Forex Crunch EUR/USD Sep. 2 – Riding Higher in Uptrend Channel

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• EUR/USD Sep. 2 – Riding Higher in Uptrend Channel
• Forex Daily Outlook – September 2 2010
• How to Stop Following the Dumb Money in Forex
• Will Foreign Forex Brokers Get “Gambling” Classification

EUR/USD Sep. 2 – Riding Higher in Uptrend Channel Posted: 02 Sep 2010 12:31 AM PDT EUR/USD made a sharp move up and settled in a new region, within the uptrend channel. Will it stick to the channel until the Non-Farm Payrolls?  Here is a quick update on fundamentals, technicals  and community trends. EUR/USD within uptrend channel, that began last week. Click to enlarge. EUR/USD Technicals Asian session:  After yesterday’s sharp move upwards, EUR/USD relaxed in the Asian session. Current Range is between 1.2770 to 1.2830. Further levels: Below, 1.2722, 1.2610, 1.2460, 1.2330 and 1.2150. Above  1.2840, 1.2930, 1.30 and 1.3110. Uptrend channel dominates: EUR/USD trades in an uptrend channel. Uptrend support began from the lows it reached on August 24th through a low on August 25th. Uptrend resistance began on a swing high on August 24th and was formed on August 26th. After losing it two days ago, EUR/USD returned to this range, and even tested the top limit with yesterday’s swing move to 1.2855 – exactly at uptrend resistance. EUR/USD Fundamentals All times are GMT. Most important events emphasized. 9:00: Revised GDP. Exp. +2.2%. 9:00: PPI. Exp. +0.2%. 11:45: Rate decision. Expectations are for an unchanged interest rate of 1% in the Euro-zone. The focus will be on the the wording of the statement – if Jean-Claude Trichet emphasizes concerns and more stimulus – Euro weakens. If the talks are about the exit strategy, Euro rises. 12:30: US Unemployment Claims: Exp. 476K 12:30: US Revised Nonfarm Productivity. Exp. -1.9%. 13:00: Federal Reserve Chairman Ben Bernanke testifies. The markets always rock on his words, even many hours after he finished speaking. 14:00: US Pending Home Sales. Exp. -1.3%. 14:00 US Factory Orders. Exp. +0.4%. EUR/USD Sentiment Market is in risk aversive mood. This means that bad US indicators are dollar positive, although devastating figures that we’ve seen in recent days just shocked the markets. The 1.2610 line is critical on the downside. This is a busy week, with the Non-Farm Payrolls at the end of it. Very busy day today, that begins with the rate decision in Europe, continues with the rlated press conference by the ECB at the same time of the US jobless claims – the last hint for the NFP. And then, Bernanke takes over and more data is released. Very choppy trading expected. Currensee Community: 56% are Short, 44% are long. These are 967 open positions in real accounts trading this pair at the moment. Note – This is a new and still experimental section on Forex Crunch. It’s still in development. Want to see what other traders are doing in real accounts? Check out Currensee. It's free..

Forex Daily Outlook – September 2 2010 Posted: 01 Sep 2010 02:00 PM PDT U.S. Unemployment Claims, U.S. Pending Home Sales and the Euro-zone GDP are at the front of the news. Here is an outlook on all market moving events awaiting us today. In the US, Unemployment Claims was lower than expected in the previous week with 473K a rise of 3000 to 476K is expected now. More in the US, Non-farm business sector labor productivity decreased at a 0.9 percent annual rate during the second quarter of 2010 a further decline of 1.9% is expected in the third quarter and Revised Unit Labor Costs are predicted to rise 1.3% from 0.2% in the previous quarter in relation to productivity since a drop in a worker’s productivity is equivalent to a rise in their wage. Later in the US, Pending Home Sales forecasted to edge down 1.3% following 2.6% drop in June and 30.0% in May after a popular tax credit expired at the end of April continuing the gloomy situation in the housing industry. Federal Reserve Chairman Ben Bernanke testifies on the causes of the recent financial and economic crisis before the Financial Crisis Enquiry Commission, in Washington. Interest rates could be affected and information revealed on future monetary policy. Finally in the US, Factory Orders predicted to rise 0.4% after 1.2% decline in June and Natural Gas Storage expected to rise by 16B reaching 56B compared to the last week. In Europe, Euro-zone Gross Domestic Product, the main measure of economic activity and growth expected to grow by 1.0% q/q in Q2 2010, as shown by the preliminary estimate. More in Europe, Central Bank Interest Rate Announcement, in the midst of a global slowdown and with the sovereign debt problems in the Euro-zone, the European Central Bank would not raise rates until next year. Finally in Europe, Producer Price Index has a mute effect since released after Germany and France PPI, expected 0.2% rise 0.1% less than in the previous month. For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis. In Great Britain, Nationwide House prices Index a leading indicator of the housing industry’s health expected to drop 0.3% following 0.5% drop in July and Construction PMI predicted to drop 0.6 points compared to July reaching 53.5 points. More in Great Britain, Halifax House prices Index a leading indicator of the housing industry’s health increased by 0.6% in July.  This modest rise offset the 0.6% fall in June and is likely to increase this time as well. Read more about the Pound in the GBP/USD forecast. In Switzerland, Retail Sales the primary gauge of consumer spending, forecasted to continue its rise by 2.3% after 1.0% rise in June and encouraging sign for the Swiss economy and Gross Domestic Product also predicted to rise by 0.8% following a smaller than expected rise of 0.4% in the previous quarter. In Australia, Trade Balance surplus is expected to reach 3.11B 0.43B less than the impressive rise in June. More in Australia, AIG Services Index based on a survey of about 200 service-based companies reached 46.6 points in July and is expected a small rise now. For more on the Aussie, read the AUD/USD forecast. In Japan, Japan Capital Spending a leading indicator of economic health , expected to further improve to -6.6% in the 2Q from -11.5%. That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It's free.

How to Stop Following the Dumb Money in Forex Posted: 01 Sep 2010 09:00 AM PDT If you want to achieve forex success and profits you need to stop following the dumb money, which represents the majority of traders. You need to follow the patterns of the small percentage of traders who are dominating this market in terms of profits. These traders are cold, calculated killers who have studied the rest of the market (i.e. their prey) well and hard and no how to react when the market behaves in a certain way. Guest post by Kris Matthews (http://tradeforexfundamentally.com) My intention of this article is to show you how to stop following the flow of dumb money, which is always on the wrong side of the market, and start recognizing valuable, juicy clues that the market leaves behind, in order to generate consistent profits. Know your prey I'm sorry to keep on with this "predator-prey" depiction of the market, but that's what it really is. No one is leaving money on the table for you to pick up, so it's up to you to take it from the market, otherwise you become the prey. A couple ways to spot when the market is about to make a move are what are commonly referred to as a "dead cat bounce" and a key rejection. A dead cat bounce refers to when price falls violently and doesn't bounce (no cats were harmed in the writing of this article), but rather maintains a tight sideways range, as the figure below illustrates. Let's get into the psychology and the mechanics of what's happening here: If some stimulus, such as bad news, entered the market and caused traders to rapidly sell off a currency, liquidity was probably low during the selloff. In that situation we would expect price to pull back to fill orders that were missed and for traders to "test" nearby support levels to see if there was indeed enough selling pressure. However, if we see no pullback upward in the ensuing session we can expect that selling pressure is indeed very strong and traders are still trying to unload positions. The second strategy I want to share with you is called a key rejection. Often when you see price in a strong uptrend price will pull back or even change to a negative trajectory. The talent in taking a contrarian trade by selling at high levels is in recognizing and differentiating which signals are indeed turning points and which are just temporary down moves. The way to do this to look at a candlestick chart and see price try to breach a key resistance level but get rejected (as can be seen by price breaking through the level for a very short time period). If the rejection happens a couple of times, it could be an even stronger indicator of a reversal. A key resistance level is often a level that has defined the high or the low of price several times in the past, or is a "psychological" round number level, such as 1.50, 2.0, etc. What's the underlying psychology/mechanics going on here? Well, a key level is a very important benchmark for traders. If they see price break through it successfully, they may be convinced enough to put more money on a long trade. If it tries to go through and backs down (i.e. gets rejected), it's likely that some buyers tried aggressively to push the market higher, but the other buyers said, "No," so sellers get more aggressive. These two strategies are very effective for analyzing the markets but keep in mind, like in any strategy, the random generation of patterns can deceive you. In order to reduce the probability of that happening I usually combine my technical analysis with fundamental news event analysis. For example, if I hear that the market fell due to the worsening debt crisis in Europe, I'm more likely to sell Euros after the dead cat bounce. Furthermore, if I learn that the rejection of price at a key resistance level after a long uptrend occurs after a better than expected employment number, that's a powerful indication that despite good news, the market doesn't have enough pressure to maintain upward momentum. It's always important to zoom out and look at the big picture and put your trading indicators/strategies into context. By adopting this style of thinking and these types of behavioral strategies for adapting to and trading the forex market, rather than becoming the hunted, you become the hunter. Happy trading. Want to see what other traders are doing in real accounts? Check out Currensee. It's free..

Will Foreign Forex Brokers Get “Gambling” Classification Posted: 01 Sep 2010 05:18 AM PDT The new CFTC rules consist of 50:1 leverage decision as well as many other regulations for the industry. But there might be one big hidden rule: US clients won’t be able to open accounts with foreign brokers. This can be implemented by assigning the notorious 7995 credit card classification to foreign brokers – preventing American from depositing funds with foreign brokers. Here are the full details. The CFTC finalized their ruling for forex, with the 50:1 leverage decision taking the headlines. The rules that will be in effect on October 18th, about 6 weeks from now are based on the initial proposals from January, but also on the Dodd-Frank act. And this is already something else: In the past 24 hours, there’s been a lot of talk about one implication of the Dodd-Frank act – that US brokers won’t be able to open accounts with foreign brokers – including subsidiaries of respected and regulated US brokers in the UK. Here’s what Rob Booker said on a comment on Michael Greenberg’s post yesterday: The requirement that a counterparty to retail fx transactions be a U.S. financial institution has not changed. That is not part of the CFTC regs that were published today, but rather part of the ''Dodd-Frank Wall Street Reform and Consumer Protection Act'' – the finreg that everyone has been talking about. Francesc Riverola mentions and then emphasizes on a small comment on the official statement made by InterbankFX: InterbankFX in its public note states: "Beginning October 18, 2010, overseas brokers will no longer be able to service U.S. customers." So, in order to protect the American public, regulation in the US may not be enough. “Protection” may go beyond dmoestic regulation – it may forbid US clients from opening accounts abroad. In my report about the CFTC 50:1 ruling, I asked if US traders will run away. But maybe they’ll have nowhere to go to. How can this be implemented? By blocking credit cards. Every company has a credit card classification by the IRS. This is called Merchant Category Code (MCC). 7995 is the code for Betting/Casino Gambling. US credit cards are often rejected when a client tries to fund an account with an online gambling company. This is one of the ways to prevent Americans from gambling outside the US. This 7995 mechanism to keep money in the US already exists for gambling. Will it also be used for forex trading? Now, I’m sure there are workarounds, and as Michael states, the gambling industry is still on its two feet. So, this may not fully prevent US clients from trading abroad. But,  it still might have a strong implication – the average American will virtually have no choice. What do you think? Want to see what other traders are doing in real accounts? Check out Currensee. It's free..

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