with a left and right shoulder (the three swing highs), and that’s how it got its name. The neckline is connecting the two shoulders, and a break-out below the neckline is considered a selling signal, with a price target being the distance from the top of the head to the neckline (green arrows). If the Head and Shoulders pattern occurs during a downtrend, the same inverse pattern (with three swing lows) is called an Inverse Head and Shoulders pattern.

Reversal Chart Patterns  – Triple Bottom and Triple Top

Reversal Chart Patterns – Triple Bottom and Triple Top

Triple Top and Triple Bottom formations are basically the same as Double Top and Double Bottom formations. Both are reversal patterns, with the difference that Triple Tops and Bottoms have three swing highs and swing lows, respectively. Trigger signals are again the break of support and resistance lines, with target prices being the distance between the top and support line (for Triple Tops), and bottom and resistance line (for Triple Bottoms).

Rectangles – A Nice Breakout Play

A rectangle is a continuation pattern, which means it confirms that the underlying trend should continue. It is divided into bullish and bearish rectangles, depending on the underlying trend. A bullish rectangle appears during an uptrend, when the price enters a congestion phase, during a sideways trading. The price will likely break out in the direction of the preceding trend. The trigger signal is the break of the upper line of the rectangle, with the price target being the height of the rectangle. For the bearish rectangle, the opposite rules apply. It forms during a prevailing downtrend, when the price enters a congestion phase and trades sideways. This means the trend will most likely continue downwards, with the break of the lower rectangle line. The price target is again the height of the rectangle.

Rectangles – A Nice Breakout Play

Bullish and Bearish Wedges – Wait for the breakout

Bullish and Bearish Wedges – Wait for the breakout

A wedge is another continuation pattern. A bullish wedge forms during an uptrend, as the price trades inside converging trendlines. These converging trendlines imply that sellers are trying to push the price lower, but don’t have enough strength to win against the buyers. Ultimately, the buyers win and the price breaks through the upper trendline, indicating that the uptrend will resume. Target prices are calculated as the maximal height of the wedge, which is then projected to the point of break-out.

A bearish wedge is similar to a bullish one, with the difference that it is appearing during downtrends, and the slope of the wedge is up. Converging trendlines are again showing that buyers interrupted the downtrend, trying to push prices higher. A break-out through the lower trendline indicates that sellers won the battle, and the downtrend is resuming. The target price is, like by bullish wedges, the maximal height of the wedge which is then projected to the point of break-out.

Bullish and Bearish Flags

A flag is very similar to a wedge, with the difference that the trend lines which form the flag are parallel, and not converging. A flag pole is also a part of the flag pattern, because the target price is measured in a different way than by other chart patterns. Flags can be bullish and bearish, with a bullish flag shown on the chart above. A bullish flag forms during an uptrend, with parallel trend lines above and below the price-action, which form a down slope. A break-out above confirms that the uptrend is resuming. A bearish flag is pretty much the same as a bullish flag, with the difference that it forms during downtrends and has an up slope. The price target is measured as the height of the flagpole (green arrow) to the top of the flag, which is then projected to the lowest point of a bullish flag (or highest point of a bearish flag).

To start trading chart patterns effectively you can just work on one first. Before long you can easily recognize these top 5 chart patterns that will help you gain consistent results on a weekly and monthly basis. Master one and then move on to the next. If you just can master one, it’s seriously enough to make your trading journey a profitable journey.

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