15 Dec 2016
FOMC stands for Federal Open Market Committee. It is the body that vote to decide what is the interest rate the Federal Reserve of US should set.
Knowing very well the Fed would increase interest rate last night at 0300 SGT, the pound continued to ran up from 1.255 to 1.272. For what the reason? The climb begins yesterday morning with no fundamental to support that. With UK released of a better claimant count at 1730 SGT, which gives reasons for climb.
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It was a massive swing with 200 pips up then 200 pips down in a day.
I am expecting a quiet Asian morning.Action will starts after 1730 SGT when UK reports retail sales. But it will not be a big impact unless MPC surprise with an intention to raise interest rate too for the pound at 2000 SGT.
Now with the support at 1.255 broken and the price action now below at 1.252, the next support is at 1.250 then 1.242. WMA3 stills hover above EMA21/EMA55 which means a potential for the pound to rebound above 1.255 to a resistance at 1.26/1.262 (mid of EMA100). As seen EMA 100 is converging towards EMA55. EMA100 has been high at 1.275, 1.272 and now at 1.270.
The pound may stay below 1.255 and rnage between 1.250.
If it breaks above 1.255, it may range between 1.260. Otherwise if it continues it downward move which CCI support that trend (as CCI is out of its lower BB but has not reverse), it will gain towards 1.242
Thursday, December 15, 2016
Wednesday, December 14, 2016
14 Dec 2016
14 Dec 2016
The pound test the resitance at 1.278 (EMA100) and hit high at 1.275. It reverse back.
The key is this Thursday FOMC, which expect the Fed to raise interest rate. A hike in the rate will help to propell a stronger dollars, bring the pound down.
The support is at 1.256 (EMA55) which has convrge with EMA21, offer a strong support.
News today from the UK such as Unemployment rate and Claimant at 1730 SGT will make some move, but within the bound of 1.27 and 1.26.
CCI has not clear the lower band, giving hint that the pound will be weaker.
The pound test the resitance at 1.278 (EMA100) and hit high at 1.275. It reverse back.
The key is this Thursday FOMC, which expect the Fed to raise interest rate. A hike in the rate will help to propell a stronger dollars, bring the pound down.
The support is at 1.256 (EMA55) which has convrge with EMA21, offer a strong support.
News today from the UK such as Unemployment rate and Claimant at 1730 SGT will make some move, but within the bound of 1.27 and 1.26.
CCI has not clear the lower band, giving hint that the pound will be weaker.
Friday, December 09, 2016
9 Dec 2016
9 Dec 2016 GBP/USD
The morning start with a spike up to 1.267 because of a better than expected UK RISC (housing) at 0800 SGT. It show a recovery from the Brexit. Though there was no major news in the afternoon affecting the pound, it continue to hit high at 1.27 (the first resistance, the second one being 1.278 EMA100).
It was the news from the US that reverse the direction. Unemployment claims remains the same. On the stock markets, the DOW, the Nasdaq all made records high, indicating a more confident US economy.
The pound hit a low yesterday at 1.255.
With a quiet Europe front till 1730 for UK construction output, which is expected to remains the same.
CCI continue to give an indicator for the pound to move lower. But the movement is strongly support by both EMA21 and EMA55 which now converge at 1.255. The fib retracement from 1.2775 to 1.2305 is 1.254 at 50% retracement.
So if a break below this strong support will move the level of support to 1.248.
On the contrary, 1.266 (Fib retracement 23.6%) and 1.272 (EMA100) is the resistance.
I am expecting some side movement within 1.254 and 1.260, which is my expectation of the strength of the pound for this period of time before Fed changes the interest rate or after next March Brexit negotiation.
The morning start with a spike up to 1.267 because of a better than expected UK RISC (housing) at 0800 SGT. It show a recovery from the Brexit. Though there was no major news in the afternoon affecting the pound, it continue to hit high at 1.27 (the first resistance, the second one being 1.278 EMA100).
It was the news from the US that reverse the direction. Unemployment claims remains the same. On the stock markets, the DOW, the Nasdaq all made records high, indicating a more confident US economy.
The pound hit a low yesterday at 1.255.
With a quiet Europe front till 1730 for UK construction output, which is expected to remains the same.
CCI continue to give an indicator for the pound to move lower. But the movement is strongly support by both EMA21 and EMA55 which now converge at 1.255. The fib retracement from 1.2775 to 1.2305 is 1.254 at 50% retracement.
So if a break below this strong support will move the level of support to 1.248.
On the contrary, 1.266 (Fib retracement 23.6%) and 1.272 (EMA100) is the resistance.
I am expecting some side movement within 1.254 and 1.260, which is my expectation of the strength of the pound for this period of time before Fed changes the interest rate or after next March Brexit negotiation.
Thursday, December 08, 2016
8 Dec 2016
8 Dec 2016
It was a retracement for the pound yesterday. It did retrace to 1.26 before rebound back to 1.266, within the 0.382 and 0.236 level.
The fundamental of UK came from manufacturing production month to month, it fell below the 0.2% to a negative 1.2%. On the US, the price of crude fell to below $50. The price of crude oil is based on USD. If the price of crude is low, the USD is weakening.
Likewise, DOW and Nasdaq continue to have the Trump effect and continue to run high. A co relationship between DJIA and GUS/USD pair can be seen at this link . At this stage there is a positive relationship.
That explains the downward movement of the pound from around 1.27 the day before to a low of 1.26 during Europe trading hours, before moving up again to 1.266 during US trading hours.
Today, quiet from news on the UK front. But of course, PM May are coming out a plan for Brexit. Any speculative news release that is favorable for UK in the exit in negotiation with EU will bring a spike in the pound.
Else, it will be a wait for US unemployment claims. A better than expected result will push the cable in the other direction.
The pound has retrace to its 0.236 level at 1.266. Resistance is at 1.27. A strong support is presence at 1.26 by EMA55 as well as fib retracement level at 0.382.
CCI indicator offer a downside to the cable, which means a good short at 1.266 to 1.27 level. With WMA5 now above EMA55 and EMA21 converging with EMA55, now offer more reason for a strong support at 1.26.
I am expecting a price range of 1.27 to 1.26.
It was a retracement for the pound yesterday. It did retrace to 1.26 before rebound back to 1.266, within the 0.382 and 0.236 level.
The fundamental of UK came from manufacturing production month to month, it fell below the 0.2% to a negative 1.2%. On the US, the price of crude fell to below $50. The price of crude oil is based on USD. If the price of crude is low, the USD is weakening.
Likewise, DOW and Nasdaq continue to have the Trump effect and continue to run high. A co relationship between DJIA and GUS/USD pair can be seen at this link . At this stage there is a positive relationship.
That explains the downward movement of the pound from around 1.27 the day before to a low of 1.26 during Europe trading hours, before moving up again to 1.266 during US trading hours.
Today, quiet from news on the UK front. But of course, PM May are coming out a plan for Brexit. Any speculative news release that is favorable for UK in the exit in negotiation with EU will bring a spike in the pound.
Else, it will be a wait for US unemployment claims. A better than expected result will push the cable in the other direction.
The pound has retrace to its 0.236 level at 1.266. Resistance is at 1.27. A strong support is presence at 1.26 by EMA55 as well as fib retracement level at 0.382.
CCI indicator offer a downside to the cable, which means a good short at 1.266 to 1.27 level. With WMA5 now above EMA55 and EMA21 converging with EMA55, now offer more reason for a strong support at 1.26.
I am expecting a price range of 1.27 to 1.26.
Wednesday, December 07, 2016
7 Dec 2016
7 Dec 2016
The pound retreat after hitting 1.278, It did not meet the resistance at EMA100 at 1.283. The pound has been making new highs since surfacing from the level at 1.23. So the question is will this retreat be another retracement before making another high?
Today UK will report manufacturing production numbers at 1730 SGT and it will be quiet at the US side. This month to month report may favor forecast and report better than expected (because the forecast is 0.2% compare to last month at 0.6%). I am expecting 0.4-0.5%. based on the fact that a weak pound boost manufacturing.
Using a fib retracement from 1.23 to 1.278, the pound has a potential to retreat to 1.26 then 1.253. This is also supported by EMA55 (1.26) and EMA21 (1.253).
On the up side, 1.278 and 1.283 offer a strong resistance. I am not expecting the resistance to be broken today.
CCI continue to support a down side movement, given potential for the pound to retreat to 1.26 a likelihood.
The pound retreat after hitting 1.278, It did not meet the resistance at EMA100 at 1.283. The pound has been making new highs since surfacing from the level at 1.23. So the question is will this retreat be another retracement before making another high?
Today UK will report manufacturing production numbers at 1730 SGT and it will be quiet at the US side. This month to month report may favor forecast and report better than expected (because the forecast is 0.2% compare to last month at 0.6%). I am expecting 0.4-0.5%. based on the fact that a weak pound boost manufacturing.
Using a fib retracement from 1.23 to 1.278, the pound has a potential to retreat to 1.26 then 1.253. This is also supported by EMA55 (1.26) and EMA21 (1.253).
On the up side, 1.278 and 1.283 offer a strong resistance. I am not expecting the resistance to be broken today.
CCI continue to support a down side movement, given potential for the pound to retreat to 1.26 a likelihood.
Tuesday, December 06, 2016
6 Dec 2016
6 Dec 2016
US reported a better than expected non-manufacturing PMI. While earlier on UK reported also a better than expected service PMI.
The pound does not look like it is going to reverse. It continue to hit new high at 1.275, despite the fundamental of a stronger US data.
CCI has strong indication of over bought. Very over bought. So I am expecting at least some off stream from the pound.
Resistance is at EMA100 at 1.282. Now with the WMA5 within the EMA55 and EMA100 region, support is at EMA55 at 1.26.
With the lack of major news, the pound may move side within the range 1.270 and 1.278. Any spike today may also be constraint within EMA100 and EMA55.
US reported a better than expected non-manufacturing PMI. While earlier on UK reported also a better than expected service PMI.
The pound does not look like it is going to reverse. It continue to hit new high at 1.275, despite the fundamental of a stronger US data.
CCI has strong indication of over bought. Very over bought. So I am expecting at least some off stream from the pound.
Resistance is at EMA100 at 1.282. Now with the WMA5 within the EMA55 and EMA100 region, support is at EMA55 at 1.26.
With the lack of major news, the pound may move side within the range 1.270 and 1.278. Any spike today may also be constraint within EMA100 and EMA55.
Monday, December 05, 2016
5 Dec 2016
5 Dec 2016
The pound gain after comments from EU for possible continue access to the market. This despite a better US unemployment rate failed to stop the pound from rallying.
On the rest of the currencies against the USD, most of them lost strength against the dollars.
Today UK will release service PMI at 1730 SGT and US FOMC Dudley speaks at 2130 SGT followed by US ISM non manufacturing PMI at 2300 SGT.
The pound has gained from the support at 1.235 to 1.257. It makes peak at 1.257 then to 1.270 and may attempt 1.285.
On the daily CCI, the pound is clearly overbought. The peak at last Friday 1.273 was brought back to 1.262. I am expecting a down to support at 1.26 (EMA55) and 1.252 (EMA21) for some profit takings this week.
On the contrary, the pound may push higher to 1.282 (EMA100) and hover in the range betwen EMA100 and EMA55.
As such, it will be either to sell the pound at the resistance or to buy the pound at the support.
The pound gain after comments from EU for possible continue access to the market. This despite a better US unemployment rate failed to stop the pound from rallying.
On the rest of the currencies against the USD, most of them lost strength against the dollars.
Today UK will release service PMI at 1730 SGT and US FOMC Dudley speaks at 2130 SGT followed by US ISM non manufacturing PMI at 2300 SGT.
The pound has gained from the support at 1.235 to 1.257. It makes peak at 1.257 then to 1.270 and may attempt 1.285.
On the daily CCI, the pound is clearly overbought. The peak at last Friday 1.273 was brought back to 1.262. I am expecting a down to support at 1.26 (EMA55) and 1.252 (EMA21) for some profit takings this week.
On the contrary, the pound may push higher to 1.282 (EMA100) and hover in the range betwen EMA100 and EMA55.
As such, it will be either to sell the pound at the resistance or to buy the pound at the support.
Friday, December 02, 2016
2 Dec 2016
2 Dec 2016
The pound climb above the resistance level at 1.256 after Brexit Minister Davis comment. iT continue to spur up after ECB favors QE extension till next March. It hit a high of 1.269/1.270
But news from the US with crude making high, brought the pound back to 1.258, which make 1.256 the support.
What has crude high prices do with the US or the UK economy? Nevertheless, the US also followed by better than expected data from ISM manufacturing (Institute of Supply Management Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry ).
Looking at today news - UK construction PMI at 1730 SGT and US Unemployment rate at 2130 SGT. US unemployment claims increase, but dollars does not means the increase in number of unemployment. At the same time US is reporting non-farm employment change.
The December Fed rate has point to an increase which means the data in US are getting better.
Looking at the day chart CCI, the pound has been over bought, it has indicate a downtrend. The resistance is at 1.282 (EMA100), with the price now hovers above at EMA55 with WMA5 below EMA55 (yet to break).
The price now is at 1.26. If it break the support level, I am expecting the price range between 1.256 and 1.248. given that WMA5 failed to punch through EMA55.
On the other hand if WMA5 punch through EMA55, support will be at 1.26 and resistance at 1.282 (EMA200).
Given the over bought CCI indicator, the pound may weaken against USD, returning to support at 1.248/1.244 level.
The pound climb above the resistance level at 1.256 after Brexit Minister Davis comment. iT continue to spur up after ECB favors QE extension till next March. It hit a high of 1.269/1.270
But news from the US with crude making high, brought the pound back to 1.258, which make 1.256 the support.
What has crude high prices do with the US or the UK economy? Nevertheless, the US also followed by better than expected data from ISM manufacturing (Institute of Supply Management Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry ).
Looking at today news - UK construction PMI at 1730 SGT and US Unemployment rate at 2130 SGT. US unemployment claims increase, but dollars does not means the increase in number of unemployment. At the same time US is reporting non-farm employment change.
The December Fed rate has point to an increase which means the data in US are getting better.
Looking at the day chart CCI, the pound has been over bought, it has indicate a downtrend. The resistance is at 1.282 (EMA100), with the price now hovers above at EMA55 with WMA5 below EMA55 (yet to break).
The price now is at 1.26. If it break the support level, I am expecting the price range between 1.256 and 1.248. given that WMA5 failed to punch through EMA55.
On the other hand if WMA5 punch through EMA55, support will be at 1.26 and resistance at 1.282 (EMA200).
Given the over bought CCI indicator, the pound may weaken against USD, returning to support at 1.248/1.244 level.
Thursday, December 01, 2016
1 Dec 2016
1 Dec 2016
With last evening US pending homes sales result at 2300 SGT, and the less than expected result, the pound gain strength. It hit a high at 1.254 before retreating back to 1.251/2
The Fed will most likely to raise interest rate in December and as such we have to put in perspective that unless the UK has "something" to counter, it will be a downward trend for the pound.
UK will be announcing Manufacturing PMI at 1730 SGT, but not expecting any big changes.
On the technical side, it will be a uptrend before CCI indicates an overbought. Resistance at 1.256/7 (EMA55) and support at 1.245/6 (EMA21). Expecting the price range to be confine within these range as no dispersion likely.
With last evening US pending homes sales result at 2300 SGT, and the less than expected result, the pound gain strength. It hit a high at 1.254 before retreating back to 1.251/2
The Fed will most likely to raise interest rate in December and as such we have to put in perspective that unless the UK has "something" to counter, it will be a downward trend for the pound.
UK will be announcing Manufacturing PMI at 1730 SGT, but not expecting any big changes.
On the technical side, it will be a uptrend before CCI indicates an overbought. Resistance at 1.256/7 (EMA55) and support at 1.245/6 (EMA21). Expecting the price range to be confine within these range as no dispersion likely.
Wednesday, November 30, 2016
30 Nov 2016
30 Nov 2016
Look like a better than expected good news in US GDP (q/q) report as well as US consumer confidence raise the GDB/USD pair instead of lowering it!
On the contrary UK consumer confidence fall short of expected this morning.
In addition, Federal Reserve member Powell said that the case for interest rate hike in December is stronger, given the better than expected economic numbers and unemployment rate.
As such, fundamentally, the GBP/USD pair will weaken.
Looking at the technical, resistance is at 1.257 (EMA55 day chart) then 1.267. Support at 1.241 then 1.234.
Look as if the CCI support a short term gain for the pound, which the pair now will be confine within the range bounded by EMA55 and EMA21 (1.256 and 1.245).
Trade within the confinement and if a break at either 1.268 or 1.236, then it will be a trend up or down respectively.
Look like a better than expected good news in US GDP (q/q) report as well as US consumer confidence raise the GDB/USD pair instead of lowering it!
On the contrary UK consumer confidence fall short of expected this morning.
In addition, Federal Reserve member Powell said that the case for interest rate hike in December is stronger, given the better than expected economic numbers and unemployment rate.
As such, fundamentally, the GBP/USD pair will weaken.
Looking at the technical, resistance is at 1.257 (EMA55 day chart) then 1.267. Support at 1.241 then 1.234.
Look as if the CCI support a short term gain for the pound, which the pair now will be confine within the range bounded by EMA55 and EMA21 (1.256 and 1.245).
Trade within the confinement and if a break at either 1.268 or 1.236, then it will be a trend up or down respectively.
Tuesday, November 29, 2016
29 Nov 2016 - Forex Setup
29 Nov 2016 - Forex Setup
Below was a post written some years ago when I started forex. I will be revisiting the indicators especially after the Brexit and the down spike on 7 Oct 2016.
I have been trading this pair and this pair for the last many years.
1. Trading style:
Day trade - I trade daily - that is if possible close the trade before I sleep.
Monthly closure - all open trades should be closed on the last Friday of the month, for accounting purposes and also to enable starting afresh for each month.
2. Determine the trend - direction for the day
I used both fundamentals and technical to have a "feel" of the trend. By trend, the pair will move up, down or side for at least a couples of days or a week or two.
Fundamentals information can be obtained from www.forexfactory.com or your preferred sites. I used http://finance.yahoo.comand http://money.cnn.com. I need to have a feel through reading the data and news to gauge as to whether the UK (sometimes Europe) economies are doing better or worse than the US. Monetary policies (money supplies) and interest rates affect the movement.
Technical analysis I used a daily chart from Oanda. The indicators I used are
BB(14, 2) and BB(14, 1.2). It gives a feel of the trend. In theory, when the price reach the boundary lines of the BB, a reversal will follows. A shot out of the BB indicate a break out (that is the trend will not reverse and will likely to continue in the same direction)
WMA(5), EMA21, EMA55, EMA100 and EMA200. The application is based on a method developed by David Kolachi. It is useful when used both on the daily chart and the 1 hour chart to find support and resistance as well as if the trend is moving side way or an impending breakouts.
CCI(14) coupled with BB(0.9) and BB(1.2). This is my stochastic oscillator. Useful and gives confidence when to hold to position or when that position is to gave up. It also points to when a reversal might takes place.
With all said, together with both technical and fundamental, use your judgement and with confidence or no confidence what the trend should be. That will determine the way you trade for that day.
3. Using CCI to determine trend
I used the CCI(14) to give confidence to the type of trends.
Up trend - when the CCI is oversold (more than -150) and cuts the first BB line. This trend will continue until the CCI exit the top BB line and until the line change gradient. There are times where more than 2 over sold occur. Therefore do not enter with a show hand. I recommend a quarter at a time. Exit long position when gradient reverse (after exiting top most BB line).
Down trend - the opposite of up trend.
Unknown (sometime go into side way) - is a region when the CCI exits the top most (or the bottom most) BB line and the gradient reverse till the CCI enters the BB line again.
4. Determine the entry
Once I decided it is going to be up, down or side, I will find the good entry. Entry is also affected by timing. for example, you may do a buy just minutes before a big data news announcement and find yourself caught in a wrong direction.
I enter a trade based on support and resistance - using 1 hour chart with WMA5, EMA21, EMA55, EMA100 and EMA200 noting Kolachi method.
Normally, the reversal will take place at the resistance or the support, but once is goes beyond the resistance or support region, a breakout occur and the trend will continue. The resistance becomes support and the support becomes resistance line. Therefore know these bounds so that you know when to let go if breakout happens.
Using a 15min chart, I use technical BB(1.8). I normally entered at the 15min mark and after a major news announcement (not 15 min before). Once the candle exit the BB, I will enter a trade. If the position is in the same trend as you have determined during the day or the entry is at a good support or resistance, even is the position is not in your favor, I can still hold.
Happy trading.
Below was a post written some years ago when I started forex. I will be revisiting the indicators especially after the Brexit and the down spike on 7 Oct 2016.
I have been trading this pair and this pair for the last many years.
1. Trading style:
Day trade - I trade daily - that is if possible close the trade before I sleep.
Monthly closure - all open trades should be closed on the last Friday of the month, for accounting purposes and also to enable starting afresh for each month.
2. Determine the trend - direction for the day
I used both fundamentals and technical to have a "feel" of the trend. By trend, the pair will move up, down or side for at least a couples of days or a week or two.
Fundamentals information can be obtained from www.forexfactory.com or your preferred sites. I used http://finance.yahoo.comand http://money.cnn.com. I need to have a feel through reading the data and news to gauge as to whether the UK (sometimes Europe) economies are doing better or worse than the US. Monetary policies (money supplies) and interest rates affect the movement.
Technical analysis I used a daily chart from Oanda. The indicators I used are
BB(14, 2) and BB(14, 1.2). It gives a feel of the trend. In theory, when the price reach the boundary lines of the BB, a reversal will follows. A shot out of the BB indicate a break out (that is the trend will not reverse and will likely to continue in the same direction)
WMA(5), EMA21, EMA55, EMA100 and EMA200. The application is based on a method developed by David Kolachi. It is useful when used both on the daily chart and the 1 hour chart to find support and resistance as well as if the trend is moving side way or an impending breakouts.
CCI(14) coupled with BB(0.9) and BB(1.2). This is my stochastic oscillator. Useful and gives confidence when to hold to position or when that position is to gave up. It also points to when a reversal might takes place.
With all said, together with both technical and fundamental, use your judgement and with confidence or no confidence what the trend should be. That will determine the way you trade for that day.
3. Using CCI to determine trend
I used the CCI(14) to give confidence to the type of trends.
Up trend - when the CCI is oversold (more than -150) and cuts the first BB line. This trend will continue until the CCI exit the top BB line and until the line change gradient. There are times where more than 2 over sold occur. Therefore do not enter with a show hand. I recommend a quarter at a time. Exit long position when gradient reverse (after exiting top most BB line).
Down trend - the opposite of up trend.
Unknown (sometime go into side way) - is a region when the CCI exits the top most (or the bottom most) BB line and the gradient reverse till the CCI enters the BB line again.
4. Determine the entry
Once I decided it is going to be up, down or side, I will find the good entry. Entry is also affected by timing. for example, you may do a buy just minutes before a big data news announcement and find yourself caught in a wrong direction.
I enter a trade based on support and resistance - using 1 hour chart with WMA5, EMA21, EMA55, EMA100 and EMA200 noting Kolachi method.
Normally, the reversal will take place at the resistance or the support, but once is goes beyond the resistance or support region, a breakout occur and the trend will continue. The resistance becomes support and the support becomes resistance line. Therefore know these bounds so that you know when to let go if breakout happens.
Using a 15min chart, I use technical BB(1.8). I normally entered at the 15min mark and after a major news announcement (not 15 min before). Once the candle exit the BB, I will enter a trade. If the position is in the same trend as you have determined during the day or the entry is at a good support or resistance, even is the position is not in your favor, I can still hold.
Happy trading.
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