This was certainly a "smart money" trading day. Hedge fund managers controlled everything before and after today’s main fundamental event, oil inventories, was released. Watch this video to see how we scalped the news using a 1 min chart and also see how the professional traders were trading the 4 hour chart. You will not, because of the influence of the institutional players, today’s daily pivot points were usueless, however the weekly pivots were extremely powerful.

We were able to use currency and commodity correlation to put together a few good trade plans today. During the Pre London session we noticed the USD was in the middle of some longer term plays, it was then a matter of using support, resistance and oil correlation to provide a good entry for continuation of yesturday’s price action.  Happy trading- David Pegler

Correlation analysis of price data over the past two weeks suggests a strong positive association between the movements of crude oil futures and the EUR/USD currency pair. You don’t need a correlation coefficient, though, to see that the euro and oil have moved in sync with each other during their recent sell-off.

We shorted gold and oil today, but the best setup was a EUR/USD double top with MACD divergence. Watch the video for a minute by minute review and how we used oscillators to trade the bounce back.

http://forex.typepad.com/fxbootcamp/2008/07/forex-video-n-3.html

Source: http://eia. doe. gov

I’ve done very well trading oil this year.  Its become my new "GBP/JPY"… my "always have the chart open and ready to go" trading opportunity.  With that being said, its also been the most frustrating to trade.

I trade technically, but I’m a huge fan of fundamentals.  Fundamental analysis creates trends.  Technical analysis simply helps me enter and exit trades within the fundamental trend.  However, oil has not traded fundamentally for several months.  We’ve all seen the TV reports and newspaper articles.  Let me show you the EIA report… the FACTS.

Above you will see oil inventories rise since the end of 2007.  Fundamentally, oil prices should have fallen.  They shot up like a rocket from $100 to $150.  Now oil prices are falling.  We’ve dropped $20 in less than two weeks, however, look at the EIA report above… oil stocks have also been falling.  Fundamentally speaking… prices should be rising.

Advice.  Open a chart and don’t think too much.  Get in "technically" and get out "technically".  There are no fundamentals to help you here.  If you don’t trade commodities, watch EUR/JPY and EUR/USD… and find an oil chart to watch too!  Why not CAD? Historically, oil prices have correlated very well to the value of the Canadian dollar.  Without fundamental oil trades in place, the correlation has broken down between oil and CAD.  When the value of oil is dictated by fundamentals, then the CAD trade will return.

Weekly Pivot Points*
July 28 - August 1, 2008

       EUR/USD   GBP/USD   USD/CHF   USD/JPY   USD/CAD

R3      1.6208      2.0315     1.0735      110.43     1.0484
M5     1.6142      2.0255     1.0652      109.82      1.0415
R2      1.6076      2.0195     1.0570      109.20     1.0345
M4     1.5984      2.0125     1.0518      108.86      1.0308
R1      1.5892      2.0055     1.0466      108.51     1.0270
M3     1.5826      1.9995     1.0383      107.90      1.0201 
PP      1.5760      1.9935     1.0301      107.28     1.0131
M2     1.5668      1.9865     1.0249      106.94      1.0094 
S1      1.5576      1.9795     1.0197      106.59     1.0056
M1     1.5510      1.9735     1.0115      105.98      0.9987
S2      1.5444      1.9675     1.0032      105.36     0.9917
M0     1.5352      1.9605     0.9980      105.02      0.9880
S3      1.5260      1.9535     0.9928      104.67     0.9842

       AUD/USD   NZD/USD    EUR/CHF  GBP/CHF   EUR/CAD

R3      0.9974      0.7816      1.6487     2.1313    1.6308
M5     0.9928      0.7771      1.6443     2.1182    1.6235
R2      0.9882      0.7725      1.6399     2.1050    1.6163
M4     0.9802      0.7647      1.6368     2.0947    1.6126
R1      0.9722      0.7569      1.6338     2.0843    1.6090
M3     0.9676      0.7524      1.6294     2.0712    1.6018
PP      0.9630      0.7478      1.6250     2.0580    1.5945
M2     0.9550      0.7400      1.6220     2.0477    1.5909
S1      0.9470      0.7322      1.6189     2.0373    1.5872
M1     0.9424      0.7277      1.6145     2.0242    1.5800
S2      0.9378      0.7231      1.6101     2.0110    1.5727
M0     0.9298      0.7153      1.6071     2.0007    1.5691
S3      0.9218      0.7075      1.6040     1.9903    1.5654

       AUD/JPY   EUR/JPY    GBP/JPY   NZD/JPY   CAD/JPY

R3     106.71     172.85      220.78      83.63     108.99
M5    106.15      172.13      219.55      83.12     108.53
R2     105.59     171.41      218.32      82.60     108.07
M4    104.97      170.90      217.42      81.94     107.48
R1     104.35     170.39      216.52      81.27     106.89
M3    103.79      169.67      215.29      80.76     106.43
PP     103.23     168.95      214.06      80.24     105.97
M2    102.61      168.44      213.16      79.58     105.38
S1     101.99     167.93      212.26      78.91     104.79
M1     101.43     167.21      211.03      78.40     104.33
S2     100.87     166.49      209.80      77.88     103.87
M0     100.25     165.98      208.90      77.22     103.28
S3      99.63      165.47      208.00      76.55     102.69

* - based on GFT DealBook 360 price data

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Tom Aspray began doing computer analysis of the financial markets in the early 1980s. He helped to introduce many of the technical tools that are now very popular through his writings and lectures around the world. He now works as a private consultant and educator.

Read the full review of MoneyShow.com’s "Book of the Month"! http://www.moneyshow.com//trading/books.asp?aid=BOM-TE-08-14947

In the past year, the dollar has spent quite a bit of time on the front pages and needless to say  has not slowed the exponential growth in FX trading. This interest should increase the demand for Wayne McDonell’s new book, FX Bootcamp’s Guide to Strategic and Tactical Forex Trading. One of the steps I always take when reviewing a book is to read the preface or foreword to understand the author’s goal as this helps me better assess the book. Wayne shares an interesting perspective in the preface of his book, pointing out the fact that 90% of FX traders fail may be a good thing since it means 10% make all the money. It is his opinion that traders fail because "they are not willing or able to do the work required to become an amazing trader." Additionally he points out that "patience and discipline are just as important as technical and fundamental analysis." The book is divided into five parts and starts off with a discussion of both lagging and leading indicators. In these chapters, Wayne covers the MACD, stochastics, Fibonacci, and pivot point analysis. The latter two he thinks of as leading indicators since both are looking for future price points as opposed to analyzing past data with the MACD or stochastics. Part Two focuses on what Wayne calls strategic analysis, where he teaches how to develop a bias in a currency pair that will help you stay with the longer-term trend. In order to achieve this, Wayne feels you have to look at global money flow, economic performance, and central banking operations… Overall this was one of the better FX books I have read in some time and one I can whole-heartedly recommend. … the book is well worth the time and money for both the novice and experienced traders. If you have been trading for some time and are not satisfied with your performance the book may help you fine-tune your trading, and I would bet that the book will be a good re-read in future years. You can buy this book at with a Pre-Release Discount of 37% here: http://www.amazon.com/Bootcamp-Guide-Strategic-Tactical-Trading/dp/0470187700/ref=sr_1_28?ie=UTF8&s=books&qid=1216974999&sr=1-28

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for Congress. Often called the "congressional watchdog," GAO investigates how the federal government spends taxpayer dollars. The head of GAO, the Comptroller General of the United States, is appointed to a 15-year term by the President from a slate of candidates Congress proposes.

Gene L. Dodaro became Acting Comptroller General of the United States on March 13, 2008, succeeding David M. Walker, who appointed him upon resigning. Hmm… David Walker resigned? Or was he forced out? If so, what did he say that was so bad? First, watch this video that was created by the GAO: http://www.gao.gov/media/video/numbers/windows/morethannumbers.wmv

OK, seems like he was powerful and well respected. But what did he tell the public that may have got him kicked out of this position? Remember, he was appointed to a 15 year term… he’s no political… HE CAN’T BE FIRED. So someone really put the squeeze on him.

This isn’t my kind of show. The host turns me off a bit… but watch the interview with David Walker… before he left the GOA… do you think he pissed somebody off?  I love the comment on the dollar at the end!

Food for thought.  Not my usual posts or even flavor of news media, but its very intersting to see someone with knowledge and power put everything on the line because he has "nothing to lose"… but then suddenly… it seems that he did lose.