Mid-Day Report: Yen Crosses Dive again as Risk Aversion is Back
The Japanese yen strengthens sharply in early US session, following a reversal in the European stock markets and the anticipation of a lower opening in the US stock markets. It seems that the markets have fully digested the surprised 75bps rate cut from Fed yesterday and is focusing back to the risk of recession in the US economy again. Technically speaking, as we've pointed out in various technical outlook report, some key resistance are still intact in most pairs despite yesterday's powerful sell off in both dollar and yen. After all, the short term outlook remained unchanged. Yen cross is set to lead the way in the the US session today which could be followed by further decline in Euro, Sterling and Aussie against the greenback.
BoE meeting minutes published today revealed that the decision to keep rates unchanged in Jan was by a 8-1 vote instead of market's expected 7-2 vote. Blanchflower was the only member who voted for a cut. The decision was supported by still solid growth in Q3 of 07 and upside risks to inflation, echoing what King said yesterday that inflation could rise above 3.0% this year. Q4 GDP in UK slowed sharply from 3.3% yoy to 2.9% but was slightly above expectation of 2.8%. Today's minutes and data raised some questions that the expected rate cut from BoE in Feb is still not a done deal and will very much depends on the upcoming development in the financial markets.
Said in a speech today, ECB Trichet emphasized again that he's committed to fight inflation as he said "particularly in demanding times of significant market correction and turbulence, it is the responsibility of the central bank to solidly anchor inflation expectations to avoid additional volatility." Nevertheless, markets were rather unmoved by the comments and continue to expect that ECB will soon follow Fed's path on policy easing, in particular after Services PMI dropped another 1.1 pt to 52 in Jan, even though manufacturing PMI was unchanged at 52.6.
IT professionals Thats for you Guys!
Thursday, January 24, 2008
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Very Simple Very Good ;-)
Forex is all about making pips and converting them into Dollars ;-) isent it? yeah it is ... well the more you know the more you get confused... isent it? I DISAGREE :-) Know more but implement only Few .... so when you use simple strategies you wont get confused atleast you wont be thinking about to trust your Moving averages or to trust your MACD or RSI ... apart from all of this ... I designed and implemented very simple strategy and to expose it to all you people mostly my Marketiva Friends and Students !!!
Why you trade 10 or 20 trades a day? to risk more? A survey reports said that " Out of 10 people only 2 people are successful in trading" why dont you be the one in those 2 TRADERS?
So if you want to be in those 2 Traders "TRADE LESS" and enter only when trend is set.... your 2 or maximum of 3 trades can make you earn a SINGLE position but your 10 trades can make you pay 8 trades in losses according to that Survey :-)
Best Regards,
Pip-Machine.
Why you trade 10 or 20 trades a day? to risk more? A survey reports said that " Out of 10 people only 2 people are successful in trading" why dont you be the one in those 2 TRADERS?
So if you want to be in those 2 Traders "TRADE LESS" and enter only when trend is set.... your 2 or maximum of 3 trades can make you earn a SINGLE position but your 10 trades can make you pay 8 trades in losses according to that Survey :-)
Best Regards,
Pip-Machine.
Forex was never easy before ;-)
..::Pip-Machine's Simple System::..
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Elliot Wave Theory::
Elliot Wave Theory::
Back in the old school days during the 1920-30s, there was this mad genius named Ralph Nelson Elliott. Elliott discovered that stock markets, thought to behave in a somewhat chaotic manner, actually, did not.
They traded in repetitive cycles, which he pointed out were the emotions of investors and traders caused by outside influences (ahem, CNBC) or the predominant psychology of the masses at the time.
Elliott explained that the upward and downward swings of the mass psychology always showed up in the same repetitive patterns, which were then divided into patterns he called "waves". He needed to claim this observation and so he came up with a super original name: The Elliott Wave Theory.
The 5 – 3 Wave Patterns
Mr. Elliott showed that a trending market moves in what he calls a 5-3 wave pattern. The first 5-wave pattern is called impulse waves and the last 3-wave pattern is called corrective waves.
Let’s first take a look at the 5-wave impulse pattern. It’s easier if you see it as a picture:
Back in the old school days during the 1920-30s, there was this mad genius named Ralph Nelson Elliott. Elliott discovered that stock markets, thought to behave in a somewhat chaotic manner, actually, did not.
They traded in repetitive cycles, which he pointed out were the emotions of investors and traders caused by outside influences (ahem, CNBC) or the predominant psychology of the masses at the time.
Elliott explained that the upward and downward swings of the mass psychology always showed up in the same repetitive patterns, which were then divided into patterns he called "waves". He needed to claim this observation and so he came up with a super original name: The Elliott Wave Theory.
The 5 – 3 Wave Patterns
Mr. Elliott showed that a trending market moves in what he calls a 5-3 wave pattern. The first 5-wave pattern is called impulse waves and the last 3-wave pattern is called corrective waves.
Let’s first take a look at the 5-wave impulse pattern. It’s easier if you see it as a picture:
Yes! Thats more like it, Colors always sounds good to eyes instead of black and white Images.
Here is a short description of what happens during each wave. I am going to use stocks for my example since stocks is what Mr. Elliott used but it really doesn’t matter what it is. It can easily be currencies, bonds, gold, oil, or Tickle Me Elmo dolls. The important thing is the Elliott Wave Theory can also be applied to the foreign exchange market.
Wave 1 The stock makes its initial move upwards. This is usually caused by a relatively small number of people that all of the sudden (for a variety of reasons real or imagined) feel that the price of the stock is cheap so it’s a perfect time to buy. This causes the price to rise.
Wave 2 At this point enough people who were in the original wave consider the stock overvalued and take profits. This causes the stock to go down. However, the stock will not make it to its previous lows before the stock is considered a bargain again.
Wave 3 This is usually the longest and strongest wave. The stock has caught the attention of the mass public. More people find out about the stock and want to buy it. This causes the stock’s price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.
Wave 4 People take profits because the stock is considered expensive again. This wave tends to be weak because there are usually more people that are still bullish on the stock and are waiting to “buy on the dips”.
Wave 5 This is the point that most people get on the stock, and is most driven by hysteria. You usually start seeing the CEO of the company on the front page of major magazines as the Person of the Year. People start coming up with ridiculous reasons to buy the stock and try to choke you when you disagree with them. This is when the stock becomes the most overpriced. Contrarians start shorting the stock which starts the ABC pattern.
The ABC Correction
The 5-wave trends are then corrected and reversed by 3-wave countertrends. Letters are used instead of numbers to track the correction. Check out this example of smokin’ hot 3-wave corrective wave pattern!
Here is a short description of what happens during each wave. I am going to use stocks for my example since stocks is what Mr. Elliott used but it really doesn’t matter what it is. It can easily be currencies, bonds, gold, oil, or Tickle Me Elmo dolls. The important thing is the Elliott Wave Theory can also be applied to the foreign exchange market.
Wave 1 The stock makes its initial move upwards. This is usually caused by a relatively small number of people that all of the sudden (for a variety of reasons real or imagined) feel that the price of the stock is cheap so it’s a perfect time to buy. This causes the price to rise.
Wave 2 At this point enough people who were in the original wave consider the stock overvalued and take profits. This causes the stock to go down. However, the stock will not make it to its previous lows before the stock is considered a bargain again.
Wave 3 This is usually the longest and strongest wave. The stock has caught the attention of the mass public. More people find out about the stock and want to buy it. This causes the stock’s price to go higher and higher. This wave usually exceeds the high created at the end of wave 1.
Wave 4 People take profits because the stock is considered expensive again. This wave tends to be weak because there are usually more people that are still bullish on the stock and are waiting to “buy on the dips”.
Wave 5 This is the point that most people get on the stock, and is most driven by hysteria. You usually start seeing the CEO of the company on the front page of major magazines as the Person of the Year. People start coming up with ridiculous reasons to buy the stock and try to choke you when you disagree with them. This is when the stock becomes the most overpriced. Contrarians start shorting the stock which starts the ABC pattern.
The ABC Correction
The 5-wave trends are then corrected and reversed by 3-wave countertrends. Letters are used instead of numbers to track the correction. Check out this example of smokin’ hot 3-wave corrective wave pattern!
Just because I’ve been using a bull market as my primary example doesn’t mean the Elliott Wave theory doesn’t work on bear markets. The same 5 – 3 wave pattern can look like this:
Waves within a Wave
The other important thing you have to know about the Elliot Wave Theory is that a wave is made of sub-waves? Huh? Let me show you another picture. Pictures are great aren't they? Yee-haw!
The other important thing you have to know about the Elliot Wave Theory is that a wave is made of sub-waves? Huh? Let me show you another picture. Pictures are great aren't they? Yee-haw!
Do you see how Wave 1 is made up of a smaller 5-wave impulse pattern and Wave 2 is made up of smaller 3-wave corrective pattern? Each wave is always comprised of smaller wave patterns.
As you can see, waves aren’t shaped perfectly in real life. You’ll also learn its sometimes difficult to label waves. But the more you stare at charts the better you’ll get.
Okay, that’s all you need to know about the Elliott Wave Theory. Remember the market moves in waves. Now when you hear somebody say “Wave 2 is complete.” You’ll know what the heck he is talking about.
If you wish to become an Elliott Wave Theory guru, you can learn more about it at www.elliottwave.com.
Okay, that’s all you need to know about the Elliott Wave Theory. Remember the market moves in waves. Now when you hear somebody say “Wave 2 is complete.” You’ll know what the heck he is talking about.
If you wish to become an Elliott Wave Theory guru, you can learn more about it at www.elliottwave.com.
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