


Weekly Trend direction: Bearish
Weekly trend reversal level:1.5050
Key G7 resistance levels: 1.4950/60, 1.5000, 1.5050
Counter-trend opportunities:
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal.
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Today's trade suggestion:
Another day – another dollar for range traders as the euro has been stuck in the 1.4800-1.5000 range since the beginning of the month. This really could break out eitherway(as it eventually will) but there are signs that the 1.5000/5050 barrier is going to be tough to break. Notice on the hourly chart that we have the makings of a “descending triangle” with lower highs each time the rally to near the range top takes place. We are currently butting up against the downward top of the triangle as I write, and I’ll be watching and waiting for signs of reversal on the hourly chart. Target for short trades is the range bottom around 1.4800 and, on a successful break lower, 1.4650.
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Summary:
Sell rallies to 1.4950/60 or at higher resistance levels, target 1.4800 and then 1.4650
GBP/USD
Weekly Trend direction: Bearish
Weekly trend reversal level 1.6880
Key G7 resistance levels:
1.6600/20, 1.6680, 1.6720
Counter-trend opportunities:
Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal
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Today's trade suggestion:
A big bearish engulfing candle last week means that we are going to look to sell the pound into rallies this week.There is little doubt that the markets are struggling with the levels they are at presently, and this is causing a lot of quite volatile (and often unexpected) intra-day movement. This makes trading tricky and one needs to be patient and wait for the clear setups before leaping into trade positions. Resistance on the pound lies quite some distance above at 1.6600/20 and above, so we’ll have to wait for some decent counter-trend rallies before
selling. Don’t rush this process. It may be tempting to sell with out a clear signal or at lower levels, but this would be a strategic mistake!
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Summary:
Sell rallies to 1.6600/20 (or higher up if this fails) Target 1.6500 and then 1.6250.
Here is a list of things you should do:
1 - When you're looking for a Forex system, course, ebook or software, use your good sense.
2 - If you're planning on buying some Forex product, choose one that has a guarantee or a free trial offer.
3 - Check a reviews website in order to know what other traders are saying about the product you're thinking of buying.
4 - Read the entire sales page of the product and if you have any question, contact the owner.
5 - Before you use the product on a real account, test it deeply on a demo account.
These simple advices might save you a lot of money and time.
There is an ideal mindset, character, and mental attitude that traders need to acquire. I say "acquire" because few people have the innate personality that makes this mindset "natural". With respect to your trading, this involves being free of anxiety, fear, despair or regret. It also involves being able to remain calm, confident, focused and disciplined in the face of adverse trading outcomes.
Here is a list of 6 advices:
1 - Trade with a Disciplined Plan:
The problem with many traders is that they take shopping more seriously than trading. The average shopper would not spend $500 without serious research and examination of the product he/she is about to purchase, yet the average trader would make a trade that could easily cost him/her $500 based on little more than a feeling or hunch.
The plan must include stop and limit levels for the trade, as your analysis should encompass the expected downside as well as the expected upside. Be sure that you have a plan in place before you start to trade.
2 - Don't Trade Based On Emotions:
This is the worst thing you can do. If you're with some kind of problem in your head that just don't let you think straight, take the day off. It's better not to make any money than losing it.
It may also happen that you just lived a losing strike. You're jut furious and you just can't wait to show that you're in charge... Don't! Stop! Take a deep breath, calm down and try to ignore what you just went through. Follow your system rules and ignore everything else.
But this isn't the only case. You might just be on a winning strike. Well, you're winning, you're the man... Stop! You're not the man. You're a trader that is being successful. If you want to keep trading well, put those emotions aside...
3 - Good Execution Good Anticipation:
Everybody knows that trading is a number game. I mean, our success is not dependent on the outcome of the next trade; our success is dependent on the overall profitability of many trades. So, while we are trading, whether the last trade we did was profitable or not is definitely not important. There is no point drawing conclusions on the outcome of just one -or even a few-trades. We can only access our anticipation skills when we have made a reasonable number of trades and see the longer-term result of our action. It is so important that when we are trading, our goal should be focus on executing our trades with ruthless efficiency and to judge only that. If you consider the ways that you lose money trading, you will find that it is down to poor execution, rather than poor anticipation.
4 - Cut Your Losses Early and Let Your Profits Run:
This simple concept is one of the most difficult to implement and is the cause of most traders' demise. Most traders violate their predetermined plan and take their profits before reaching their profit target because they feel uncomfortable sitting on a profitable position.
These same people will easily sit on losing positions, allowing the market to move against them for hundreds of pips in hopes that the market will come back.
In addition, traders who have had their stops hit a few times only to see the market go back in their favor once they are out, are quick to remove stops from their trading on the belief that this will always be the case. Stops are there to be hit, and to stop you from losing more than a predetermined amount. You simply allow your profits on the winners to run and make sure that your losses are minimal. What is it about cutting a loss that is so hard?
5 - Do Not Over Trade:
One of the most common mistakes that traders make is leveraging their account too high by trading much larger sizes than their account should prudently trade. Leverage is a double-edged sword. Just because one lot of currency only requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin.
Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to never use more than 5% of your account at any given time.
6 - Do Not Marry Your Trades:
The reason trading with a plan is the #1 tip is because most objective analysis is done before the trade is executed. Once a trader is in a position, he tends to analyze the market differently in the hopes that the market will move in a favorable direction rather than objectively looking at the changing factors that may have turned against your original analysis. This is especially true for losses. Traders with a losing position tend to marry their position, which causes them to disregard the fact that all signs point towards continued losses.
Well, that's it.
Bearish Regular Divergence – price makes a higher high while the oscillator makes a lower high. This is a warning or indication of a potential impending bearish reversal after an uptrend.
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Bullish Regular Divergence – price makes a lower low while the oscillator makes a higher low. This is a warning or indication of a potential impending bullish reversal after a downtrend.
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Bearish Hidden Divergence – price makes a lower high while the oscillator makes a higher high. This is a warning or indication of a potential downtrend continuation.
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Bullish Hidden Divergence – price makes a higher low while the oscillator makes a lower low. This is a warning or indication of a potential uptrend continuation.
EUR/USD
The Euro edged higher in early Europe on Tuesday, but was again unable to make much headway with resistance below 1.4850 and was subjected to renewed selling pressure during the day.
German consumer prices provisionally rose 0.1% for October which was in line with market expectations and did not have a significant impact on currency rates.
The US durable goods data was broadly in line with expectations with a 1.0% monthly increase and an increase in capital spending provided some limited optimism over the manufacturing sector.
In contrast, the housing data was weaker than expected with new home sales declining to an annual rate of 402,00 from a downwardly-revised 417,000 the previous month. There was a drop in inventories for the month with the number of un-sold homes at the lowest level sine August 1982. Nevertheless, there were further fears over the housing outlook, especially with tax credits for first-time purchases due to expire during November.
Risk appetite deteriorated again following the housing data as Wall Street dipped significantly with particular pressure on the Nasdaq index. In response, the Euro weakened to lows near 1.47 during the US session.
There was some further speculation that the Federal Reserve will tighten its policy rhetoric at next week’s FOMC meeting which provided some dollar support. The Fed will need to tread a very careful path as it will remain very sensitive to a rose in bond yields and currency volatilities are liable to increase.
Yen
The trend of a firmer Japanese yen persisted on Wednesday with Asian equity markets weaker with the dollar retreating to 91.20 while the yen also recovered to a 1-week high against the Euro.
The Bank of Japan will announce its interest rate decision on Friday and there is a possibility that they will announce a timescale for removing emergency corporate funding measures, although a further delay is the more likely outcome, especially with pressure from the government. Further evidence of policy tensions between Finance Ministry and central bank would tend to undermine the yen to some extent.
As global equity markets came under further pressure, the yen strengthened to highs near 90.50 against the dollar and also secured a renewed advance to beyond 134 against the Euro.
Sterling
Sterling again found support below 1.63 against the dollar during Wednesday and secured a significant advance in US trading with a peak above 1.6450. The main catalyst for the move was a sharp Sterling advance against the Euro with some stop-loss Euro selling once there was a break of the 0.90 level.
There were no significant economic data releases during the day and Sterling was surprisingly resilient when global stock markets were subjected to renewed selling pressure. Any renewed stresses within the UK banking sector would tend to undermine the currency.
There will be further uncertainties over monetary policy ahead of next week’s Bank of England policy decision. Sterling is in a better position to gain protection from a lack of confidence in other major economies rather than any great optimism over the UK outlook.
Swiss franc
The dollar found support below 1.02 against the franc on Wednesday and strengthened to a high around 1.0270 during New York trading. The Euro drifted back to near 1.51 against the Swiss currency which will inevitably result in fresh speculation that the National Bank will intervene to prevent further franc appreciation.
The bank will certainly be on alert, but it is also likely to be cautious, especially as they will not want to get locked into a pattern of defending specific levels.
The franc will still tend to gain some defensive support when there is a deterioration in risk appetite.
Australian dollar
The headline Australian consumer inflation data was marginally higher than expected with a 1.0% increase in prices for the third quarter, but the data was not strong enough to trigger increased expectations of a 0.50% interest rate increase at next week's Reserve Bank meeting and this curbed Australian dollar support as at least a 0.25% increase is already priced in.
Risk appetite was also generally weaker which encouraged profit taking and there was a low near 0.9070 in Asia. The Australian currency was subjected to renewed selling pressure as Wall Street weakened and there was a slide to lows below 0.8970 during New York as the break of 0.90 triggered stop-loss selling.
On Sunday, November 22, FXCM LTD will be making changes to existing margin requirements for all account holders.
Margin requirements will be increasing, particularly for currency pairs with EUR or GBP as the base currency. FXCM’s experience in Hong Kong, where significantly lower leverage levels (higher margins) are mandated by law, suggests that trading with lower leverage may assist clients in trading more successfully over an extended time period. The new margin requirements are intended to reduce risk by restricting traders from using excessive leverage.
Below, you will see the a comparison of the present USD margin requirements* for some of our most popular currency pairs next to the new USD margin requirements that will take effect on November 22.
NEW MARGIN REQUIREMENTS — USD DENOMINATED ACCOUNTS** | ||
CURRENCY PAIR | CURRENT USD MARGIN* | NEW USD MARGIN |
USD/JPY AUD/USD (most USD based pairs) | $50 | $50 |
EUR/USD EUR/JPY (most EUR based pairs) | $50 | $80 |
GBP/USD GBP/JPY (most GBP based pairs) | $50 | $85 |
EXOTIC PAIRS | VARIABLE BY PAIR | VARIABLE BY PAIR |
*CURRENT USD MARGIN IS BASED ON AN FXCM LTD 10K STANDARD ACCOUNT WITH 0.5% MARGIN. If you have changed your default margin to be above 0.5%, your NEW margin amounts will be higher. Please consult our FAQs for details. |
Based on price fluctuations, all margin requirements are subject to change without notice and will be adjusted up or down in increments of $10 for USD denominated accounts. At present, FXCM does not anticipate that margin requirements will have to be changed more than once a month. Up-to-date margin requirements are and will continue to be displayed in the “Simplified Dealing Rates” window of the trading platform by currency pair.
**VIEW A FULL LIST OF THE NEW MARGIN REQUIREMENTS BY ACCOUNT DENOMINATION
Important Notice
We recommend watching this video to determine if you have sufficient margin to prevent positions from being liquidated. View Video
Visit our Online Margin Help Center for more detailed information, frequently asked questions, and steps you can take to prepare for this change. Visit Now
Why Lower Leverage Is Important
The combination of high leverage and volatile currencies can be extremely dangerous. Accounts that trade volatile pairs, such as GBP/USD and GBP/JPY, with the maximum amount of leverage tend to have less positive performance. On the other hand, traders that focus on less volatile currency pairs, such as USD/JPY and AUD/USD, and use more conservative leverage may benefit from the reduced risk that accompanies trading on lower leverage. When trading volatile currencies with high leverage, one bad trade can wipe out the profits from many good trades. By trading with less leverage, a trader can reduce the risk of a big drawdown from one bad trade.
If you have specific questions about the new margin requirements, or their effect on your risk management, please do not hesitate to contact us at +0808 234 8789 or e-mail us at info@fxcm.co.uk.
Best regards,
Forex Capital Markets Ltd.
145 Leadenhall Street
2nd Floor Rear
London EC3V 4QT
+0808 234 8789
info@fxcm.co.uk
www.fxcm.co.uk