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Articles by Mark De La Paz

December 11th, 2014 @ 9:19 am by Mark De La Paz

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Less than an hour from the latest Targeted LTRO we have Euro retreating once more off the highs as people are concerned of another slow uptake for the ECB’s special free money program. Recall that in its last outing the figures fell well short of both the ECB’s numbers and markets forecasts. This time around markets are forecasting that the ECB is intent on lending out from 90 billion to as much as 250 billion Euros, the upper end of the range suggesting that we actually have a pick up in business confidence. The big risk for end of year position squaring plays here will be a weak figure, the consensus is about 150 billion Euros, which would increase pressure for the ECB to go into a full blown QE program. Say hello to 1.2000 on a very poor uptake.

calendar 121114

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December 10th, 2014 @ 2:09 pm by Mark De La Paz

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Though unable to hold earlier gains as UK data disappointed Tuesday, the British Pound still continues to show a nice looking descending wedge in its daily charts with the approaching holidays and end of the year making the pattern even more attractive to those looking to initiate some profit taking as books need to be closed and bonuses calculated. Reviewing the latest fundamentals we note that there is little reason to believe that another drop will be forthcoming. True Mark Carney is no longer talking hawkish but this simply means there is less chance for him to disappoint the markets. Meanwhile the UK economy is clearly distinguishing itself from its nearest neighbor and with the US not exactly reversing monetary policy we could be talking mediumterm lows off the mid 1.5500′s.

1GBPUSDDaily

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December 9th, 2014 @ 12:38 pm by Mark De La Paz

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Ever since Japanese Prime Minister Shinzo Abe announced a smap election this December the Japanese Yen has seen steady losses across the board in anticipation that the gamble by Abe would prove successful leading to greater control of the Diet. Five days until the main event however we are seeing signs of speculators hedging their nets as the push past 120 courtesy of the US NFP’s Friday was followed by a ‘dark cloud cover’ at the open of the week with Tuesday action now taking us below the psychological 120 mark. Considering the gains seen for the year, the coming holidays and year end, along with Sundays political exercise it is not unreasonable to expect more of this pull back from happening. Key now will be the question of reentering the consolidation from 117.10 to 119 in late October. Even as we note that we have not seen prices at the EMA’s for the past two months with 21D EMA at 117.85 beckoning for mean reversion.

1USDJPYDaily

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December 8th, 2014 @ 12:55 pm by Mark De La Paz

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Wellington and Aussy dealers were quick to see a follow through to the dollar’s NFP inspired rally from Friday though the rest of the market does not appear to be in any hurry for pushing things further. Recall Friday gave us our first plus 300K read for the Non-farm payrolls since June 2010 when the US jobs market saw a boost over a three month courtesy of uncle Sam. For the moment our interest lies with the Aussy where recent setbacks in the previous wonder economy and the central banks failure to sound the inflation horn has seen AUDUSD to lows last explored in the middle of 2010. While hardly critical it appear the surge in Job Advertisements according to ANZ, from 0.2% to 0.7% month-on-month has helped the pair bounce off earlier lows now skirting S1 at 0.8296 off the lower S2 with the candlestick building a potential daily hammer.

1AUDUSDDaily

 

Note we have had AUDUSD prices well off the daily EMA lines for more than a week with the widening gap suggesting a broader pressure to pullback.

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December 5th, 2014 @ 1:06 pm by Mark De La Paz

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Less than 30mins until the weeks big event for the US calendar and we are seeing plenty of indecision in the market with either narrow range bodies orlong wicks and tails among the dollar pairs. The sole exception USDJPY which has solidly broken past 120.00.

1-MetaTrader - FX Clearing

So how are we suppose to trade the US data. To those who have attended our webminars on NFP trading you know what we are looking for Quadrant 2 or Quadrant 3. With consensus forecast calling for an NFP read of 232K and an Unemployment Rate of 5.8% Quadrant 2, aka strong dollar scenario would call for numbers above 232K and below 5.8%. Quadrant 3 which calls for a weak dollar play means we fall short in NFP preferable below 200K and shoot up in the unemployment rate to well above the 5.8% consensus. A mix combination of these two numbers should have us abit more cautious. For choosing which pairs to trade to to go for a Yen or Swiss franc play with disappointing news or dump the Euro and look for a bearish break in GBPUSD should things turnout impressive.

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That said we would suggest avoiding the commodities even if AUDUSD look  to be in need of a pullback.

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December 4th, 2014 @ 1:10 pm by Mark De La Paz

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As could be expected the ECB decided to keep rates steady with no word on when they will be moving into the real world of quantitative easing, i.e. US style bond buying. Recall that although the ECB has indeed put in place some bond buying programs these have so far been limited to the normal high grade corporate debt which could be seen as a natural extension of any central banks open market operations. Ahead we have press conference to watch out for where we will be looking for several things that could lead to further Euro weakness:

1) A definitive announcement on ECB purchases of government bonds
2) A hint of massive downside readjustment in the inflation forecast of 1.1% to something substantially below 1%
3) Germany’s Sabine Lautenschlaeger reversing her opinions

Absent any of these we will be risking the “sell the fact” portion of that famous adage, “Buy the rumor, sell the fact”. Market has bought the rumor with yesterdays drop now its time for a does of reality.

1MetaTrader - FX Clearing

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December 3rd, 2014 @ 2:30 pm by Mark De La Paz

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With the recent spate of bad numbers and another ECB meeting coming up, the single currency is seeing some pre-meeting dumping with people again hoping for hints of action from Mario Draghi. Given all this we would be remiss to point out that we actually risk disappoint for the market in tomorrows release as Draghi remains hesitant to actually do real US style QE which would be the last bullet in its arsenal to get the economy going. On a side note there has been an emphasis of late from the ECB for European governments to do there part in buttressing the recovery with spending.

1MetaTrader - FX Clearing

From the calendar the days earlier releases merely reinforced the EU dumping with annualized Retail Sales for the region short of consensus at 0.6% against expectations of a 1.4% read. Ahead key figure for the market will be the US ISM Non-Manufacuring Index where market is looking for an improvement to 57.5 from 57.1 that should see even more Euro weakness for today.

calendar 120314

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December 2nd, 2014 @ 12:41 pm by Mark De La Paz

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The first day of the last month of the year turned out to be an explosive trading day with Gold in particular opening with a downside gap only to see a the market rip closing higher with the daily range at $78. The move comes as the monthly close for November turned into a high wave candle, suggesting a possible reversal, and resting just above the 61.8 Fib retracement level of the rally from October 2008. For today we have the yellow metal already seeing a $20 pullback with prices just above the daily pivot and average ranges at $23. Consider longs off the 1191.55 pivot as we begin to see hammers forming in intraday charts with stops ideally $5 below the said pivot. Note medium term we expect to see more of a base building as the month progresses as there remains little excuse for a sustained Gold rally.

1XAUUSDMonthly

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