19/11/2010 - The Current Market Sentiment

[walid]

The British pound could get back above 1.6 versus the greenback underpinned by improving of the risk appetite during the US session after better than expected release of Nov US Philadelphia Fed manufacturing index came at 22.5 and it was expected to be just 4.5 to calm down the markets after this week shock of US New York empire states manufacturing index of October massive falling to -11 while the market was waiting for 11!. The British pound has been already supported by stronger than expected UK retail sales of October came up monthly by .5% and it was waited to be just .2% after falling in September by .5% and another CPI release of October came this week above 3% at 3.2% yearly which could maintain to the market the BOE worries about the upside inflation risks and cooling it down from taking further easing steps to stimulate the economy which is expected to show growing by 0.5% q/q as The National Institute of Economic and Social Research has expected in the third quarter. The British pound has been underpinned recently by the BOE keeping of its buying bonds plan as it is worrying about the inflation outlook for the second consecutive meeting against wide markets expectations of exceeding its plan more than it is currently at 200B Stg specially after the recent decision of the Fed of adding another 600B to its adopted quantitive easing policy of its buying of US treasuries till the end of June 2011 keeping its mortgages baked securities buying program at its same rate which is about 35B$ a month currently making the total planed pumping funds about 880B$ in what's been read as a devaluation of the greenback can be approved by BOE to some extent for containing the inflation pressure while it is still worrying the Asian economies which are about to take steps for containing inflation currently as China despite the G20 meeting and Obama's recent Asian trips which have not come out with what can be new to calm down these economies worries about US QE monetary policy stance which has already driven the prices of the energy and the commodities up which can increase the cost of their growth and force them to cool it down weighing negatively on their equities markets while you can see this week easily dear reader this week US October PPI coming out from US at just .4% below the market expectations of .8% and excluding the food and energy at -.6% while it was waited to be .1% and also Oct CPI which was expected to be up monthly by .3% from .1% in September coming at .2% and its core figure to be .1% from a flat reading in September came flat again which refer to the same Fed's concerns about the deflation forces which face the US economy and forced it to surprise the market by another 600B$ package of buying new debts while the market was waiting for a new package from 300B$ to 500B$ keeping its monthly buying mortgages baked securities at about 35B$ making the total expected pumped funds above 850B$ till the end of next June about 880B$ in what could be read as a devaluation of the greenback.
In this same time and after the market has got the Fed's easing actions out of its focusing, the single currency has started to get back to its main debt problems which it is facing since the end of last year containing the market sentiment again driving it to be traded below 1.36 versus the greenback as the worries have renewed about the debt crisis negative impact on the single currency and the debt financial situation of Greece, Portugal, Spanish and Ireland which can face further austerity measures effecting negatively on the current market sentiment and the single currency stability after its recent rally across the broad which encouraged the investors to start to take profits especially after the better than expected release of US non-farm payrolls of October has shown adding 151k after losing 41k in September while the market was waiting for adding just 60k.
God willing, we have no important data today but we have speaking from Fed's chairman Bernenke and the ECB's president Trichet today

Best wishes

FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
http://www.fx-recommends.com

[walid]

Trader Tip 1: First of all you should know that the future is by god's will and the door is always opened for some luck strikes can help you or tackle you from time to time.



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Trader Tip 2: The money in your account is always floating and it is on your anticipation and you always exposed on your experiences.



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Trader Tip 3: The market fundamentals such as the data or the comments can change the current market sentiment and by the way changing the best to buy and the best to sell and this can be against you or by your side. You should evaluate this change and try to be involved by its side.



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Trader Tip 4: Do not open a new position on a spike or a dip during the trading day as it is on the current market sentiment forming a trend and it is not on data. The trend can persist and you may not get out on the correction you are looking for. In the same time, it can be a good chance to get along with the trend.



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Trader Tip 5: As it is the same market sentiment and there is no change, it is preferred to keep your own position as it is not the suitable time yet to take profits.



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Trader Tip 6: Try to avoid the thin trading times. The market moves in a side way and it is to be mixed and there is no clear direction and this light trading generally helping correction.



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Trader Tip 7: Appreciate the resistance and the supports and the instrument movement when it touches it. It is mostly to face strength with the first touch but the second touch can come with an end to these strong levels.

No need to remind you that the support becomes a resistance and the resistance becomes a support on the breaking. Most of the stop loses are there and the option barriers breaking can give much more strength to this base.



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Trader Tip 8: Do not look for these spikes or dips to trade this can waste real chances in the market to take much controllable risk on.



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Trader Tip 9: The chart you trade on should have the historical resistances and supports and this should be by pointing them out on the long term charts such at the hourly charts if you are a day trader and then you get to the shorter one to draw your intraday lines of the trend and strong levels that you should appreciate in your actual trade and this help you to determine your target and your stop loss clearly and the expected period of time of your trade.



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Trader Tip 10: Try to be with the pulse waves and avoid the corrective waves. The pulse wave is faster and longer and you can choose the average points on its retracement easier and reasonable and also your cut loss point.



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Walid Salah El Din
FX Consultant
E-Mail: mail@fx-recommends.com

[walid]

Trader Tip 11
Wait for the news. Do not anticipate on the data before it. Take profit on the effect of the data (the spikes and the dips).
The rate you receive after the data instantly (especially as the high weighted data such as the US labor report) is much more attractive and exposed to the market profit taken and you can be heavy but take
care when you get out as there is a third wave after the correction on the profit taken as the market sentiment has been changed on the significant data and the new direction after these significant data can persist again mostly. It is not the same sentiment after this significant data.
When you find a 100% retracement of the first wave on the data it is preferred to get out as the market is mostly to shrug off the data especially if there is a clear trend against these significant data.
This can be supported by technical strong levels meeting after the data for forming a new pulse wave inside the trend.


Trader Tip 12:
The discounted data is always followed with clear profit taken waves can be prolonged than the normal ones.


Trader Tip13:
These support and resistance levels can help you in putting your limit orders and stop loss orders on its clear breaking. Consider the major and the psychological strong levels more than the short terms ones.


Trader Tip 14:
It is preferred generally to open you position on a new anticipated pulse wave on the 38.2% Fibonacci retracement.


Trader Tip 15:
When you trade on technical reason should appreciate the longer term chart than you currently use. You can be tackled by a strong level you do not realize on the current chart you use. So it is better and recommended to start your draws on the longer term chart than you want to trade on. These can make these strong levels much obvious.


Trader Tip 16:
At the serious levels of JPY strength especially against USD, you may find cautiousness on the Japanese intervention threats. This can make the USDJPY meeting with the big figures having especial characteristics making each break of these levels a new strong resistance and you can find the pair well supported above them for a while and then JPY crosses can get some strength such as GBPJPY and EURJPY.


Trader Tip 17:
The spot hedge option has a psychological effect as it saves you and gives some rest as the stop loss orders. You can use the hedge much more effectively if your broker affords stop loss orders grantees then you can make a hedge before the effective data such as the US labor report with close stop loss orders for each part of the hedge then you have a long winner trade and a short losing trade.
Anything but that the hedge is just like the stop loss and you should not go far beyond that! It costs much more interest payment when you have it for more than a day than the normal stop loss order choice. The hedge does not use more leverage but you should not reach this high risk point which is more than 50% of your account amount to take use of this.


Trader Tip 18:
It is preferred mostly to direct most of your trading time to the European session and the US one on the big market volume and the standard volatility.
It is preferred to avoid trading during the light volume of the Asian session and always save your efforts for better chances even the Japanese economic indicators can move the market lightly in the Asian session but the Japanese GDP, Tankan survey and the significant numbers of the Japanese trade surplus and industrial data.
Take care that the earlier NASDAQ performance effects on Nikkei and by the way on the JPY and high JPY effect negatively on the Japanese stocks generally.


Trader Tip 19:
It is better to be an intraday trader when you trade in the spot market. This can help you to get along with any change of the market sentiment and increases your ability to catch up with the new market sentiments and the breaking of the strong levels and the continuations signs of it.


Trader Tip 20:
Try to be a bargain hunter that you hold yourself till you find the real chance and try to not be involved most of the time this is wasting your chances. Again try to be with the pulse waves and with the change of the market sentiment. Do not hesitate to change your direction on this change.


Walid Salah El Din
FX Consultant
E-Mail: mail@fx-recommends.com