Something Happening Here, What it is - Not Exactly Clear

The Chinese stock market in Shanghai had its largest loss in over 10 years, losing almost 10% of value. Is this an excuse to exit the Carry Trade?

GBP-YEN is testing Key Trend Line Support and a big 61.8% retracement

Or is there something else happening….

Fear on Bloomberg - As More News Comes In

A parade of panicked traders and Bears has been spotted… As the US Equity Markets were preparing to open - Is this a contrary indicator… or something more indicative to take note of?

Fear abounds as phrases like - Bad day ahead, they are running scared, sellloff, “So called Goldie-Locks market”, weakness, is this fundamental, exploiting emotions! My My…. they are talking about “Behavioral Finance!”

US Durable Goods fell 7.8% posting the worst results in almost two years! This began driving the US Dollar lower, Followed by better than expected Existing Home sales Rising 3%. Consumer Confidence also surprised to the upside…

What’s a Trader to do? - Trade or get out of the way…

Tomorrow the US GDP Report - 1st on FX Webinar

Tune in to the live webinar coverage of Wednesday’s  US GDP Report on FX Street - register here

Mr. Furst is Founder of Investors Education Network - A mentor and trading coach to select clients. Jerry can be reached at JerryB1st (at) ienweb (dot) com or visit www.Investors-Education-Network.com

Watch Live Coverage of the US GDP Report
This Wed String at 8:00am EST February 28
Sponsored by Investors Education Network on FX Street.com

The US GDP report is closely watched as it tells institutions, governments, investors, and traders about the overall health of the US Economy.

The release of this important economic indicator is likely to cause a temporary spike in volatility.

• 8:00 AM (EST) - Before: What makes this scheduled event so important
• 8:30 AM (EST) - During: Watch the markets react with volatility spiking charts in all markets!
• 9:00AM (EST) - After: What Happened and What to Expect Next!

———> To Register for the special US GDP Webinar: Click Here to Register or copy and paste this link into your browser: http://tinyurl.com/2lncnn

Reminder - Register for “The Week Ahead” Weekly Webinar Every Monday at 7am EST Live on FX Street.com

Is it Real or is it the Carry Trade?

While everyone is talking about the BoJ raising a measly .25 to a whopping .5% the USD, GBP, and EUR seem to be enjoying continued strength against the Yen - but is it real or is it the Carry Trade? Eventually the Yen will correct.

Looking at the broader landscape the AUD-USD and CAD-USD look interesting. It could be a reason to look at Gold again…. but for now let’s look at the charts.

The USD-CAD is continuing it’s fall (click on Chart 1)

the AUD-USD has broken two trend lines to the upside (Click on chart 2)

FYI - Just hearing a report that US Equity Margin Debt is breaking above 2000 tech bubble levels…

Jerry Furst is Sr. Analyst for IEN-FX, presenter, educator, and trading coach/mentor.

Tune in to his Webinars on FXstreet.com, every Monday at 7am EST for his  1^st on Forex – The Week Ahead Live Report - Click to register

Well once again - the fact that the US Gov’t call it a Holiday may mean that the banks are closed - But Trading in the currencies goes on!

The Pound is tearing up (and down) the charts! (click to Enlarge)

I like the charts….

Last weekends G7 meeting seems so far away now. Ben Bernanke’s testimony to Congress is done. Looks like the currencies are on the move. The Yen and Sterling is weakening, China is tightening, the Loonie looks bright… what’s a trader to do?

Look at Chart 1 - Is The Yen Finding Support  - or Breaking the Trendline?

Look at Chart 2 - Is this a buying opportunity for the Sterling?

Look at Chart 3 - The Loonie is building more strength against the USD

Transparency Abounds - Interest Rate Watch, BoE, FOMC

Although sometimes it’s what not is said that can be most important - the days of the Fed being vague on future interest rate policy may be over - for now…It appears that the Fed is “Data Dependant with Transparency”  

The following seems to be the current consensus for Interest Rates:

BoE - Raises rates .25 - .5

ECB - Raises rates .5 - 1.0

BoJ - Raises at the most 1.0

FOMC: Holds Steady - but “Data Dependant”

If you agree with the above  Add to that the widening gap between the US Trade deficit and the Capital inflows - then the pressure on the US Dollar is on.

Jerry Furst is Sr. Analyst for IEN-FX, presenter, educator, and trading coach/mentor.

Tune in to his Webinars on FXstreet.com, every Monday at 7am EST for his  1^st on Forex – The Week Ahead Live Report

Click to register

A Not So Happy Valentines Day for Long Time USD-CAD pair

While the data released on Tuesday Feb 13th, 2007 shows that the US Trade Deficit continues to grow, Canada - the neighbor to the north, posted a larger surplus showing strong growth in both exports and imports. 

Could this be the beginning of the end for the long time relationship of US Dollar strength against the Canadian Dollar. Often joked about in the past, The Loonie  was often tossed aside like a rag doll and the butt of many jokes. 

Trend Line and 50 SMA Break

The widening disparity in Trade Balance reports quickly showed up on the charts as the Loonie broke a strong uptrend that began back in Sept 2006. Winter is temporarily hibernating global warming advocates as Heating Oil comes back in demand and puts value back into the “Resource Currencies” such as Canada and Australia  Chart one shows how the USD-CAD Daily 50 SMA has been a decent indicator that has proven to hold price quite well. That line and the solid up trend has now been violated.(Click on chart to enlarge)

Well, Once upon a time (not that long ago) the term “Made in Japan” was synonymous with an inferior product from a second rate country. Will the Loonie soon be given equal R-E-S-P-E-C-T in the relationship that often counts the most - next to your cheeks and in your wallet!

Jerry Furst is Sr. Analyst for IEN-FX, presenter, educator, and trading coach/mentor.

Tune in to his Webinars on FXstreet.com, every Monday at 7am EST for his  1^st on Forex – The Week Ahead Live Report

Click to register

Scheduled Volatility Events

Main News for Tuesday Feb 12th  is GDP reports from the Euro zone,  GBP Core CPI due at 4:30am EST.

US Trade Balance Report at 8:30am EST. the consensus is that the US trade Gap will widen to -$59.8B.  Canada also reports Trade balance at the same time as the US.

Japan reports Trade balance report at the beginning of their session 6:50pm EST Tuesday.  Consumer Confidence for Japan is due out at 12 Midnight EST.

The US Dollar has been showing strength against the Majors. This may be an opportunity for dollar bears - but wait for Bernanke’s congressional testimony Wednesday before making any major decisions.

Jerry Furst is Sr. Analyst for IEN-FX, presenter, educator, and trading coach/mentor.

Tune in to his Webinars on FXstreet.com, every Monday at 7am EST for his  1^st on Forex – The Week Ahead Live Report

Click to register

The G7 Finance Ministers official statement Sunday started off by stating that they “support the orderly adjustment of global imbalances” but did not name pairs! Is it an imbalance of the USD and China, or Euro-Yen.

Tough Talk Directed at China - Not Japan

Most analysts were expecting tough talk on the Yen to put pressure on Tokyo to raise rates. But the G7 had more to say about hedge funds than the Yen. thee was a statement of “exchange rates should reflect economic fundamentals.” However, this was directed at especially at “China, it is desirable that their effective exchange rates move so that necessary adjustments will occur.”

Hedge Funds Under Scrutiny

US Treasury Secretary Henry Paulson released his own statement and stated that although the US wants a free and open price discovery market - Investor protection and financial stability must be maintained.

 Friday’s Close on the GBP-USD Spike Marks Resistance

Although Spikes and Gaps are not supposed to occur in FX trading it is interesting to note when they do appear. Sometimes they can provide opportunities or clues as to what to expect. Chart 1 is a composite of over 500 data feeds. As the FX markets were closing on Friday February 9th, 2007 - a 400 pip spike on the GBP-USD took price from the 1.9500 range clear up to approx 1.9900!

This spike is also a double top going back a few weeks to January 23’s high.

Click on Chart One for a better view.

Jerry Furst is Sr. Analyst for IEN-FX, presenter, educator and mentor.

Tune in to his Webinars on FXstreet.com, every Monday at 7am EST for his  1^st on Forex – The Week Ahead Live Report

Click to register

Last week saw a very busy calendar of scheduled economic news. GDP, and FOMC Announcements came out on on the same day January 31st, and Friday;s Non-Farm Payroll Report on February 2nd.

When you have three huge reports aligning with planetary like gravity on the markets - will this be a major chart shaking event – or will it result in a just a pebbles ripple in the ocean that makes up the price charts?

Click on Chart 1 to see how these three reports affected the GBP-USD during the week of January 31. – despite causing temporary volatility, really had no effect overall in the grand scheme of the chart pattern and direction.

Click on Chart 2 and look on the Four Hour/240 minute chart of the GBP-USD. Can you identify any significant day that sticks out as identifiable as a major change – based on a economic news event? Not really.

. Depending on the time frame you are trading – especially if you are short term trading – your stops may need to be reevaluated, adjusted, or you may even consider closing and reopening a trade. This is something to consider, to stand aside - when these news events take place. Otherwise, you may just end up hear yourself muttering something about your stops being taken out!

Jerry Furst is Sr. Analyst for IEN-FX, presenter, educator and mentor.

Tune in to his Webinars on FXstreet.com, every Monday at 7am EST for his  1^st on Forex – The Week Ahead Live Report

Click to register