Foreign Currency Trading

This London Forex trading session video preview suggests looking for a pull-back opportunity on the current EUR/USD trend and enter long after that pull-back.

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The British pound has been on a tear lately and part of the reason are the signs of recovery in the housing market. The following chart illustrates the close correlation between the trade weighted value of the GBP (white line) and the HBOS house price index (red line). The sharp increase in the HBOS suggests that we could see further gains in the GBP/USD

Source: Bloomberg

The improvement has been so significant that many analysts are stressing the undervaluation of the British pound. According to a report by Citigroup, the British pound is one of the most undervalued major currencies. Some analysts even calling for a 20 percent rally in the pair.
The more optimistic outlook is supported by recent improvements in the service and manufacturing PMI surveys.

Unlike other major currencies, the British pound could see sharper gains as long positions in the currency pair remain limited. According to the latest COT report, net short positions increased the British pound which indicates that traders are not long

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In two-three clicks a new indicator can be added to your chart, in two more clicks its parameters can be changed to comply with your new needs, in two more clicks the indicator can be removed from your chart. That’s Streamster platform. Watch this video to see how it’s done.

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Information is the answer to victory and an enlightened Currency exchange trader will have a larger understanding of the market, letting them make better profits from trading. There’s a ton of info accessible on currency trading on loads of sites, offering guidance. You may learn a great amount from these step by step guides. However, one main problem with the guidance available though the web is that it is frequently extraordinarily patchy and can be short of any real structure. If you’re serious per currency trading, in that case there’s little hesitation that you’ll have to end up getting a good study course particularly on Currency exchange coaching which presents the study materials in both a structured and logical demeanour. Such courses, which are at length available, will change in cost from those that are free to those costing thousands of bucks or perhaps even more and customarily you can get what you pay for. There are 2 sorts of courses for Foreign exchange coaching available.

The downside is that you are learning alone and it’s hard to find the help that you need if you get run or stuck across something that you don’t understand. The second type is a standard’classroom’ course. By contrast, you’ll be needed to go to your Foreign exchange coaching classes and tag on a class schedule.

Being absent for a lesson or 2 may present complexities as it’s not straightforward to make up lost subjects. Whether you select self study into the art of Foreign exchange Coaching or select another options, currency exchange coaching will surely give you the practical data you need to grasp, but the particular secret to making in depth profits from currency trading lies in having the information and discernment of trading methods that just a few years experience and practice can bring.

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I was on Bloomberg talking about the outlook for the U.S. Dollar today. Click on the image to access the video:

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Although it’s not very well made, this video briefly explains the basic principles of determination of the actual stop-loss levels depending on the current Forex market situation.

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In today’s Financial Times, there is an op-ed article by David Walker, the CEO of the Peter G. Peterson Foundation pondering the possibility of the U.S. losing its prized AAA credit rating. The paper focuses on a warning that was issued by rating agency Moody’s months ago. Moody’s has not issued a new warning, yet Walker and in turn, the FT has decided to re-inject uncertainty into the financial markets by resurrecting this fear. What has prompted this article is most likely the recent comments about the insolvency of the Social Security and Medicare systems. According to the trustees for the systems, the Social Security trust fund could be depleted by 2037 while Medicare could be insolvent by 2017. These dates of insolvency have been pushed up as the weak labor market reduces contributions. The Obama Administration has pressed the importance of gaining control of the growth in Medicare costs and their desire to tackle Social Security insolvency once health care reform is passed.

According to Walker, if the health care reforms strains finances further or if the federal government fails to monitor spending, tax or budget control, rating agencies could strip the U.S. of its credit rating.

Is Losing AAA Rating that Big of a Deal?

But is losing the AAA rating that big of a deal? Yes. A credit rating reflects the risk of default. Therefore a lower credit rating means that a country is at greater risk of defaulting on their debt. Some global funds are mandated to invest only in AAA debt and therefore if the U.S. loses its AAA rating, we could see a massive outflow of foreign investment. Also, a credit rating downgrade is the perfect excuse to push through an alternative reserve currency to replace the dollar because it would strip the confidence of sovereign funds like China that have been buying dollars to prop up the U.S. economy. Yes, investors will still buy U.S. Treasuries, but their purchases will be less. It could also have a spillover effect on corporate debt and will raise the cost of borrowing for the U.S. government.

How Real is the Risk?

Now with the risk in mind, I think that ratings agencies talk a good game but they will problems following through. The consequences of downgrading U.S. sovereign debt is huge both politically and economically. Therefore Moody’s or any rating agency for that matter may be reluctant to the first to pull the trigger. Downgrading the U.S. is very different from downgrading Ireland. Based upon how the rating agencies have handled the credit derivatives bubble, chances are they will be behind the curve once again.

With that in mind, U.S. finances are deteriorating significantly, raising the concern of Asian nations. However if President Obama is successful at turning around the U.S. economy, America will be well equipped to meet its debt obligations.

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This Forex video tutorial explains how to trade on the pin bar 50% retracement chart pattern. his method is based on the Japanese candlestick pin bar pattern. The video will show you how to set up an appropriate stop-loss and where the profit level will probably lie.

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The U.S. dollar has sold off significantly against the Japanese Yen over the past 2 trading days. It is nearing a very important support level. If it breaks that level, we could see a test and potential break of 95. Given that equities are pressuring USD/JPY lower, a “break” of the 95 level would be contingent upon a top in equities. In my special report on FX360, I talk about the fundamental reasons behind the sell-off in USD/JPY.

On a technical basis, the chart below illustrates how USD/JPY is approaching very critical levels. We have a major head and shoulders pattern in place, the currency pair is attempting to enter the sell zone according to our Bollinger Bands and is approaching trend line support. For those of you that like Ichimoku clouds, it has also entered the cloud. Therefore a close below 96.80 would open the door for a significant slide.

Click on Chart to see Larger Version

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Today’s release of the London Forex trading session from David Pegler features a rather complex trading plan for GBP/JPY intraday action, involving Fibonacci retracements analysis.

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