Tag: trading

Daily Crypto Review, Sept 24 – Bitcoin Following Gold: $9,300 On The Horizon

Post author By Ilija Rankovic
Post date 24 September, 2020
1 Comment on Daily Crypto Review, Sept 24 – Bitcoin Following Gold: $9,300 On The Horizon

The cryptocurrency sector has experienced a slight decrease in value as (as many traders speculate) Bitcoin mirrored Gold’s triangle pattern breakout and headed towards the downside. Bitcoin is currently trading for $10,261, representing a decrease of 1.72% on the day. Meanwhile, Ethereum lost 4.54% on the day, while XRP lost 3.79%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, Uniswap gained 13.73% on the day, making it the most prominent daily gainer. HedgeTrade (9.22%) and Hyperion (5.61%) also did great. On the other hand, DigiByte lost 17.91%, making it the most prominent daily loser. It is followed by Ren’s loss of 17.78% and Reserve Rights’ loss of 11.70%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight increase since our last report, with its value currently being at 61.45%. This value represents a 0.35% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has decreased in value over the past 24 hours. Its current value is $325.05 billion, which represents a decrease of $8.86 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the day mirroring Gold’s movement from a day ago, where it broke the same triangle pattern to the downside. With the same happening to Bitcoin, we saw its price falling to sub-$10,300 levels. If we take into account the CME Futures, which will expire on Friday, deeming as much as 86% of $284 million worth of contracts worthless, we can guess with accuracy that the bears will continue to reign over the market for now. The suggested price of $9,300 to $9,500 is even more realistic now.

BTC/USD 1-day Chart

If we take a look at the 4-hour time frame, the largest cryptocurrency by market cap has dropped below the 23.6% Fib retracement as well as the triangle bottom line, suggesting strong bearish sentiment in the short-term. While the volume is descending and preparing for the next move, Bitcoin’s next one will most likely be to the downside.

BTC/USD 4-hour Chart

Bitcoin’s short-term technicals haven’t changed from yesterday, and are still very bearish. However, while the technicals are very bearish on the 4-hour chart, the daily and weekly technical overview is slightly less bearish, while the monthly overview is very bullish.

BTC/USD 4-hour Technicals

Technical factors (4-hour Chart):

Price is below both its 50-period EMA and 21-period EMA
Price slightly closer to the bottom Bollinger band
RSI is neutral (34.72)
Volume is slowly descending from a massive spike

Key levels to the upside Key levels to the downside

1: $10,500 1: $10,015

2: $10,630 2: $9,880

3: $10,850 3: $9,740

Ethereum

The DeFi market has managed to recover from its plummet, with yearn.finance leading the move to the upside. While Ethereum has lost value due to its correlation with Bitcoin, its short-term overview is slightly more bullish.

However, if we take a look at Ethereum’s chart, we can see that the second-largest cryptocurrency by market cap managed to stabilize after hitting the bottom Bollinger band, which provided adequate support. While ETH did fall below $340 and broke a major support level, which calls for a push towards $300, the situation is slightly more bullish than the day before.

ETH/USD 4-hour Chart

Ethereum’s short-term technicals are extremely bearish, while the situation changes drastically in the weekly and monthly overview, where the overview is quite bullish.

ETH/USD 4-hour Technicals

Technical Factors (4-hour Chart):

The price is below both its 21-period and its 50-period EMA
The near its bottom Bollinger band
RSI is hovering around the oversold line (30.56)
Volume is average (except for the one-candle volume spike during the downturn)

Key levels to the upside Key levels to the downside

1: $340 1: $300

2: $360 2: $289

3: $371 3: $278

Ripple

XRP has spent the day continuing its Elliot impulse wave 5th leg. While its price did go down, many traders have turned slightly bullish, calling out for the end of the 5th leg of the impulse wave at the spot where the price meets the ascending trend line from March (the red ascending line). This would put the price target for XRP at somewhere between $0.215 and $0.218 before pushing towards the upside.

XRP/USD 1-day Chart

While many traders have turned bullish, XRP’s technicals are still firm with their bearish sentiment. The bearish sentiment doesn’t end at the shorter time frames; it rather extends to the daily and weekly overview as well.

XRP/USD 4-hour Technicals

Technical factors (4-hour Chart):

The price is below both its 21-period EMA and its 50-period EMA
Price is very close to its bottom Bollinger band
RSI is in the oversold territory (27.28)
Volume is volatile, with occasional spikes

Key levels to the upside Key levels to the downside

1: $0.227 1: $0.221

2: $0.235 2: $0.214

3: $0.2454 3: $0.2

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Education Forex Indicators Forex System Design

Designing a Trading Strategy – Part 3

Post author By Eduardo Vargas
Post date 23 September, 2020
No Comments on Designing a Trading Strategy – Part 3

Introduction

In our previous article, we presented the first component of a trading strategy, which corresponds to the market entry and exit rules. Likewise, we exposed the case of a basic trading system based on the crossing of two moving averages.

In this educational article, we will present the filters and how they can help the trader refine a trading strategy.

Setting Additional Filters in Trading Strategy

Signals originated in a trading strategy can use filters to improve the entry or exit signals that the system generates. The purpose of incorporating filters is to improve both the accuracy and reliability of the strategy.

A filter can be an indicator’s level or additional instructions to the initial entry, or exit rules. Some examples of filters can be:

Avoid buy entries if the reading of the 60-period RSI oscillator is less than 49.
Allow Buy entries if the price closes above the high of the previous day or allow sell-short signals if the price closes below the last day’s low.

Also, rules can be established to control the strategy’s risk, and preserve the trading account’s capital. In this context, two elements that can help to manage the risk are:

Initial stop-loss, which can be a fixed amount of pips or depending on some previous periods’ volatility. In turn, this rule can be fixed or dynamic, its level moving as the trade progresses through time.
limiting the number of simultaneously opened trades. This rule can be useful, mainly when the market moves in a sideways path.

Measuring the Risk of Strategy

The risk of trading strategy corresponds to the amount of capital that the investor risks with the expectation of a possible return on the financial market by applying a set of rules with positive expectations.

One way to measure the risk of trading strategy is through the maximum drawdown, which corresponds to the maximum drop in equity from the peak of the equity value to the subsequent equity low.

The developer can obtain this measure as well as other strategy performance indicators by running a historical simulation.

Incorporating Additional Rules into Trading Strategy

The following example corresponds to the addition of rules to the trading strategy formulated and developed in the previous article, based on moving averages crossovers with 5 and 55 periods.

Before incorporating additional rules and evaluating their subsequent impact on the trading strategy, we will display the results of a historical simulation, developed using the EURUSD pair in its hourly timeframe. Likewise, the size of each trade position corresponded to 0.1 lot in a $10,000 account.

The following figure illustrates the strategy’s performance in its initial condition, which executed 652 trades providing a drawdown level of 22.66% and a net profit of -$716.93.

The additional proposed filter rules are as follows:

The strategy must have an initial stop loss of 30 pips. This stop will limit the possible maximum amount of loss per trade.

extern double SL_Pips = 30;

We propose using a Break-Even rule to ensure the opened trades’ profits, which will be used when the price advances 40 pips. Likewise, the strategy will apply a Trailing Stop of 40 pips of advance and a 3-pips step

extern double BreakEven_Pips = 40;
extern double Trail_Pips = 40;
extern double Trail_Step = 3;

The function that computes the Trailing Stop is as follows:

void TrailingStopTrail(int type, double TS, double step, bool aboveBE, double 
aboveBEval) //set Stop Loss to "TS" if price is going your way with "step"
  {
   int total = OrdersTotal();
   TS = NormalizeDouble(TS, Digits());
   step = NormalizeDouble(step, Digits());
   for(int i = total-1; i >= 0; i--)
     {
      while(IsTradeContextBusy()) Sleep(100);
      if(!OrderSelect(i, SELECT_BY_POS, MODE_TRADES)) continue;
      if(OrderMagicNumber() != MagicNumber || OrderSymbol() != 
Symbol() || OrderType() != type) continue;
	  RefreshRates();
      if(type == OP_BUY && (!aboveBE || Bid > OrderOpenPrice() + TS + aboveBEval)
 && (NormalizeDouble(OrderStopLoss(), Digits()) <= 0 ||
 Bid > OrderStopLoss() + TS + step))
         myOrderModify(OrderTicket(), Bid - TS, 0);
      else if(type == OP_SELL && (!aboveBE || Ask < OrderOpenPrice()
 - TS - aboveBEval) && (NormalizeDouble(OrderStopLoss(), Digits()) <= 0 ||
 Ask < OrderStopLoss() - TS - step))
         myOrderModify(OrderTicket(), Ask + TS, 0);
     }
  }

Also, the strategy must allow a maximum limit of one trade at a time.

extern int MaxOpenTrades = 1;

In this context, the code that will determined the limit reached will be as follows:

   //test maximum trades
   if((type % 2 == 0 && long_trades >= MaxLongTrades)
   || (type % 2 == 1 && short_trades >= MaxShortTrades)
   || (long_trades + short_trades >= MaxOpenTrades)
   || (type > 1 && type % 2 == 0 && long_pending >= MaxLongPendingOrders)
   || (type > 1 && type % 2 == 1 && short_pending >= MaxShortPendingOrders)
   || (type > 1 && long_pending + short_pending >= MaxPendingOrders)
   )
     {
      myAlert("print", "Order"+ordername_+" not sent, maximum reached");
      return(-1);
     }

The trading strategy must preserve the account equity using a position size that should be proportional to 1 lot per $100,000 of equity.

extern double MM_PositionSizing = 100000;

double MM_Size() //position sizing
  {
   double MaxLot = MarketInfo(Symbol(), MODE_MAXLOT);
   double MinLot = MarketInfo(Symbol(), MODE_MINLOT);
   double lots = AccountBalance() / MM_PositionSizing;
   if(lots > MaxLot) lots = MaxLot;
   if(lots < MinLot) lots = MinLot;
   return(lots);
  }

Now, the entry rules with the Stop-Loss rule will be as follows:

   //Open Buy Order, instant signal is tested first
   if(Cross(0, iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) >
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0)) 
//Moving Average crosses above Moving Average
   )
     {
      RefreshRates();
      price = Ask;
      SL = SL_Pips * myPoint; //Stop Loss = value in points (relative to price)   
      if(IsTradeAllowed())
        {
         ticket = myOrderSend(OP_BUY, price, MM_Size(), "");
         if(ticket <= 0) return;
        }
      else //not autotrading => only send alert
         myAlert("order", "");
      myOrderModifyRel(ticket, SL, 0);
     }
   
   //Open Sell Order, instant signal is tested first
   if(Cross(1, iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) <
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0))
 //Moving Average crosses below Moving Average
   )
     {
      RefreshRates();
      price = Bid;
      SL = SL_Pips * myPoint; //Stop Loss = value in points (relative to price)   
      if(IsTradeAllowed())
        {
         ticket = myOrderSend(OP_SELL, price, MM_Size(), "");
         if(ticket <= 0) return;
        }
      else //not autotrading => only send alert
         myAlert("order", "");
      myOrderModifyRel(ticket, SL, 0);
     }
  }

Finally, the position’s closing code including the trailing stop will be as follows:

  {
   int ticket = -1;
   double price;   
   double SL;
   
   TrailingStopTrail(OP_BUY, Trail_Pips * myPoint, Trail_Step * myPoint, false,
 0); //Trailing Stop = trail
   TrailingStopTrail(OP_SELL, Trail_Pips * myPoint, Trail_Step * myPoint, false,
 0); //Trailing Stop = trail
   
   //Close Long Positions
   if(iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) <
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0)
 //Moving Average < Moving Average
   )
     {   
      if(IsTradeAllowed())
         myOrderClose(OP_BUY, 100, "");
      else //not autotrading => only send alert
         myAlert("order", "");
     }
   
   //Close Short Positions
   if(iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) >
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0)
 //Moving Average > Moving Average
   )
     {   
      if(IsTradeAllowed())
         myOrderClose(OP_SELL, 100, "");
      else //not autotrading => only send alert
         myAlert("order", "");
     }

The historical simulation with the inclusion of the additional rules to the trading strategy is illustrated in the next figure and reveals a reduction in the Drawdown from 22.66% to 10.49%. Likewise, we distinguish a variation in the Total Net Profit from -$716.93 to -$413.76.

Although the trading strategy continues having a negative expectation, This exercise shows the importance of including additional rules to improve the trading strategy’s performance.

Conclusions

This educational article presented how the inclussion of filters into a trading strategy can improve the performance of two key indicators such as the Drawdown and the Total Net Profit.

On the other hand, we did not consider the parameters optimization during this step. Optimization will be discussed in a future article.

In the next educational article, we will extend the concepts of Profits Management and Position Sizing.

148. How To Fade The Breakout By Successfully Trading It?

Post author By Reddy Shyam Shankar
Post date 23 September, 2020
No Comments on 148. How To Fade The Breakout By Successfully Trading It?

Introduction Most retail traders have a greedy mentality, so they always prefer to trade the breakouts to catch the home run. They believe in considerable gains in huge moves. Trading smaller moves are something they are not interested in because it takes a lot of work and time to scan the market. The problem with […]

Introduction

Most retail traders have a greedy mentality, so they always prefer to trade the breakouts to catch the home run. They believe in considerable gains in huge moves. Trading smaller moves are something they are not interested in because it takes a lot of work and time to scan the market. The problem with breakout trading is that the majority of the breakouts fail. To make consistent money from the market, professionals always prefers to fade the breakout. The fading breakout essentially means trading a false breakout.

Fading Breakouts = Successfully trading the False Breakout

The image above represents the formation of a false breakout, which gives us a potential sell opportunity. Experienced industrial traders are always interested in fading the breakout because they know the crux of it. Most of the time, when the price action attempts to fade the breakout, it fails and closes back inside any of the major levels. Therefore, fading the breakout is always a smarter move than avoiding it.

Trading Strategies

Always remember that fading the breakout is a short term strategy. Therefore, please do not expect a home run while taking these trades. What we are doing here is that we are trading the false breakout moves. During the fight between the buyers and sellers, we will witness the initial moves, often failing to give the breakouts.

We are just taking advantage of these exact moves. In the end, one party always wins, and we will eventually get the breakout on the price chart. Instead of waiting for the home run, it is always advisable to trade some smaller moves, and if the market allows the home run, we must definitely go for it.

Buy Trade

The price chart below represents a false breakout in the GBP/NZD Forex pair.

As we can see in the below chart, where the price action breaks below the channel, it came back right into the channel, indicating a false breakout. After the breakout, we can see the price action holding at the support zone. We decided to go long after we saw the red candles struggling to go down and when a clear big Green Candle is formed. Instead of being disappointed that the breakout didn’t happen to take the trade, these small trades inside the major areas come handy to make money.

Sell Trade

The image below represents the formation of a false breakout in the GBP/AUD Forex pair.

As you can see, the image below represents our entry, exit, and stop-loss in this pair. When the price failed to go above the major level, it is an indication for us to take a trade inside the triangle. Therefore, when the price came back, we took the sell entry to the most recent support area. The stops above the entry should be good enough.

Another Sell Trade

The image below represents a false breakout in the GBP/AUD Forex pair.

As you can see, when the prices failed to break the trend line and started to hold below the trend line, it was a sign that it is a failed breakout. It also indicates that the sellers are going to take over the market when we look-in the price action perspective. In this trade, we choose not to close our position at the most recent higher low. Instead, we went for the actual breakout. The holds below the support area is an additional confirmation for us to go to the most recent lower low area.

That’s about Fading the breakout, and we hope you find this lesson informative. Let us know if you have any questions in the comments below. Cheers!

Tags Breakout trading, Education, Fading The Breakout, false breakout, Forex Course, Forex Trading, Technical Analysis, trading, Trading Breakouts

Forex Basic Strategies

A Brand New Forex Trading Strategy By Combining The ‘Flag & Pennant’ Patterns

Post author By Reddy Shyam Shankar
Post date 23 September, 2020
No Comments on A Brand New Forex Trading Strategy By Combining The ‘Flag & Pennant’ Patterns

Introduction

Until now, we discussed a bunch of trading strategies that were based on numerous technical indicators. In today’s article, we discuss a strategy that is based on a candlestick pattern. Flags and Pennants are short-term continuation patterns where the market tends to continue moving in the same direction after the formation of the pattern on the chart. These patterns are found on both short-term and long-term charts.

In the case of Flag, the initial move is a sudden, sharp directional move. It is doesn’t matter where the move is formed on the chart; what matters here is the velocity of the move. If the movement is not sharp and large, the reliability of the pattern will be under question. However, it will also use the volume indicator to confirm the strength of the Flag and pattern. Let us understand all the specifications of the strategy in detail.

Time Frame

As mentioned earlier, the Pennant-Flag strategy can be traded on time frames varying from 15 min to ‘Daily.’

Indicators

The only indicator we will be is the ‘Volume’ indicator. The rest of all is based on candlestick and price action patterns.

Currency Pairs

The strategy can only be used on major currency pairs listed on the broker’s platform. Few preferred pairs are EUR/USD, USD/JPY, GBP/USD, GBP/JPY, EUR/JPY, etc.

Strategy Concept

The strategy is based on the concept of the Pennant Candlestick Pattern. A sharp thrust creates a flagpole, and then when the market begins to consolidate into an asymmetric triangle, we wait for a breakout or breakdown. The consolidation is a brief pause before a potential break on either side. If the price clears the top of the ‘Pennant,’ we look for ‘long’ trades, and if breaks below the bottom of the ‘Pennant,’ we look for ‘short’ trades.

After a large vertical flagpole and a triangular consolidation, the market might be getting ready for a further continuation. The odds of a breakout increase when this pattern is accompanied by high volume. In a bullish flagpole, we place our ‘entry’ order above the ‘high’ of the flagpole, and in a bearish flagpole, we place our order below the ‘low’ of the Flag. Of course, when we enter, we’ll need to place a stop.

The stop is calculated by measuring the number of pips that is equivalent to 35-40 percent of the flagpole. For example, if the height of the flagpole is 100 pips, the stop will be placed 25 beneath the entry point.

Finally, we will need to define exits for our trade. Our first target will be equal to the number of pips that we are risking on the trade. Another strategy is to trail the stop-loss trade and exit when the market shows signs of reversal. Let us look at the specifics of the pattern and technique to make winning trades.

Trade Setup

In order to explain the strategy, we have considered the 4-hour chart of EUR/USD, where we will be illustrating a ‘long’ trade. Here are the steps to execute the strategy.

Step 1: The first step of the strategy is to wait for a sharp, sudden, and strong candle to show up on the chart. This usually happens after a major news announcement or after the release of economic data. This candle should compulsorily be with high volume as it indicates that big players of the market created this move. If the candle is not with high volume, the move cannot be trusted upon. We could use the economic calendar to find out the exact time of news release and the event.

In the below image, we can see a large candle that popped up after a news announcement that took the prices sharply higher.

Step 2: After the sudden move, prices should necessarily move in a triangular pattern, which is shrinking in nature. Few traders also refer to this as ‘squeeze.’ This pattern should be formed on the lower time frame. Market moving in this ‘squeeze’ pattern is very important for the strategy to work at its best. This leads to the formation of a Pennant candlestick pattern. Pennants involve two parts – a vertical flagpole and a triangular consolidation. The consolidation is usually for a shorter duration of time. Once the pattern has been formed along with the necessary conditions, let us see how to enter a trade.

The below image shows the formation of a Pennant candlestick pattern on the 1-hour chart.

Step 3: The rules of ‘entry’ are pretty simple. In a bullish setup, we place a ‘long’ entry order just above the ‘high’ of the ‘flagpole’ candle formed on the higher time frame. In a bearish setup, we place a ‘short’ entry order just below the ‘low’ of the ‘flagpole’ candle. As and when the market continues to move in the direction of the ‘flagpole,’ the order will automatically be executed.

In the case of our EUR/USD example, our ‘buy’ order gets executed as soon as prices start moving higher.

Step 4: Now, let us define the exit rules for the strategy. The stop-loss is calculated by the number of pips equal to 35-40 percent of the ‘flagpole.’ Stop-loss is placed below the entry price equivalent to the pips obtained by calculation. The ‘take-profit’ is set a price where the resultant risk to reward of the trade is 1:1. Therefore, the take-profit is determined by the stop-loss. Another exit strategy is to trail the stop loss and exit after we witness a reversal pattern in the market.

Strategy Concept

The idea behind this technique is not to place most trades but to place the best trades. The most crucial aspect of the trade is the ‘Flagpole’ candle. We need to ensure that this candle is a consequence of a major news announcement and not just a normal candle. Many traders become impatient and enter even though all criteria have not been met. Patience and discipline will help us to avoid falling into this trap and keep us on the course.

Tags Basic Strategies, Education, flag, Flag Pattern, Forex, Forex Stratgies, Forex Trading, Pattern Trading, pennant, Pennant Pattern, trading, Trading Strategies

Forex Fundamental Analysis

What Should You Know About ‘Asylum Applications’ Fundamental Indicator

Post author By Reddy Shyam Shankar
Post date 23 September, 2020
No Comments on What Should You Know About ‘Asylum Applications’ Fundamental Indicator

Introduction

People from war-ravaged countries seek refuge in neighboring countries for their protection and survival. There are countries where military conflicts, wars, and political tensions were so adverse that people had to leave their homeland to go to an entirely different country to protect their life and survive barely. An understanding of the refugee movements, the price neighboring countries pay, and the corresponding economic impacts for the host countries is worth knowing.

What are Asylum Applications?

It is essential that we first clarify the fundamental differences between the terms refugee, migrant, asylum seeker before we understand asylum applications.

Refugee: They are the people fleeing from their home country to neighboring countries due to armed conflict, political wars, and persecution. Their conditions are so adverse that the only way to save their life is to seek shelter in neighboring countries. The prospect of a career, financial independence are out of the question, and it is just a matter of survival for these people.

Migrants: These are the people who move out of their country of origin in pursuit of a better standard of living and to improve life quality. The reasons can include better education, finding work, or reuniting with families. Unlike refugees, migrants can return to their native safely. Migrants are subject to the immigration laws of the recipient countries.

Asylum seekers: Asylum seekers are people who have claimed to be a refugee, but their status has not been yet evaluated. This individual would have applied for asylum (place to stay) because he/she will be persecuted if returned to their homeland. Not all applicants will qualify as a refugee but will have to go through the due process to become one. Asylum applications refer to the number of people who have come from other countries to seek asylum in the host country.

How can the Asylum Applications numbers be used for analysis?

War-ravaged countries primarily produce refugees in such large numbers that the neighboring countries would need to provide aid by providing protection, shelter, food, clothing, and water. The provisions for these asylum applicants would have to be provided by the local and central Government. Based on the available resources that can be dispensed to provide aid, countries may choose to close their gates and refuse entry too.

It is difficult to give accurate estimates of the effect of asylum applications on the economy due to lack of before and after data estimates. Some researches have shown poorer host countries have had a negative impact while developed nations have had zero or some positive impact. It has also been found that the applicants have actively sought work to improve their living conditions in the host country.

It is worth noting that the countries from which people flee are often surrounded by countries of similar economic strength, meaning the host countries are also underdeveloped nations. For such countries hosting a large influx of asylum seekers would also be burdensome and negatively impact their economic conditions. Only in a few cases, there are scenarios that people have sought asylum in a developed nation. Most of the time, people move to a developed nation as migrants to seek better work and not as a refugee.

Some researches have also shown that the funds received through the relief providing organizations and programs like the World Food Program (WFP), which provide in cash or directly food, add to the income of the host country, thus boosting the economy. Adding people into the host country also increases consumer demand, as well as revenue generated through the refugees who have found work also boosts the economy.

The influx of the refugee is generally small and lies on the border sides of the country. The overall impact on the economy is many a time negligible and is significant only when the host country is a small economy in itself and is underdeveloped. The way the host country’s Government manages refugee situations also determines whether they lose or benefit out of it.

Only when the influx of asylum seekers increases suddenly due to an overnight development of some critical situations is the effect felt on the host country. Under such circumstances, the host country may need to allocate resources to provide aid, which would impact the Government spending budget. The more the funds allocated for such rescue programs, the lesser the funds available for the Government to spend on economy-boosting activities.

Large scale influx of asylum seekers can also add to unemployment in either the refugee camps or the jobs taken away from host country citizens by the refugees. Refugees are desperate for work and would offer their labor at a very minimum rate compared to the citizens of the host country. All these effects come into play during extreme war-like situations in neighboring countries; otherwise, the economy comes to a natural equilibrium in due time with negligible impact.

Impact on Currency

The impact of Asylum applications on economy and currency is not always clear due to lack of sufficient before and after scenario data. Asylum application data comes into use during critical times when we are trying to trade currencies of the host or the crisis countries. Any volatility in the market created would be through the general market sentiment reacting to the news and not from the statistics.

Hence, asylum applications are a low-impact indicator that is only useful in critical times for data gathering and analysis. Therefore, the currency markets overlook it as they would have priced in any economic shocks presented through media ahead of the statistics.

Economic Reports

The United Nations Refugee Agency (UNHCR) publishes monthly reports on asylum application count as and when they receive reports from the Government authorities of different countries. The consolidated data of the same reports are also available on Trading Economics.

Sources of Asylum Applications

We can find refugee briefs on UNHCR official website for reference and latest updates on refugee migration. Asylum Applications for available countries are consolidated and available on Trading Economics.

That’s about Asylum Applications and their importance. We hope you find this article informative and useful. Let us know if you have any questions in the comments below. Cheers!

Tags Asylum Applications, Asylum seekers, Economics, Education, Forex, Forex Fundamental Analysis, Forex Trading, Fundamental Analysis, Macro Economic Indicators, trading

Forex Market Analysis

Daily F.X. Analysis, September 23 – Top Trade Setups In Forex – Manufacturing PMI in Focus!

Post author By Ali B.
Post date 23 September, 2020
1 Comment on Daily F.X. Analysis, September 23 – Top Trade Setups In Forex – Manufacturing PMI in Focus!

On the news, the eyes will remain on the PMI figures from Eurozone, United Kingdom, and the United States. All of the indicators are expected to perform better than before, therefore, buying can be seen in EUR, GBP during the European session and selling during the U.S. session.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.17062 after placing a high of 1.17737 and a low of 1.16914. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair extended its losses on Tuesday and dropped to its lowest till July 27 amid the broad-based U.S. dollar strength. The pressure on EUR/USD pair was brought up by the hawkish comments from Evans and Powell on Tuesday.

In the earlier trading session, the U.S. stocks were higher ahead of Powell’s testimony before U.S. Congress. Meanwhile, the worries about the resurging coronavirus cases from across the globe continue to weigh.

The S&P 500 futures and NASDAQ rose by 0.1% and 0.4% respectively on Tuesday after posting losses for four consecutive days. At the same time, Dow Jones Industrial Average continued to fell for the 5th consecutive day on Tuesday by 0.2%.

On the European side, the European stock market rebounded on Tuesday after the session’s sharp losses. Overall the market tone in Europe remained depressed amid the concerns that new lockdowns will disrupt the region’s recovery.

The fresh coronavirus outbreak in Europe has raised fears for more new lockdowns on the continent as PM Boris Johnson told people to work from home and imposed restrictions on bars, restaurants, and parks to tackle the second wave of coronavirus. Meanwhile, several European countries, including France, Spain, and Greece, have already imposed renewed lockdown restrictions.

These virus-related tensions kept the local currency under pressure and dragged the EUR/USD pair on the downside.

Furthermore, on the U.S. side, the focus was all over on the testimony of Fed Chair Jerome Powell who said that there was no doubt that the U.S. economy was recovering, however, the recovery was still dependent on the COVID-19.

He said that economic activities had come out of its depressed phase that started in the second quarter of this year when the lockdown was imposed globally. He explained that many economic indicators were showing improvement and a full recovery could only come when people become confident that a broad range of activities could be re-engaged.

Moreover, the U.S. secretary of State, Steven Mnuchin, urged more spending to help economic recovery from the coronavirus pandemic. The fed important official Chares Evans said that interest rates could be raised before inflation reached 2%. These hawkish comments from the Fed supported the U.S. dollar that ultimately weighed on EUR/USD pair and supported its daily losses.

On the data front, the Consumer confidence from Europe came in as -14 against the forecasted -15 and supported Euro that capped further losses in EUR/USD pair. The Richmond Manufacturing Index on Tuesday from the U.S. increased to 21 from the predicted 12 and helped the U.S. dollar that added further pressure on EUR/USD pair.

Daily Technical Levels

Support Resistance

1.1709 1.1851

1.1649 1.1933

1.1568 1.1993

Pivot Point: 1.1791

EUR/USD– Trading Tip

The stronger U.S. dollar has also driven sharp selling in the EUR/USD pair as it trades at 1.1680 level today. The pair ha formed three black crows pattern on a daily timeframe, which is suggesting odds of selling bias in the EUR/USD. However, the EUR/USD has closed a Doji candle at 1.1685 level and we may see some bullish correction over 1.1676 until the next resistance level of 1.7020 and 1.1745 level today.

GBP/USD – Daily Analysis

During Wednesday’s European trading session, the GBP/USD currency pair extended its previous day losing streak and hit the multi weeks low near below the 1.2700 level. The currency pair hit a multi-day low the previous day after the Bank of England (BOE) Governor Andrew Bailey delivered downbeat comments and UK PM Boris Johnson announced activity restrictions to control the coronavirus (COVID-19) resurgence risk. Apart from this, the losses in the currency pair were further bolstered by the reports suggesting that the U.K.’s virus-lead deaths raised to a 2-month high, which fueled the worries about the U.K. economic recovery and undermined the GBP currency.

Meanwhile, the on-going Brexit woes also prob the currency pair bulls. Across the pond, the broad-based U.S. dollar strength, supported by upbeat U.S. economic data, could also be considered as the key factor that kept the currency pair under pressure. At this particular time, the GBP/USD currency pair is currently trading at 1.2704 and consolidating in the range between 1.2682 – 1.2748.

While discussing the positive side of the story, the renewed optimism over the coronavirus (COVID-19) aid package helping the market trading sentiment on the day. The U.S. Congress passed the stop-gap funding to avoid a government shutdown in October, which raised the hopes of breaking stimulus deadlock. Besides this, the reason for the upbeat market mood could be associated with the latest upbeat U.S. economic data.

At the data front, the U.S. data showed that existing home sales rose to 6 million in August, the highest level in nearly 14 years. Moreover, the market risk sentiment was further bolstered by the Fed Chair Jerome Powell’s measured comments. He said on Tuesday that it might be possible for the Fed to raise interest rates before inflation starts to average 2%.

As in result, the broad-based U.S. dollar succeeded to maintain its positive traction and remain bullish on the day amid upbeat U.S. data and pullback in technology shares. However, the U.S. dollar gains seem rather unaffected by the upbeat market tone and held its gaining streak, at least for now. Thus, the gains in the U.S. dollar could be considered as the major factor that kept the currency pair under pressure.

Across the ocean, the reports that suggest the worsening condition in the U.K. also keeps the currency pair under pressure. As per the latest report, the COVID-19 related deaths climbed the most since July 14, with Tuesday’s death losses being 37. As in result, the UK PM Johnson warned, “if Reprodtuon of coronavirus rate does not go below 1, there could be more restrictions.” This, in turn, undermined the sentiment around the GBP and dragged the currency pair below 1.2700.

During the day, the U.K. Foreign Minister Dominic Raab gave warning that the new coronavirus restrictions announced by the Prime Minister (PM) Boris Johnson should be taken seriously and proportionate. These remarks fuelled further worries and kept the traders cautious.

Additionally, weighing on the quote could be the statement of the BOE Governor Bailey, which raised concerns over the economic instability even before the activity restrictions, which increased courtesy to the watch today’s preliminary readings of September month PMI numbers.

At the Brexit front, the discussions need a push on fisheries and less noise over the Internal Market Bill (IMB) to break the deadlock in talks. However, the U.K. parliament recently agreed to have a say over whether the IMB will break the Brexit Withdrawal Agreement Bill or not, if yes it must not harm Northern Ireland.

The market traders will keep their eyes on the preliminary readings of September month PMIs from the U.K., Europe, and the U.S. for fresh direction. Meanwhile, the USD price dynamics and coronavirus headlines will be key to watch.

Daily Technical Levels

Support Resistance

1.2737 1.2930

1.2659 1.3045

1.2544 1.3123

Pivot point: 1.2852

GBP/USD– Trading Tip

The GBP/USD traded sharply bearish at 1.2678 support level, having violated the upward channel on the hourly chart. The already violated triple bottom level of 1.2780 is likely to keep the GBP/USD pair under pressure, below this pair can drop towards 1.2678 and 1.2603 level. On the higher side, the Sterling may drive upward movement until the 1.2780 level. The 50 periods EMA is likely to extend selling until 1.2670 level. The MACD is also moving into the selling zone therefore let’s consider taking a sell trade below 1,2750 level today.

USD/JPY – Daily Analysis

The USD/JPY pair managed to keep its early-day winning streak and picked up further bids around well above 105.00 level mainly due to the broad-based U.S. dollar fresh strength, backed by the upbeat U.S. economic data, which eventually heightened the hopes about the U.S. economic recovery. The market risk-on sentiment, supported by the Fed Chair Jerome Powell’s measured comments and upbeat U.S. data, undermined the safe-haven Japanese yen and contributed to the currency pair gains.

In the meantime, the risk-on market sentiment was further bolstered by the optimism over the coronavirus (COVID-19) aid package. Which also helps the currency pair to put the bids. On the contrary, the rising cases of coronavirus (COVID-19) keep challenging the market risk-on sentiment, which could be considered as the key factor that kept the lid on any additional gains in the currency pair. At this moment, the USD/JPY currency pair is currently trading at 105.10 and consolidating in the range between 104.90 – 105.19.

Despite intensifying concerns over the escalation in the Sino-American tussle and the rising cases of coronavirus (COVID-19), the investors continued to cheer the upbeat data from the U.S. At the data front, the U.S. data showed that existing home sales rose to 6 million in August, the highest level in nearly 14 years. Moreover, the market risk sentiment was further bolstered by the Fed Chair Jerome Powell’s measured comments. He said on Tuesday that it might be possible for the Fed to raise interest rates before inflation starts to average 2%. This, in turn, underpinned the safe-haven U.S. dollar and contributed to the currency pair.

Besides this, the market trading sentiment was also cheered the latest optimism concerning the coronavirus (COVID-19) aid package. It is worth reporting that the U.S. Congress recently showed readiness to the bipartisan stop-gap funding bill to avert the government shutdown by the end of the current month, which helps to recede differences between the ruling Republicans and the opposition Democratic party. However, the hopes of stimulus could be considered as one of the key factors that have been supporting the market sentiment.

Despite the risk-on market sentiment, the broad-based U.S. dollar succeeded to gain positive traction and took strong bids on the day amid upbeat U.S. data and pullback in technology shares. However, the U.S. dollar gains seem rather unaffected by the upbeat market tone and held its gaining streak, at least for now. Thus, the modest gains in the U.S. dollar could be considered as the major factor that kept the currency pair higher.

On the contrary, the long-lasting tussle between the world’s two largest economies remained on the cards as portrayed by U.S. Secretary of State Mike Pompeo’s latest comments, which could be considered as the key factor that capped further upside momentum int he currency pair.

The preliminary readings of September month PMIs from the U.K., Europe, and the U.S. for fresh direction. Meanwhile, the USD price dynamics and coronavirus headlines will be key to watch.

Daily Technical Levels

Support Resistance

104.44 105.10

104.15 105.47

103.78 105.76

Pivot point: 104.81

USD/JPY – Trading Tips

Despite sharp movement in the other currency pairs, the USD/JPY continues to follow the same technical setup. On the 4 hour chart, the downward channel is anticipated to drive selling sentiment in the USD/JPY pair as it provides resistance at the 105.250 level. On the downside, the support lingers at 104.460 level, and a bearish breakout can lead USD/JPY price further lower towards 103.700 level. The focus will remain on the U.S. manufacturing and services PMI figures to drive the further direction of the pair.

Good luck!

Tags Daily Brief, EUR-USD, Forex, Fundamental Analysis, GBP-USD, Technical Outlook, trading, USD-JPY

Forex Options

FX Options Market Combined Volume Expiries for 23rd September 2020

Post author By Kevin O'Sullivan
Post date 23 September, 2020
1 Comment on FX Options Market Combined Volume Expiries for 23rd September 2020

Thank you for visiting the Forex Academy FX Options market combined volume expiries section. Each day, where available, we will bring you notable maturities in FX Options of amounts of $100 million-plus, and where these large combined maturities at specified currency exchange rates often have a magnetic effect on price action, especially in the hours leading to their maturities, which happens daily at 10.00 AM Eastern time. This is because the big institutional players hedge their positions accordingly. Each option expiry should be considered ‘in-play’ with a good chance of a strike if labelled in red, still in play and a possible strike if labelled in orange and ‘out of play’ and an unlikely strike if labelled in blue, with regard to the likelihood of price action meeting the strike price at maturity.

…………………………………………………………………………………………………………

FX option expiries for Tuesday September 23 at the 10am NY cut

EUR/USD euro amount

1.1700 767m
1.1805 503m

EURUSD pair has found support just below 1.1700 where a good size option sits. Euro area and US data up later will help price direction.

USD/JPY USD amount

103.60 575m
104.00 360m
104.50 859m
105.00 471m
105.15 530m

USDJPY pair is adjacent to two good-sized option expiries and price is consolidating. US data will pave the way for the next move.

GBP/USD GBP amount

1.2860 212m

GBPUSD pair is on the back foot and the option is out of play.

………………………………………………………………………………….

As you can see on the preferred 1-hour chart(s), we have also plotted the expiration levels at the various exchange rate maturities and we have also labelled in red, orange and blue. Therefore, if you see option expiry exchange rates labelled in red these should be considered in-play, because we believe there is a greater chance of the expiry maturing at these levels based on technical analysis at the time of writing. There is still a lesser possibility of a strike if they are in orange and so these are ‘in-play’ too. However, if we have labelled them in blue, they should be considered ‘not in-play’ and therefore price action would be unlikely to reach these levels, which are often referred to as Strikes, at the time of the 10 AM New York cut.

Our technical analysis is based on exchange rates which may be several hours earlier in the day and may not reflect price action at the time of the maturities. Also, we have not factored in economic data releases or keynote speeches by policymakers, or potential market volatility leading up to the cut.

Although we have added some technical analysis, we suggest you take the levels and plot them onto your own trading charts and incorporate the information into your own trading methodology in order to use the information to your advantage. Remember the higher the amount, the larger the gravitational pull towards the exchange rate maturity at 10:00 AM Eastern time.

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

DISCLAIMER: Please note that this information is for educational purposes. Also, the maturities will look more or less likely to become a strike at 10 AM NY time due to exchange rate fluctuations resulting in a different perspective with regard to technical analysis, and also due to upcoming economic data releases for the associated pairs.

Tags fores, fx options, options, trading

Forex Daily Topic Forex Price Action

What Does A Combination of Double Top and Evening Star Do?

Post author By Tareq Sikder
Post date 23 September, 2020
No Comments on What Does A Combination of Double Top and Evening Star Do?

We know a double top is a strong bearish reversal pattern. When the price trends with a double top, it usually creates strong bearish momentum. At consolidation, if it produces an evening star, it creates more momentum that is more bearish since the evening star is a strong bearish reversal pattern as well. In today’s lesson, we are going to demonstrate an example of that.

The chart shows that the price has been roaming around within two horizontal levels. It has several rejections at the resistance zone. At the last two rejections, it produces two bearish engulfing candles. Moreover, the last candle breaches through the level of support or the neckline. It means the chart may get bearish since it produces a double top.

As expected, the price heads towards the South with good bearish momentum. The sellers are to wait for the price to consolidate and a bearish reversal candle/pattern to go short in the pair.

It seems that the price may have found its support. It produces a bullish inside bar followed by a Doji candle. If the price makes a breakout at the level of consolidation support, the sellers may go short in the pair and drive the price towards the South.

The chart produces a bearish engulfing candle closing well below consolidation support. It is a strong bearish reversal candle itself. The combination of the last three candles is called the evening star, which is a very strong bearish reversal pattern. It suggests that the price may get very bearish soon. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above the last candle’s highest high. We talk about the take-profit level in a minute. Let us find out how the trade goes.

The price heads towards the South with extreme bearish momentum. The last candle comes out as a bullish engulfing candle. It may make a bullish correction or reversal now. However, before producing the bullish engulfing candle, the price travels 2R. Even if the sellers close the entry at the last candle close, they make 1R profit.

When a trend starts with a strong reversal pattern such as the double top/double bottom, morning star, evening star, and it produces a strong reversal pattern at consolidation as well, the price usually produces a longer wave. Trade management is to immaculate, though. Thus, make sure that the trade is made relatively on a bigger time frame such as the H4, the daily, the weekly, etc.

Tags double top. evening star, Education, Forex, Forex price action, Price Action, Technical Analysis, trading

Crypto Market Analysis

Daily Crypto Review, Sept 23 – Gold Pushing BTC Towards $9,500; XRP Bears Taking Over

Post author By Ilija Rankovic
Post date 23 September, 2020
1 Comment on Daily Crypto Review, Sept 23 – Gold Pushing BTC Towards $9,500; XRP Bears Taking Over

The cryptocurrency sector has mostly tried to consolidate after this weekend’s losses. Bitcoin is currently trading for $10,496, representing an increase of 0.68% on the day. Meanwhile, Ethereum gained 0.26% on the day, while XRP lost 1.28%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, OMG Network gained 21.05% on the day, making it the most prominent daily gainer. Synthetix Network (20.54%) and Hyperion (16.87%) also did great. On the other hand, Avalanche lost 54.43%, making it the most prominent daily loser. It is followed by Orchid’s loss of 13.56% and Celo’s loss of 10.10%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight decrease since our last report, with its value currently being at 61.10%. This value represents a 0.19% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has slightly increased in value over the past 24 hours. Its current value is $333.91 billion, which represents an increase of $3.7 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the day trying to “end the battle” for the 23.6% Fib retracement level. With it ultimately ending up above it, Bitcoin has managed to stay out of the bearish cycle it was about to jump in. With that being said, the 1-day chart is still calling for a pullback towards the $9,300-$9,500. The large red triangle on our chart shows Bitcoin’s possible correlation with gold (as the gold chart looks exactly the same, with the exception that its triangle already popped to the downside), which may cause another push towards the downside.

BTC/USD 1-day Chart

If we take a look at the 4-hour time frame, the largest cryptocurrency by market cap managed to stay above the triangle bottom line and gain a foothold at the 23.6% Fib retracement line. However, Bitcoin’s sentiment is still slightly bearish in the short-term, which may ultimately result in another nosedive.

BTC/USD 4-hour Chart

Bitcoin’s short-term technicals are still very bearish. However, the more we look at longer time frames, the better the situation is. While the technicals are very bearish on the 4-hour chart, the daily and weekly overview are not so bad (though still tilted towards the downside), while the monthly overview is still very bullish.

BTC/USD 4-hour Technicals

Technical factors (4-hour Chart):

Price is slightly below its 50-period EMA and its 21-period EMA
Price slightly below its middle Bollinger band
RSI is neutral and recovering from the downswing (39.62)
Volume is slowly descending from a massive spike

Key levels to the upside Key levels to the downside

1: $10,630 1: $10,500

2: $10,850 2: $10,015

3: $11,000 3: $9,880

Ethereum

DeFi market is experiencing a bloodbath, with yearn.finance dropping 50% from its highs established in the past weeks and the rest of the market following. With that being said, many institutional investors have said they are macro-driven and not crypto-driven and that ETH’s fundamentals have never been better.

However, if we take a look at Ethereum’s chart, we can see that the situation is not exactly bullish. The second-largest cryptocurrency by market cap has barely established support at the $340 level. With the volume coming back to normal, it seems that ETH will stay at this level and try to consolidate in the short-term.

ETH/USD 4-hour Chart

Ethereum’s short-term technicals are extremely bearish, while its mid-term technicals are getting quite bullish. This confirms the story that the “smart money” is telling, which is that institutional money is coming into the market regardless of the short-term bearishness.

ETH/USD 4-hour Technicals

Technical Factors (4-hour Chart):

The price is below both its 21-period and its 50-period EMA
The between its middle and bottom Bollinger band
RSI is neutral but tilted towards the downside (34.67)
Volume has returned to average

Key levels to the upside Key levels to the downside

1: $360 1: $340

2: $371 2: $300

3: $400 3: $289

Ripple

XRP has spent the day trying to consolidate after a push towards the downside. The fourth-largest cryptocurrency by market cap has (for now) stopped its squeeze down after hitting the bottom of the bottom Bollinger band, which stopped it from descending further. While the sentiment is still bearish, the move towards the downside that will finish the Elliot impulse wave’s fifth leg may be delayed slightly.

XRP/USD 1-day Chart

Taking a look at the technicals, XRP is showing extreme bearish sentiment on both short-term and long-term charts. Its 4-hour, daily, weekly and monthly indicators are heavily tilted towards the downside, which is certainly not a good sign for the XRP bulls.

XRP/USD 4-hour Technicals

Technical factors (4-hour Chart):

The price is below both its 21-period EMA and its 50-period EMA
Price is slightly above its bottom Bollinger band
RSI is neutral and flat (38.38)
Volume is coming back to average

Key levels to the upside Key levels to the downside

1: $0.235 1: $0.227

2: $0.2454 2: $0.221

3: $0.266 3: $0.214

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Basic Strategies

An Exclusive Strategy To Trade The Fiber (EUR/USD) Currency Pair

Post author By Reddy Shyam Shankar
Post date 22 September, 2020
No Comments on An Exclusive Strategy To Trade The Fiber (EUR/USD) Currency Pair

Introduction

In the previous article, we discussed a trading strategy that was a combination of EMA and RSI. Presuming that all the readers easily understood it, we will now discuss a trading strategy that is a combination of three technical indicators. Today’s article will acquit us with another useful and reliable trading system that is based on the combination of Simple Moving Average, Stochastic Oscillator, and Relative Strength Index (RSI).

Time Frame

This strategy is only applicable on the 1-hour time frame. This is because all the indicators tend to sync in this time frame. Therefore, the strategy may not be suitable for day traders.

Indicators

The strategy consists of three indicators – a 150-period Simple Moving Average (SMA), Relative Strength Index (RSI) with period 3, and a Full Stochastic Oscillator with standard settings. The overbought and oversold levels for the indicators stand at 70-80 and 30-20, respectively.

Currency Pairs

As the name suggests, this strategy is exclusively meant for ‘EUR/USD.’ The liquidity and volatility of EUR/USD are extremely supportive of this strategy.

Strategy Concept

We first identify the direction of the market using the 150-period SMA and then establish a channel in the same direction. This is the first condition that has to be met before we can initiate a ‘trade.’ One could also this is a ‘channel’ based strategy as it involves going ‘long’ at the bottom of the channel and ‘short’ at the top once the indicators generate signals.

For a ‘long’ entry, we need to see if the Relative Strength Index drops in the oversold area. Once it drops, we look for a bullish crossover of the Stochastic lines, while they are also within their oversold zone. In simple words, we need a channel in a bull trend with both the indicators indicating that the market is oversold and with the Stochastic displaying a bull reversal.

Conversely, a ‘short’ trade is generated when the price starts moving in a downward channel in a bearish trend. The RSI and Stochastic should be in the overbought area that will later display a bearish reversal. As soon as the Stochastic fast and slow lines make a bearish crossover, we enter for a ‘sell’ on the next price bar. All of the above price action must happen below the 150-period SMA.

The strategy offers a high degree of capital protection as we place our stop-loss at the most recent ‘swing low’ or ‘swing high.’ As far as the ‘take-profit’ is concerned, we can use a fixed profit target, or we could scale out as the market approaches our target and protecting it with a trailing stop. An exit signal is also generated by the Stochastic indicator, which we will be discussing in the upcoming section of the article.

Trade Setup

In order to explain the strategy, we have considered the 1-hour chart of EUR/USD, where we will be applying the rules of the strategy to execute a ‘long’ trade.

Step 1: First of all, open the 1-hour chart of EUR/USD and establish the trend of the market. Plot Simple Moving Average (SMA) with a period of 150, Stochastic and Relative Strength Index with their default settings on the chart. If the price is above the 150-period SMA, we say that the market is in an uptrend. Whereas if the price is below the 150-period SMA, we say that it is in a downtrend. Next, draw a channel within the trend. It is better to have an upward channel in an uptrend and a downward channel in a downtrend.

Step 2: This is the crucial step of the strategy, where we align the three indicators together to generate a signal. After the identification of the trend and channel, we need to wait for the price to come at the extreme of the channel. In an upward channel, the price should be at the bottom of the channel, while in a downward channel, the price should be at the top.

Once the price reaches these extremes, we should watch the Stochastic and RSI. We enter ‘long’ when we notice a bullish crossover in Stochastic and an oversold circumstance of RSI (below 40). This means that the price might be putting up a ‘low’ that will result in a reversal. Similarly, we will go ‘short’ in the currency pair when we notice a bearish crossover in Stochastic along with an overbought condition of RSI (above 60).

The below image shows an example where the above step is being accomplished.

Step 3: In this step, we shall determine the Stop-Loss and Take-Profit for the trade where both these levels are derived mechanically. We place the stop-loss just below the ‘swing low’ from where the reversal took place. It will be above the recent ‘swing high’ in a ‘short’ trade. When speaking of the take-profit level, there is no fixed point for it. We take our profits when Stochastic reaches the opposite overbought/oversold level. At this point, we can either exit the trade, scale-out, or use a trailing stop. This can help in increasing the risk-to-reward (RR).

In our case, the risk-to-reward (RR) ratio of the trade was 1.5, which is above average.

Strategy Roundup

The RSI+Stochastic+SMA strategy is a reliable trend trading system that accurately pinpoints the bottom of a channel in a trend. More importantly, the strategy can provide the best-with-trend entry points that are necessary to increase the probability of winning. Since we are applying this strategy on a higher time frame, it will limit the effects of whipsaws that are encountered more often these days.

Tags Basic Strategies, Currency pairs, Education, EUR-USD, Fiber, Forex, Forex Strategies, Forex Trading, RSI, SMA, Stochastic, Stochastic Indicator, trading

Forex Fundamental Analysis

Do You Know That ‘IP Addresses’ of A Nation Is Also Considered A Macro Economic Indicator?

Post author By Reddy Shyam Shankar
Post date 22 September, 2020
No Comments on Do You Know That ‘IP Addresses’ of A Nation Is Also Considered A Macro Economic Indicator?

Introduction

The advent of the Internet and the rapid growth of technology over the years has dramatically changed the way we define development and living standards. The number of literate people nowadays do own an electronic gadget with access to the Internet. It was not the case long before, but now access to the Internet is seen as a growth measure for countries. Understanding the IP addresses count as a means to assess how developed a nation is fascinating to acknowledge and look back on how the Internet changed the world.

What is an IP Address?

Each electronic gadget with internet access has a unique identifier called its IP address. An analogy would be like the “from” address in a post letter. Successful transfer of to-and-fro of data from mailer to recipient is possible when “from” and “to” addresses are clear. The unique address of your computer machine is used to relay data across a network in either direction.

The majority of the networks today use TCP/IP (Transmission Control Protocol/Internet Protocol) as a means to communicate with other machines over a network. The unique identifier for a computer is known as its IP address.

There are two standards for IP address: IPv4 and IPv6 (v stands for version). All computers have the IPv4 address, and it is the prior version consisting of (2⁴ =32 bit binary digits). At the same time, it will soon exhaust all possible combinations as more people start accessing the Internet. A sample IP address would look like “138.23.45.23” this. The IPv6 (2⁶ = 128-bit binary digits) is the later implementation that came into the picture when we realized the limitation of IPv4 as the Internet was not an immediate trendsetter during its initial launch. The IPv6 will have six numbers as part of the address and would look something like “12.158.23.61.3.23” this.

How can the IP Addresses numbers be used for analysis?

Ten-twenty years ago, this article would be invalid as the Internet’s popularity grew exponentially until today to become an indispensable part of most economies. The Internet is now the primary source of information and communication. In today’s world countries, where the majority of people do not have access to the Internet are seen as third-world countries. It is a meaningful inference, though. Countries that have high literacy rates are bound to be aware of the Internet, computers, and similar electronic gadgets. People are rapidly incorporating technology all across the world and, through the Internet, are more connected than ever before.

Even if we look at the statistics and see the countries with one of the highest number of IP addresses are generally the most developed nations. Likewise, countries with the least number of IP addresses are generally underdeveloped nations. As more people are educated, have enough money to own a computer or electronic gadget, and have access to the Internet are likely to have a better living standard than those who do not.

One likely drawback of this type of inference would be that the IP address count is also a function of the population. Countries like India or China that have a large population count would easily surpass those who have a relatively small area of land and population. In that case, a percentage of the total population could be used to compare how many people have access to the Internet. In this digital age, the Internet is a powerful tool to incorporate new technologies, take advantage of access to external resources, and rapidly grow.

Businesses that do not have a “.com” are typically seen as not an established brand themselves. A digital presence of a business is almost mandatory as it has become one of the primary sources through which people know about the company. People, businesses, corporations, and governments are all accessible to us via the Internet. Hence, IP addresses count can give us more insight into how developed a country is than we think.

For instance, Bangalore, a city in India, is nowadays referred to as the Indian Silicon Valley due to a massive number of IT and Software companies operating as a primary business center there. With India incorporating electronic gadgets and the Internet (3G, 4G, and now 5G soon) boosted the economy, providing rapid growth and for consecutive years had one of the highest GDP growth rates globally. In this sense, the IP address count trend can be used to forecast growth trends in other developing countries.

Internet is a gold mine, companies like Facebook, Google have a net worth in billions, and the traditional definitions of large businesses do not apply to internet giants. Making proper use of the Internet and the available resources can potentially help in earning huge revenues. Even currency or stock trading are all done online for which we need internet access. Even this very article you are reading requires an internet connection and a computer (or a mobile) to begin-with.

Impact on Currency

The IP address count of countries serves as a general measure of prosperity. The relative growth of countries by the count and percentage share can be used to understand how open and adaptive countries are to the latest technologies. The countries with increasing IP addresses are likely to undergo a transformation and achieve high economic growth. We can forecast long-term trends through these statistics due to which it is a low-impact leading economic indicator as currency markets focus on current economic trends.

Economic Reports

The global count of IP addresses across countries is available through an internet company known as Akamai. However, the quarterly consolidated and graph plots of these statistics of most countries are available on Trading Economics.

That’s everything about IP Address Forex fundamental driver. It is obvious that there won’t be any impact on the price charts after the news release of this economic indicator. Cheers!

Tags Broadband, Economics, Education, Forex, Forex Fundamental Trading, Forex Trading, Fundamental Analysis, fundamentals, Internet, IP Addresses, Macro Economic Indicators, trading

Forex Daily Topic Forex Price Action

Using Weekly High or Weekly Low in the H4 Chart Trading

Post author By Tareq Sikder
Post date 22 September, 2020
1 Comment on Using Weekly High or Weekly Low in the H4 Chart Trading

The Weekly high or Weekly low plays a significant part in the H4 chart traders. In today’s lesson, we will demonstrate an example of how last week’s high works as a level of support and pushes the price towards the upside by offering a long entry to the buyers. Let us get started.

It is an H4 chart. Look at the vertical dotted line. The price starts its week with a spinning top having a bullish body. The price then heads towards the North and come down again. In the end, the price closes its week around the level where it starts its trading week.

The pair starts its week with a spinning top having a bearish body this time. The price heads towards the North and makes a breakout at the last week’s high. The price usually comes back at the breakout level to have consolidation and ends up offering entry upon producing a reversal candle. Let us draw the breakout level to have a clearer picture.

The drawn line indicates the last week’s high. Now, the H4 chart suggests that the price made a breakout, and the pair is trading above the level currently. The buyers are to wait for the price to consolidate and produce a bullish reversal candle to go long in the pair.

The chart produces a bearish candle closing within the breakout level first. The next candle comes out as a Doji candle. The buyers are to wait for a breakout at consolidation resistance to go long in the pair. Let us proceed to the next chart to find out what the price does next.

The chart produces three more bullish candles. One of the candles breaches through the level of resistance closing above it. The buyers may trigger a long entry right after the last candle closes. The buyers may set their stop loss below the breakout level. To set the take-profit level, the buyers may set their take profit with 2R. It is the best thing about this trading strategy. It offers at least 2R. Sometimes the price travels even more than 2R. Let us find out how the trade goes.

The price heads towards the North with good bullish momentum. Before hitting 2R, it produces a bearish inside bar. It continues its journey towards the North and travels more than 2R. The last candle comes out as a bearish engulfing candle. It suggests that the price may get bearish now.

The best things about using the strategy are

Traders know where the price is going to consolidate.
Which level is going to produce the signal candle.
It offers an excellent risk-reward.

Tags Breakout, Bullish, bullish reversal candle, Education, Forex, Forex price action, Price Action, Technical Analysis, trading, weekly high, weekly low

Forex Market Analysis

Daily F.X. Analysis, September 22 – Top Trade Setups In Forex – Fed Chair Powell Testifies!

Post author By Ali B.
Post date 22 September, 2020
1 Comment on Daily F.X. Analysis, September 22 – Top Trade Setups In Forex – Fed Chair Powell Testifies!

The economic calendar is again busy with Federal Reserve events such as today, the Fed Chair Powell Testifies. Jerome Powell is expected to testify on the CARES Act before the House Financial Services Committee in Washington DC. Besides this, the eyes will be on the Existing Home Sales from the United States. Overall, the market is likely to exhibit corrections today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.7713 after placing a high of 1.18715 and a low of 1.17315. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair slumped on Monday amid the reclaimed safe-haven status by the U.S. dollar and the re-imposed lockdown measures to curb the spread on the virus in Europe.

The U.S. Dollar Index was up by 0.8% to 93.69 level on Monday, its highest level since August 13. This supported the greenback on its way to reclaiming its safe-haven status and pulled the EUR/USD pair on the downside.

According to the European health minister, the second wave of coronavirus in France, Austria, and the Netherlands could spike and affect the European countries and hold threats that Germany could also see infection spikes.

The U.K. is also reporting new coronavirus cases and the Britain Chief Scientific adviser, Patrick Vallance, said that there could be 50,000 new infections every day by mid-October if the virus continues at its current rate. The rising number of coronavirus cases from Europe weighed on prices of EUR/USD pair on Monday.

Furthermore, the European Central Bank President Christine Lagarde said that Europe’s economic rebound was uncertain and uneven, and it required a careful assessment of incoming data, including the evolution of the coronavirus pandemic. On Monday, Lagarde said that the recovery strength was dependent on the future evolution of the pandemic and containment policies’ success. These remarks came in as the economists expect the ECB to expand its emergency 1.35T euros bond-buying program this year to revive inflation.

Germany’s Bundesbank also said that it expected the recovery in Europe’s largest economy to continue at a slower pace during the rest of the year. These concerning comments raised caution and stressed the local currency that ended up weighing on EUR/USD pair prices on Monday.

Meanwhile, the risk sentiment further deteriorated after the US-China tensions continue to expand along with the delayed U.S. stimulus measure that raised the safe-haven appeal. The U.S. dollar regained its safe-haven status and was up by 0.8% on Monday. This strong U.S. dollar added further pressure on EUR/USD prices.

Daily Technical Levels

Support Resistance

1.1709 1.1851

1.1649 1.1933

1.1568 1.1993

Pivot Point: 1.1791

EUR/USD– Trading Tip

The stronger U.S. dollar has also driven sharp selling in the EUR/USD pair as it trades at 1.1768 level today. The pair gains support over a double bottom pattern of 1.1736, and a bullish crossover of 1.1773 level may extend the buying trend until 1.1797 level. Bullish bias can remain strong today as most of the traders may do profit-taking in the EUR/USD pair. Let’s stay bullish over the 1.1728 level and bearish below the same level today.

GBP/USD – Daily Analysis

Today in the Asian trading hours, the GBP/USD pair was closed at 1.28156 after placing a high of 1.29664 and a low of 1.27751. Overall the movement of the GBP/USD pair remained bearish throughout the day. The GBP/USD pair extended its previous day’s losses on Monday and fell to its 5-days lowest level amid the broad-based U.S. dollar strength and rising number of coronavirus cases in the U.K., along with Brexit worries.

The rising signals drove the downward momentum in the Pound to U.S. dollar exchange rate that the U.K. government could send Britain into another lockdown. The rising concerns over Britain’s economy and the stalled Brexit process further weighed on the Sterling that dragged the GBP/USD prices on Monday.

The top science adviser of the U.K., Sir Patrick Vallance, said on Monday that U.K.’s coronavirus numbers could reach new 50,000 cases per day by mid-October. His warning was based on current trends that showed that the pandemic was doubling every seven days.

Valance said that 50,000 figure was a warning and not a prediction. In response to his warning, the fears that the U.K.’s economy could see another round of lockdown measures to control the spread of coronavirus raised and weighed on local currency. The weak British Pound added further pressure on the declining GBP/USD prices on Monday.

On the Brexit front, the former Prime Minister of the UK, Theresa May, said that she could not support the government’s plan to override parts of its Brexit agreement with the European Union. She said that moving ahead with this law would break international law and damage the United Kingdom’s trust. On Tuesday, the internal market bill will be voted on in the Commons as it had already passed the first hurdle last week. Ministers have said that the bill contains vital safeguards to protect Northern Ireland and the rest of the U.K.

In simple terms, the bill is designed to enable goods and services to flow freely across England, Scotland, Wales, and Northern Ireland after Brexit on January 1 when U.L. will leave the E.U.’s single market customs union. However, this bill gives the government the power to change the aspects of the E.U. withdrawal agreement that was signed between both nations earlier this year. Theresa May has spoken against this bill, and the markets have started selling British Pound that ultimately led to a declining GBP/USD pair.

On the data front, the Rightmove Housing Price Index in September rose to 0.2% against the previous -0.2% and supported GBP. On the other hand, the greenback was strong across the board as it regained its safe-haven status amid the increasing concerns over the U.S. stimulus measure. The strength of the U.S. dollar added further pressure on GBP/USD pair on Monday.

Daily Technical Levels

Support Resistance

1.2737 1.2930

1.2659 1.3045

1.2544 1.3123

Pivot point: 1.2852

GBP/USD– Trading Tip

The GBP/USD traded sharply bearish at 1.2784 support level, having violated the upward channel on the hourly chart. The triple bottom level of 1.2780 is likely to keep the GBP/USD pair supported, and violation of this may lead the Cable towards 1.2727 level. On the higher side, the GBP/USD may drive upward movement until the 1.2840 level. The 50 periods EMA are likely to extend selling until 1.2727 level. The MACD is currently moving into the bullish zone; however, it can be merely for correction. Let’s consider taking a sell trade below 1.2780 level today.

USD/JPY – Daily Analysis

The USD/JPY currency pair failed to extend its early-day recovery moves and dropped to a 104.47 level while representing 0.11% losses on the day. However, the currency pair losing streak could be attributed to the downbeat market sentiment, which tends to underpin the safe-haven Japanese yen and contributed to the currency pair declines. Hence, the market trading sentiment was being pressured by the negative comments from the Federal Reserve members.

Apart from this, the recent resurgence in the pandemic, mainly in Europe and the U.K., also weighing on the market risk tone. Across the pond, the broad-based U.S. dollar weakness, triggered by the multiple factors, could also be considered as a key factor that dragged the currency pair lower. Currently, the USD/JPY currency pair is currently trading at 104.53 and consolidating in the range between 104.47 – 104.75.

However, the market risk tone extended its previous 5-consecutive day selling bias as fears of the coronavirus (COVID-19) resurgence disturbed the global markets. In the meantime, the Federal Reserve members’ downbeat comments also exerted pressure on the global traders. It is worth mentioning that the Fed Chair Jerome Powell said that the economic recovery track remains “highly uncertainty.” Moreover, the Federal Reserve Bank of St. Louis President James Bullard, also delivered a dovish tone while stating that the Fed will be much less pre-emptive about increasing rates.

On the flip side, the renewed tussle between the U.S. and China and Trump’s latest warnings to the firms helping Iran build arms also exerted downside pressure on the market risk-tone. The tension further boosted after the U.S. Secretary of State Mike Pompeo took help from France, Germany, and the U.K. to reject China’s South China Sea claims at the United Nations (U.N.). This, in turn, underpinned the safe-haven Japanese yen and dragged the currency pair lower.

At the coronavirus front, the recent hike in the virus cases, mainly in Europe and the U.K., probes the buyers. As per the World Health Organization’s (WHO) regional director Hans Kluge, Europe reported 300,000 new infections, the most significant weekly rise ever, including the first spike in spring. Meanwhile, the U.K. is also preparing to slap new restrictions, which keeps the market trading ton sluggish and contributed to the currency pair losses.

Across the ocean, the decision-makers from the European Central Bank (ECB) and the Reserve Bank of Australia (RBA) also cited their worries in the latest appearances, which also probe the bulls. This was evident from a bearish sentiment around the equity markets, which underpinned the safe-haven Japanese yen and contributed to the USD/JPY pair’s downfall.

Despite the risk-off market sentiment, the broad-based U.S. dollar failed to gain any positive traction and edged lower on the day amid worries over the U.S. Congress’ stimulus impasse. Furthermore, the concerns about the ever-increasing number of coronavirus cases faded the optimism over the V-shape recovery, which also kept the U.S. dollar under pressure. However, the losses in the U.S. dollar kept the USD/JPY currency pair lower. Whereas, the U.S. Dollar Index that tracks the greenback against a bucket of other currencies fell to 93.623.

Looking forward, the traders will keep their eyes on the continuous drama surrounding the US-China relations and updates about the U.S. stimulus package. Given the holiday in Japan, due to the Autumnal Equinox Day, coupled with an absence of major data/events, the USD moves and coronavirus headline will be key to watch.

Daily Technical Levels

Support Resistance

104.44 105.10

104.15 105.47

103.78 105.76

Pivot point: 104.81

USD/JPY – Trading Tips

Despite sharp movement in the other currency pairs, the USD/JPY continues to follow the same technical setup. On the 4 hour chart, the downward channel is anticipated to drive selling sentiment in the USD/JPY pair as it provides resistance at the 104.800 level. On the downside, the support lingers at 104.100 level, and a bearish breakout can lead USD/JPY price further lower towards 103.700 level. The eyes will remain on the Fed Chair Powell Testifies as it may drive further market trends.

Good luck!

Tags EURUSD, forex review, Forex Trading, Fundamental Analysis, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USDJPY

Forex Options

FX Options Market Combined Volume Expiries for 22nd September 2020

Post author By Kevin O'Sullivan
Post date 22 September, 2020
1 Comment on FX Options Market Combined Volume Expiries for 22nd September 2020

…………………………………………………………………………………………………………

FX option expiries for Tuesday, September 22 at the 10 am NY cut

EUR/USD (euro amount)

1.1770 659m
1.1800 837m
1.1820 1.0bn
1.1850 796m

EURUSD pair is approaching oversold with a double bottom formation and potential for a phase of consolidation.

USD/JPY (USD)

104.35 600m
104.48 500m
105.00 827m
105.20 629m
105.75 450m
105.90 1.0bn
106.00 354m

USDJPY pair is in the oversold region, but not getting bought. Small candlesticks suggest a breather for the pair with more downside potential.

GBP/USD (GBP)

1.2950 949m

GBPUSD is on the back foot, the option is out of play.

NZD/USD (NZD)

0.6660 240m

NZDUSD is in a bear trend and continuation from a pullback. Double bottom potential from 10/11 Sept.

………………………………………………………………………………….

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

Tags Forex, fx options, options, trading

Forex System Design

Designing a Trading Strategy – Part 2

Post author By Eduardo Vargas
Post date 22 September, 2020
No Comments on Designing a Trading Strategy – Part 2

Introduction

Our previous article presented the three key elements of a trading strategy, which is the base of a trading system. In this second part of the designing process of a trading strategy, we will present the first component of a trading strategy corresponding to the entry and exit.

Trade Positioning and Trading Strategy

A trade is made of at least by a buy order and a sell order. In other words, when, for example, the trader places a long position (buy), he should close it using a sell (cover) order.

On the other hand, a trading strategy with a positive expectation can identify and provide both long and short trading opportunities under a specific condition. Similarly, the strategy must be able to determine when to close the trading position and exit the market.

Generating Trading Opportunities

As we have seen in previous articles, a trading strategy is born from an idea that we believe might generate profits in any financial market. In this regard, the entry signals can vary from the simplest to the most complex requirement.

A buy position will arise when the price meets a condition for a bull market. On the contrary, a short position will activate if the market accomplishes the conditions for a bear leg. Some examples of long entries are:

The 5-period fast moving average crosses over the 55-period slow moving average.
The 65-period RSI oscillator closes above a reading of the 52-level.
The price surpasses and closes above the high of the previous day.
The price breaks and closes above the high of the 55-day range.

The definition of the exit rule of the trade must be considered from the basis that an open position in one direction must be closed with a position of equal size and opposite direction. For example, if the trader has opened a long trade, it will be closed with a selling trade. In this way, the developer should define a set of criteria that allow the execution of the closing of the trade. For example:

1) Closing the trade if the price advances 1.5 times the risk of the transaction.
2) The price reaches 3 times the ATR of 14 periods.
3) The rolling average of 5 periods crosses the average of 21 periods.

An example of Trading Signals using Metatrader 4

Metatrader 4 is one of the most popular trading platforms in the retail trading segment. Despite other trading platforms, such as TradeStation, Multicharts, or VisualChart, we will use Metatrader for our example. This platform includes the MetaEditor application, with which the creation of trading strategies can be developed through the programming of custom indicators.

In the following example, we show the creation of a custom indicator based on the crossing of two moving averages. This trading strategy uses a 5-period Weighted Linear Moving Average (Fast LWMA) and a 55-period Simple Moving Average (Slow SMA).

Now it is time to define the entry and exit rules of our trading strategy as ideas and code rules for MetaEditor of MetaTrader 4.

The setting of each moving average period is as follows:

extern int Period1 = 5;
extern int Period2 = 55;

The entry criterion will occur as follows:

A buy position will be activated when the LWMA(5) crosses above the SMA(55).

//Open Buy Order, instant signal is tested first
   if(Cross(0, iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) >
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0)) 
//Moving Average crosses above Moving Average
   )
     {
      RefreshRates();
      price = Ask;   
      if(IsTradeAllowed())
        {
         ticket = myOrderSend(OP_BUY, price, TradeSize, "");
         if(ticket <= 0) return;
        }
      else //not autotrading => only send alert
         myAlert("order", "");
     }

A sell position will trigger when the LWMA(5) crosses below the SMA(55).

//Open Sell Order, instant signal is tested first
   if(Cross(1, iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) <
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0)) 
//Moving Average crosses below Moving Average
   )
     {
      RefreshRates();
      price = Bid;   
      if(IsTradeAllowed())
        {
         ticket = myOrderSend(OP_SELL, price, TradeSize, "");
         if(ticket <= 0) return;
        }
      else //not autotrading => only send alert
         myAlert("order", "");
     }
  }

The exit criterion will occur as follows:

A buy position will be closed if the LWMA(5) crosses below the SMA(55).

//Close Long Positions
   if(iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) <
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0) 
//Moving Average < Moving Average
   )
     {   
      if(IsTradeAllowed())
         myOrderClose(OP_BUY, 100, "");
      else //not autotrading => only send alert
         myAlert("order", "");
     }

A sell position will be closed if the LWMA(5) crosses above the SMA(55).

//Close Short Positions
   if(iMA(NULL, PERIOD_CURRENT, Period1, 0, MODE_LWMA, PRICE_CLOSE, 0) >
 iMA(NULL, PERIOD_CURRENT, Period2, 0, MODE_SMA, PRICE_CLOSE, 0) 
//Moving Average > Moving Average
   )
     {   
      if(IsTradeAllowed())
         myOrderClose(OP_SELL, 100, "");
      else //not autotrading => only send alert
         myAlert("order", "");
     }

Until now, we have not defined a money management rule or the position size for our trading strategy, just entries, and exits.

Conclusions

Entry and exit criteria are the basis of a trading strategy, which arises from an idea. The trading strategy’s essential objective is to obtain an economic profit from applying specific rules in both long and short positioning in the financial market.

In this educational article, we presented the case of a trading strategy based on two moving averages crossovers. In particular, we used the LWMA(5) as the signal moving average with an SMA(55) as the slow m.a.

In the following article, we will present some filters to avoid false signals.

Daily Crypto Review, Sept 22 – Crypto Sector Plummets Alongside Stocks and Gold; Markets Preparing for the US Presidential Election

The cryptocurrency sector has dropped severely as the traditional markets tumbled and caused the crypto market to do the same. Bitcoin is currently trading for $10,458, representing a decrease of 4.38% on the day. Meanwhile, Ethereum lost 7.68% on the day, while XRP lost 5.87%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, only three have actually increased in value. Orchid gained 25.73% on the day, making it the most prominent daily gainer. Loopring (5.88%) and Hyperion (5.03%) also did great. On the other hand, Celo lost 19.17%, making it the most prominent daily loser. It is followed by Uniswap’s loss of 19.04% and Aave’s loss of 16.93%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced an increase since our last report (as it always happens when the market drops), with its value currently being at 61.29%. This value represents a 0.67% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has lost value over the course of the past 24 hours. Its current value is $330.84 billion, which represents a decrease of $21.61 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the day in a bearish pullback, which stopped at the 23.6% Fib retracement. However, its current position is just below that line, which makes it possible that it will continue its drop towards $9,300 to $9,500 levels. This push towards the downside was a bit premature, and most likely caused by the traditional market plummeting. Traditional markets have historically been slightly bearish before the presidential election, while they quickly recovered shortly after.

BTC/USD 4-hour Chart

If we take a look at the 4-hour time frame, the largest cryptocurrency by market cap has bounced off of the pink line after failing to break it, pushing further towards the downside, and ultimately breaking the 23.6% Fib retracement level. Bitcoin’s immediate position will be determined by whether it can break the 23.6% Fib retracement, but its overall short-term position is still bearish.

BTC/USD 4-hour Chart

Bitcoin’s short-term technicals have turned bearish as BTC dropped in price. However, its longer-term technicals are still bullish. With that being said, we can expect Bitcoin to drop a bit further before turning towards the upside.

BTC/USD 4-hour Technicals

Technical factors (4-hour Chart):

Price is far below its 50-period EMA and its 21-period EMA
Price slightly above its bottom Bollinger band
RSI is extremely close to being oversold (34.92)
Volume is slowly descending from a massive spike

Key levels to the upside Key levels to the downside

1: $10,630 1: $10,500

2: $10,850 2: $10,015

3: $11,000 3: $9,880

Ethereum

While fundamental traders are calling for ETH’s price increase, most traders that take technical indicators into account are calling for a pullback towards $300. Etherum has lost over 7% of its value in the past 24 hours, with the move towards the downside ending at $340.

ETH/USD 4-hour Chart

Ethereum’s short-term technicals are still extremely bearish, while its mid-term technicals are tilted towards the bear side just a bit. With that being said, we can expect Ethereum to push towards the $300 level, unless Bitcoin pulls out of its bearish sentiment and pushes the market upwards.

ETH/USD 4-hour Technicals

Technical Factors (4-hour Chart):

The price is far below both its 21-period and its 50-period EMA
The slightly above its bottom Bollinger band
RSI is recovering from being oversold (32.42)
Volume is descending from its spike during the downswing

Key levels to the upside Key levels to the downside

1: $360 1: $340

2: $371 2: $300

3: $400 3: $289

Ripple

XRP has spent the day (as almost every single cryptocurrency) pushing towards the downside. While the overall market move seemed premature and looked like it was pushed by the traditional markets, that may not be the case with XRP. If we take a look at the 4-hour chart, XRP’s 4th leg of the Elliot impulse wave has ended, which prompted the price to go towards the downside. Traders can most likely expect XRP’s price pushing towards $0.21.

XRP/USD 4-hour Chart

Taking a look at the technicals, XRP is showing bearish sentiment with both its short-term and long-term indicators. Its indicators change from just bearish to extremely bearish the longer we go in time, which implies an inherent bearishness when it comes to XRP.

XRP/USD 4-hour Technicals

Technical factors (4-hour Chart):

The price is well below both its 21-period EMA and its 50-period EMA
Price is slightly above its bottom Bollinger band
RSI is oversold but recovering (27.50)
Volume is coming back to normal after a huge spike (low)

Key levels to the upside Key levels to the downside

1: $0.235 1: $0.227

2: $0.2454 2: $0.221

3: $0.266 3: $0.214

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Basic Strategies

Generating Reliable Trading Signals Using ‘The Power of Two’ Forex Strategy

Post author By Reddy Shyam Shankar
Post date 21 September, 2020
No Comments on Generating Reliable Trading Signals Using ‘The Power of Two’ Forex Strategy

Introduction

In the previous article, we discussed a strategy that was based on three indicators, namely the RSI, Stochastic, and SMA. It was not only a bit complex in nature but involved many rules that had to be fulfilled before we could make a ‘trade.’ Also, the probability of occurrence of the signal was lower as it involved many indicators.

In today’s article, we will discuss a setup that is observed more often in the market and has a higher probability of success. Again, the strategy may not be suitable for day traders as it used a longer time frame for analysis. In this strategy, we will be examining the 4-hour time frame chart of the currency pairs. This is simpler than the previous strategy.

Time Frame

As mentioned in the previous paragraph, the strategy yields the best results when applied on the 4-hour time frame. However, the ‘daily’ is also a suitable time frame for the strategy.

Indicators

We will be using the Relative Strength Index (RSI), with a 14-bar period. The overbought and oversold levels stand at 70 and 30, respectively. We also apply the Bollinger Band indicator with its default settings.

Currency Pairs

This is the best part of the strategy, where we can apply on all currency pairs listed on the broker’s platform, including few minor and exotic pairs.

Strategy Concept

The strategy is based on a simple concept that the RSI is a very powerful indicator of a trend. It can accurately identify the highs and lows that will give rise to a new trend. This is combined with the Bollinger Band indicator to generate exact entry points for the strategy.

The trend becomes especially reliable when the reading of RSI makes a swift jump from an oversold level to a median level (above 50) and vice-versa. The Bollinger Band indicates the formation of a ‘low,’ after which we can execute a ‘long’ trade. Similarly, when Bollinger Band pin-points a ‘high,’ we execute ‘short’ trades in the market. The exact rules of ‘entry’ will be discussed in the next section of the article.

The risk-to-reward (RR) of the trades done using this strategy is highly appealing. This is because it employs a small stop-loss with a much higher take-profit. If the market is in a strong trending state, traders can ride their profits as long as they see signs of reversal.

Trade Setup

In order to explain the strategy, we have considered the 4-hour chart of GBP/JPY, where we will be illustrating a ‘long’ trade. Here are the steps to execute the strategy.

Step 1

The first step is to open the 4-hour timeframe of the desired currency pair and plot Bollinger Band and RSI indicator on it. Just from the appearance and basic knowledge of trends, identify the trend of the market. This means if the market is making higher highs and higher lows, the market is in an uptrend. And if we see lower lows and lower highs on the chart, it is a downtrend. We can also take the assistance of a simple moving average (SMA) to get a clear picture of the trend.

In the case of GBP/JPY, it is evident from the below image that the market is in a strong downtrend.

Step 2

Next, we need to wait for the price to go above the highest point visible on the chart, where we will be analyzing signs of a reversal to the downside. Similarly, we need to wait for the price to go below the lowest point visible on the chart, where we will be analyzing the signs of a reversal to the upside. For example, suppose the price is near its lowest point visible on the chart. In that case, we say that market may be reversing to the upside if a bearish candle closes below the lower band of the Bollinger Band, and the immediate next candle is a bullish candle that closes above the lower band. This has to be accompanied by the RSI moving into the oversold zone (below 30).

In case of a reversal of an uptrend, a bullish candle should close above the upper band of the Bollinger band with a bearish candle that closes below the upper band. At this price, the RSI should indicate an overbought situation of the market (above 70).

Step 3

This is the easiest step of the strategy where we have to only observe the movement of price following the ‘two-candle’ pattern discussed in the previous step. Essentially, we need to see that the price starts moving in the direction of the reversal, i.e., above or below the median line of Bollinger Band. This should again be accompanied by a rising RSI for ‘long’ entry and falling RSI for a ‘short’ entry.

In the below image, we can see how the rise in price above the median line goes with a sudden rise in RSI.

Step 4

In this step, we determine the stop-loss and take-profit for the trade done using this strategy. The stop-loss is placed just below the ‘low’ or above the ‘high’ from where the market reverses. However, there is no fixed take-profit level here. We exit a ‘long’ trade once RSI goes below 50 and start moving lower. While a ‘short’ trade is exited as soon as RSI goes past the level of 50.

As we can see in the image below, the market reversed fully, and the trade turned to be extremely profitable.

Strategy Roundup

When Bollinger Band and RSI are combined to generate trade signals, we can accurately identify the market top and bottom where we take advantage of the reversal. But this can only be done efficiently after practicing well. The above strategy is suitable for swing and part-time traders.

Tags BB, bollinger bands, Currency pairs, Education, Forex, Forex Trading, Indicator Based Trading, Relative Strength Index, RSI, Technical Trading, trading

Forex Fundamental Analysis

The Impact Of ‘Total Vehicle Sales’ Data On The Forex Market

Post author By Reddy Shyam Shankar
Post date 21 September, 2020
No Comments on The Impact Of ‘Total Vehicle Sales’ Data On The Forex Market

Introduction

Vehicle sales figures offer us much insight into the consumer demand and overall health of the economy. Changes in vehicle sales figures could also be used for predicting the near-future direction of economic growth. Understanding how vehicle sales figures can be used to infer upcoming trends in crucial economic indicators could always give us the advantage of being ahead of the market trend.

What is Total Vehicle Sales?

Total Vehicle Sales represent the overall number of domestically produced vehicles that have been sold. The reports could be monthly, quarterly, or even yearly, depending on the reporting vehicle manufacturing companies. In other words, Total Vehicle Sales is the annualized new vehicles sold count for a given month.

The automotive industry represents a vital component of the United States economy. It makes up about 3% of the total GDP and remains the largest industry in the manufacturing sector. It is responsible for employing lakhs of people in the United States and transacts in billions each year.

How can the Total Vehicle Sales numbers be used for analysis?

At first, the importance of the vehicle sales figure may not be apparent, but vehicle sales serve useful for economic analysis. A vehicle is a significant purchase for people. People buy vehicles when they are confident about their ability to make payments. It is possible only when they have considerable disposable income or procure loans at lower interest rates.

When people’s disposable income is considerable, it means the people are affluent financially and reflects the good health of the economy. On the other hand, when loans are available to more people at lower interest rates, it means there is sufficient monetary stimulus from Central Banks to promote economic growth and money is easy to come by. Such inflationary pressures stimulate economic growth and indicate that the economy is likely to grow steadily.

The increase in vehicle sales figures reinforces the positive affirmations forecasted by other economic indicators like consumer spending or interest rates. As consumer spending comprises more than two-thirds of the GDP, an increase in vehicle sales likely indicates a healthy two or three quarters that are going to continue in the economy.

Equity markets respond and perform exceptionally well around the Total Vehicle Sales figures, as the increasing figures in sales imply increasing profits for the related companies. The increase in profits due to sales is doubled down by the stock prices soaring higher, and vice-versa also holds. Hence, the vehicle sales figures are given much-deserved attention every month by the equity traders and the media. To some degree, currency markets feed off from the equity markets, but the effect is noticeable only when the changes are significant.

Vehicle purchases are considered to be discretionary spending, and when people are paying for such items, it indicates the economy is flourishing. The relation between vehicle sales and economic growth also becomes more apparent during recessions, where vehicle sales drop significantly. During the Great recession of 2007-2009, vehicle sales fell by 3 million.

With rapid development in the automobile industry, more durable vehicles that last longer, unlike older models, are coming into the market. It means people need not buy new vehicles as frequently as before. Hence, recent trends should incorporate this factor also into the statistics.

Alongside this, there is a shift in the industry due to disruptive brands like Tesla introducing electric cars as a contrast to combustion engines. It affects the industry and the dependent oil and gasoline industries as well. Self-driving and Artificial Intelligence equipped automobiles are catching up with the people, and this could soon invalidate many traditional jobs that came as a result of the regular gasoline cars and trucks.

The current COVID-19 pandemic already cost the economies of most countries much than they could handle, and many industries suffered heavy losses. The silver lining for the automotive industry is coming from the fact that as people resume their regular life by going back to their work require a safe commute. Things are looking brighter for the automobile industry as more people are considering the safety assured through private commute over the risk involved in the public transportation system.

Impact on Currency

Vehicle Sales acts as a coincident indicator that reflects the health of the economy at the current state. The currency markets are focused more on the leading indicators before the trends pick up. Total vehicle sales prove to be more useful for the equity markets for trading on the automobile and other related industries, but currencies require more than just vehicle sales.

Hence, overall Total Vehicle Sales are a low-impact indicator for the FOREX market and are useful in double-checking or reaffirming our leading indicator predictions. Economists and business analysts will use total vehicle sales data to report current economic health, but currency traders can overlook this indicator for other macroeconomic leading indicators.

Economic Reports

The Bureau of Economic Analysis (BEA) provides monthly reports on total vehicle sales on its official website. Apart from this, the St. Louis FRED website also details the same figures historically in a more comprehensive and visually depictive way.

Sources of Total Vehicle Sales

We can obtain Total Vehicle Sales figures for the United States from BEA.

For analysis purposes, the St. Louis FRED website offers better resources and ease of access for Vehicle Sales figures.

We can obtain Global Total Vehicle Sales figures for the majority of the countries from Trading Economics.

How Total Vehicle Sales Data Release Affects The Price Charts

In the US economy, total vehicle sales data is an important leading indicator of consumer spending and consumer confidence. It measures the annualized number of new vehicles sold domestically in the reported month. The most recent data related to this was released on August 3, 2020, at 7.00 PM ET. The total vehicle sales is a combination of all car sales and all truck sales data and can be accessed from Investing.com here. The historical data of total vehicle sales can be accessed from Trading Economics here.

The screengrab below is of the monthly total vehicle sales from Investing.com.

As can be seen, the total vehicle sales data is expected to have a low impact on the USD upon its release.

The screengrab below shows the most recent changes in the monthly total vehicle sales data in the US. In July 2020, the monthly total vehicle sales were 14.5 million compared to 13.1 million in June 2020. This increase is expected to be positive for the USD.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before Monthly Total Vehicle Sales Release on August 
2020, Just Before 7.30 PM ET

From the above 15-min EUR/USD chart, the pair can be seen to be trading on a neutral trend before the release of the total vehicle sales data. This trend represents a period of relative market inactivity with candles forming near a flattening 20-period Moving Average.

EUR/USD: After the Monthly Total Vehicle Sales Release on 
August 2020, 7.30 PM ET

After the data release, this Forex pair formed a 15-minute bearish candle, indicating that the USD became stronger as expected due to the increase in total vehicle sales. The data release was, however, not significant enough to cause any market volatility as the pair continued to trade in a neutral trend with the 20-period Moving Average flattening.

GBP/USD: Before Monthly Total Vehicle Sales Release on August 
2020, Just Before 7.30 PM ET

Similar to the trend that we have observed with the EUR/USD pair, the GBP/USD was trading in a neutral pattern before the data release with candles forming around a flattening 20-period MA.

GBP/USD: After the Monthly Total Vehicle Sales Release on 
August 2020, 7.30 PM ET

After the news announcement, this pair formed a 15-min bearish candle but continued trading in the neutral trend observed before the data release.

AUD/USD: Before Monthly Total Vehicle Sales Release on August
2020, Just Before 7.30 PM ET

AUD/USD: After the Monthly Total Vehicle Sales Release on 
August 2020, 7.30 PM ET

As observed with the EUR/USD and the GBP/USD pairs, the AUD/USD traded within a subdued neutral trend before the data release. The pair formed a 15-minute bearish candle after the news release, but unlike the other pairs, it continued trading in a weak uptrend.

Although it plays a vital role as an indicator within the economy, it is evident that the total vehicle sales indicator does not cause any significant impact on the price action in the forex markets.

Tags Education, Forex, Forex Fundamental Analysis, Forex Trading, Fundamental Analysis, GDP, Macro Economic Indicators, Macro Economics, Sales, Total Vehicle Sales, trading, Vehicles

Forex Daily Topic Forex Price Action

Keep an Eye at the Last Daily Candle’s Closing

Post author By Tareq Sikder
Post date 21 September, 2020
No Comments on Keep an Eye at the Last Daily Candle’s Closing

In today’s lesson, we are going to demonstrate an example of the daily-H4 chart combination trading. In the daily-H4 chart combination trading, the daily chart plays a very significant role. As long as the price in the daily chart heads towards the trend, the traders may find the opportunities to take entry. Let us now proceed and find out what that means.

It is a daily chart. The chart shows that the price heads towards the North with good bullish momentum. The last candle comes out as an inverted hammer with a tiny bullish body. The long upper shadow suggests that the price has a strong rejection at a level of resistance. Nevertheless, the candle has a bullish body, and the candle closes above its last candle’s highest high. Thus, the daily-H4 combination traders may flip over to the H4 chart to go long in the pair.

This is how the H4 chart looks. It produces a bearish engulfing candle followed by a spinning top. It seems that the price may have found its support. If the price makes a breakout at the last swing high, the buyers may go long in the pair.

The chart produces two more bullish candles. The last candle comes out as a hammer with a bearish body. It seems that the price does not know where to go. Traders must be patient here.

The chart produces a bullish engulfing candle closing well above the last swing high. The buyers may trigger a long entry right after the last candle closes. It seems that the bull may make another strong move towards the North. Let us find out how the trade goes.

As expected, the price heads towards the trend with extreme bullish pressure. It hits 1R by the next candle. The candle closes with a thick bullish body. It means that the buyers still have control in the chart. Thus, the buyers may wait for the price to consolidate and get a bullish reversal candle followed by a bullish breakout to go long and drive the price towards the North further.

If we concentrate on the daily chart, we see that the last daily candle is not a strong bullish candle. However, consolidation and a bullish engulfing candle in the H4 chart attract the buyers to go long in the pair. As long as the daily candle closes above/below the last candles highest high/lowest low, the daily-H4 chart combination traders shall keep their eyes in the H4 chart for finding trading opportunities.

Tags Bullish, Bullish Engulfing, Education, engulfing, Forex, Forex price action, Price Action, Resistance, Support, Support and Resistance, trading

Forex Options

FX Options Market Combined Volume Expiries for 21 st September 2020

Post author By Kevin O'Sullivan
Post date 21 September, 2020
No Comments on FX Options Market Combined Volume Expiries for 21 st September 2020

…………………………………………………………………………………………………………

FX option expiries for Sept 21 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

-USD/JPY USD amount

105.90 510m

USDJPY is still in a bear trend. The option is out of play.

………………………………………………………………………………….

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

Tags Forex, fx options, options, trading

Crypto Market Analysis

Daily Crypto Review, Sept 21 – Crypto Market is Preparing For a Bearish Move; UNI Token Booming

Post author By Ilija Rankovic
Post date 21 September, 2020
1 Comment on Daily Crypto Review, Sept 21 – Crypto Market is Preparing For a Bearish Move; UNI Token Booming

The cryptocurrency sector has mostly stayed at the same place over the weekend as Bitcoin was trying to break the psychological $11,000 resistance. Bitcoin is currently trading for $10,935, which represents an increase of 0.28% on the day. Meanwhile, Ethereum lost 1.58% on the day, while XRP lost 1.27%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, Celo gained an astonishing 45.37% on the day, making it the most prominent daily gainer. ZB Token (33.20%) and DigiByte (15.24%) also did great. On the other hand, HedgeTrade lost 13.52%, making it the most prominent daily loser. It is followed by Flexacoin’s loss of 12.67% and yearn.finance’s loss of 9.63%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight increase since our last report, with its value currently being at 60.62%. This value represents a 0.48% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization stayed at virtually the same place over the weekend. Its current value is $351.13 billion, which represents a decrease of $3.37 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the weekend trying to get past the psychological resistance of $11,000, but failed to do so. The daily chart shows a possible resistance level at the 61.8% Fib retracement from the Head and Shoulders pattern. If that happens, we may expect lows of $9,300 to $9,500.

BTC/USD 4-hour Chart

If we take a look at the 4-hour time frame, Bitcoin fell under the pink ascending line, which is now acting as resistance. However, this resistance is not as strong and may be surpassed with ease. Bitcoin is still struggling and trading within the range bound by $11,000 and $10,850 to the upside and downside, respectively.

BTC/USD 4-hour Chart

Bitcoin’s short-term technicals are showing bullish sentiment, while its mid-term technicals are slightly more bearish. While Bitcoin shows the most bullish sentiment out of the top three cryptocurrencies, we can expect a rebound from the current highs as BTC is unable to gain any meaningful bull push.

BTC/USD 4-hour Technicals

Technical factors (4-hour Chart):

Price is above its 50-period EMA and just slightly above its 21-period EMA
Price is at its middle Bollinger band
RSI is flat but overextended to the upside (53.96)
Volume is slowly descending

Key levels to the upside Key levels to the downside

1: $11,000 1: $10,850

2: $11,090 2: $10,630

3: $11,460 3: $10,500

Ethereum

Ethereum’s price has been squeezed out of its current levels over the weekend, pushing it below the yellow bottom support (now resistance) line. However, the bears didn’t do much either, with ETH’s price descent ending after failing to break $371 to the downside. If this level breaks, we can expect a push towards the $360 support level.

ETH/USD 4-hour Chart

Ethereum’s technicals have turned towards the bear side as the price went down. While the DeFi surge should be taken into account, Ethereum looks like it will push towards the downside in the short-term.

ETH/USD 4-hour Technicals

Technical Factors (4-hour Chart):

The price is below both its 21-period and its 50-period EMA
The price below its middle Bollinger band
RSI neutral and stabilizing (45.44)
Volume is average (two-candle spike during the downswing)

Key levels to the upside Key levels to the downside

1: $400 1: $371

2: $415 2: $360

3: $445 3: $340

Ripple

When taking a look at the 1-day chart, XRP has continued its Elliot Wave impulse pattern, nearly ending the fourth part of the wave. It is expected for XRP to push towards the downside (most likely towards $0.21) as a final leg of the impulse wave.

XRP/USD 1-day Chart

XRP spent its weekend in a slow push towards the upside as a continuation of its 4th leg of the impulse wave. With that being seemingly done, we can expect more bears to enter the market quite soon. This prediction is also confirmed by XRP finding much resistance at its 21-period and 50-period moving averages.

Taking a look at its technicals, XRP is (just as Ethereum) tilted towards the sell-side. Unlike Ethereum, however, XRP is showing even more bearish sentiment on longer time frames.

XRP/USD 4-hour Chart

XRP/USD 4-hour Technicals

Technical factors (4-hour Chart):

The price is below both its 21-period EMA and its 50-period EMA
Price is slightly below its middle Bollinger band
RSI is neutral and stabilizing (43.93)
Volume is average (low)

Key levels to the upside Key levels to the downside

1: $0.266 1: $0.2454

2: $0.285 2: $0.235

3: $0.31 3: $0.227

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Videos

Position Sizing Part 5! Optimise your returns using the Percent Risk Model

Post author By Keiran
Post date 20 September, 2020
No Comments on Position Sizing Part 5! Optimise your returns using the Percent Risk Model

https://youtu.be/IMH5duW-4oU

Position Sizing V: Optimize your returns using the Percent Risk Model

Besides the constant position size, the Percent Risk Model is the most used method. The Percent Risk Model allows us to define the number of lots (or mini/micro Lots) as a fixed percentage of the available cash in the trading account.

The risk is defined as the loss incurred if the trade hits the stop-loss order. Thus, every trade must have at least a pre-defined entry and stop-loss. The monetary value in pips from the entry point to the stop-loss is the risk of the trade. The size is determined by MCP simple formula, as already stated in a previous video presentation.
M=C/P
M is the number of mini-lots, C is the cash at risk, the percent risk decided by the trader, and P is the pip distance from entry to stop-loss.

C, the cash at risk, can vary widely, and it will determine the profitability of the strategy and, also, the max drawdown incurred.

From the MCP formula, we can deduct that M increases as P decreases. So tight stops wold allow traders to increase M without increasing the dollar risk C, but, before analyzing this methodology, we have to emphasize that the stop-loss setting must be set at its optimal place. Setting them too close to the entry to increase the position size will force the trader to close a position that would be profitable with a proper stop setting.
In our site, Forex.academy, we have already published several methods to optimize the stops. We recommend you to give them a look.

Masteting Stop-Loss setting: How about using Kase Dev-Stops?

Maximum Adverse Excursion

The Case for Average True Range-based Stop-loss Settings

The Constant Size Risk Model

The Percent Risk Model is a compounding method. The constant-size trading method uses a single size, independent of the amount of cash available, so it has drawbacks. The first one is that the size of the position does not decrease on drawdowns. Imagine a trader risking One-tenth of the initial cash, experiencing a 10-losing streak. He will be wiped out! Also, If he is successful, this position sizing method does not allow him to use the money gained in the markets to make more profits. It is like having a constant account and withdrawing all the gains. Thus it is much more difficult to create wealth.

To see the importance of compounding, let’s look at the difference between a constant mini-lot size and a compounding 1% risk in one year of trading using the trade signals of our Live Signal Service, starting in both cases with $10,000:

In the image, we can see that while the profits of the constant-sizing methodology are linear, the equity curve of the percent-risk model is exponential. We can also observe by the ripples of the curve that the Percent Risk Model has higher drawdowns, which grow (moneywise) with the trading account’s growth. These are the main features of these sizing models.

Optimizing Our Percent Risk Model

The figure below, shows the hypothetical position sizing curves of 1%, 2%, 5%, 10%, and 20% risk models in log-scale, for the same segment of a trading system with 68% winners and 1.1 reward/risk factor, which shows similar figures as our Live Signal Service. We can see that the theoretical account growth can be made astronomical by increasing the position sizing. Unhappily, the future is not written in stone, and future returns can vary substantially from past performances. Thus, the trader must set his trading goals taking into consideration no only the growth but also the drawdown.

For instance, in the figure above, the steepest curve, corresponding to the 20% risk model, shows several 90% drawdown segments. Are you willing to accept to lose 90% of your hard-earned profits to push your returns to the sky? Indeed, there is a limit to the amount a trader can withstand to lose. Thus, it seems reasonable to define our desired maximum drawdown and set the percent risk accordingly.
Let’s say our risk appetite allows us to lose up to 25% Drawdown, and that our system is well below 10 losing streaks. An approximation of our ideal Percent Risk Model Size is to divide 25% by 10 and set our trade size to 2%.

To verify this figure, traders with programming abilities could create a code to produce a Monte Carlo simulation of futures trades. That is what we have done here. The curve below corresponds to the drawdown histogram of 10,000 synthetic trade histories.

Mean Drawdown: 21.02 %
Our little exercise tells us that the average max drawdown is 21.02%, but there is a 3% chance that we could experience a 30% drawdown in a year. A small sacrifice to convert $10,000 into $2.5 million in 12 months.
In a future video, we will discuss improvements on this basic model.

Tags Education, Forex, position sizing, trading

Forex Videos

Position Size Part 4! Equity Calculation Models ( Mastering The Markets )

Post author By Keiran
Post date 20 September, 2020
No Comments on Position Size Part 4! Equity Calculation Models ( Mastering The Markets )

https://youtu.be/2eZgOzlVz3U

Position Size IV – Equity Calculation Models

In our previous video, we learned the basics of calculating mini-lot sizes for a single position. But how to proceed if we have concurrently open positions? This video is aimed at providing different solutions to the theme.

Core Supply Model

Using this guideline, you determine the dollar risk for the next trade by taking the remaining cash left on your account. For example, your initial account cash balance is $5,000, and you have risked 2% (or $100) in your first trade. To compute the next position size, you should consider the $4,900 remaining cash; thus, if your position sizing method told you to use a 2% risk, the size of your next trade should be $4900 *2% or $98.

Using the Core Supply Model, open profits are not considered until the trade or trades are closed. The formula subtracts all the initial risk of the previous trades until the trades are closed. New positions are always computed using the cash calculated with the formula:

Cash = Total equity – Open-trade risks

Balanced Total Supply Model

This method is similar to the Core Supply Model, but it adds the profits of the positions in your favor, but only if a stop-loss level protects them. For example, let’s assume you currently have a paper gain of $260 in your first trade, as in the following figure, and you’ve placed a trailing stop that is now protecting $200 of it. In this case, the available cash for the second trade will be $4,900+$200 = $5,100.

Total Supply Model

The total available cash is calculated by adding and subtracting all the open positions’ gains and losses. This model is a bit riskier than the previous model, as all the profits are added without the requirement of protecting them with a stop-loss. This makes it very simple, although it delivers slightly larger sizes. If we use the previous table, the $250 current profit on the first trade will be entirely added to the $4,900 base supply for a total supply of $5,150 available for the next trade.

This risk model is very much used by account managers, as it helps them keep their position size (their risk) constant, because the next trade size it will always be a percentage of the total available equity.

Boosted Supply Model

This model is made of two “pockets”: The Conservative Money Pocket and the Boosted Money Pocket. This central approach uses a low-risk sizing model on the Conservative Money Pocket and an expanded risk sizing model on the Boosted Money Pocket. The Boosted Money Pocket can be filled using two methods. The first one is to allocate a percentage of the equity ( from 5% to 20%) to the Boosted Money Pocket. The second method is to wait for “market money.” Market money is money resulting from your net gains.
The Boosted Supply Model’s main idea is to be conservative with most of your trading funds and be speculative with the market’s money or a small part of your equity.
Also, the key to this methodology is that the Boosted Money Pocket be rebalanced. We can set a rule to rebalance every week, 15 days or one month, or set a profit target for this pocket that, when reached, will trigger a rebalance action to set it to a pre-defined 5%-20% level.

Using this boosted model, a trader is willing to set a max drawdown much higher to profit from the accelerated equity growth. It is well known that equity growth grows in a geometric progression while drawdowns move in an arithmetic progression. That means that we could obtain over 10X equity growth with just a 2X drawdown increase. We will develop more on this with specific models in future videos. But, as an example, if a trading system delivers a 10% drawdown using 1% position sizing, a boosted pocket could be set to 6X this risk (6%) for a 60% projected drawdown on this 10% portion of the funds of the market’s money. That would triple the profitability of the system but remaining conservative on the core funds of the trader.

Tags Education, Forex, Position Size, trading

Forex Basic Strategies

Learning The ‘Intraday Strategy’ To Trade The Forex Market

Post author By Reddy Shyam Shankar
Post date 20 September, 2020
No Comments on Learning The ‘Intraday Strategy’ To Trade The Forex Market

Introduction

In today’s article, we present to you a fairly simple but reliable trading strategy that can be used by all types of traders, irrespective of their style. It is believed that when markets are strongly trending in one direction, it gets impossible to catch the stalling point. It is only difficult to catch the ‘top’ or ‘bottom’ of the market, but it also carries a huge amount of risk. We are going to discuss a trading strategy that is contrary to this common belief. We shall try to catch the highest or the lowest point in the market by using some of the most powerful technical indicators and techniques.

Time Frame

The strategy can be used on the 5 minutes, 15 minutes, and 1-hour time frame chart. An intraday trader would apply the strategy on the 5 or 15 minutes chart, whereas a positional trader would open the 1-hour chart.

Indicators

We use the following indicators in the strategy:

5-period Exponential Moving Average (EMA)
10-period Exponential Moving Average (EMA)
14-period Relative Strength Index (RSI)
Slow Stochastic Oscillator
K and D period – 3

Currency Pairs

This strategy can only be applied on major currency pairs of the forex market. Some of the preferred pairs include EUR/USD, GBP/JPY, GBP/USD, USD/CAD, USD/JPY, EUR/GBP, etc.

Strategy Concept

The rules of the strategy are quite simple and straightforward. We enter the market for a ‘long’ when the 5-period EMA crosses above the 10-period EMA after a prolonged downtrend. But this isn’t enough. Along with this, the RSI should be above the level of 50, and Stochastic slow and fast lines should move in the same direction (upward). Here we need to make sure that the Stochastic does not enter the overbought zone. Similarly, if the 5-period EMA crosses below the 10-period EMA after a prolonged uptrend, we prepare to enter ‘short.’ In this case, the RSI should be below the level of 50, and Stochastic lines should be moving downwards.

We exit the trade when 5-period EMA crosses beyond the 10-period EMA, where this is confirmed by the close of a candle beyond the latter. Another way to exit the trade is when the RSI drops below the 50 level. The several conditions which must be fulfilled in order to execute a trade make the strategy a good filter for trade entries. However, the two EMAs have a drawback as they can get choppy and generate false signals. We can avoid this by carefully monitoring the movement of EMA lines along with the other indicators. When the strategy is executed by following every rule of the strategy, wrong ‘trades’ can be eliminated to a great extent.

Trade Setup

In order to explain the strategy, we have considered the 5 minutes chart of EUR/USD, where we will be illustrating a ‘long’ trade. Here are the steps to execute the strategy.

Step 1: The first step is to identify the trend of the market and plot all the indicators on the chart, as mentioned in the above section. An easier way to identify the trend is by looking at the price concerning 5 and 10 period EMA. If the 5-period EMA is above the 10-period EMA, we say that the market is an uptrend. Whereas, if the 5-period EMA is below the 10-period EMA, the market is said to be in a downtrend.

In the example considered, it clear from the below image that the market is in an uptrend, and at the end, the trend seems to be weakening.

Step 2: This is the most critical step where we combine all the rules of the strategy. Once the trend has been identified, we should wait for a crossover of the 5-period EMA below the 10-period EMA, during the reversal of an uptrend. We say that the market has made a ‘top’ when both RSI and Stochastic lines start moving lower after the crossover. We should make sure that RSI does not move into the oversold zone. In order to catch the reversal of a downtrend, we should see a crossover of the 5-period above the 10-period EMA. At the crossover, the RSI and Stochastic lines should head upwards but so much that they move into the overbought zone.

The below image shows the crossover of both the EMAs that is accompanied by a ‘moving down’ RSI and Stochastic.

Step 3: Let us discuss the ‘entry’ of the strategy. We enter the market after a confirmation candle in the direction of the reversal. That means we enter ‘short’ after the close a bearish candle below both the EMAs. Similarly, we go ‘long’ after the appearance of a bullish candle, where the price closes above both the EMAs.

We can see in the below image that we are entering the market for a ‘sell’ right after at the close of the price below the 10-period EMA.

Step 4: In this step, we determine the stop-loss and take-profit for the strategy. The stop-loss is pretty straight forward where we place it just above the ‘highest’ or ‘lowest’ point. We take our profit and exit the position based on the signal provided by RSI. There two ways to exit the strategy. The first signal provided by the market to exit is when the crossover of the EMAs takes place. The second way to exit is when the RSI starts moving higher and crosses above the level of 50.

In the case of EUR/USD, as shown below, we take our profits when both the indicators indicated a reversal of the trend.

Final Words

The strategy actually generates various entry signals, and each of them can at least result in a profit for scalpers, by running very tight stops and keeping risk low. Thus, the strategy makes a reliable reversal trading system which relatively accurately pinpoints reversal points at the end of a trend and, more importantly, the ability to provide high risk-to-reward (RR) trades.

Tags Basic Trading Strategies, Double Moving Average, Education, Exponential Moving Average, Forex, Forex Trading, Intraday, Intraday Trading, Moving Average, trading, trading strategy

Forex Fundamental Analysis

Understanding What ‘GDP Deflator’ Is & Its Relative Impact On The Forex Market

Post author By Reddy Shyam Shankar
Post date 18 September, 2020
No Comments on Understanding What ‘GDP Deflator’ Is & Its Relative Impact On The Forex Market

Introduction

Investors and traders are continuously trying to determine which country is growing relatively faster to make currency investment decisions. Assessing growth for capitalist economies that use inflation as fuel can be tricky to understand. The differentiation between nominal and real growth, effects of inflation, and the role of a deflator are necessary to understand to arrive at correct conclusions from statistics.

What is GDP Deflator?

Most of the economies that we have today are capitalist economies and use inflation as the primary fuel for growth. Currency traders want to go “long” on currencies of countries that are experiencing relatively higher growth than other countries. Hence, a correct assessment of growth is crucial.

The broadest and most widely used measure of the growth of economies is the Gross Domestic Product (GDP). The GDP is the monetary measure of all goods and services produced within a country for a given period (quarter or year). Although, before GDP, Gross National Product (GNP) was widely used to compare growth amongst economies. GNP measures growth beyond borders and has certain limitations in its usage as a growth measure.

GDP Deflator

It is also known as GDP Price Deflator or Implicit price deflator. It measures the price changes in all goods and services produced within an economy. It measures inflation at the macroeconomic (or national) level. As prices of commodities increase over time, the GDP values are “inflated” over time.

For instance, a country that has a GDP of 10 million dollars for the year 2019 and 12 million dollars for the year 2020 would appear to have grown 20%. If the inflation rate for the duration was 10%, meaning the prices rose by 10% for all the commodities, then 1 million dollars out of 12 million dollars came purely through increased prices and not increased production. Hence, in 2020, the real GDP was only 11 million dollars. Therefore, real growth was only 10% instead of 20%.

The Nominal and Real GDP figures are vital to understand and measure the level of inflation by calculating the GDP deflator. The following formula gives the GDP deflator:

Here, the nominal GDP is the total dollar value of all commodities produced in an economy without accounting for inflation. It is a direct monetary measure of goods and services. Real GDP is the inflation-adjusted value of GDP. It strips away the effect of inflation from Nominal GDP to show real growth.

Deflators like the Real GDP also have a base year against which all other years’ figures are compared. For the United States, 2012 is the base year, meaning GDP deflator value for the year 2012 would be 100 (as nominal and real GDP would be equal due to zero inflation). Subsequent years will have higher or lower values accordingly to indicate inflation and deflation, respectively. The base year varies from country to country.

How can the GDP Deflator numbers be used for analysis?

It is essential to understand how inflation masks the real growth and leads us to make the wrong conclusions. As seen in the above example, countries may show higher and higher GDP figures, but in reality, they may have only achieved little or no growth at all. When comparing growth over several years, the GDP deflator is key to the analysis to strip away the effects of inflation. By employing the equation above, if we get a deflator score of say 110, it would indicate there is a 10 percent inflation during the observed period.

The Consumer Price Index (CPI) is the most popular and widely used indicator to measure inflation. The GDP deflator has some advantages over the CPI. As the CPI measures inflation for a fixed basket of goods and services, which does not change frequently, the GDP is a macroeconomic aggregate measure of inflation. The GDP deflator factors in any change in economic output and investment patterns. Any new change in the goods produced or change in the consumption patterns of people is accounted in by the GDP deflator, unlike CPI. The CPI basket is static and cannot account for commodities price changes that are not in the basket, whereas the deflator is all-inclusive in this regard.

It is also necessary to know that CPI includes the most commonly used goods and services that have an impact on the economy. It updates its basket as patterns change over the years. Hence, over time the GDP deflator and the CPI have similar trends and can be used interchangeably.

Impact on Currency

The GDP deflator is a basic measure of inflation that erodes currency value. It is an inversely proportional lagging indicator. High values of the deflator are bad for the currency value and vice-versa. Since it is one of the measures of inflation, it is a low-impact lagging indicator as it is not as popular and as frequent as the CPI. It is a quarterly statistic, whose effects are already priced in through more frequent inflation measuring statistics.

Economic Reports

The Bureau of EA releases quarterly reports of the GDP price deflator alongside the quarterly GDP figures on its official website for the United States. GDP and deflators are essential macroeconomic indicators, and therefore are available on the World Bank and many other international organizations like the OECD, IMF, etc.

Sources of GDP Deflator

The BEA releases its quarterly GDP deflator statistics on its official website for the public.

The World Bank also maintains GDP and GDP deflator statistics for most countries on its official website.

Deflator figures for most countries can be easily found on the Trading Economics website.

How GDP Deflator Data Release Affects The Price Charts

In the US, the GDP deflator is released by the Bureau of Economic Analysis quarterly, about 30 days after the quarter ends. It measures the annualized change in the price of all goods and services included in gross domestic product; and is the broadest inflationary indicator. The most recent data was released on July 30, 2020, at 8.30 AM ET can be accessed at Investing.com here. An in-depth review of the GDP deflator data release can be accessed at the Bureau of Economic Analysis website.

The screengrab below is of the GDP deflator from Investing.com. On the right, a legend indicates the level of impact the fundamental indicator has on the USD.

As can be seen, GDP deflator data is expected to have a medium impact on the USD after its release.

The screenshot below shows the most recent changes in the GDP deflator in the US. The GDP deflator changed by -2.1%, worse than analysts’ expectations of a 1.1% change. This change is expected to the negative for the USD.

Now, let’s see how this release made an impact on the Forex price charts.

EUR/USD: Before the GDP Deflator Data Release on July 30, 
2020, Just Before 8.30 AM ET

Before the news release, the EUR/USD pair traded in a neutral pattern. This trend is evidenced by the 15-minute candles forming on an already flattened 20-period Moving Average, as shown in the above chart.

EUR/USD: After the GDP Deflator Data Release on July 30, 
2020, at 8.30 AM ET

After the data release, the pair formed a 15-minute “hammer” candle. This trend is as expected since the USD weakened against the EUR. The data release was significant enough to cause a change in the market trend. The market adopted a steady bullish stance as the pair traded in an uptrend with the 20-period Moving Average steeply rising.

GBP/USD: Before the GDP Deflator Data Release on July 30, 
2020, Just Before 8.30 AM ET

Unlike the EUR/USD pair, the GBP/USD pair was trading in a steady uptrend before the data release.

GBP/USD: After the GDP Deflator Data Release on July 30, 
2020, at 8.30 AM ET

After the data release, the pair formed a bullish 15-minute candle. It subsequently traded in a renewed uptrend with the 20-period Moving Average steeply rising similar to the EUR/USD pair.

NZD/USD: Before the GDP Deflator Data Release on July 30, 
2020, Just Before 8.30 AM ET

NZD/USD: After the GDP Deflator Data Release on July 30, 
2020, at 8.30 AM ET

The NZD/USD pair was trading in a similar neutral pattern as the EUR/USD pair before the data release. Similar to the EUR/USD and the GBP/USD pairs, the NZD/USD pair formed a 15-minute bullish candle after the data release. Subsequently, the pair adopted an uptrend with the 20-period Moving Average steadily rising.

Bottom Line

As observed in this analysis, the GDP deflator has a strong impact on the price action, enough to alter the prevailing market trend upon its release. Forex traders should avoid having any significant open positions before the GDP deflator data release to avoid being caught on the wrong side of the news release.

Tags Education, Forex, Forex Fundamental Analysis, Forex Fundamentals, Forex Trading, Fundamental Analysis, GDP, GDP Deflator, Gross Domestic Product, trading

Forex Videos

Forex Position Sizing Part 3 – The Advantage!

Post author By Keiran
Post date 18 September, 2020
No Comments on Forex Position Sizing Part 3 – The Advantage!

https://youtu.be/b_LOwrpIdOA

Position Size III – The Advantage

After deciding the current price movement was a good trading signal, position sizing answers the question of “how much shall I take,” which is a crucial question to ask, especially on leveraged trading. But position sizing defines not only the Risk and drawdown but also the overall profitability of a trader.

Van K. Tharp usually presents his learners a game, There are commonly near 300 traders attending to his courses, and the game consists of a bag of 30 marbles with defined gains and losses representing trades. A marble is pulled out randomly and then replaced each time. Everyone gets the same results in terms of reward/risk ratios or R. The participants only have to choose the size of R. At the end of the game, except for those who went broke, everyone ended up with different equity, although the trades are the same.
Van K. Tharp also mentions a study by G. Brinson appearing in “Financial Analysts Journal” in 1991 that studied the performance of 82 portfolio managers over a 10-year period. Their primary variable was how much was invested in bonds, stocks, and cash. The study concluded that over 90% of the variability in performance was due to “asset allocation,” which is a word used by professionals to refer to how much to invest. That means position sizing modeling results in considerable variations in the performance of a trading strategy.

The Three Components of Position Sizing Settings

1.- Psychology:

People with no knowledge of position sizing methods modify the size of their position based on their current emotions. Traders with no regard for Risk usually overtrade. Their account balance is likely insufficient; thus, they go broke at the minimum flip of the market against them.

2.- Objectives:

A person with only profitability objectives will have a different result from a trader with a combination of profit/risk objectives.

3.- Position sizing Method

Some people use a single position size, no matter how large is his current trading account. Others use a percentage of the account balance, while others vary the position size, pyramiding or downsizing, as their trading results evolve.

The combination of these three elements can create a wide variety of models.

Simplifying the model

Indeed, there are trading strategies in which trades are correlated, or dependent, which may be improved by the use of trading sizes adapted to the past results, such as the Turtles trend-following methods, which might benefit from pyramiding schemes. Still, the majority of trading systems show independency. Thus, we are in favor of separating the decision part from the sizing part.

Thus, the trading system should deliver the entry and exit signals, with a precise R-risk- figure, its results as a stream of multiples of R. This allows the trader to measure and determine the profitability and drawdown, adapting the size of future trades to fit his trading objectives.

The MCP Model

A simple shortcut to help you define the size of every trade is the LCR formula.
C: Cash, a trader, is willing to risk. That part comes from your position sizing strategy. For example, if you’re ready to risk 1% of your current $3,500 trading balance, C will be 3,500×1% = $35

R: Risk of the trade: The dollar distance between entry and stop-loss level.
L: Position size in lots

L = C/R

In Forex, the definition of Risk is in pips. So, the first thing you need to know is the dollar risk of one pip. For instance, in the EURUSD, the dollar risk of one pip is $10 for one lot. If you think in mini-lots, this goes to $1, which is a nice figure since it is mathematically “transparent.” Also, the majority of pairs have a pip value close to $1 on mini-lot sizes; the only one exceeding this value is the EUR/GBP, which is $1.28. Therefore, we can simplify the formula to calculate P in mini-lots with the formula for practical uses.

M = C/P

Where M = mini-lots, C= cash at risk, P= Pip distance from entry to stop-loss.

As an example, If our C is $35, and we have 20 pips distance between entry and stop-loss,
M = $35/20 = 1.75 mini-lots.

This methodology is valid on systems with only one open position at a time. For more than one open positions, there are three additional modes needed to compute C. That will be left for another video. Stay tuned…

Tags Education, Forex, position sizing, trading

Forex Education Forex System Design

Designing a Trading Strategy – Part 1

Post author By Eduardo Vargas
Post date 18 September, 2020
No Comments on Designing a Trading Strategy – Part 1

Introduction

In a previous article, we introduced the basic concepts that should include a trading strategy. In this context, a trading strategy tends to be confused with a trading system. In this educational article, we start to present a series focused on developing a trading strategy that could end as a trading system.

The Trading Strategy Concept

Before advancing in designing a trading strategy, it is necessary to explain the difference between a trading strategy and a trading system.

A trading strategy is a set of objective and formalized rules, such as parameters from a mathematical formula; these values can vary in different types of markets. Additionally, this set of rules are characterized by being independent of the emotional trader’s behavior.

A trading system is a systematic application of a trading strategy designed to achieve a profitable return by positioning in long or short financial markets. The main advantage of using a tested and validated trading system is significant confidence in producing profits.

Trading strategies can vary from the simplest to the complex rules criteria. Some classical trading strategies are moving average crosses, channel breakouts, bar patterns, candlestick patterns, and strategies based on oscillators such as MACD or RSI.

According to the complexity level of the trading strategy, as complexity increases, the construction, testing, optimization, and evaluation process will become more difficult. In this context, if the system developer does not control the trading strategy complexity, the optimization process results can become challenging, even could lead to the over-fit of the trading strategy.

The Basic Components

Each trading strategy must contain three essential components identified as follows:

Entry and Exit: Both entry and exit are the core of a trading strategy. The entry and exit criterion can vary in its complexity level. Similarly, the strategy could consider an entry in a specific price as a pending order (limit or stop), a market entry, open, or the closing price. On the other hand, the exit criteria could use a broad kind of methods such as percentage of price advancement or key support/resistance levels. As the reader may realize, the possibilities on entries and exits are unlimited.

Risk Management: It is a fact that any trading strategy will generate losing trades. In this regard, all trading strategies must contain a set of objective rules to reduce the risk. Risk management’s main objective is to limit losses in the trading account while allowing the trader to continue trading despite losing streaks.

Position Sizing: The third element a trading strategy must include is the amount to be traded. The position size may correspond to a fixed number of units, such as contracts, lots, shares, etc. The problem of position sizing becomes critical, especially when the trading strategy is profitable. In this context, Pardo suggests that it is more effective to allocate resources to improve the strategy’s entries and exits.

Conclusions

In this educational article, we have introduced the difference between a trading strategy and a trading system. In this regard, we can understand a trading strategy as the basis of a trading system.

A trading strategy can be based on the simplest or the most sophisticated criteria. However, as the complexity level of the strategy increases, the level of complexity in the trading system’s development will also increase.

On the other hand, a trading strategy must contain three elements, which are as follows:

Entry and Exit.
Risk Management.
Position Sizing.

Finally, in the next educational article, we will expand the concepts of inputs and outputs in a trading strategy.

Double Top and Evening Star Drive the Price Far Down to Consolidate

Post author By Tareq Sikder
Post date 18 September, 2020
No Comments on Double Top and Evening Star Drive the Price Far Down to Consolidate

In today’s lesson, we are going to demonstrate an example of a double top offering an entry, not right after the breakout. It rather offers an entry upon finding its resistance, which is well below the neckline level. Let us find out how that happens.

The chart shows that the price gets trapped within two horizontal levels. It produces a bearish engulfing candle but heads towards the North upon having a bounce at the level of support. The last candle comes out as a Doji candle around the resistance zone. Let us find out what happens next.

The chart produces a bearish engulfing candle closing well below the neckline. The chart produces an evening star to make the breakout. It suggests that the price may head towards the South with good bearish momentum.

The price heads towards the South with three more candles. However, the price does not consolidate around the neckline. Thus the sellers in the chart may find it difficult to go short in the pair. Let us wait and see whether it consolidates or not.

The chart produces two bullish corrective candles. If the price finds its resistance and produces a bearish reversal candle, the sellers may go short below the last swing low.

The chart produces a bearish engulfing candle closing well below the last swing low. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above the candle’s highest high and by setting take profit with 1R.

The price travels a long way towards the South. The last candle comes out as a bullish inside bar. It is a weak bullish reversal candle. However, the way the price has been heading towards the South; it suggests that the price may continue its bearish move. However, many sellers may want to close their entries and come out with the profit after the last candle.

Usually, traders wait for the price to consolidate and produce a reversal candle at the breakout level. However, when a trend starts with a strong reversal pattern, such as the morning star/evening star, the price may not consolidate around the neckline level. Nevertheless, if the chart allows the price space to travel, traders may wait for the price to consolidate and to get a reversal candle to trade. This is what happens here. The price finds its resistance, not at the neckline but somewhere else, and produces a strong bearish engulfing candle offering an entry.

Tags Bearish, Double Top, Education, Evening star, Forex, Forex price action, Price Action, Technical Analysis, trading

Crypto Market Analysis

Daily Crypto Review, Sept 18 – Uniswap’s UNI Token Surges Over 100% After Launch; Bitcoin Continues Fighting For $11,000

The cryptocurrency sector has mostly stayed at the same place as Bitcoin was fighting for the psychological $11,000 resistance. Bitcoin is currently trading for $10,938, which represents an increase of 0.46% on the day. Meanwhile, Ethereum gained 1.8% on the day, while XRP gained 1.33%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, |Uniswap gained an astonishing 112.59 % on the day, making it the most prominent daily gainer. ABBC Coin (28.18%) and SushiSwap (21.75%) also did great. On the other hand, Hyperion lost 19.78%, making it the most prominent daily loser. It is followed by Flexacoin’s loss of 12.93% and Celo’s loss of 11.74%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight decrease since our last report, with its value currently being at 60.14%. This value represents a 0.16% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization stayed at the same place in the past 24 hours. Its current value is $354.50 billion, which represents an increase of $0.59 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the day trying to confirm its position above $11,000 or to push above it yet again after it dropped below the level. The largest cryptocurrency by market capitalization struggled to cross this psychological resistance but confirmed the $10,850 support, which puts it in a narrow range that traders can use to their advantage.

Bitcoin’s short-term indicators are a bit less bullish than a couple of days ago, as Bitcoin did not manage to break the $11,000 mark. However, its long-term technicals are still extremely tilted towards the upside.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is right between its middle and top Bollinger band
RSI is flat but overextended to the upside (64.35)
Volume is slowly descending

Key levels to the upside Key levels to the downside

1: $11,000 1: $10,850

2: $11,090 2: $10,630

3: $11,460 3: $10,500

Ethereum

Ethereum has followed its tight movement towards the ascending trend line, which took its price a bit higher than yesterday. Technicals, as well as the influx of people using Ethereum due to UNI token launching, bumped its price up to around 2% towards the upside.

With this being said, Ethereum’s technicals have turned extremely bullish as many traders called for the double bottom that formed, propelling ETH’s price up towards $400.

ETH/USD 4-hour Chart

Technical Factors:

The price is above both its 21-period and its 50-period EMA
The price slightly closer to its top Bollinger band than the middle one
RSI slowly descending (60.41)
Volume is average

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP has continued its push towards the upside and has continued heading towards the $0.266 resistance level. The steady push has slowed down a bit due to a decrease in volume but has shown no signs of completely stopping. XRP is in quite a good spot now, as many traders are calling for long positions (mostly on the 1-day and 1-week charts).

XRP saw a change of its short-term technicals to extremely bullish, while its mid-term technicals (1-month) are still tilted towards the sell-side. With that being said, more and more traders are slightly less bearish on XRP in the mid-term.

XRP/USD 4-hour Chart

Technical factors:

The price is well above its 21-period EMA and its 50-period EMA
Price is very close to its top Bollinger band
RSI is pushing towards overbought (64.37)
Volume is descending

Key levels to the upside Key levels to the downside

1: $0.266 1: $0.2454

2: $0.285 2: $0.235

3: $0.31 3: $0.227

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Options

FX Options Market Combined Volume Expiries for 18th September 2020

Post author By Kevin O'Sullivan
Post date 18 September, 2020
1 Comment on FX Options Market Combined Volume Expiries for 18th September 2020

…………………………………………………………………………………………………………

FX option expiries for Sept 18 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

– EUR/USD: EUR amounts

1.1750 980m
1.1800 753m
1.1850 758m
1.1900 1.0bn
1.1950 1.3bn

EURUSD pair is approaching overbought, but the US dollar remains on the backfoot and the bull run looks to continue to a retest of the 1.1900 level where a large option expiry is placed.

– USD/JPY: USD amounts

104.00 500m
104.50 585m
105.25 971m
105.50 1.1bn

USDJPY remains in a bear trend with yen being bought as a safe haven currency. Potential for a retest of the 104.50 level although the pair is approaching oversold.

– AUD/USD: AUD amounts

0.7300 2.4bn

AUDUSD is in a bull trend which is fading in volume. Scope for a pullback to the large option expiry at 0.7300

– USD/CAD: USD amounts

1.3050 875m
1.3100 551m
1.3160 653m
1.3200 574m
1.3250 920m

USDCAD is stuck in a trading range since the 8^th September. Important retail sales data out from Canada later and could cause volatility.

………………………………………………………………………………….

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

DISCLAIMER: Please note that this information is for educational purposes. Also, the maturities will look more or less likely to become a strike at 10 AM NY time due to exchange rate fluctuations resulting in a different perspective with regard to technical analysis, and also due to upcoming economic data releases for the associated pairs.

Tags Forex, fx options, options, trading

Forex Videos

How to read a volatile chart! EURUSD Price Analysis…

Post author By Keiran
Post date 17 September, 2020
No Comments on How to read a volatile chart! EURUSD Price Analysis…

https://youtu.be/KCPaLes7U6k

How to read a volatile chart: EURUSD Price Analysis for 13th August 2020

Thank you for joining this forex academy educational video. In this session, we will look at one of the most frustrating things that a trader will find and about a complete turn in price action, which does not necessarily go with technical analysis.

This is a one-hour chart of the euro US dollar pair, and I’m interested in the period between the 12th and 13th of August.
We can see that at position A, on the 11th August, the price action high, is at the same level as on the 10th of August, suggesting a price action double top reversal formation, and indeed the market reacts accordingly, and price action begins to fade back to position B, which breaches the previous lows going all the way back to the beginning of August, suggesting that the bears were in control of the pair, and price action might continue lower into the high 1.16’s
However, frustratingly for those sellers, the price could not be maintained in the downward direction and then completely reverses, retesting the high at position ‘A’ and finally breaching it to the upside, and where now we might expect a retest of the 1.19 level.

So, what is going on here where our chart suggests the bears are in control, and then all of a sudden, during the Asian session on the 12th of August, things just completely reverse, and the pair is driven higher?
One of the main factors to consider during the current economic crisis throughout the world caused by the global covid pandemic is the continuous change in sentiment for one country against the next, which at the moment is causing such a volatility and where the market can turn for no apparent reason with regards to technical analysis.

This pair was simply unable to bridge the 1.1700 key level, and this became a significant turning point. Key level trading such as round numbers can often reverse an exchange rate in its tracks, and that is what happened on this occasion. However, we must also take into account market sentiments, and a critical component of this reversal was the continuing spat between the democrats and republicans of the United States Congress who have so far not been able to come to a solution with regard to the continuation of the covid relief fund, which expired the previous Friday, leaving millions of Americans wondering how they are going to cope financially without the support that they had been relying on in the last few months.
Until such time as the Americans have got their act together and implement extra financial relief, we can expect more market volatility and a weakening United States dollar. Watch out for key number reversals and spikes in price action, where technical analysis must be used in combination of market sentiment while keeping fundamentals in the background and remembering that these are not the key market drivers during the continuing crisis. Keep informed with up-to-date news, especially pertaining to the United States covid relief status. And Keep stops tight.

Tags Education, Forex, forex analysis, Technical Analysis, trading

Forex Options

FX Options Market Combined Volume Expiries for 17th September 2020

Post author By Kevin O'Sullivan
Post date 17 September, 2020
1 Comment on FX Options Market Combined Volume Expiries for 17th September 2020

…………………………………………………………………………………………………………

FX option expiries for Sept 17 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

– EUR/USD: EUR amounts

1.1700 501m
1.1775 530m
1.1800 943m
1.1850 1.2bn
1.1875 1.0bn

EURUSD is in a pullback from a bear trend. The pair is looking to retest the 1.1800 level where there is a large option expiry.

– USD/JPY: USD amounts

104.25 393m
105.00 1.9bn
105.10 512m
105.25 355m
105.40 856m
105.48 800m
105.50 506m
105.53 400m
105.55 522m
106.00 2.0bn

USDJPY continues the downward move as Yen buyers take advantage of its safe-haven status. The pair is oversold and overdue for a period of consolidation with more price action around the 105.00 level.

– AUD/USD: AUD amounts

0.7235 688m

AUDUSD is bouncing off an oversold area at 0.7250. There is scope for another attempt to crash this support level leaving the door open for the expiry.

– USD/CAD: USD amounts

1.3225 735m

USDCAD is overbought at the 1.3250 level and the pullback from this area of resistance paves the way for the only option expiry for the pair today.

………………………………………………………………………………….

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

Tags Forex, fx options, options, trading

Forex Market Analysis

Daily F.X. Analysis, September 17 – Top Trade Setups In Forex – Brace for BOE Policy!

Post author By Ali B.
Post date 17 September, 2020
1 Comment on Daily F.X. Analysis, September 17 – Top Trade Setups In Forex – Brace for BOE Policy!

On the news front, the eyes will remain on the U.K. Monetary Policy reports due during the late European hours. BOE isn’t expected to change the rates, and it may keep them at 0.10%; however, it will be important to see MPC Official Bank Rate Votes. Besides, the European Final CPI data will remain in focus today. During the U.S. session, the Unemployment Claims and Philly Fed Manufacturing Index will be the main highlight to drive further market movement.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18161 after placing a high of 1.18824 and a low of 1.17873. The EUR/USD pair continued following its previous day bearish trend on Wednesday ahead of the FOMC meeting. The pair posted losses on the day despite upbeat macroeconomic data from Europe.

The U.S. dollar became strong in response to the Federal Reserve’s rate decision. The Fed left its monetary policy unchanged and signaled no changes to borrowing costs potentially through 2023. The growth projections by Fed pointed a return to pre-pandemic levels by the end of 2021.

The Federal Reserve Chairmen, Jerome Powell, said that the current bond-buying level was appropriate and said that more fiscal support was likely to be needed. The U.S. dollar index found support at 92.8 level and spiked to 93.15 level and weighed on EUR/USD pair.

On the data front, At 14:00 GMT, the Trade Balance from the Eurozone showed a surplus of 20.3B against the forecasted 19.3B in July and supported single currency Euro. However, the upbeat data failed to reverse the pair’s movement as the focus was all on the FOMC meeting and Fed decision.

On the U.S. front, the Core Retail Sales in August declined to 0.7% from the forecasted 1.0%, and the Retail Sales in August also dropped to 0.6% from the projected 1.2% and weighed on the U.S. dollar. Whereas, the Business Inventories in July dropped to 0.1% from the projected 0.2% and supported the U.S. dollar. The NAHB Housing Market Index advanced to 83 from the anticipated 78 and supported the U.S. dollar. The mixed macroeconomic data from the U.S. also failed to impact on EUR/USD prices on Wednesday.

As the WHO has warned that the death toll in Europe is likely to increase in October and November, the local currency has come under pressure since then. On Wednesday, the regional health authorities announced that Madrid’s Spanish capital would introduce selective lockdowns in urban areas where the coronavirus has spread widely. This also weighed on local currency and added further pressure on EUR/USD pair.

On Wednesday, the European Commission President Ursula von der Leyen came to the European Parliament in Brussels to deliver her first state of European Union Address. She announced new plans that included measures to tear down single market restrictions, a new strategy for the Schengen zone, a proposal to increase the 2030 target of emission reduction to 55%, and investment for digital technologies.

Daily Technical Levels

Support	Pivot	Resistance
1.1773	1.1828	1.1869
1.1732		1.1924
1.1676		1.1966

EUR/USD– Trading Tip

The EUR/USD pair has traded sharply bearish at 1.1750 area, and now the same level is extending solid support to the pair. On the higher side, the EUR/USD may soar until 1.1780 level that marks 38.2% Fibo and 1.1810 level of 61.8% Fibonacci retracement. Conversely, the support stays at 1.1699 level today.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.29666 after placing a high of 1.30070 and a low of 1.28749. Overall the movement of the GBP/USD pair remained bullish throughout the day. The pair GBP/USD extended its previous daily gains and rose above 1.3000 level on Wednesday amid dovish hopes for the FOMC meeting. The strong CPI report from the U.K. negative Retail Sales report from the U.S. also added further gains in the GBP/USD pair on Wednesday.

As investors have digested the recent developments surrounding Brexit and the internal market bill, the heavy tone surrounding the U.S. dollar also helped the GBP/USD pair to surgeon Wednesday. The heavy bearish pressure on the U.S. dollar was exerted by the release of disappointing U.S. monthly Retail Sales figures for August.

At 17:30 GMT, the Core Retail Sales dropped to 0.7% from the anticipated 1.0%, and the Retail Sales were declined to 0.6% from the projected 1.1% and weighed heavily on the U.S. dollar that helped GBP/USD pair to move on the upside. Meanwhile, from the U.K., at 11:00 GMT, the Consumer Price Index for the year rose to 0.2% from the expected 0.1% and supported the Sterling. The Core Consumer Price Index also rose to 0.9% from the expected 0.7% and supported British Pound.

Whereas the PPI Input in August was declined to -0.4% from the forecasted 0.1%, and the PPI Output also declined to 0.0% against the forecasted 0.2% and weighed on local currency. The year’s RPI declined to 0.5% from the expected 0.6% and weighed on British Pound. However, the Housing Price Index for the year rose to 3.4% from the projected 3.2% and supported British Pound that added further gains in GBP/USD pair.

On the Brexit front, the head of the European Commission said on Wednesday that the chances of reaching a trade deal with Britain were fading by the day as the British government pushes ahead with moves that would breach their withdrawal agreement.

Brussels have warned Prime Minister Boris Johnson to scrap the Internal Market Bill, or it would sink the talks on future trade arrangements before Britain finally leaves the E.U.’s orbit on December 31. However, Johnson has refused to step back from issuing an Internal Market Bill.

The President of the European Commission, Ursula von der Leyen, said that the timely agreement’s chances have started to fade with the time passing, which raised the fears on no-deal Brexit. However, this failed to cap the additional gains in GBP/USD pair as markets have already priced the no-deal Brexit worries. Moreover, the U.S. dollar was also under pressure on Wednesday ahead of FOMC meeting results and the speech of Fed Chair Jerome Powell. This added further strength in the GBP/USD pair.

Daily Technical Levels

Support	Pivot	Resistance
1.2890	1.2949	1.3024
1.2815		1.3083
1.2757		1.3157

GBP/USD– Trading Tip

The GBP/USD pair is trading at 1.2909 level, holding within an upward channel supporting the pair at 1.2909 level. The closing of the recent Doji candle over the EMA and upward trendline support level of 1.2909 level suggests odds of upward movement in the market. Considering this, we may have some upward trend in the Sterling ahead of the BOE rate decision. Thus, we should look for a buying trade with a target of 1.2996 level. Violation of 1.2909 le el can trigger selling bias until 1.2828 level, but it depends upon the policy decision today. Let’s keep an eye on it.

USD/JPY – Daily Analysis

The USD/JPY Pair was closed at 104.944 after placing a high of 105.432 and a low of 104.799. Overall the movement of the USD/JPY pair remained bearish throughout the day. The pair USD/JPY extended its bearish trend for the 3rd consecutive day and fell to its lowest since July 31. The U.S. Dollar Index fell 0.3% on Wednesday ahead of the U.S. Federal Reserve policy meeting outcome.

The decline in the U.S. dollar was due to the expectations that the Federal Reserve Open Market Committee will maintain a dovish stance on the economy’s outlook. Last month during the Fed’s annual Jackson Hole Symposium, the Federal Reserve unveiled a major change in policy and said it would now target an inflation rate that averages 2% over time. Previously the Fed’s target was to maintain inflation at 2%; the current U.S. consumer inflation is at 1.3%.

The Market Participants do not expect any rise in the Fed’s benchmark interest rate of 0.25% for a longer period; however, they were keenly awaiting the meeting to conclude whether the central bank issues any surprise economic projections. The dovish expectations kept the local currency under pressure that weighed on the USD/JPY pair on Wednesday.

Meanwhile, the Trade Balance from Japan showed a surplus of 0.35T from the anticipated 0.01T and supported the Japanese Yen that added further pressure on the USD/JPY pair on the data front. On the U.S. side, the Core Retail Sales in August fell to 0.7% from the anticipated 1.0% and weighed on the U.S. dollar that exerted further pressure on the USD/JPY pair. In August, the Retail Sales also fell to 0.6% from the anticipated 1.1% and weighed on the U.S. dollar that kept the pair USD/JPY on the downside.

However, in July, the Business Inventories that were released at 19:00 GMT dropped to 0.1% from the forecasted 0.2% and supported the U.S. dollar. The NAHB Housing Market Index also favored the U.S. dollar when it rose to 83 from the anticipated 78 and capped further downward movement in the USD/JPY pair.

On Wednesday, the U.S. President Donald Trump urged Republicans to hold a larger coronavirus package as this will increase the chances of striking a deal with Democrats. The comments from Trump showed a need for stimulus and raised hopes that the stimulus package will be announced soon, and hence, the U.S. dollar came under fresh pressure that ultimately weighed on USD/JPY pair prices.

On the other hand, the USD/JPY pair’s losses were limited by the latest news that supported the risk sentiment in the market. The U.S. Federal Government drew a sweeping plan on Wednesday to make vaccines for the coronavirus available for free to all Americans. The federal health agencies and the Defense Department offered plans for a vaccination campaign that will start in January or later this year. The market participants are waiting for his speech to find fresh clues about the economic condition and further monetary policy decisions by the U.S. government. Hence, the local currency remained under pressure ahead of it and kept weighing the USD/JPY currency pair.

Daily Technical Levels

Support	Pivot	Resistance
104.6700	105.0600	105.3300
104.4100		105.7100
104.0200		105.9800

USD/JPY – Trading Tips

The USD/JPY pair had violated the double bottom support level of 105.300 level, and closing of the candle below 105.300 level may drive more selling bias in the USD/JPY. On the lower side, the support stays at 104.780 level, and a bearish breakout can lead USD/JPY price further lower towards 104.300 level. The focus will remain on the U.S. Jobless claims data as it may drive further market trends. The MACD and EMA are also in support of selling bias.

Good luck!

Tags Daily Brief, EURUSD, Forex, forex review, Fundamental Analysis, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 17 – Bitcoin Above $11,000; XRP Skyrocketing

Post author By Ilija Rankovic
Post date 17 September, 2020
1 Comment on Daily Crypto Review, Sept 17 – Bitcoin Above $11,000; XRP Skyrocketing

The cryptocurrency sector has shot up as Bitcoin pushed towards $11,000. Most cryptos ended up in the green, with some even outperforming Bitcoin. Bitcoin is currently trading for $11,019, which represents an increase of 2.72% on the day. Meanwhile, Ethereum gained 5.58% on the day, while XRP gained an astonishing 7.24%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, DigiByte gained 23.07% on the day, making it the most prominent daily gainer. Hyperion (19.61%) and Kusama (11.85%) also did great. On the other hand, SushiSwap lost 15.68%, making it the most prominent daily loser. It is followed by Flexacoin’s loss of 11.46% and UMA’s loss of 11.43%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight decrease since our last report, with its value currently being at 60.30%. This value represents a 0.21% difference to the downside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone up significantly in the past 24 hours. Its current value is $353.89 billion, which represents an increase of $10.48 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has, as we said in our previous article, pushed towards the upside, attempting an $11,000 break. While it has broken the $11,000 psychological resistance, it got stopped out at the $11,090 resistance level. Bitcoin will have to make a confirmation move in order to stay above $11,000, which may be hard since it will be in such a tight range ($11,000 to $11,090).

Bitcoin’s short-term indicators are extremely bullish, but its longer-term indicators are also tilted towards the bull side. Traders should look out for how Bitcoin handles the $11,000 level and trade off of it.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is near its top Bollinger band
RSI is overextended to the upside (71.42)
Volume is stable (with a couple of spikes)

Key levels to the upside Key levels to the downside

1: $11,000 1: $10,850

2: $11,090 2: $10,630

3: $11,460 3: $10,500

Ethereum

As we said in our previous article, it would take a strong push towards the upside to pull Ethereum out of the 35% downside prognosis, which many trades called since the ETH/USD pair created a bear flag. However, Bitcoin’s push towards $11,000 prompted Ethereum to push towards the upside and get back into the range.

With this being said, Ethereum hasn’t confirmed its position above the bear flag lower line, which is because the $371 level it passed will remain in our “key level to the upside” section until ETH confirms otherwise. Still, its short-term indicators have changed to a bit more bullish scenario.

ETH/USD 4-hour Chart

Technical Factors:

The price is above both its 21-period and its 50-period EMA
The price is right at its top Bollinger band
RSI is neutral but pushing towards the upside (59.82)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP had an amazing day, with its price pushing over 7% on the day. The third-largest cryptocurrency by market cap has used this influx of bulls to its fullest, confirming its position above $0.2454 and even pushing towards $0.266.

XRP has joined Ethereum in terms of technicals, with the short-term overview changing to a short-term buy, while its long-term technicals are still showing slight bearishness. Traders can look for a pullback that XRP will inevitably make and trade off of it.

XRP/USD 4-hour Chart

Technical factors:

The price is above its 21-period EMA and its 50-period EMA
Price is above its top Bollinger band
RSI is skyrocketing and pushing towards overbought (67.99)
Volume is low (but slowly increasing)

Key levels to the upside Key levels to the downside

1: $0.266 1: $0.2454

2: $0.285 2: $0.235

3: $0.31 3: $0.227

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Options

FX Options Market Combined Volume Expiries for 16th September 2020

Post author By Kevin O'Sullivan
Post date 16 September, 2020
No Comments on FX Options Market Combined Volume Expiries for 16th September 2020

…………………………………………………………………………………………………………

FX option expiries for Sept 16 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

– EUR/USD: EUR amounts

1.1835 654m

EURUSD is overbought but ignoring the indicator having established an area of support at 1.1830. A busy day with EU speeches and EU and US data with the Fed interest rate decision later which may affect price action early on.

– GBP/USD: GBP amounts

1.3000 357m

GBPUSD is in a bull squeeze with 1.2930 playing a major area of resistance. The option is out of play.

– USD/JPY: USD amounts

105.00 837m
105.15 360m
105.20 691m
105.25 365m
106.15 376m
106.25 450m

USDJPY is in a bear trend lower with a cluster of option expiries at and slightly above 105.00. Yen is being sold as a safe haven currency with emphasis on Fed interest rate uncertainty and fluctuations in the US dollar index.

………………………………………………………………………………….

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

Tags Forex, fx options, options, trading

Forex Market Analysis

Daily F.X. Analysis, September 16 – Top Trade Setups In Forex – Eyes on FOMC Fed Fund!

Post author By Ali B.
Post date 16 September, 2020
1 Comment on Daily F.X. Analysis, September 16 – Top Trade Setups In Forex – Eyes on FOMC Fed Fund!

On the news front, the eyes will remain on the FOMC Statement and Federal Funds Rate, which is not expected to show a rate change but will help us understand U.S. economic situation and policymakers’ stance on it. Besides, the Inflation reports from the U.K. and Eurozone are also likely to drive some price action during the European session today.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD pair closed at 1.18461 after placing a high of 1.19003 and a low of 1.18393. Overall the movement of the EUR/USD pair remained bearish throughout the day. After rising for four consecutive days, the EUR/USD pair fell on Tuesday amid renewed safe-haven appeal for the U.S. dollar despite the strong Eurozone data. The EUR/USD turned negative for the day as the greenback managed to trim losses versus Euro as the latest statement from WTO weighed down the risk sentiment.

On Tuesday, the World Trade Organization ruled that the U.S. tariffs imposed on Chinese goods in 2018 that led to trade war were inconsistent with international trade rules. The WTO said that the U.S. did not provide evidence that its claims of China’s unfair technology theft and state aid justified the border taxes.

The U.S. condemned and called WTO inadequate to the task of confronting China while Chinese officials cheered the ruling. Due to its safe-haven status on such news and weighed on EUR/USD pair on Tuesday, the U.S. dollar gained due to its safe-haven status.

On the data front, at 11:45 GMT, the French Final CPI in August remained flat with the expectations of -0.1%. At 14:00 GMT, the ZEW Economic Sentiment for Eurozone rose in September to 73.9 from the forecasted 63.0 and Euro. The German ZEW Economic Sentiment in September also rose to 77.4 from the forecasted 69.7 and supported the single currency. These positive reports from Eurozone gave the Euro strength and capped further losses in EUR/USD pair.

On the U.S. front, the Empire State Manufacturing Index for August rose to 17.0 from the projected 6.2 and supported the U.S. dollar that added further losses in EUR/USD pair. The Import Prices in August also advanced to 0.9% from the anticipated 0.5% and supported the losses of the EUR/USD pair.

On Tuesday, the U.S. Dollar Index (DXY) erased its previous losses and rose to 93.00 and was up by 0.6% on Tuesday. On the other hand, the Euro was weak against the U.S. dollar; hence, the pair EUR/USD came under pressure. Another factor involved in the sudden fall of EUR/USD pair prices was the World Health Organization’s latest warning. The WHO warned on Monday that Europe would face a rising death toll from the coronavirus during the autumn months as the number of daily infections worldwide reached a high record. This raised the fears and weighed on risk sentiment that dragged the EUR/USD pair on the downside.

Daily Technical Levels

Support	Pivot	Resistance
1.1821	1.1861	1.1883
1.1799		1.1923
1.1760		1.1945

EUR/USD– Trading Tip

The EURUSD pair is bouncing off the support level of 1.1835 level, and now it’s trading at 1.1845 level. For now, the EUR/USD may find support at 1.1815 level, and above this, the continuation of a bullish trend may lead EUR/USD price until 1.1903 level. Bearish correction can be seen until 1.1815 and 1.1764 support levels.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.28885 after placing a high of 1.29262 and a low of 1.28145. Overall the movement of the GBP/USD pair remained bullish throughout the day. The GBP/USD pair on Tuesday rose and extended its previous day’s bullish track on the back of positive macroeconomic data from the U.K. despite the strong rebound of the U.S. dollar in the market. However, the gains were limited as the issue of the internal market bill was still intact.

The GBP/USD pair rose on the strong U.K. jobs data on Tuesday when at 11:00 GMT, the Claimant Count Change from the U.K. dropped in August to 73.7K from the forecasted 99.5K and supported a single currency, the British Pound.

The Average earning Index for the quarter came in as -1.0% against the forecasted -1.3% and supported the British Pound that helped GBP/USD to gain traction. The Unemployment Rate in July remained flat with expectations of 4.1%.

The strong jobs report from the U.K. gave strength to the local currency Sterling and helped the pair rise for the second consecutive day.

Meanwhile, the U.S. dollar was also strong on the board after the WTO ruled the U.S. tariffs as illegal on Chinese goods imposed in 2018 and triggered the US-China trade war. The U.S. dollar’s safe-haven status supported the greenback and the capped further gains in GBP/USD pair on Tuesday.

Moreover, the mixed U.S. macroeconomic data also helped the GBP/US pair to post gains on Tuesday. At 17:30 GMT, the Import Prices in August rose by 0.9% from the forecasted 0.5% and supported the U.S. dollar. While, at18:15 GMT, the Industrial Production from the U.S. in August fell to 0.4% from the forecasted 1.2% and weighed on the U.S. dollar. The Capacity Utilization Rate also dropped to 71.4% from the expected 71.7% and weighed on the U.S. dollar that ultimately supported the GBP/USD pair’s strength on board.

Furthermore, the concerns related to the availability of coronavirus testing in the country have been raised as the hospital staff has warned about the situation. However, Prime Minister Boris Johnson has unveiled an “Operation Moonshot” that aimed to test 10 million people every day for the coronavirus and restore life to normal by winter.

The U.K. also struggled to impose the latest “rule of six” limit on social gathering as the crime minister urged neighbors to report for any suspected breach of the new rule. This comes after the U.K.’s reproduction or R number escalated between 1 and 1.2 for the first time since March. These ongoing virus updates also capped further upside momentum in GBP/USD pairs.

However, on the Brexit front, the main sticking point, for the time being, was that whether the U.K. will go back on its word over the custom territory in Northern Ireland. The Internal Market bill is undervotes through the House of Commons and the House of Lords. It is not clear whether the bill will pass, but it will break the international law if it does. A deal between the E.U. and the U.K. will still be possible, but it would represent a lack of trust and could impact the future relationship of E.U. & U.K.

Daily Technical Levels

Support	Pivot	Resistance
1.2825	1.2876	1.2937
1.2763		1.2989
1.2712		1.3050

GBP/USD– Trading Tip

The GBP/USD traded sharply lower at 1.2843 level, and now it’s forming a Doji candle, which may trigger buying in the GBP/USD pair. On the higher side, the Sterline may soar to target 1.2928 level, and even above this, the next target for Sterling can be 1.3033 level. The MACD and EMA are still supporting a selling bias; therefore, we should be looking to take selling entry below 1.2928 level today.

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.440 after placing a high of 105.812 and 105.299. Overall the movement of the USD/JPY pair remained bearish throughout the day. The USD/JPY pair extended its losses and dropped to its 2-weeks lowest level near 105.200 ahead of the FOMC meeting. The U.S. Dollar Index fell to 92.85 on Tuesday and lost 0.22% as the U.S.’s major equities were higher with the S&P 500 up by 0.7%.

The USD/JPY pair came under fresh pressure after the latest comments from WTO and WHO on Tuesday. China’s upbeat data also boosted risk sentiment, but the market traders ignored it, and the pair USD/JPY continued its downward movement. On Tuesday, the World Trade Organization ruled that the tariffs imposed in 2018 on Chinese goods by the United States were inconsistent with the international rules. This raised the uncertainty and safe-haven appeal, and the Japanese Yen gained traction that ultimately weighed on the USD/JPY pair.

The top American trade Ambassador, Robert Lighthizer, said that the U.S. must be allowed to defend itself against unfair trade practices and that WTO was inadequate with its task to confront China. Whereas, Chinese officials cheered the ruling by WTO.

On the other hand, on Monday, the World Health Organization warned that Europe would see a rise in the daily number of COVID-19 deaths in October and November as the rising number of coronavirus cases worldwide was not slowing down. This also weighed on risk sentiment, and the Japanese Yen gained traction that led to downward momentum in the USD/JPY pair.

Meanwhile, the Chinese Industrial Production and Retail Sales for the year advanced in August and supported the hopes of economic recovery. This supported the risk sentiment and capped further losses in the USD/JPY pair on Tuesday.

On the data front, at 17:30 GMT, the Empire State Manufacturing Index in September rose to 17.0 from the expected 6.2 and supported the U.S. dollar. The Import Prices in August also rose to 0.9% from the forecasted 0.5% and supported the U.S. dollar.

At 18:15 GMT, the Capacity Utilization Rate from the U.S. in August dropped to 71.4% from the forecasted 71.7% and weighed on the U.S. dollar and supported the downward momentum of the USD/JPY pair. The Industrial Production in July also dropped to 0.4% from the forecasted 1.2% and the previous 3.5% and weighed heavily on the U.S. dollar that supported the losses of the USD/JPY pair on Tuesday.

Furthermore, the FOMC meeting for September has started on Tuesday, and it will be concluded on Wednesday with the speech of Jerome Powell, the chairman of the Federal Reserve. The market participants are waiting for his speech to find fresh clues about the economic condition and further monetary policy decisions by the U.S. government. Hence, the local currency remained under pressure ahead of it and kept weighing the USD/JPY currency pair. In July, industrial production also dropped to 0.4% from the forecasted 1.2% and the previous 3.5% and weighed heavily on the U.S. dollar that supported the losses of the USD/JPY pair on Tuesday.

Daily Technical Levels

Support	Pivot	Resistance
105.2100	105.5200	105.7500
104.9800		106.0600
104.6700		106.2800

USD/JPY – Trading Tips

On Wednesday, the USD/JPY currency pair continues to drop to test the

the double bottom support area of 105.250 level. Recently on the 4-hour timeframe, the USD/JPY pair is forming a bullish engulfing candle that’s followed by the bearish candles, suggesting that sellers are exhausted, and the bulls enter the market now. The USD/JPY pair may bounce off over 105.250 level to complete the 38.2% Fibonacci retracement level at 105.545 and 61.8% Fibonacci level of 105.750 level. Later today, the U.S. Fed Fund Rate will remain in the highlights. Therefore, we should be cautious with the trades that we open, and in fact, we should try to close them ahead of the news release. Good luck!

Tags EURUSD, Forex, Fundamental Analysis, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USDJPY

Crypto Market Analysis

Daily Crypto Review, Sept 16 – Ethereum Facing a 35% Drop; Bitcoin Remains Bullish

Post author By Ilija Rankovic
Post date 16 September, 2020
1 Comment on Daily Crypto Review, Sept 16 – Ethereum Facing a 35% Drop; Bitcoin Remains Bullish

The cryptocurrency sector has ended up with almost every single cryptocurrency in the top100 in the red. Bitcoin is currently trading for $10,707, which represents a decrease of 0.52% on the day. Meanwhile, Ethereum lost 5.13% on the day, while XRP lost 3.44%.

Daily Crypto Sector Heat Map

If we look at the top100 cryptocurrencies, ABBC Coin gained 11.74% on the day, making it the most prominent daily gainer. Nervos Network (11.40%) and Hyperion (9.41%) also did great. On the other hand, the SushiSwap lost 34.73%, making it the most prominent daily loser. It is followed by NXM’s loss of 27.55% and Aragon’s loss of 24.48%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced an increase since our last report, with its value currently being at 60.51%. This value represents a 1.04% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone down in the past 24 hours. Its current value is $343.41 billion, which represents a decrease of $6.08 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After a strong push towards the upside, Bitcoin has tried to consolidate just below the $10,850 mark. The largest cryptocurrency by market cap grazed the RSI overbought territory while failing to push its momentum past the $10,850 level, which held up quite nicely. Bitcoin is now stabilizing around the $10,700 level, where it will try to gather enough bull presence for another push towards $11,000.

Bitcoin’s short-term indicators are showing a bit less bull presence compared to yesterday, while its long-term indicators are still bullish.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is between the middle and top Bollinger band
RSI is overextended to the upside but descending (63.56)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,850 1: $10,630

2: $11,000 2: $10,500

3: $11,090 3: $10,360

Ethereum

Ethereum has experienced quite a massive drop, considering it was not caused by a Bitcoin selloff. The second-largest cryptocurrency by market cap started its price descent and confirmed its bear flag formation. If the bear flag prediction comes true, we may experience a 35% move towards the downside from Ethereum. However, if the $360 level holds and pushes the price back up, the current move towards the downside may be called a fakeout.

With this being said, after the price has left the bear flag and confirmed it, the indicators have turned to “strong sell”. This is certainly a strong bearish indicator (or rather a set of indicators).

ETH/USD 4-hour Chart

Technical Factors:

The price is below both its 21-period and its 50-period EMA
The price is right below the middle Bollinger band
RSI is neutral and descending (41.22)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP had quite a wild day when looking at its price movement. The third-largest cryptocurrency by market cap fell below the $0.2454 level, which triggered a massive selloff that brought its price to the $0.235 level. However, XRP bulls quickly reacted and brought the price back up near the $0.24 level, which is where XRP is at.

XRP has joined Ethereum in terms of technicals, with the short-term overview showing a “strong sell” sign.

XRP/USD 4-hour Chart

Technical factors:

The price is below its 21-period EMA and its 50-period EMA
Price is below its middle Bollinger band
RSI is neutral and descending (40.77)
Volume is low (one-candle spike during the selloff)

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 15 – Top Trade Setups In Forex – Series of Events in Focus!

Post author By Ali B.
Post date 15 September, 2020
1 Comment on Daily F.X. Analysis, September 15 – Top Trade Setups In Forex – Series of Events in Focus!

On the news front, the eyes will remain on the U.K. labour market report along with EU ZEW Economic Sentiment and German ZEW Economic Sentiment that are forecasted to report negative figures. Later during the U.S. session, the U.S. Capacity Utilization Rate and Industrial Production m/m are expected to support greenback amid positive forecast.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD closed at 1.18633 after placing a high of 1.18877 and a low of 1.18316. The EUR/USD pair moved in an upward direction on Monday and extended its bullish streak for the 4th consecutive day on the back of a weak U.S. dollar and improved the global equity market along with the positive Eurozone economic data.

The S&P 500 futures were up by 1.2%, and Dow Jones Futures was up by 0.9% whereas the NASDAQ rose by 1.6%. The EUR/USD pair moved higher as the equities were marginally higher in Asia and Europe on the back of positive news from the vaccine side. The vaccine developed by Oxford and AstraZeneca has resumed its phase-3 trials, and this improved the market risk sentiment on the renewed hopes of potential vaccine development.

The same vaccine trials were stopped in the previous week after a participant was reported with an unexplained illness. However, the trials have been started this week again, and the hopes for economic recovery have returned with it that gave a push to EUR/USD prices on the upside.

Other than that, July’s Industrial Production from Eurozone showed an improvement to 4.1% against the forecasted 4.0% and supported the single currency Euro. The strong Euro then added further gains in the EUR/USD pair.

Moreover, the U.S. dollar weakness also played an important role in pushing the pair EUR/USD further on the upside. The U.S. dollar was weak on the board ahead of the upcoming Fed’s September monetary policy meeting this week. The two-day meeting of the FOMC (Federal Reserve Open Market Committee) will start on Tuesday and will be concluded by the comments from Jerome Powell on Wednesday.

The market participants are waiting for the comments from the Chairman of the U.S. Federal Reserve on Wednesday, and this has increased the selling pressure against the U.S. dollar. The weak U.S. dollar pushed the EUR. The USD pair is higher on Monday.

The U.S. dollar was under more pressure after the House of Representatives returned from summer break, and the hopes for reaching a consensus on the fifth round of stimulus measure increased. These hopes exerted further pressure on the U.S. dollar and added strength to the EUR/USD pair’s upward movement.

However, the gains in EUR/USD pair were capped after the WHO reported a record rise in the daily cases of coronavirus from across the globe. The organization said that 307,930 cases were recorded in a single day. This raised uncertainty around the market related to economic recovery and helped cap further losses in EUR/USD pair on Monday.

Daily Technical Levels

Support	Pivot	Resistance
1.1835	1.1862	1.1894
1.1803		1.1921
1.1776		1.1954

EUR/USD– Trading Tip

The EURUSD pair has violated the double top resistance level of 1.1885 level, and now it’s trading at 1.1895 level. For now, the EUR/USD may find support at 1.1885 level, and above this, a continuation of a bullish trend may lead EUR/USD price until 1.1916 level. Bearish correction can be seen until 1.1885 and 1.1870 before continuation of further buying trend in the EUR/USD.

GBP/USD – Daily Analysis

The GBP/USD closed at 1.28450 after placing a high of 1.2919 and a low of 1.27705. The pair GBP/USD rose in the first trading session on Monday, and after that, it converted its direction in the late trading session and lost some of its daily gains. The rise in prices of the GBP/USD pair on Monday was due to a weak U.S. dollar and improved risk sentiment.

However, the Pound eased from session highs on Monday as Prime Minister Boris Johnson continued to make a case for a controversial bill that threatens to break the terms of the post-Brexit deal with the European Union the following vote later today.

The U.S. dollar came under fresh selling pressure on Monday after the equities rose in Asian and European session due to positive news from the vaccine front. The AstraZeneca and Oxford vaccine resumed its vaccine’s phase-3 trials after they were paused due to an unexplained illness found in one of the shareholders last week.

The resumed trials of the long-awaited vaccine raised hopes for economic recovery and risk sentiment and helped the risk perceived British Pound to gain traction and move the GBP/USD pair on the upside.

However, the GBP/USD pair came under pressure ahead of the parliament vote on the internal market bill when Boris Johnson suggested that the legislation was needed to avoid a situation in which the E.U. counterparts seriously believe that they had the power to break up the U.K.

The expectations are high that the bill will pass the first parliamentary process despite the several party members of the Tory government have refused to back the bill. Furthermore, the upward movement of the Pound was short lives ahead of the Bank of England’s meeting later this week. Market participants have suggested that the central bank would welcome further easing in November and would renew its cautious outlook on the economy.

The hopes for further easing also weighed on GBP/USD pair and capped further gains in the currency pair at the starting day of the week in the absence of any macroeconomic data from both sides.

Daily Technical Levels

Support	Pivot	Resistance
1.2774	1.2847	1.2919
1.2702		1.2992
1.2629		1.3063

GBP/USD– Trading Tip

USD/JPY – Daily Analysis

The USD/JPY currency pair failed to halt its Asian session bearish moves and witnessed some further selling moves near 105.90 level mainly due to the broad-based U.S. dollar weakness, triggered by the doubts over the next round of the U.S. fiscal stimulus measures. Moreover, the upbeat market sentiment, backed by the recently positive coronavirus (COVID-19) vaccine news, also weighed on the safe-haven U.S. dollar, which ultimately dragged the currency pair below 106.00 level. However, the risk-on market sentiment also undermined the safe-haven Japanese yen and became the critical factor that helped the USD/JPY currency pair to limits its deeper losses.

On the contrary, the fears of a no-deal Brexit and the Sino-American tussle keep challenging the market risk-on tone, which might suffer the currency pair into deeper losses.

The ongoing impasse over the next round of the U.S. fiscal stimulus or the upbeat market sentiment, not to forget the record single-day increase in COVID-19 cases, these all factors tend to undermine the broad-based U.S. dollar. The U.S. Senate rejected a Republican bill that would have provided around $300 billion in new coronavirus aid. Democrats voted to block the law as they have been pushing for more funding to control the economic downturn that led the coronavirus pandemic.

Despite the lingering doubts over the U.S. economic recovery and the intensifying tension between the world’s two biggest economies, the market players continue to cheer the optimism about the coronavirus treatment. These hopes fueled after the AstraZeneca’s showed readiness to restart the third phase of coronavirus (COVID-19) vaccine trials.

This, in turn, the broad-based U.S. dollar edged lower on the day as the lack of progress over the U.S. aid package continuously destroying hopes for a quick economic recovery. Meanwhile, the weaker tone surrounding the U.S. Treasury bond yields further weakened the already weaker sentiment surrounding the dollar. At the US-China front, the rising tensions between the United States and China as China’s Commerce Ministry said that it launched an anti-subsidy investigation on certain glycol ethers imports from the U.S., starting September 14.

Besides this, China announced that Beijing had sent a note detailing reciprocal restrictions on the U.S. Embassy and consulates on Friday. These moves came after the U.S. sanctions on Chinese individuals, which fuels worries about worsening US-China relations. These fears keep challenging the market risk-on tone and might suffer the currency pair into deeper losses.

Daily Technical Levels

Support	Pivot	Resistance
105.4500	105.8300	106.1200
105.1600		106.5000
104.7800		106.7800

USD/JPY – Trading Tips

The USD/JPY currency pair has dropped sharply amid increased safe-haven appeal and weakness in the U.S. dollar. The pair fell from 106 to 105.650 level and now it’s facing resistance at 105.795 level. On the lower side, the USD/JPY pair may drop until 105.265. Let’s consider opening a sell trade below 105.750 to target 105.450 and 105.250 level as the MACD and RSI also signalling selling bias. Good luck!

Tags EUR-USD, EURUSD, Forex, forex review, Fundamental Analysis, GBP-USD, GBPUSD, Support and Resistance, Technical Analysis, Technical Outlook, trading, USD-JPY, USDJPY

Forex Options

FX Options Market Combined Volume Expiries for 15th September 2020

Post author By Kevin O'Sullivan
Post date 15 September, 2020
1 Comment on FX Options Market Combined Volume Expiries for 15th September 2020

…………………………………………………………………………………………………………

FX option expiries for Sept 15 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

– EUR/USD: EUR amounts

1.1830 823m
1.1850 2.4bn
1.1885 957m
1.1910 637m

EURUSD is throwing up lots of support and resistance areas. The 1.1850 option is huge at €2.4Bn and can not be discounted as a huge magnet. High impact Euro area and US data up later.

– USD/JPY: USD amounts

105.00 1.1bn
105.70 535m
105.95 999m
106.00 665m

USDJPY is stuck in a narrow range with a slight upward bias testing the resistance line.

………………………………………………………………………………….

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

Tags Forex, fx options, options, trading

Forex Basic Strategies

Learning To Trade The Forex Market Using ‘2-Period RSI’ Trading Strategy

Post author By Reddy Shyam Shankar
Post date 15 September, 2020
1 Comment on Learning To Trade The Forex Market Using ‘2-Period RSI’ Trading Strategy

Introduction When we look for a trade setup, most of the times we do not have an idea of the strategy, we will be using for taking a particular trade. From there, we start to pick random indicators and start trading using those indicators without a proper strategy associated with that indicator. With our 2-Period […]

Introduction

When we look for a trade setup, most of the times we do not have an idea of the strategy, we will be using for taking a particular trade. From there, we start to pick random indicators and start trading using those indicators without a proper strategy associated with that indicator. With our 2-Period RSI strategy, we will solve this confusion by looking at the market with a systematic approach that involves using the RSI indicator. In addition to the RSI indicator, we will also use a 20-period EMA. Most importantly, we will look to take trades in the direction of the main trend.

Now that we know what our goals are, we will look into the various parameters of the strategy and understand how to apply the same.

Time Frame

This strategy works well on the 5-minutes and 15-minutes time frame. This is a perfect intraday trading strategy.

Indicators

The strategy uses RSI as its major indicator. We also use the EMA for identification of the trend. Both the indicators are applied with their default settings.

Currency Pairs

This strategy is applicable to most of the currency pairs listed on the broker’s platform. However, illiquid pair should be completely avoided.

Strategy Concept

The concept of the strategy is very simple if we have a clear understanding of the previously discussed strategy. The basic idea of here is to trade the retracement of an established trend. Therefore, the strategy can only be used when the market is trending. Once the trend has been identified, we wait for a ‘pullback’ in the price and then take an ‘entry’ in the direction of the market after a suitable confirmation. The Relative Strength Index (RSI) is an important indicator in this strategy which helps us in measuring the over-extended phase of the retracement.

A reading above 70 indicates an over-extended ‘up’ move while a reading below 30 indicates an over-extended ‘down’ move. In an uptrend, we will look for a retracement that is overextended, implying that the RSI should be below 30. While in a downtrend, we will look for a retracement that is overextended, implying that the RSI should be above 70. The crucial part of the strategy is that we don’t enter for a ‘buy’ or ‘sell’ soon after the RSI gives an indication, but instead wait for a sign of reversal that confirms the continuation of the trend.

Trade Setup

In order to explain the strategy, we will be taking a ‘long’ trade in the GBP/USD currency pair on the 5-minutes chart using the 2-period RSI strategy.

Step 1

The first step is to identify the major direction of the market. Many technical indicators help in identification of the trend, but the one that is suitable for this strategy is the EMA. We will identify the trend of the market using the 20-period EMA, which is best suited as per the conditions of the strategy.

In our example, we have identified an uptrend whose retracement shall be evaluated.

Step 2

Next, we need to wait for the market to turn from its highest or lowest point, depending on the trend, and then check if that is a retracement or a reversal. After the price starts to pull back, we wait until the RSI shows a reading below 30, in an uptrend and above 70, in a downtrend. Once that happens, we become alert and watch the price cautiously.

Step 3

Now we wait for the price to reverse and close above the 20-period EMA, in an uptrend and close below the EMA, in a downtrend. Ensuring this step is critical as it confirms the continuation of the trend. We enter the market with an appropriate position at the close of the candle. There are two ways of entering the market. One, wait for the candle to close and then enter. Second, enter at the crossing of the price above or below the EMA. The second approach is an aggressive form of ‘entry’ and is not recommended for everyone. There is also a conservative form of entry, that is entering at the re-test of the EMA.

In the below image, we can see that we are entering at the close of the bullish candle above the EMA. But since the candle is long and has a large body, the ‘entry’ price is much higher than what we were looking for.

Step 4

Finally, we determine the stop-loss and take-profit for the strategy. The stop-loss is placed below the ‘low’ from where the market reverses and starts moving higher in case of a ‘long’ trade. In a ‘short’ trade, it will be placed above the ‘high’ from where the market reverses and starts moving lower. Since we are trading with the trend, the ‘take-profit’ can be set at the new ’high’ or ‘low’ that will result in a higher risk-to-reward ratio.

In our case, the risk-to-reward ratio of the trade is just 1:1 since we took a late ‘entry.’

Strategy Roundup

We are making use of the RSI indicator in a most constructive way which helps us in identifying when the market is overbought or oversold. Using the concept of trends, we are applying the strategy to reduce risk and maximise gains. The rule for entering the market in this strategy is what stands out. We are entering only after getting clear signs of confirmation from the market. We can also trail our stop-loss and exit when we get signs of another reversal. This is an aggressive way of taking profit and is mostly done to increase the gains.

Tags Basic Strategies, Education, Forex, Forex Trading, Forex Trading Strategies, Indicator Based Trading, Indicators, Relative Strength Index, RSI Strategy, trading

Forex Fundamental Analysis

The Importance of ‘Wages’ In Determining The Economic Condition of a Nation

Post author By Reddy Shyam Shankar
Post date 15 September, 2020
No Comments on The Importance of ‘Wages’ In Determining The Economic Condition of a Nation

Introduction It is completely fair to say that it would be difficult to sustain a country’s economy in the absence of households’ consumption. The amount of money that employees are typically paid determines their purchasing power and their level of demand. Wages can, therefore, be said to be the best leading indicators of consumer inflation. […]

Introduction

It is completely fair to say that it would be difficult to sustain a country’s economy in the absence of households’ consumption. The amount of money that employees are typically paid determines their purchasing power and their level of demand. Wages can, therefore, be said to be the best leading indicators of consumer inflation. More so, we can establish a direct correlation between the wages paid and the growth of the economy. For this reason, forex traders need to understand how wages drive the economy and the currency.

Understanding Wages

Wages are compensation that an employer pays their employees over a predefined period. It is the price of labour for the contribution to the production of goods and services. Thus, wages can be regarded as anything of value an employer gives an employee in exchange for their services. Wages include salaries, hourly wages, commissions, benefits and bonuses.

There are two categories of wages: nominal and real wages.

Nominal wages: are the amount of money that an employee is paid for the work done. Nominal wages are expressed in terms of pure monetary value.

Real wages: are the wages received by the employees adjusted for the rate of inflation. Real wages show the purchasing power of money. They are meant to guide on how the overall living standards have changed over time.

Therefore, Real wages = nominal wages – inflation

How Wages can be used for analysis

Their levels of disposable income determine the purchasing power of the households. The disposable income is directly proportional to the wages received. Therefore, the amount of wages paid for labour affects not only the quality of life of the households but also economic growth.

Growth in the wages received can be considered as a source of demand. Wages contribute a significant proportion of income for the middle- and low-class households who do not have other sources of income from investments. Assuming no corresponding increase in taxation, an increase in the wages corresponds to an increase in the amount of disposable income. Higher wages also give households the capacity to borrow more from financial institutions at competitive rates. The cheaper loans significantly contribute to increased aggregate demand. In this case, more goods and services will be demanded. The increase in aggregate demand compels producers to increase their scale of production to match the supply and demand. Consequently, the employment levels increase while the economy expands.

Source: St. Louis FRED

Conversely, decreasing wage growth implies that a decrease in disposable income. A reduction in the aggregate demand and supply will follow. Producers will be forced to scale back their operations, increasing the unemployment rate and consequently a slow-down in the economic growth.

Investments and savings rate rise with the growth in wages. These investments create employment opportunities and spur innovation within the economy. Contrary to this, the decrease in wages forces households to prioritise consumption over investments and saving. The resultant effect is fewer new job opportunities and stifled innovation. As can be seen, changes in the level of wages have a multiplier effect on the economy.

A rise in the rate of inflation is primarily driven by a disproportionate increase in demand driven by a rise in wages. Rising wages lead to a wage push inflation. This particular type of inflation is a result of an increase in prices of goods and services by producers to maintain corporate profits after an increase in the wages. Furthermore, since the responsiveness of supply to an increase in demand is not instant, increasing wages results in inflation since more money will be chasing the same amount of goods.

Impact of Wages on Currency

Forex traders monitor the fundamental indicators to gauge economic growth and speculate on the central banks’ policies. Central banks set their average inflation targets which guide their monetary policies. In the US, the inflation rate target is 2%.

When the wages increase, it forestalls a growth in the economy due to increased investments, aggregate demand and supply. An increase in employment levels also accompanies it. Since the value of a country’s currency is directly proportionate to its economic performance and outlook, wages growth leads to the appreciation of the currency. More so, consistent growth in wages is accompanied by wage push inflation. To keep this inflation under control, the central banks may implement contractionary policies to increase the cost of borrowing money and encourage savings and investments. These policies appreciate the currency.

A decrease in wages implies that the economy could be contracting due to declining aggregate demand and supply within the economy. If the central banks fear that this might result in a recession, they will implement expansionary monetary policies such as lowering interest rates. These policies tend to depreciate the currency.

Sources of Data

This analysis will focus on Australian wages. The comprehensive indicator of wages is Australian Wage Price Index which measures Wages, salaries, and other earnings, corrected for inflation overtime to produce a measure of actual changes in purchasing power. Thus, it measures the change in the price businesses, and the government pay for labour, excluding bonuses.

The real earnings data is released quarterly by the Australian Bureau of Statistics. The statistics can be accessed here.

Statistics on the global wages by country can be accessed at Trading Economics.

How Real Earnings Data Release Affects The Forex Price Charts

The most recent real earnings data in Australia was released on August 12, 2020, at 1.30 AM GMT. A summary review of the data release can be accessed at the Australian Bureau of Statistics website. The screengrab below is of the monthly real earnings from Investing.com.

As can be seen, the release of the real earnings data is expected to have a moderate volatility impact on the AUD

The screengrab below shows the most recent change in the Australian wage price index. In the second quarter of 2020, the wage price index grew by 0.2%. This growth is slower than the 0.5% increase in the first quarter of 2020. More so, the change in the second quarter was lower than analysts’ expectations of a 0.3% increase.

In theory, this improvement should lead to depreciation of the AUD relative to other currencies.

Now, let’s see how this release made an impact on the Forex price charts of a few selected pairs

AUD/USD: Before the Wage Price Index QoQ Data Release on 
August 12, 2020, Just Before 1.30 AM GMT

From the above 15-minute chart of AUD/USD, the pair can be seen trading in a subdued downtrend before the data release. This trend is evidenced by candles forming just below an almost flattening 20-period Moving Average.

AUD/USD: After the Wage Price Index QoQ Data Release

After the data release, the pair formed a long 15-minute bearish candle indicating the weakening of the AUD as expected. The weak wages price index data resulted in the selloff of the AUD, which led to the pair adopting a steady trend. This downtrend is shown by the steeply falling the 20-period MA with subsequent candles forming further below it.

Now let’s see how this news release impacted other major currency pairs.

GBP/AUD: Before the Wage Price Index QoQ Data Release on 
August 12, 2020, Just Before 1.30 AM GMT

The GBP/AUD pair traded in a neutral trend before the wages data release. As shown above, the 15-minute candles are forming just around an already flat 20-period MA. This trend indicates that traders were inactive waiting for the data release.

GBP/AUD: After the Wage Price Index QoQ Data Release

As expected, the GBP/AUD pair formed a long 15-minute bullish candle indicating the selloff of the AUD due to the weaker than expected data. Subsequently, the pair adopted a bullish trend as the 20-period MA steadily rising with candles forming further above it.

EUR/AUD: Before the Wage Price Index QoQ Data Release on 
August 12, 2020, Just Before 1.30 AM GMT

EUR/AUD: After the Wage Price Index QoQ Data Release

The EUR/AUD pair traded in a similar neutral pattern as the GBP/AUD pair before the wages data release. 15-minute candles can be seen forming just around a flattened 20-period MA. Similar to the GBP/AUD pair, the EUR/AUD formed a long 15-minute bullish candle immediately after the wages data release. Subsequently, the pair adopted a strong bullish trend as the 20-period MA rose steeply with candles forming further above it.

Bottom Line

From the above analyses, it is evident that the wages data has a significant effect on price action. Although the wage price index is categorised as a medium-impact indicator, its impact was amplified by the ongoing effects of the coronavirus pandemic. The worse than expected wages data indicated that the Australian labour industry is yet to recover from the economic shocks of Covid-19.

Therefore, traders should avoid having significant positions open with pairs involving the AUD before the release of the quarterly wage price index.

Tags Economic Indicators, Education, Forex, Forex Drivers, Fundamental Analysis, Fundamental Trading, fundamentals, Macro Economics, Nominal Wages, Real Wages, trading, Wages

Crypto Market Analysis

Daily Crypto Review, Sept 15 – BTC Heading Towards $11,000; ETH Facing a 35% Drop?

Post author By Ilija Rankovic
Post date 15 September, 2020
1 Comment on Daily Crypto Review, Sept 15 – BTC Heading Towards $11,000; ETH Facing a 35% Drop?

The cryptocurrency sector has mostly been in the green in the past 24 hours, with Bitcoin leading the way towards the upside. Meanwhile, most of the tokens that ended up in the red on the daily were Ethereum (mostly DeFi) tokens. Bitcoin is currently trading for $10,763, which represents an increase of 4.09% on the day. Meanwhile, Ethereum gained 3.41% on the day, while XRP gained 2.42%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, Hyperion gained 51.28% on the day, making it the most prominent daily gainer. NXM (40.86%) and Bytom (18.97%) also did great. On the other hand, the UNUS SED LEO lost 6.72%, making it the most prominent daily loser. It is followed by Waves’ loss of 6.35% and Band Protocol’s loss of 5.57%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced a slight increase since our last report, with its value currently being at 59.47%. This value represents a 0.1% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has skyrocketed in the past 24 hours. Its current value is $351.49 billion, which represents an increase of $15.59 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has made a move towards the upside, passing through its $10,360 and $10,500 levels. As we mentioned in our previous articles, this is a huge bullish sign, and the overall indicators are showing that as well. If the bulls regain momentum, we can expect a push towards $11,000 once the consolidation continues.

With that being said, Bitcoin’s current price movement got stopped at the $10,850 level. While this does mean that Bitcoin bulls have encountered some resistance, it certainly does not mean that the overall trend is over. Bitcoin has shown great resistance at the $10,000 psychological level, which prompted this push towards the upside.

BTC/USD 4-hour Chart

Technical factors:

Price is above both its 50-period EMA and 21-period EMA
Price is right at the top Bollinger band
RSI is overextended to the upside, though with more room to go up (67.45)
Volume is stable

Key levels to the upside Key levels to the downside

1: $10,850 1: $10,630

2: $11,000 2: $10,500

3: $11,090 3: $10,360

Ethereum

Ethereum was extremely volatile in the past 24 hours. Its price movements were quite hectic, with the price pushing past the $371 level and reaching the $385 mark before coming back down to restest the newly-conquered level, only to go up again and down again. Ethereum is currently supported by both the 50-period and 21-period moving averages, which are right below its price level. On top of that, the $371 level was turned to a support level after a clean confirmation move.

While its technicals show a short-term buy opportunity, the long-term technicals are still tilted towards the sell side. On top of that, Ethereum has created a nice bear flag formation, which (if it turns out to be correct) can prompt a 35% move towards the downside.

ETH/USD 4-hour Chart

Technical Factors:

The price is right above both its 21-period and its 50-period EMA
The price is right above the middle Bollinger band
RSI is neutral (53.36)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $400 1: $371

2: $415 2: $360

3: $445 3: $340

Ripple

XRP has managed to push itself above the $0.2454 level once again, but still hasn’t confirmed its position above it. A confirmation above this level and a slight push towards the upside will be crucial for the future of XRP, as many traders are calling for bearish scenarios and drawing a bearish flag (though this flag is a lot less picture-perfect as the one on the ETH/USD chart).

XRP is showing signs of slight short-term bullishness, while its longer-term technicals are still pointing towards the downside.

XRP/USD 4-hour Chart

Technical factors:

The price is just above its 21-period EMA and its 50-period EMA
Price is right above its middle Bollinger band
RSI is neutral and pushing towards the upside(54.88)
Volume is extremely low, but stable

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Market Analysis

Daily F.X. Analysis, September 14 – Top Trade Setups In Forex – U.S. Industrial Production in Focus!

Post author By Ali B.
Post date 14 September, 2020
1 Comment on Daily F.X. Analysis, September 14 – Top Trade Setups In Forex – U.S. Industrial Production in Focus!

On Monday, the focus will remain on the European Industrial Production m/m data; however, the data is low impact and may not drive major market movements. Therefore, the technical side may drive further trends in the market.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD prices were closed at 1.18435 after placing a high of 1.18740 and a low of 1.18099. Overall the movement of the EUR/USD pair remained bullish throughout the day. The EUR/USD pair rose for the 3rd consecutive day on Friday amid the rising risk-on market sentiment and more hawkish comments from the ECB. The market’s attention was on if the ECB would mention the recent appreciation in the local currency.

The ECB President Christine Lagarde said that ECB members had noticed the single currency’s recent strength, but there was no policy change to address given the rise as there was nothing to worry about. The recent rise was attributed to the improving economic data after the restrictions imposed due to coronavirus were lifted and economic activities started.

However, ECB’s more positive comments, even the Eurozone, have entered into a deflationary period, giving further strength to the single currency and the pair EUR/USD posted gains.

On the data front, the German Final CPI in August remained flat with the expectations of -0.1%. At 11:00 GMT, the German WPI in August dropped to -0.4% from the expected 0.5% and weighed on a single currency. At 13:00 GMT, the Italian Quarterly Unemployment Rate dropped to 8.3% in August from the forecasted 8.4% and supported a single currency that helped the EUR/USD pair rise and post gains.

Furthermore, the upward trend in EUR/USD pair on Friday was also supported by the Eurogroup and other European Union finance ministers who met in Berlin on the day and facilitated the growth in Europe.

Whereas, the gains in EUR/USD pair were capped by the improving U.S. dollar strength that was backed by the positive CPI data from the United States on Friday. At 17:30 GMT, the Consumer Price Index in August rose to 0.4% from the expected 0.3% and supported the U.S. dollar. In August, the Core Consumer Price Index also rose to 0.4% against the expected 0.2% and supported the U.S. dollar.

The strong U.S. dollar kept the gains in EUR.USD pair limited at the ending day of the week. Meanwhile, the latest Brexit worries with no progress from both sides also kept the EUR/USD pair’s gains limited on Friday.

On the coronavirus pandemic front, the cases in many European countries rose back to March levels and forced governments to re-impose restrictions to curb the spread. The latest surge in coronavirus cases was attributed to August’s vacations when many tourists visited a handful of destinations. Another reason could also be the fact that schools were reopened in August. These rising cases from many European countries kept the gains in EUR/USD pair limited.

Daily Technical Levels

Support	Pivot	Resistance
1.1831	1.1840	1.1850
1.1820		1.1860
1.1811		1.1870

EUR/USD– Trading Tip

The EUR/USD continues to trade at 1.1835 level as the ECB decided to leave its interest rate unchanged in its monetary policy meeting. On the higher side, the pair may find resistance at 1.1839 level, and above this, the pair may find the next resistance at 1.1860 level along with support at 1.1828 level. Below 1.1828, the EUR/USD may find the next support at 1.1797 and 1.1755 level.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.27946 after placing a high of 1.28656 and a low of 1.27624. Overall the movement of the GBP/USD pair remained bearish throughout the day. The GBP/USD pair extended its previous day bearish trend and posted losses on Friday amid the strong U.S. dollar and lingering Brexit worries. Prime Minister Boris Johnson reportedly pushed ahead with the bill that would seek to override the withdrawal deal despite threats from the European Union.

According to the Guardian report, Prime Minister Boris Johnson attempted to whip up demand for their internal market bill. He told his lawmakers that the legislation was necessary to stop a foreign power from breaking up the United Kingdom. He also insisted that there was no time for questions. Prime Minister Boris Johnson also faced a rebellion from his party, who have tabled an amendment that would give Parliament the right to veto the bill. After the E.U., this move came in threatened to abandon a UK-EU trade deal if the Prime Minister moved ahead with the legislation.

The latest internal market bill published on Wednesday could create standard rules that apply across the U.K., including England, North Ireland, Scotland, and Wales. The new bill is expected to clash with key terms of the Brexit agreement that requires Northern Ireland to follow E.U. rules in the post-Brexit period to avoid a hard border with the Republic of Ireland.

The emergency talks held this week also failed to break the deadlock between E.U. & U.K. negotiators, and the differences in essential areas remain. PM Boris Johnson has warned that if no progress in trade talks will not be made until mid-October, the U.K. will leave the E.U. without a deal and follow WTO rules. The GBP/USD pair remained under pressure. Both sides were ready and prepared for a no-deal or hard Brexit as Michel Barnier, the top E.U. negotiator, said that the E.U. had intensified its preparedness work to be ready for all scenarios on January 1, 2021.

Apart from Brexit, the macroeconomic data released on Friday from Great Britain also affected GBP/USD prices. At 110:00 GMT, the Construction Output from the United Kingdom in July rose to 17.6% against the forecasted 10.3% and supported GBP. The GDP from the U.K. in July remained flat with expectations of 6.6%. The Goods Trade Balance from Britain declined more than forecast and weighed on local currency. The balance was dropped to -8.6B from the projected -7.4B and weighed on GBP.

The Index of Services for the quarter also dropped to -8.1% from the expected -7.8% and weighed on the local currency that added pressure on GBP/USD pair. The Industrial Production in July rose to 5.2% in the U.K. against the forecasted 4.2% and supported GBP. The Manufacturing Production in the United Kingdom in July rose to 8.3% from the forecasted 8.4% and supported GBP. Consumer Inflation Expectations in August dropped to 2.8% from the previous 2.9%.

The negative data from the United Kingdom weighed on local currency and added losses in the GBP/USD pair on Friday. From the USD front, the CPI and Core CPI in July rose to 0.4% against the expectations of 0.3% and 0.2%, respectively, and supported the U.S. dollar. The strong U.S. dollar added further losses in GBP/USD pair.

Daily Technical Levels

Support	Pivot	Resistance
1.2786	1.2799	1.2823
1.2762		1.2836
1.2748		1.2860

GBP/USD– Trading Tip

USD/JPY – Daily Analysis

The USD/JPY currency pair stopped its early-day bearish rally and drew some modest bids around above 106.20 level, mainly due to the risk-on market. However, the positive tone around the equity market was supported by the news of receding tension between India and China, and Tokyo’s optimism over easing lockdown restriction also favor the market trading sentiment, which eventually undermined the Japanese yen currency and contributed to the currency pair gains.

In the wake of low safe-haven demand, the broad-based U.S. dollar weakness becomes the major factor that kept the pressure on any further gains in the currency pair. Meanwhile, the ongoing US-China tussle over several issues, the risk of a no-deal Brexit, and delay in the U.S. stimulus keep challenging the market trading sentiment, which might cap further gains in the currency pair. The USD/JPY is trading at 106.19 and consolidating in the range between 106.08 – 106.20.

Across the ocean, the market trading sentiment rather unaffected by the intensified US-China tussle and Brexit issue. The Trump administration continues to hold TikTok on the sellers’ radar. In the meantime, the cancellation of over 1,000 visas of Chinese residents also irritates China.

Also capping the gains could be the headlines suggesting that the Tokyo metropolitan government lowered its coronavirus alert by one level to 3 on Friday. This might underpin the local currency and dragged the currency pair down.

The Japanese yen currency might also take clues from the Producer Price Index (PPI) data for August that recovered to -0.5% from -0.9% YoY. The traders will keep their eyes on the U.S. Consumer Price Index (CPI) for August, which is expected 1.2% against 1.0% YoY. Moreover, the updates surrounding the Sino-US tussle, as well as Brexit related headline, could not lose their importance.

Despite this, the crude oil prices’ gains were capped by the continuing oversupply fears and a slow recovery in global fuel demand. This was witnessed after the builds in crude oil supply reported during the previous week by both the American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA). Meanwhile, the ongoing COVID-19 pandemic continuing to hamper fuel demand recovery. As per the latest report, the World Health Organization (WHO) recorded a record single-day hike in COVID-19 cases by 307,930 in 24 hours during this weekend.

Daily Technical Levels

Support	Pivot	Resistance
106.0900	106.1500	106.2100
106.0300		106.2800
105.9600		106.3400

USD/JPY – Trading Tips

The USD/JPY is consolidating at 106.050, with a resistance mark of 106.480 level. An upward crossover of 106.480 level may extend further buying trend until the 106.840level, and the violation of this level can extend buying until the next resistance level of 107.150. On the downside, the safe-haven USD/JPY currency may gain support at 105.620 and 105.280. Let’s consider taking a sell trade below 106.024 level as the MACD and RSI also suggest selling bias. Good luck!

Tags EURUSD, Forex, forex review, Fundamental Analysis, GBPUSD, Technical Analysis, trading, USDJPY

Forex Options

FX Options Market Combined Volume Expiries for 14th September 2020

Post author By Kevin O'Sullivan
Post date 14 September, 2020
1 Comment on FX Options Market Combined Volume Expiries for 14th September 2020

…………………………………………………………………………………………………………

FX option expiries for Sept 14 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

– EUR/USD: EUR amounts

1.1900 1.2bn

EURUSD pair is overbought but price action is continuing in an upward trend. The 1.1900 option has a large combined volume of €1.2Bn and will act as a magnet for price action, with little on the economic data front.

– USD/JPY: USD amounts

106.50 555m
106.69 444m

USDJPY is in a bear trend. The two option expiries are out of play.

………………………………………………………………………………….

If you want to learn how forex option expiries affect price action in the spot FX market see our educational article by clicking here: https://bit.ly/2VR2Nji

Tags Forex, fx options, oprions, trading

Crypto Market Analysis

Daily Crypto Review, Sept 14 – The EU Regulating Stablecoins; Crypto Market Preparing For a Move

Post author By Ilija Rankovic
Post date 14 September, 2020
1 Comment on Daily Crypto Review, Sept 14 – The EU Regulating Stablecoins; Crypto Market Preparing For a Move

The cryptocurrency market managed to stay relatively healthy over the weekend as most cryptos tried to consolidate rather than move. Bitcoin is currently trading for $10,343, which represents a decrease of 0.85% on the day. Meanwhile, Ethereum lost 5.22% on the day, while XRP lost 2.06%.

Daily Crypto Sector Heat Map

If we take a look at the top100 cryptocurrencies, Flexacoin gained 13.18% on the day, making it the most prominent daily gainer. OKB (13.14%) and Waves (12.08%) also did great. On the other hand, the NXM lost 18.45%, making it the most prominent daily loser. It is followed by DFI. Money’s loss of 17.46% and yearn .finance’s loss of 16.42%.

Top 10 24-hour Performers (Click to enlarge)

Bottom 10 24-hour Performers (Click to enlarge)

Bitcoin’s dominance level experienced an increase since our last report, with its value currently being at 59.37%. This value represents a 4.93% difference to the upside when compared to when we last reported.

Daily Crypto Market Cap Chart

The crypto sector capitalization has gone slightly down in the past 24 hours. Its current value is $335.90 billion, which represents a decrease of $2.27 billion when compared to our previous report.

_______________________________________________________________________

What happened in the past 24 hours?

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin has spent the weekend steadily and slowly increasing and trying to reach past $10,500. While it has gotten past the $10,360 level once, it fell under it once the move couldn’t carry enough momentum to pass $10,500 as well. Bitcoin is currently fighting for the $360 level, with its price being right below it.

Our prediction regarding the price movement stays the same as Bitcoin did not move much over the course of the weekend. If Bitcoin doesn’t pass the $10,360 line soon, we should look for support at $9,600, and ultimately at the 200-day SMA ($9,080).

It is also important to note that, as the price movement has been muted for such a long time, it is extremely likely that, once the price moves past $10,360 or below $10,000 (with confidence), we might see a massive surge in volume extending that move. This will be a great opportunity for traders to trade on the way down, as well as the pullbacks.

BTC/USD 4-hour Chart

Technical factors:

Price is below the 50-period EMA and right at the 21-period EMA
Price is right at middle Bollinger band
RSI is neutral (50.27)
Volume is stable (slightly below average)

Key levels to the upside Key levels to the downside

1: $10,360 1: $10,015

2: $10,500 2: $9,870

3: $10,630 3: $9,600

Ethereum

Ethereum’s price movement in the past couple of days looks exactly like Bitcoins in direction, but with much higher volatility. The second-largest crypto by market cap took the weekend to push towards $400, which ended unsuccessfully. As the move could not carry the momentum forward, bears took over and brought the price to its current position, where it is bound in a narrow range by $360 to the downside and $371 to the upside.

Ethereum’s volatility certainly comes from people investing in DeFi as Ethereum was never as volatile as it is now. However, its moves are still following Bitcoin. This volatility might be a good opportunity for traders to push for some trades.

ETH/USD 4-hour Chart

Technical Factors:

The price is right above its 21-period and its 50-period EMA
The price is at its middle Bollinger band
RSI is neutral (49.14)
Volume is low and stable

Key levels to the upside Key levels to the downside

1: $371 1: $360

2: $400 2: $340

3: $415 3: $300

Ripple

XRP has not been much different from the aforementioned two cryptocurrencies. The third-largest cryptocurrency by market cap is still trading within a range bound by $0.235 to the downside and (more importantly) $0.2454 to the upside. XRP did have one a short period where it spiked above the resistance level, but the price quickly dwindled back down to its original level.

XRP is now fighting for the $0.2454 level, trying to surpass it. However, the extremely low volume shows us that this is will most likely not happen. Traders might have the opportunity to trade the pullback.

XRP/USD 4-hour Chart

Technical factors:

The price is just above its 21-period EMA and just below its 50-period EMA
Price is right above its middle Bollinger band
RSI is neutral (51.35)
Volume is extremely low, but stable

Key levels to the upside Key levels to the downside

1: $0.2454 1: $0.235

2: $0.266 2: $0.227

3: $0.285 3: $0.221

Tags bitcoin, BTC, Crypto, Crypto Trading, cryptocurrency, Daily Brief, ETH, Ethereum, Fundamental Analysis, Ripple, Technical Analysis, trading, XRP

Forex Videos

Forex Options Part 15 Delta Neutral Strategies!

Post author By Keiran
Post date 13 September, 2020
No Comments on Forex Options Part 15 Delta Neutral Strategies!

https://youtu.be/bTQcEnczetA

Forex Options XV – Delta Neutral Strategies
The Delta

To be proficient with Delta-neutral strategies, one obviously needs to understand Delta. The option Delta can be considered the ratio of change in the option premium relative to the underlying spot price movement.
Delta’s range is 0 to100 for Calls and -100 to 0 for Puts. Thus, on a combination of options, it may range from -100 to 100. Bullish strategies will show positive Deltas, whereas bearish positions will present negative Deltas. Bullish strategies include long the underlying, long calls, and short puts. Also, short the underlying, short calls and long puts are bearish strategies.
The deeper in-the-money a strategy is, the higher its Delta (regardless of the sign). Out-of- the-money options present Delta values below 50. The farther out, the less its Delta will be. As already explained, the Delta is a proxy to the probability of an option to end in the money at expiration. An option with Delta of 10 has a 10 percent probability of being in-the-money at expiration. An option very deep in-the-money acts very similarly to its underlying. Its time value shrinks while its intrinsic value increases.
On the other hand, out-of-the-money options are almost unaffected even by a significant movement in the underlying. For example, if you were holding that option with a delta of 10, it would catch only 10 percent of the underlying movement. Therefore, a 10-Delta option is cheap, but it captures a tiny portion of market action.

Delta Features

 Are estimates of the option’s price change against the underlying changes in price
 Defines the probability of it expiring with profits
 Delimits the number of options needed to equal the movement of the asset

Relationship between Volatility and Deltas

As we have already understood, Volatility is a measure of the uncertainty of the markets and the degree to which the prices of an asset are expected to move over time. Also, Delta can be considered as the sensitivity of an option to its underlying price movement. An increase in Volatility causes all option deltas to move toward 50. For in-the-money options, Deltas will decrease, and for out-of-the-money options, Deltas will increase. Since Deltas are related to the probability of expiring in-the-money, when Volatility grows, probabilities move towards 50-50.

Volatility is a crucial element for Delta-neutral strategies, and knowing how Deltas behave due to Volatility changes and price movements in the underlying is critical.

The Delta Neutral Strategy

A Delta Neutral Strategy is a combination of securities to create a position with a total Delta of zero. It can be a combination of asset plus options or only options whose total delta summation is close to zero. The key idea is to profit from the Volatility changes while covering the position from the movement of the underlying.

Professional traders think in terms of option spreads, and they hedge their trades to stay neutral on the market direction. To them, the direction of the asset is less critical than the Implied Volatility. Implied Volatility will define when to buy or when to sell options, as it will determine if the option’s price is cheap or expensive.

The second key element is to manage the trade when needed. If the position becomes too bullish or too bearish, the trader should act without hesitation and adjust it back to neutral. The beauty of this concept is that it naturally makes you do the right thing: buy cheap and sell expensive.

Think about it. You start your options trade delta neutral. If your position goes to the bullish side after some time, it means your options betting to the bullish side gained value, whereas your bearish side lost it. What should you do under these circumstances? To move back to neutral, you should sell. Thus, you’re selling high. Imagine then that the price turns and go bearish. Then you must buy some assets to balance the position back to neutral, and you’ll do that when the price is relatively low. We can see that buying and selling come naturally from the need to balance the position, not by market timing considerations, but this happens to be the right strategy.

As with other strategies, the upside and downside break-evens must be computed to identify the profit range. The maximum profit and loss potential should be understood by a trader to see if the trade is viable, modified, or discarded. You’re not timing the market, but on mean- reverting markets such as in Forex, this strategy is quite profitable.

Usual Delta Neutral Strategies

Strategies with zero Delta include buying or selling straddles and strangles, as well as Butterflies. It can also be created by a combination of underlying and options, such as buying one lot of a forex pair and sell two at-the-money calls of the same asset.
One of the most used delta-neutral position is a Ratio Spread. A Ratio Spread involves the uneven number of options are purchased and sold. Spreads can also be combined with the underlying asset. The particular spread to use should be based on the market conditions, as we already have understood in previous videos.
Ratio spreads are attractive strategies that present a broad profit region; nevertheless, they also show an unlimited risk; therefore, the position should be observed and managed.
Our videos are an introduction to Forex options; consequently, an in-depth explanation of a particular delta-neutral strategy is left for the reader.

Tags Education, Forex, Forex options, trading

Forex Options

Forex Options Part 14 The Butterfly Spread!

Post author By Keiran
Post date 13 September, 2020
No Comments on Forex Options Part 14 The Butterfly Spread!

https://youtu.be/lJibsi737nY

Forex Options XIV – The Butterfly Spread

The Call Butterfly spread requires buying a Call at one strike price, selling two Calls at a higher strike, and buying one additional Call at an even higher strike level. The Put Butterfly spread consists of buying a Put at a strike price, selling two more Puts at a lower strike, and buying an extra call at a strike below the written Puts. The Butterfly ratios are always 1:2:1 or a multiple of it. The purpose of a Butterfly spread is to profit from the high volatility of assets in a trading range by collecting option premiums. Butterfly Spreads are a specialized, statistically-based strategy. To improve the chanced of success, traders must consider the following.

Guidelines when selecting a Butterfly spread trade

 The underlying asset should be in a trading range, with no potential news that would disrupt the ranging state. The asset should have produced visible support and resistance zones on a daily or weekly chart. That means that assets that are trending are poor candidates.

 The implied volatility of the asset is high. The higher, the better, also considering the first guideline, of course. High volatility is required as the money comes from the two sold options, as the time premium increases with volatility. Thus, the more time premium the written options have, the better the profit.

 No more than 60 days till expiration, to help accelerate the time decay. Options with 30 days to expiration are ideal.

 The written options should be at-the-money or only slightly out-of-the-money. That will improve the chances of the asset to expire near at-the-money, where the premium maximizes.

 Make sure to trade it as a unity, avoiding market orders to sell and buy its components. A Butterfly created at optimal prices will increment the odds of making profits. The use of limit orders to guarantee you get the trade as you’ve planned is essential.

 Look to commissions also. A low-commission broker is desirable, as this trade involves trading four options.

Position management

The risk profile graph shows that the maximum profit available grows with the approach to the expiration, but also, the range of prices in which the spread is profitable gets narrower. The maximum profit is produced when the underlying’s price is at the strike price at the expiration date.

The best plan for exits is to close the spread before expiration; therefore, we have to make another four option trades. This is why Butterflies are complicated to trade. A complete trade requires eight trades in which spreads and commissions might eat all the available profit. Therefore, the trader must be alert to the best opportunity to close the position and create appropriate orders to minimize trade costs.
By good opportunity, we mean occasions where the combination of decreasing volatility and the price in the vicinity of the maximum level allows the closing of the spread at an acceptable profit.

Stop-loss

We should plan a stop-loss level in which our loss does not go beyond our projected profit to try to make sure our overall reward-to-risk ratio is at least 1:1.

Tags Education, Forex, Forex options, trading

Forex Fundamental Analysis

Everything You Should Know About ‘Retail Sales YoY’ Macro Economic Indicator

Post author By Reddy Shyam Shankar
Post date 11 September, 2020
No Comments on Everything You Should Know About ‘Retail Sales YoY’ Macro Economic Indicator

Introduction

The computation of gross domestic product takes into account the consumption by households. In the households’ consumption, the retail sales data is considered to be the best leading indicator. Retail sales account for the majority of consumption by households. Retail sales are estimated to account for up to 70% of the US economy. It is, therefore, important for forex traders to understand how it affects the economy and the currency.

Understanding Retail Sales YoY

Retail Sales: the definition of retail sales is the purchase of finished goods and services by the end consumers. As an economic indicator, retail sales are used to measure the changes in the value of the goods and services bought at the retail level. This change can be monthly (retail sales MoM) or over the previous twelve months (retail sales YoY).

Retail Sales YoY: covers the retail sales made to consumers for the preceding 12 calendar months. It measures the rate of change in the value of purchases made by households.

How Retail Sales YoY is Measured

The data collected for the YoY retail sales cover all retail outlets from physical stores to e-commerce. It also includes data from the services sector, such as hotels and restaurants. According to the US Census Bureau, retail sales are divided into 13 categories, which include: e-commerce retailers, department stores, food and beverage stores, health and beauty stores; furniture stores; hospitality, apparel, building stores, auto dealers, and gas stations.

In the US, the measurement of the annual retail sales is done using the Annual Retail Trade Survey (ARTS). The ARTS is aimed at giving the estimates of the national total annual sales, sales taxes, e-commerce sales, end-of-year inventories, purchases, total operating expenses, gross margins, and end-of-year accounts receivable for retail businesses. This survey is conducted annually.

The retail sales YoY tends to be influenced by the seasonality of the economic activities since it covers more extended periods. These seasons including the holiday shopping seasons account for about 20% of the retail sales YoY. As a result, retail sales YoY cannot be expected to provide the most current and up-to-date retail data.

How Retail Sales YoY can be used in Analysis

As aforementioned, the retail sales account for about 70% of the GDP, making it a vital leading indicator.

Consumer spending drives the economy. An increase in retail sales implies that more money is circulating in the economy. This increase could be a result of increased wages, which increases the disposable income, increase in the rate of employment; and accessibility to loans and credit. All these factors increase the aggregate demand within an economy. The increase in demand leads to an increase in aggregate supply. This increase leads to the creation of more employment opportunities due to the expansion of businesses. Therefore, a steady increase in the retail sales YoY signifies that the economy has been steadily expanding over the long term.

Source: St. Louis FRED

Declining retail sales YoY is an indicator that the economy might be contracting. The decrease in retail sales implies that there is less disposable income within the economy, either as a result of low wages or job cuts. Subsequently, there will be reduced demand for the finished goods and services in the economy, which will, in turn, compel producers to cut the output to avoid price distortion. The reduction in the production will force them to scale down their operations, leading to more unemployment. Thus, a continually decreasing retail sales YoY could be an indicator of a looming economic recession.

Since the retail sales YoY are spread out over 12 calendar months, it provides a comprehensive outlook for the central banks to monitor the effectiveness of their monetary policies. In the US, the Federal Reserve Board uses the accounts receivable data in monitoring retail credit lending.

Monitoring the retail sale YoY enables the Federal Reserve to keep an eye on the rate of inflation. A continually increasing retail sales YoY, if left unchecked, could lead to an increased rate of inflation beyond the target rate. Thus, to ensure this does not happen, the central banks consider this data when making the interest rate decision.

Conversely, since a continually decreasing retail sales YoY forebode a possibility of a recession, this data encourages governments and central banks to implement expansionary fiscal and monetary policies. These policies, such as cutting the interest rates, are meant to reduce the cost of borrowing and increase access to credit hence spurring demand within the economy.

Impact on Currency

As established, an increase in the retail sales YoY is synonymous with an increase in economic activities and an expanding economy. A country’s economic growth leads to an increase in the value of its currency. Thus, increasing retail sales YoY results in currency appreciation.

Conversely, the declining retail sales YoY forebodes a looming recession and a possible interest rate cut in the future. More so, this decline signifies an increase in the unemployment levels and a contracting economy. All these factors contribute to the depreciating of a country’s currency.

In the forex market, the retail sales YoY is a low-level economic indicator. It is overshadowed by the MoM retail sales data, which represents the more recent changes observed within the economy.

Sources of Retail Sales YoY Data

In the US, the retail sales YoY data is released monthly by the United States Census Bureau, along with the monthly updates. A comprehensive breakdown of the US retail sales YoY can be accessed at St. Louis FRED website. Statistics on the global retail sales YoY can be accessed at Trading Economics.

How Retail Sales YoY Data Release Affects The Forex Price Charts

The most recent retail sales YoY data was released on August 14, 2020, at 8.30 AM ET. A more in-depth review of the data release can be accessed at the US Census Bureau website.

The screengrab below is of the retail sales YoY from Investing.com. On the right is a legend that indicates the level of impact the fundamental indicator has on the USD.

As can be seen, the retail sales YoY data release is expected to cause low volatility on the USD.

In the 12 months to July 2020, the retail sales YoY in the US increased by 2.74%. This increase is higher compared to the previous increase of 2.12%. In theory, this increase should appreciate the USD relative to other currencies.

The screengrab above shows the simultaneous release of the monthly retail sales data and the retail sales YoY data. It is to be expected that the monthly retail sales data will dampen any impact that the retail sales YoY would have had on the price action.

EUR/USD: Before the Retail Sales, YoY Data Release on 
August 14, 2020, Just Before 8.30 AM ET

As we can see from the above 15-minute EUR/USD chart, the pair was trading in a weak uptrend. This trend is proved by the 15-minute candles crossing above the slightly rising 20-period Moving Average.

EUR/USD: After the  Retail Sales, YoY Data Release on 
August 14, 2020, at 8.30 AM ET

After the news announcement, the pair formed a 15-minute bullish candle. This candle indicates that the USD weakened against the EUR. Subsequently, the pair continued trading in a renewed uptrend as the 20-period MA rose steeply.

GBP/USD: Before the Retail Sales YoY Data Release on 
August 14, 2020, Just Before 8.30 AM ET

Before the data release, the GBP/USD pair was trading in a steady uptrend. This trend is evidenced by a steeply rising 20-period MA, with bullish candles forming further above it.

GBP/USD: After the  Retail Sales, YoY Data Release on 
August 14, 2020, at 8.30 AM ET

Similar to the EUR/USD, the GBP/USD pair formed a long 15-minute bullish candle after the news release. The pair continued to trade in the previously observed uptrend before peaking and slowly flattening.

NZD/USD: Before the Retail Sales, YoY Data Release on 
August 14, 2020, Just Before 8.30 AM ET

NZD/USD: After the  Retail Sales, YoY Data Release on 
August 14, 2020, at 8.30 AM ET

Before the retail sales YoY data release, the NZD/USD pair was trading in a similar trend as the EUR/USD pair. The 15-minute candles were crossing above a flattening 20-period Moving Average. After the news announcement, the pair formed a long 15-minute bullish candle as did the EUR/USD and GBP/USD pairs. Subsequently, the pair traded in a renewed uptrend as the 20-period MA rose steeply with candles forming further above it.

Bottom Line

The retail sales YoY provides vital long-term data about the economic outlook of the households and their consumption patterns. In the forex markets, however, the retail sales YoY data is overshadowed by the retail sales MoM data, which is release concurrently. From this analysis, the increase of the retail sales YoY data for July 2020 had no impact on the price action since the markets reacted to the negative monthly retail sales data.

Tags Economy, Education, Forex, Forex Drivers, Forex Trading, Fundamental Analysis, Fundamental Forex Trading, fundamental indicators, Macro Economics, Retail Sales YoY, Sales, trading, Year on year

Forex Basic Strategies

How to Profit Using The ‘Gap and Leave’ Forex Trading Strategy

Post author By Reddy Shyam Shankar
Post date 11 September, 2020
No Comments on How to Profit Using The ‘Gap and Leave’ Forex Trading Strategy

Introduction

Gap and Leave is an interesting trading strategy that utilizes one of the most distressing phenomena of the forex market, a weekly gap between the last Friday’s close and the current Monday’s open price. The gap takes its origin in the fact that the interbank currency market continues to react on the fundamental news during the weekend, which results in a kind of opening on Monday at the highest level of liquidity. Today’s strategy is based on the assumption that the gap is a result of speculations and excess liquidity. Therefore, a position in the opposite direction should become profitable after a few hours.

In the past few articles, we discussed strategies that were pertaining to ‘trend pullback.’ Now, we will shift our focus and talk about a strategy that is best suited for trading a ‘range.’

Time Frame

This strategy works well on the 15-minutes and 1-hour time frame. Traders looking to trade intraday should use the strategy on the 15-minutes time frame. While traders looking for swing trading opportunities should look at 1-hour charts.

Indicators

No indicators are being used in this strategy. It mostly relies on price action and market speculation.

Currency Pairs

This strategy is suitable for trading in currency pairs, which are volatile and liquid. Also, since the Asian market is the first one to open for trading after the weekend, we would suggest applying this strategy in currency pairs involving the Japanese yen, Australian dollar, and the New Zealand dollar.

Strategy Concept

Gap and Leave is an easy strategy that is based on simple price action and speculation. It is observed that events and occasions that occur during the weekend give rise to unfilled orders in the market, which leads to a gap on Monday. This gap is a result of speculation and sudden infusion of liquidity in the market, as an outcome of the event. Most of these events are not of great importance, which means they do not have long-lasting on the value of a currency.

This characteristic can be used to our advantage by entering at discounted prices. Here it is important to note that the gap should coincide with a technical level of support and resistance. As mentioned earlier, this is a ‘range’ trading strategy. The price must reach the extremes of the ‘range’ as a result of the ‘gap.’ The idea is to go ‘long’ at support and ‘short’ at resistance. But this is done by following all the rules of the strategy.

The strategy offers a high risk-to-reward since we are executing our trades at the lowest prices, keeping a target at the other end of the ‘range.’

Trade Setup

In order to explain the strategy, we shall consider an example where we will execute a ‘long’ trade-in GBP/NZD pair on the 15-minutes time frame. Here are the steps to execute the strategy.

Step 1

Firstly, we should identify a ‘range’ that is newly formed. By this, we mean, the price should have reacted from the top or bottom of the range at least twice and moved to the other end. At the same time, we need to also ensure that the ‘range’ is not very old. We should not be considering ‘ranges’ where the support and resistance levels have been respected more than 5-6 times.

In our example, we have identified a ‘range’ on the 15-minutes time frame where the price has reacted twice from the resistance and four times from the support.

Step 2

The next step is to watch for Friday’s closing price. The candle must close somewhere in the middle of the range. This is because if the market has to gap on Monday, the gap will take the price at one of the extremes of the range. If the candle closes at support or resistance on Friday, the price gap will lead to a breakout or breakdown that will violate the ‘range’ trade. Then we should look for a breakout strategy.

In the case of GBP/NZD, we can see that the price almost closes in the middle of the range.

Step 3

This is the most important step in the strategy. In this step, we watch the market’s behavior on Monday and see if it opens with a gap or not. If the market gaps down to the support of the range, we will look for taking a ‘long’ trade after a suitable confirmation. On the other hand, if the market gaps up to the resistance, we will take a ‘short’ trade provided we have followed all the steps discussed earlier. A bullish candle after ‘gap down’ is the confirmation for a ‘long’ trade, and a bearish candle after ‘gap up’ is the confirmation for a ‘short’ trade.

In the below image, we can see that the price forms a bullish candle after gapping down on Monday. Hence, we enter for a ‘buy’ at this close of the first candle.

Step 4

Lastly, we need to determine the stop-loss and ‘take-profit’ for the strategy. Stop-loss placement is pretty simple, where it is placed below the support when ‘long’ in the market and above the resistance when ‘short.’ We take our profits when the price reaches the other end of the range. This means at resistance when ‘long’ and at the support when ‘short.’ The risk-to-reward of trades using this strategy is above average, which is quite attractive.

Strategy Roundup

Gaps are one of the most common tools used by institutional traders due to the high probability of winning trades. This strategy is based on market movement that is only a consequence of speculation, which does not hold any value. If we are looking for a gap trading strategy in forex, the Gap and Leave strategy is a good one to start with because it is great for beginners who want a relatively easy entry, at a slow pace and not involving complex indicators.

Tags Currency pairs, Education, Forex, Forex Basic Startegies, Forex Trading, Gap and Leave, timeframes, trading, Trading Forex, Weekends

Forex Market Analysis

DAX Advances in an Ending Diagonal Pattern

Post author By Eduardo Vargas
Post date 11 September, 2020
No Comments on DAX Advances in an Ending Diagonal Pattern

Overview

The German benchmark index, DAX 30 advances in the extreme bullish sentiment zone accumulating gains over 60% after the German index gained support on the March’s low at 7,957.6 pts. In spite of the up-up-up market sentiment, the DAX develops an ending diagonal pattern that is still unfinished, suggesting the current upward trend’s exhaustion.

Market Sentiment Overview

DAX 30 continues its recovery following the German index drop to 7,957.6 pts, on March 23rd, which is the lowest level since late August 2013. From Mach’s low, DAX 30 advances over 60%.

The next DAX chart presents the German index in its daily timeframe illustrates the 52-week high and low range. The German index currently develops an upward movement in the extreme bullish sentiment zone. The short-term bullish sentiment is being confirmed by the 60-day moving average, which acts as support in the latest trading sessions.

The extreme bullish sentiment aided by the DAX surpassing the opening price of the year boosted the up-up-up sentiment in the news media added with the incomplete ascending wedge that remains in progress. These signals suggest the exhaustion of the current short-term bullish trend.

On the other hand, the daily chart of the DAX Volatility Index (VDAX) shows a mostly sideways movement in the extreme bearish zone. At the same time, the lateral consolidation pattern developed by VDAX, which remains unfinished, could experience a new decline raising the possibility of further upside in the German stock market.

Consequently, the German stock market sentiment is being dominated by extreme bullish bias. However, the incomplete ascending wedge pattern suggests the exhaustion of the upward movement.

Elliott Wave Outlook

The short-term outlook of the German stock market under the Elliott Wave perspective unveils the progress on an incomplete ending diagonal pattern, developing a new upward movement.

The DAX, in its 4-hour chart, exposes the progress of an upward corrective formation that follows an internal structure of a zigzag pattern of Minute degree labeled in back. The bullish move began in the March low when the German stock market plummeted until 7,957.6 pts.

Currently, DAX advances in its fifth wave of Minuette degree labeled in blue, which, in turn, develops an ending diagonal pattern in its internal structure. This terminal formation, subdivided in a 3-3-3-3-3 sequence of Subminuette degree, identified in green, is seen advancing in its fifth wave. This pending upward movement agrees with the likely decline in the DAX Volatility Index.

Consequently, according to the Elliott wave perspective, our short-term outlook anticipates further upsides as long as the price stays above 12,737.5 pts. This potential upside could strike the 13,544.3 pts completing the wave ((c)) of Minute degree identified in black.

Tags DAX, Elliott Wave Analysis, Forex, Market Sentiment, Price Action, Technical Analysis, trading, Volatility

What happened in the past 24 hours?

Technical analysis

Bitcoin

Technical factors (4-hour Chart):

Key levels to the upside Key levels to the downside

Ethereum

Technical Factors (4-hour Chart):

Key levels to the upside Key levels to the downside

Ripple

Technical factors (4-hour Chart):

Key levels to the upside Key levels to the downside

Introduction

Setting Additional Filters in Trading Strategy

Measuring the Risk of Strategy

Incorporating Additional Rules into Trading Strategy

Conclusions

Suggested Readings

Introduction

Trading Strategies

Buy Trade

Sell Trade

Another Sell Trade

Introduction

Time Frame

Indicators

Currency Pairs

Strategy Concept

Trade Setup

Strategy Concept

Introduction

What are Asylum Applications?

How can the Asylum Applications numbers be used for analysis?

Impact on Currency

Economic Reports

Sources of Asylum Applications

Economic Events to Watch Today

EUR/USD – Daily Analysis

Daily Technical Levels

EUR/USD– Trading Tip

GBP/USD – Daily Analysis

Daily Technical Levels

GBP/USD– Trading Tip

USD/JPY – Daily Analysis

Daily Technical Levels

USD/JPY – Trading Tips

What happened in the past 24 hours?

Technical analysis

Bitcoin

Technical factors (4-hour Chart):

Key levels to the upside Key levels to the downside

Ethereum

Technical Factors (4-hour Chart):

Key levels to the upside Key levels to the downside

Ripple

Technical factors (4-hour Chart):

Key levels to the upside Key levels to the downside

Introduction

Time Frame

Indicators

Currency Pairs

Strategy Concept

Trade Setup

Strategy Roundup

Introduction

What is an IP Address?

How can the IP Addresses numbers be used for analysis?

Impact on Currency

Economic Reports

Economic Events to Watch Today

EUR/USD – Daily Analysis

Daily Technical Levels

EUR/USD– Trading Tip

GBP/USD – Daily Analysis

Daily Technical Levels

GBP/USD– Trading Tip

USD/JPY – Daily Analysis

Daily Technical Levels

USD/JPY – Trading Tips

Introduction

Trade Positioning and Trading Strategy