Forex Go!

The Wall Street Journal published a disturbing article earlier this week entitled “Federal Asset Seizures Rise, Netting Innocent With Guilty.”

You can already imagine the crux of the article.

In the United States, there are hundreds of regulations which authorize dozens federal agencies to confiscate private property — homes, cars, bank accounts, gold, company shares, and even personal effects.

Ironically, most Americans still think that they live in a country where you’re innocent until proven guilty. Nothing could be further from the truth, and it’s just another clear example of how the US Constitution has become a worthless piece of toilet paper for the federal government.

The Fifth Amendment states that “No person shall bedeprived of life, liberty, or property, without due process of law.” Tell that James Lieto, a New York businessman who was relieved of $392,000 when the armored car company used by his check-cashing firm was taken down by the FBI.

Lieto was innocent and not implicated in any wrongdoing, but the FBI took his money regardless as it just happened to be in the wrong place at the wrong time.

Last October, another businessman named Raul Stio was suspected of wrongdoing by the Treasury Department. The governmen

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August continues to be a frustrating month (which is generally the case most years because everyones on holiday and the volumes are lower), but at least I managed to make a decent profit this week after the disappointment of last week. I only placed two trades in total. One was a losing breakout trade but the other was a big winner.

Lets talk about the losing trade first of all. Ive been trading breakouts a lot in the last few months, but this week there was just the one trading opportunity on the GBP/USD (the overnight trading range was too big on the other days and on Wednesday the breakout candle was too big) and that happened yesterday morning.

Unfortunately after entering a trade right after the markets opened at 8.00 when this pair broke below the overnight trading range, it turned out to be a false breakout and I ended up taking a 25 point loss.

Luckily the other trade more than compensated for this loss. There were no trading opportunities on the GBP/USD, EUR/USD or USD/JPY pairs this week using my main 4 hour trading system.

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EURUSD Forecast The EURUSD had another volatile but indecisive movement yesterday. The upper line of the triangle still provided a good intraday resistance area while on the downside 1.4350 support region still hold so far. Overall direction remains unclear as price is still in a consolidation phase inside the triangle and need a clear break from the triangle to see clearer direction. Aggressive intraday traders can still take the advantage of the current ranging market, short around the upper line of the triangle and 1.4500 or long around 1.4250 and the lower line of the triangle with tight stop loss as a break from the triangle could lead price to a new trending situation. We still have some spaces inside the triangle and probably can not expect a valid break from the triangle this weekend.

Trading Setups / Chart in Focus:

EURUSD

The EURUSD rallied today and closed just under resistance near 1.4500. We can see the daily 8 / 21 EMAs are crossed higher and pressure seems to be building to the upside. We would need to see price break and close above 1.4500 next week to open the door for higher prices. Otherwise, more chop / consolidation is possible.

AUDUSD

The AUDUSD rallied today into resistance near 1.0600. Price will need to close above this resistance next week to have any chance at rallying further. Right now we are in hurry up and wait mode for this market, we will keep an eye on the price action next week and notify traders of any potential trade setups.

Check out this cool new Forex trading lesson: 4 Golden Nuggets of Forex Trading Insight from Nial Fuller

Forex Commentary:

The U.S.

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So you just want a simple Forex strategy to trade? Okay, let’s see what we can do…

Firstly, you want to get the probabilities in your favour; this means making sure you’re trading WITH the trend. Yes, I know, you’ve heard it before – but it’s true; trading with the trend will increase the probabilities for you.

The first thing we do is place two moving averages on the chart. The first moving average is a 50 Period Exponential Moving Average of the Highs; and the second is the same, a 50 EMA, but this time of the Lows.

You should have something that looks like this:

Now, we add another Moving Average, this time it’s a 15 EMA of the Close:

Now, there is an indicator for Metatrader4™ to download with this article called ‘QFF-MACDv1.ex4’. Leave the default setting on this indicator. Once you drag it on

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EURUSD Analysis. EURUSD has formed a cycle top at 1.4535 on 4-hour chart. Further decline would likely be seen later today, and first target would be at the lower border of the price channel. As long as the channel support holds, the fall from 1.4535 is treated as consolidation of uptrend from 1.3837, and one more rise towards 1.4700 is still possible, however, a clear break below the channel support will indicate that the rise from 1.3837 has completed.

USDCAD Analysis. USDCAD broke above the price channel on 4-hour chart, suggesting that lengthier consolidation of downtrend from 0.9777 is underway. Range trading between 0.9406 and 0.9529 would likely be seen in a couple of days. As long as 0.9529 resistance holds, another fall could be expected after consolidation and a breakdown below 0.9406 will signal resumption of downtrend.

USDCHF Analysis. No changed in our view, USDCHF remains in downtrend from 0.8276.

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***Economic Data***

– (GE) Germany Jun ILO Unemployment Rate: 6.1% v 6.0% prior
– (RU) Russia Gold & Forex Reserve w/e July 22nd: $530.9B v $528.5B prior
– (IN) India Primary Articles WPI w/e Jul 16th Y/Y: 10.5% v 11.1% prior; Food Articles WPI Y/Y: 7.3% v 7.6% prior
– (HU) Hungary Jun Unemployment Rate: 10.8% v 10.8%e
– (SP) Spain Jun Adjusted Real Retail Sales Y/Y: -7.0% v -6.6% prior; Real Retail Sales Y/Y: -7.4% v -4.5%e
– (DE) Denmark Jun Unemployment Rate: 4.0% v 4.0%e; Gross Rate: 5.9% v 6.0%e
– (SW) Sweden Q2 Manufacturing Confidence: 0 (flat) v 7e
– (SW) Sweden July Consumer Confidence: 12.0 v 15.5e; Economic Tendency Survey: 104.4 v 109.6e
– (SP) Spain Business Confidence Y/Y: v -12.0e
– (SW) Sweden Jun Retail Sales M/M: 3.1% v 0.7%e; Y/Y: 3.4% v 0.9%e
– (SW) Sweden Jun Unemployment Rate: 8.8% v 8.6%e
– (GE) Germany July Unemployment Change: -11K v -15Ke; Unemployment Rate: 7.0% v 7.0%e
– (IT) Italy Jun Hourly Wages M/M: 0.1% v 0.0% prior; Y/Y: 1.8% v 1.8% prior
– (PH) Philippines Central Bank leaves Overnight Borrowing Rate unchanged at 4.50%; As Expected; Raises the Reserve Requirement by 100bps (not expected)
– (HK) Hong Kong Jun Trade Balance (HKD): -40.3B v -37.2Be; Exports Y/Y: 9.2% v 8.4%e; Imports Y/Y: 11.5% v 9.5%e
– (EU) Euro Zone July Business Climate Indicator:0.45 v 0.83e; Consumer Confidence:-11.2 v -11.4e; Economic Confidence: 103.2 v 104e; Industrial Confidence: 1.1v 2.0e; Services Confidence: 7.9 v 9.4e
– (PO) Portugal July Consumer Confidence: -49.1 v -50.7 prior; Economic Climate Indicator: -2.3 v -2.2 prior
– (BE) Belgium July CPI M/M: 0.1% v 0.3% prior; Y/Y: 3.8% v 3.7% prior (higest reading since Oct 2008)
– (SA) South Africa Jun PPI M/M: 4.4% v 3.9%e; Y/Y: 7.4% v 6.9%e

Fixed Income
– (IT) Italy Debt Agency (Tesoro) sold approx €6.2B vs. € Read more…

Pair has been trading in a quite limited range since late Wednesday, having hovered in between 1.6300 and 1.6360 area, lacking clear direction so far. However, the 4 hours chart shows an increasing bearish momentum while 20 SMA is keeping the upside capped, supporting a bearish continuation rally for the cross: watch for a break below 1.6270 strong support area to trigger a deeper fall near the 1.6200/20 price zone.

The upside needs at least a 4 hours candle opening above 1.6360, also above 20 SMA, not seen for today, to push price higher towards the 1.6430/50 price zone.

U.S. stocks will open higher Tuesday as earnings releases from Ford and 3M beat analysts’ expectations and allayed concerns over the U.S. debt ceiling and Europe’s sovereign debt crisis. S&P 500 Index futures are currently up 0.2 percent ahead of the open. Today’s main economic data cocktail consists of S&P/CaseShiller home prices in May expected (13.00 GMT) to come out at 139.80 slightly up from 138.84 in April; could this signal the bottom in housing prices? Later, U.S. consumer confidence in July expected (14:00 GMT) to come at 56.0 down from 58.5 in June which is a significantly lower figure than we would normally see in an expansionary economy. In Europe, the Euro STOXX 50 Index futures are currently down 0.2 percent as banks such as UBS and Deutsche Bank reported earnings that missed estimates. Most disappointing in Europe is the comment from STMicroelectronics that it expects a correction in sales which is definitely not a good sign. Read more…

Resumption of uptrend needs to close above 1620-24.

Gold’s previous resumption of the uptrend still needs to close above 1620-24 in order to confirm sustainable extensions higher in line with the major uptrend for extensions into the next key level at 1700.00.

We had prefered hedge for downside risks following the recent unprecedented explosive upside move, which triggered a confluence of our exhaustion signals.

However, as previously stated, it was critical the market confirmed a reversal beneath a filtered price/time trigger point. This downside trigger level still holds at 1588/82.

In terms of the big picture, we continue to watch price activity within the apex of the 12-year exhaustion pattern (illustrated on the weekly log chart), which has also developed a unique long-term DeMark™ exhaustion signal.

Gold’s COT liquidity indicator (net long positions) remains squeezed within a tight range (as Gold continued to make push to record highs on lower volume). At th Read more…