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Koefoed — Trading ECB and US Fed Divergence

The latest minutes from the FOMC and ECB highlights divergence between the two central banks remains and that could be an opportunity for Forex traders, says Saxo Bank’s Mads Koefoed.
Koefoed: We saw a spike in EUR/USD yesterday evening following the release of FOMC Minutes. The Fed Minutes are in line with FOMC statement and the Fed remains on track for December hike. The Jobs market are much stronger than the surveys show. If we see EUR/USD rally further from here then it becomes good candidate for going short, because the dollar will strengthen as the FOMC decides to hike. Meanwhile in Europe the latest ECB Meeting shows that the Euro is under pressure. The ECB concerned about Emerging markets and volatility. We are still seeing Euro area inflation running very low. The Minutes from ECB also revealed that the ECB is ready to expand its QE program at a time when US Fed is looking to hike rates. This divergence provides a good opportunity for Forex traders. The Euro area inflation is to remain low in 2016.

Lambert — Shorting EUR/GBP

Clive Lambert from FuturesTechs is looking to short EUR/GBP after the pair has failed to go higher.
Clive Lambert: Looks like the EUR/GBP was tryig to go higher at the end of last week and the beginning of this week. On Wednesday we saw a sell off. Yesterday it tried to recover 2 or 3 times, could not get above 0.7380 and today I am looking to sell at 0.7350 to 0.7360. The stop for this trade at 0.7380. I think we head back lower to 0.7200 and 0.7290.

Interest Rate Drama

The Interest rate drama continues as US Federal Reserve puts off again an increase in rates. The rally of the US Dollar has been partially driven by the expectations of higher rates. After the Fed announced that it is not raising rates this month the US Dollar fell to its lowest level in a month. The dollar fell the most after China’s currency devaluation and Federal reserve held off on raising rates. The reason for a rate increase would be to forestall inflation. The Fed target s 2% and not higher. The basic issue with interest rates is that when the cost of borrowing goes up so does the cost of doing business. The Fed does not want to hurt the US business recovery so it is holding off on its rate increase. When it does raise rates the dollar will go up as well. US oil prices are likely to hover at or above current levels regardless of Federal reserve raises rates before the end of the year. MarketWatch notes that Fed forecasts a hike this year. The Fed on Thursday opted to keep interest rates steady due to global economic and financial developments. The footnote to the story is that Fed published a graph that forecasts an interest rates of 0.4% by the end of the year.

Japanese Candlestick Forex Signals

There are a dozen major Japanese candlestick forex signals and Japanese candlestick signals evolved from rice trading in ancient Japan. These technical trading signals are strong indicators of subsequent market action. Their strong advantage is their clarity. These forex signals are pictorial representations of price action in the Forex market. The day’s trading is represented by a vertical rectangle. The candle is white when the day ends higher than when it started and black otherwise. Its ends represent the opening and closing prices for the day. Lines extending from the top and bottom of the candle are called shadows and represent the full range of trading for the day. A trading signal can be one or more unique candlesticks.
Dark Cloud Cover: This dark sounding name is for 2 candle set that predicts a reversal of a recent up trending market. 1st day trades up, 2nd gaps higher on open and fall to close above previous day opening price.
Doji: Virtually flat candle with upper and lower shadows
Gravestone Doji: Virtually flat candle at the very bottom of the trading range.
Long Legged Doji: Virtually flat candle with 1 or 2 very long shadows. The doji pattern indicates market is indecisive.
Bullish Engulfing Pattern: Short black candle followed by much larger white candle which engulfs the first candle.
Bearish Engulfing Pattern: Short white candle followed by much larger black candle which engulfs the first candle.
These signals indicate a reversal in the direction of 2nd day candle.
Piercing Pattern: This is a bottom reversal signal. It consists of 2 candles. First is long and black. Second is white and starts lower after a gapdown to open on 2nd day.
Hammer: This signal consists of a relatively short white candle with no upper shadow an a long lower shadow. It indicates a reversal at the bottom of downtrend.
Morning Star: 3 star candlestick pattern which indicates a bullish reversal.
Evening Star: 3 star candlestick pattern which indicates a bearish reversal.
Shooting Star: A short candle with a very long upper shadow and no lower shadow. This signal predicts a market reversal after an established trend.

Daily Forex News and Analysis — October 8th 2015

Wall Street finished in the green. The Dow Jones rose by 0.73%, S&P 500 rose by 0.80% and NASDAQ added 0.90% to its value. The US Dollar traded mixed against most major currencies on a sluggish trading day as no important economic data was released. Today the Unemployment Claims is expected at 274K vs. 277K previously. In addition the FOMC Meeting will take place today. The Euro fell versus the US Dollar to close at 1.1241 after German Industrial Production came out less than expected at -1.2% forecast. According to daily chart the pair is trading in an ascending triangle with RSI above 50. The Pound rose versus the US Dollar to close at 1.5314 as Manufacturing Production came out with good result at 0.5%. According to 8 hour chart the pair is trading close to the upper hand of the Bollinger bands indicator with positive momentum. As long as the pair holds these conditions a rise towards 1.54 can be expected. However falling towards the lower band may start a reversal and fall towards 1.50. Gold fell to close at $1,145 an ounce. Crude oil fell to close at $48.32 a barrel.

Time to Buy Bonds

Over the years well chosen stocks typically provide a better return on investment than bonds. But this is not always the case. In fact now may be a time t buy bonds and sell your stocks. The Market published an interesting article about Warren Buffet’s favourite indicator and suggests that it may be time to sell stocks and time to buy bonds. So what’s a fretting investor with rate hikes on the horizon to do. There is the obvious choice. Ease up on the equity throttle and seek the security of the fixed income market.
Even as China has cut back its holdings in US debt by about $180 billion according to Bloomberg the market has barely budged. From banks to mutual funds there are plenty of buyers out there. Now it appears that the indicator is telling us it is time to buy bonds. The market cap to GNP indicator is a general indicator and an accurate one. And even though bonds may have their issues they are a safe haven when the stock market goes bust. The average fall in stocks has been 10% over the last 50 years whenever market cap goes too high in comparison to the GDP. One more voice has been added to the chorus that is singing it is time to buy bonds.

ECN Brokers

What are ECN brokers. Trading with ECN brokers allows direct access to other market participants including banks, financial institutions, individual traders and other similar entities in a comprehensive interbank network. ECN brokers allow traders with tighter bid as opposed to other brokers. ECN brokers charge a fixed commission in every trade you make. As trades are executed by ECN brokers on your behalf, trade12 ensures the safety and anonymity of your transactions. The higher the bid the bigger the profit you will gain and tighter the spreads will be.

Daily Forex News and Analysis — October 7th 2015

The US Indices traded mixed on Tuesday ending a 5 day winning streak as investors eyed upcoming reports that are expected to show a dip in corporate earnings. The Dow Jones rose by 0.08%, NASDAQ fell by 0.69% and S&P 500 lost 0.36% from its value. The US Dollar traded lower against most major currencies on Tuesday as dampened expectations for a US rate hike before the end of the year continued to weigh on the greenback. The Trade Balance report came out lower than expected at -48.3 billion vs -47.6 billion forecast. Gold rose to close at $1,147 an ounce. Crude oil finished higher to close at $49.05 a barrel.
The Euro traded higher against the dollar as diminished expectations for a rate hike by the Federal Reserve this year pushed the greenback lower. According to the daily chart the EUR/USD is holding above the bullish trend line. Maintaining this condition should keep the pair rising to around 1.15 but breaking below the line may lead to a reversal and start a fall to lower areas around 1.09. The Pound finished higher versus the dollar after Housing Equity Withdrawal came out better than expected at -10.9 billion vs. -12.5 billion forecast. According to 4 hour chart the pair is trading between higher bands of Bollinger bands. Staying here may lift the pair towards 1.5250 while breaking below the midband could take the pair to lower areas around 1.51.

Lucas — AUD/USD Bouncing Back

Steve Lucas from 3c Analysis outlines his trade in AUDUSD. We are bullish on the week. Last week the RBA kept Interest rates on hold and we have seen base and precious metals rallying last week. Along with this Oil has been rising and Stocks have been improving. So this provides a more positive outlook for the economy in generaL and that’s what the Aussie needs to appreciate as well. From technical point of view the markets posting higher daily lows since last week’s base and base close to 6 year low. There are positive and negative things to Aussie. The technical signals suggest rally is corrective and temporary. We have Alcoa results expected to be bad tommorrow. We are close to 2 week highs. So we have a cautious bullish call. So the call is to buy on the dip at 0.7154 and stop at 0.7101. The target is 0.7240 and 0.7280 levelsa.

A New Way to Invest in Forex

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