Futures Market Blog

EUR/USD Daily Commentary for 2.23.09

Even though the EUR/USD posted impressive gains Friday on large volume, the currency pair was unable to close above our 1st tier downtrend line and is weakening further Monday morning.  The EU region still faces major problems in regards to its financial exposure to floundering Eastern European economies.  Therefore, the Euro is finding less relative strength against the Dollar as compared to the Pound.  One needs to look no further than the EUR/GBP, which continues its precipitous decline.  The ECB will certainly need to lower rates at its next meeting considering the central bank kept its benchmark rate unchanged last time.  As a result, investors are pricing in what should be a sizable monetary shock.  Since the EUR/USD could not punch through our 1st tier downtrend line with 2 more tiers waiting, we maintain our negative outlook on the currency pair.  The EU will release its Current Account balance and Germany’s Business Climate reading on Tuesday, which should prove to be market movers.  Meanwhile, The EUR/USD should continue its strong correlation with U.S. equities since the two economies are inextricably connected.  Fundamentally, we find support of 1.2762 with 2nd tier and bottom-end resting at 1.2725 and 1.2669, respectively.  To the topside, find resistance of 1.2806, 1.2846, 1.2883, and 1.2948.  The 1.30 serves as a key psychological barrier.  The EUR/USD is currently exchanging at 1.2807.

USD/JPY Daily Commentary for 2.23.09

The USD/JPY is making notable progress in its uptrend, briefly setting new 2009 highs.  Therefore, it seems this present rally could have legs.  However, the USD/JPY did back away after touching the psychological 95.00 mark in a sign of hesitation.  We advise caution when using the USD/JPY and S&P correlation for the time being.  The USD/JPY is on a path of its own right now.  Since the Japanese economy is faring worse than any other economy in reaction to the global crisis, the Yen may not be viewed as a safe haven anymore.  Furthermore, the BOJ may need to implement quantitative easing to weaken the Yen so the Japanese manufacturing sector can stay afloat.  Therefore, investors could be pricing in the upcoming monetary shock.  We will keep a close eye on the USD/JPY to see if it can continue its impressive ascent.  Considering the 2009 highs were broken, we maintain our positive outlook.  Fundamentally, we find resistances of 95.02, 95.53, 96.03, and 96.71.  To the downside, we see supports of 94.62, 94.18, 93.84, and 93.53.  The USD/JPY is currently exchanging at 94.66.

GBP/USD Daily Commentary for 2.23.09

The Cable has made some impressive gains from its new base in the last 24 hours.  The Cable surged through our 1st and 2nd tier downtrend lines, yet is stalling below our 3rd tier at our previous 1.4660 top-end resistance.  If the Cable can manage to break through our 3rd tier, then we foresee more large near-term gains.  However, the rally could stall if the S&P futures turn negative.  Should the futures drop below 2008 lows, then GBP/USD would likely follow suit considering the coupling of the two economies.  Therefore, we maintain our negative outlook for the Cable until the currency pair can push through our next downtrend line and February highs.  Britain will release some closely watched economic data on Tuesday, including Prelim Business Investment, CBI Realized Sales, and BBA Mortgage Approvals.  Fundamentally, we maintain our resistance of 1.4660 with fresh resistances of 1.4742, 1.4842, and 1.4929.  To the downside, we see supports of 1.4569, 1.4496, 1.4392, and 1.4328.  The psychological 1.45 area is turning into a cushion while 1.50 serves as a strong barrier to the upside.  The GBP/USD is currently exchanging at 1.4585.

When it comes to trading Forex or any market, two types of traders have been identified.

Independent and Dependent

Which type of trader you are will dramatically affect the potential money you can make in the markets. In fact, it could well determine what the rest of your life will look like, whether it is how long you work for someone else, when and where you vacation, where and how you live. You might think that’s an exaggeration, but the reality is those who take initiative can positively affect the outcomes of their lives (and their trading) as opposed to those who let others determine the course of their lives.

You should be aware that anything requiring little to no effort will produce limited, temporary or no results. Conversely, anything requiring you to think and act for yourself will produce lasting and permanent results.
Trading, whether Forex, stocks, or other markets, most especially proves this true. Returning to the two types of traders, they illustrate very common mindsets — which one represents you?

The Dependent Trader is looking for the easy way out, wants to make a quick buck, or strike it rich — but never wants to put any effort into the process of accomplishing such things (if such things even exist, and it should be argued that they do not exist).

Dependent traders will follow the crowd, trade based on “tips”, seek out ‘automated millionaire-making’ trading programs, listen to all the news experts and blindly place ‘can’t lose’ trades (which too often, do lose) with no plan, no thought and no understanding of what they’re doing.

Then, they’ll become so frustrated at their losses and failures they do the only thing they can think of: they give up.

Dependent traders are the trading equivalent of lottery ticket buyers: They know full well the odds stacked against them, but they believe anybody can get lucky, so why not them?

Needless to say, Dependent traders exert little control over their lives and have little chance for financial success.

On the other end of the spectrum is the Independent Trader. This trader wants to have control over their financial future and has learned (or will learn) how the markets work, what approaches to trading the markets work, how to empower themselves to trade without relying on others for advice or tips or news.

An Independent trader understands and believes that only they can maximize their odds for success and only they can achieve their financial and life dreams. They will seek out and learn from others, educate themselves, learn from failure and strive to accomplish greater things.

It should be noted, however, that everyone has a little bit of the Dependent trader in them — at some point. The difference being, the person on track to become an Independent trader may take up with a mentor or lean on a reliable education source AT THE BEGINNING of their trading career. As they become more knowledgeable, the Independent trader will divorce themselves from those sources and apply what they’ve learned on their own.

The Dependent trader never will.

Three Simple Steps to becoming an Independent Trader

Step One: Create and execute a trading plan. Whether you want to day trade or trade at the end of the day, or once a week — decide what fits BEST in your daily schedule and then determine what sources from #2 and #3 below best align with your plan. Don’t try to apply day trading methodologies to end of day trading or vice versa, as you’ll likely discover they don’t and won’t work.

Step Two: Seek out 2-3 reputable education sources. We will provide some to you — but the goal is to identify one that you can understand and trust. Learn everything you can from those sources. Then, learn to apply it on your own.

Step Three: Learn from and test out multiple methods for trading (whether Forex or Stocks). You are unlikely to succeed without some basis in trading methodologies, especially when utilizing technical or fundamental indicators.

The steps above will require time and money investment. You should consider them your trading education costs. Better to invest in yourself first than to lose money too easily in the markets.

When it comes to trading Forex or any market, two types of traders have been identified.

Independent and Dependent

Which type of trader you are will dramatically affect the potential money you can make in the markets. In fact, it could well determine what the rest of your life will look like, whether it is how long you work for someone else, when and where you vacation, where and how you live. You might think that’s an exaggeration, but the reality is those who take initiative can positively affect the outcomes of their lives (and their trading) as opposed to those who let others determine the course of their lives.You should be aware that anything requiring little to no effort will produce limited, temporary or no results. Conversely, anything requiring you to think and act for yourself will produce lasting and permanent results.

Trading, whether Forex, stocks, or other markets, most especially proves this true. Returning to the two types of traders, they
illustrate very common mindsets — which one represents you?

The Dependent Trader is looking for the easy way out, wants to make a quick buck, or strike it rich — but never wants to put any effort into the process of accomplishing such things (if such things even exist, and it should be argued that they do not exist).
Dependent traders will follow the crowd, trade based on “tips”, seek out ‘automated millionaire-making’ trading programs, listen to all the news experts and blindly place ‘can’t lose’ trades (which too often, do lose) with no plan, no thought and no understanding of what they’re doing.

Then, they’ll become so frustrated at their losses and failures they do the only thing they can think of: they give up.
Dependent traders are the trading equivalent of lottery ticket buyers: They know full well the odds stacked against them, but they believe anybody can get lucky, so why not them?
Needless to say, Dependent traders exert little control over their lives and have little chance for financial success.
On the other end of the spectrum is the Independent Trader. This trader wants to have control over their financial future and has learned (or will learn) how the markets work, what approaches to trading the markets work, how to empower themselves to trade without relying on others for advice or tips or news.

An Independent trader understands and believes that only they can maximize their odds for success and only they can achieve their financial and life dreams. They will seek out and learn from others, educate themselves, learn from failure and strive to accomplish greater things.

It should be noted, however, that everyone has a little bit of the Dependent trader in them — at some point. The difference being, the person on track to become an Independent trader may take up with a mentor or lean on a reliable education source AT THE BEGINNING of their trading career. As they become more knowledgeable, the Independent trader will divorce themselves from those sources and apply what they’ve learned on their own.
The Dependent trader never will.

Three Simple Steps to becoming an Independent Trader
Step One: Create and execute a trading plan. Whether you want to day trade or trade at the end of the day, or once a week — decide what fits BEST in your daily schedule and then determine what sources from #2 and #3 below best align with your plan. Don’t try to apply day trading methodologies to end of day trading or vice versa, as you’ll likely discover they don’t and won’t work.
Step Two: Seek out 2-3 reputable education sources. We will provide some to you — but the goal is to identify one that you can understand and trust. Learn everything you can from those sources. Then, learn to apply it on your own.

Step Three: Learn from and test out multiple methods for trading (whether Forex or Stocks). You are unlikely to succeed without some basis in trading methodologies, especially when utilizing technical or fundamental indicators.
The steps above will require time and money investment. You should consider them your trading education costs. Better to invest in yourself first than to lose money too easily in the markets.