The ShadowTraderPro FX Trader is your daily companion to the foreign exchange markets. Each issue contains a look at an emerging currency trade setup from a technical perspective, along with selected news on the four major pairs and a full economic calendar specifically tailored to the Forex trader. The report also contains potential FX trade setups which are listed with defined entry, defined target and defined stop. Subscribers receive email confirmations and updates on these trades so that they can follow along.
If you have any questions or comments regarding commentary or plays in this newsletter, please email to fxtrader@shadowtrader.net.
To get the most out of your subscription, read our FX Trader User's Guide.
Dollars & Sense
Good evening Forex Traders. Continued upbeat economic data has driven the dollar and the equity markets higher ahead of non farm payroll data. We expect tomorrow to be volatile and yet directional. There appears to be a lot of pent-up energy going into the announcement. We expect to see breakouts in most of the pairs.
The EUR/USD returned to support again and it appears price may have broken through the bear flag pattern. We also have a sell signal on our stochastic system. We are shorting this pair with a 10 pip pull back as a sell limit at 1.4323 a target of 1.4245 and a stop loss of 1.4484. This may take us to a CCI signal and continuation of our bear flag as well. If we don’t hit our target but we close below 1.43 tomorrow, we will likely add to the position.(see EUR/USD below)
The GBP/USD’s also has provided a sell signal on the stochastic system. We are shorting this pair on a 15 pip pull back at 1.5951 with a target of 1.5845 and a stop loss of 1.6115. We will watch for other opportunities to short this pair after the announcement.(below).
The AUDJPY can teach us that missed opportunities can be expensive. This pair has continued to run. We still expect a pull back and will wait for one before shorting or before going long. The trend is too aggressive to chase right now and we will be patient with it.(below).
The GBP/CAD edged down slightly lower and has not created a new sell signal but is setting up for a bullish divergence using the CCI system indicator. We will watch for confirmation and a target of the previous highs on for the divergence and then a chance to sell this pair short.(below).
Major Pair Scoop
(Reuters) - The U.S. dollar was broadly firmer on Friday as growing expectations for an upbeat U.S. jobs report helped it hit a fresh four-month high against a struggling yen.
The yen underperformed on the crosses also, as traders in Asia sold the Japanese currency after after Japan's new finance minister said he wanted the yen to weaken more.
Speaking after his appointment as finance minister, Naoto Kan said many Japanese firms were in favour of dollar/yen around 95 yen, higher than the pair traded in late 2009.
The comments raised the possibility of intervention by Japanese authorities if the yen strengthened, sparking a sell-off by yen bulls.
The dollar was up at 93.69 yen JPY=, from 93.27 yen late in New York on Thursday, having risen to as high as 93.76 yen, its strongest level since late August, according to Reuters data.
Against a basket of six major currencies, the dollar index .DXY =USD was up at 78.064. It received a boost in the previous session from a stronger-than-expected weekly U.S. initial jobless claims report that added to the view that the U.S. economy continues to improve.
The euro EUR= fell to $1.4304, from $1.4316 late on Thursday, and not far from a recent low of $1.4255 struck on January 4, with investors increasingly positioning for the U.S. payrolls data.
"The potential for the first positive non-farm payrolls print since December 2007 has the U.S. dollar in pole position, aided by its main competitors either spinning into the wall, or trying to change drivers at full speed," said David Watt, senior foreign currency analyst at RBC Capital.
Forecasts for payrolls have been creeping higher all week and the median is now for a flat outcome, with some as high as a 100,000 rise
An upbeat payrolls report would fuel talk of an early tightening from the Federal Reserve and perhaps discourage leveraged positions in carry currencies and commodities.
On the other hand, any recovery in payrolls would brighten the outlook for U.S. and global growth, and thus support demand for commodities in the long run.
Still, commodity currencies were lower on Friday with the Australian dollar AUD=D4 down below 92 U.S. cents and the New Zealand dollar NZD=D4 at $0.7311, having lost 0.75 percent on Thursday.
Commodities took a hit after China set the stage for monetary tightening by hiking the interest rate on its three-month bills on Thursday. The CRB index .CRB dropped 1.1 percent, while crude oil fell <0#CL:> and gold drifted down XAU=. (Reporting by Anirban Nag; Editing by Wayne Cole)
FX Economic Calendar
Up and coming economic data relative to FX markets that may move markets this week.
| Date | Time (GMT) | Currency | Description | Importance | Forecast | Previous |
|
1/8/2010 |
12:00 AM |
CAD |
Net Change in Employment (DEC) |
High |
20.0K |
79.1K |
|
1/8/2010 |
12:00 AM |
CAD |
Unemployment Rate (DEC) |
Medium |
8.40% |
8.50% |
|
1/8/2010 |
5:45 AM |
CHF |
Unemployment Rate s.a. (DEC) |
Medium |
4.20% |
4.10% |
|
1/8/2010 |
6:45 AM |
CHF |
Unemployment Rate (DEC) |
Medium |
4.40% |
4.20% |
|
1/8/2010 |
7:00 AM |
EUR |
German Trade Balance (euros) (NOV) |
Medium |
12.0B |
13.6B |
|
1/8/2010 |
9:30 AM |
GBP |
Producer Price Index Input n.s.a. (MoM) (DEC) |
Medium |
-1.00% |
0.10% |
|
1/8/2010 |
9:30 AM |
GBP |
Producer Price Index Input n.s.a. (YoY) (DEC) |
Medium |
6.10% |
4.00% |
|
1/8/2010 |
9:30 AM |
GBP |
Producer Price Index Output n.s.a. (MoM) (DEC) |
Medium |
0.20% |
0.20% |
|
1/8/2010 |
9:30 AM |
GBP |
Producer Price Index Output n.s.a. (YoY) (DEC) |
Medium |
3.10% |
2.90% |
|
1/8/2010 |
9:30 AM |
GBP |
Producer Price Index Output Core n.s.a. (MoM) (DEC) |
Medium |
|
-0.10% |
|
1/8/2010 |
9:30 AM |
GBP |
Producer Price Index Output Core n.s.a. (YoY) (DEC) |
Medium |
1.90% |
2.00% |
|
1/8/2010 |
10:00 AM |
EUR |
Euro-Zone Gross Domestic Product s.a. (QoQ) (3Q F) |
High |
0.40% |
0.40% |
|
1/8/2010 |
10:00 AM |
EUR |
Euro-Zone Gross Domestic Product s.a. (YoY) (3Q F) |
High |
-4.10% |
-4.10% |
|
1/8/2010 |
10:00 AM |
EUR |
Euro-Zone Gross Fixed Capital (QoQ) (3Q F) |
Medium |
-0.80% |
-0.40% |
|
1/8/2010 |
10:00 AM |
EUR |
Euro-Zone Unemployment Rate (NOV) |
High |
9.90% |
9.80% |
|
1/8/2010 |
10:00 AM |
EUR |
Euro-Zone Household Consumption (QoQ) (3Q F) |
Medium |
-0.20% |
-0.20% |
|
1/8/2010 |
11:00 AM |
EUR |
German Industrial Production s.a. (MoM) (NOV) |
Medium |
1.00% |
-1.80% |
|
1/8/2010 |
11:00 AM |
EUR |
German Industrial Production n.s.a. and w.d.a. (YoY) (NOV) |
Medium |
-8.00% |
-12.40% |
|
1/8/2010 |
1:30 PM |
USD |
Change in Non-Farm Payrolls (DEC) |
High |
0K |
-11K |
|
1/8/2010 |
1:30 PM |
USD |
Unemployment Rate (DEC) |
High |
10.00% |
10.00% |
|
1/8/2010 |
1:30 PM |
USD |
Change in Manufacturing Payrolls
(DEC) |
Medium |
-35K |
-41K |
|
1/8/2010 |
1:30 PM |
USD |
Average Hourly Earnings (MoM) (DEC) |
Medium |
0.20% |
0.10% |
|
1/8/2010 |
1:30 PM |
USD |
Average Hourly Earnings (YoY) (DEC) |
Medium |
|
2.20% |
FX Trader Live Calls
Note: As currency markets are open around the clock, some action in plays can and will occur outside of U.S. trading hours. Please note that emails are only sent to clients between the hours of 9:00am EST to 5:00pm EST, Monday through Friday. Any trade action happening outside of these hours will be confirmed in an email the following morning.
Long Ideas
| Symbol | Trigger Price |
Stop Price | Target Price |
Type | Notes |
|---|---|---|---|---|---|
| none |
| Symbol | Trigger Price |
Stop Price | Target Price |
Type | Notes |
|---|---|---|---|---|---|
| EUR/USD | 1.4323 | 1.4484 | 1.4245 | Stoch | This is a sell limit on the stochastic system. We will also look for an add point with the CCI system tomorrow |
| GBP/USD | 1.5951 | 1.6115 | 1.5845 | Stoch | This is a sell limit on the stochastic system. A break below support may also have us shorting the pair discretionarily tomorrow. |
FX Trader Portfolio
| pair | type | dir | size | date entered |
entry price |
date closed |
exit price |
target | stop | status | mark to market |
p&l pips |
p&l capital |
capital commit |
OPEN POSITIONS - week of 01/04 - 01/08 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| none | ||||||||||||||||
 |
||||||||||||||||
| CLOSED POSITIONS - week of 01/04 - 01/08 | ||||||||||||||||
| GBP/USD | D | short | 1 | 01/05/10 | 1.6052 | 01/06/10 | 1.5972 | n/a | n/a | closed | n/a | 80 | $80 | $161 | ||
| |
The pair was unable to break support so we took profits as it became more volatile this morning. We now are watching for our system trade. | |||||||||||||||
Click here for year to date FX Trader Live Calls Performance - 2010
Click here FX Trader Live Calls Performance - 2009
Click here for FX Trader Performance - 2008