MP FOREX ADVISORY

Risk Aversion and Fear Have Returned to the Markets

MPFA — Sun, 15 Aug 2010 22:16:06 +0000

Similar to what was seen earlier this year and late in 2008, the currency markets, and other national and international markets, are once again being battered by risk aversion and fear as investors are growing increasingly nervous about indications of a global economic slide. Such conditions have been exacerbated by the release of news from the Federal Reserve that it will embark upon a more aggressive “dollar printing” campaign. Moreover, recent jobs data in the US has been extremely disappointing and appears to indicate that we may be headed for a double dip recession or possibly something worse. Several key reports will be released next week including the following: US Unemployment Claims, US PPI, US Housing Data, Japanese GDP, the British Inflation Report, and the German ZEW Report. All eyes are also on the sharp rise in the Japanese Yen against the US Dollar – something that is having a detrimental impact upon Japan’s export driven economy. Rumors of possible market intervention by the Bank of Japan below the 85.00 level are rampant.

Forex Market Commentary 7-17-10

MPFA — Sat, 17 Jul 2010 22:25:07 +0000

This week, the EUR/USD, after more than two months below the 1.3000 level, finally re-tested this key psychological resistance. When the 1.3000 level was reached on Friday, strong selling pressure sent the pair back down to near the 1.2900 level, closing for the week around 1.2926. The EUR/USD has reached the 61.8% Fibbonacci retracement level from the high on 4/12/10. Moreover, the pair is approaching the 38.2% Fibbonacci level (around 1.3100) from the longer term downtrend starting from the high in December 2009. The pin bar daily candle that formed on Friday suggests that the recent uptrend is possibly in need of a correction. The GBP/USD had a high degree of correlation with the EUR/USD this week, evidenced by the substantially similar chart patterns. This suggests that the currency market is being driven more by news affecting the US Dollar rather than by news affecting the Euro Zone, which is good news for Euro bulls. It appears that market conditions, for now, have returned to a much more normal and stable trading pattern – with breakouts largely occuring in the European and US sessions and with generally flat conditions during the Australian and Asian sessions. Such market conditions are conducive for the Master Pro Range Trading Model, which attempts to exploit the rhythmic and somewhat predictable sine wave patterns that tend to occur on many currency pairs during the late afternoon hours (US time) when institutional traders tend to be on the sidelines. We intend to utilize this Model to our advantage once again next week. We will keep you posted.

Forex Trading Update 7-10-10

MPFA — Sat, 10 Jul 2010 17:10:11 +0000

Unlike last week, the GBP/USD ping ponged around in a tight trading range between the 1.5200 and the 1.5100 levels for most of the week before ending the week around the 1.5063 level. The EUR/USD, on the other hand, continued its corrective recovery surging to an eight week high and climbing all the way above the 1.2700 level. The bullish sentiment was strenghtened by positive economic comments by ECB President Jean-Claude Trichet. The pair ended the week around 1.2639.

We have recently been working on an alternate trade entry formula, which is designed to have our trades entered only after a pullback following a breakout signal. Entering on a pullback after a break allows us to position ourselves at a much better entry price, eliminates broker slippage (which has been a significant and ongoing problem), provides us a significantly better risk-reward ratio, and makes it substantially easier to remove trades at the break even price following false breakouts (which should result in a higher success percentage). This modification has been fully tested and we are excited to begin implementing it next week. We will keep you posted. Have a great weekend!

Forex Trading Update

MPFA — Mon, 28 Jun 2010 03:51:44 +0000

The GBP/USD drove up steadily last week in a fairly orderly manner; however, the EUR/USD was a chaotic mess, which made trading the Euro pairs a bit of a gamble. On the 4 hour chart, the EUR/USD crossed the critical 35 period Simple Moving Average at least 16 times last week! This was truly an incredible display of choppiness and indecision. The big news over the weekend was the G-20 Summit. As expected, at the top of the agenda was the issue of the ever growing debt of the advanced economies, which has become a massive drain on the world economy. The statement released by the G-20 reflected an intention among the advanced economies to cut their deficits in half by the year 2013. It is expected that the next US employment report will be worse than previously anticipated. It is clear that neither the US economy nor the world economy has turned the corner, which opens the door for continued volatility and instability in the forex market. We do anticipate more of a trending pattern over the coming weeks. We will keep you posted.

Forex Trading Update 6-19-10

MPFA — Sun, 20 Jun 2010 05:34:06 +0000

The GBP/USD and the EUR/USD both trended upwards last week in a very gradual and in a very choppy and somewhat erratic manner. We saw more false breakouts in our model last week than we have ever seen with our breakout model. It appears that there is substantial, although discreet, market manipulation, which has been keeping the EUR/USD at artifically higher levels and preventing it from a continued decline, which would be supported by the fundamentals. Such efforts almost never succeed as currency pairs will eventually yield to the natural forces of the market. However, central bank manipulation certainly can wreak havoc with technical trading models as explosive breakouts can occur at unusual spots that leaves traders relying on technical tools of analysis somewhat befuddled. We have been spending quite a bit of time working on several enhancements to our model, which primarily are focused on dramatically improving our risk-reward ratio. We believe that such enhancements should allow us to post strong gains even if we have weeks with lower than normal success rate. We will begin utilizing these enhancements beginning this week. We will keep you posted.

Forex Market Commentary

MPFA — Sat, 12 Jun 2010 16:47:06 +0000

It was difficult to ascertain any clear sense of direction this week in the forex market – a week that was loaded with significant news announcements, including the British and European Interest Rate Announcements and Monetary Policy Statements. The EUR/USD began the week by posting its lowest price since March 2006; however, the pair reversed course and made a singificant correction during the remainder of the week, closing just shy of the 1.2100 level. The GBP/USD was far more choppy. The Cable started the week with a bearish gap, followed by a sharp V-reversal on Tuesday, which sent the pair all the way up to 1.4757. Then, the pair made another sharp V-reversal, sending the pair back down to near the 1.4500 level. We believe that there are great trading opportunities around the corner by taking adavntage of these current levels of volatility. We will keep you posted.

EUR/USD Crashses through 1.2143 Support

MPFA — Sat, 05 Jun 2010 20:46:09 +0000

The main story in the forex market this week is centered on the EUR/USD, which continues its steep decline as it crashes towards parity with the US Dollar. On Friday, after two weeks of consolidation, the EUR/USD broke the significant support level around 1.2143 and continued downward to close below the psychological support of 1.2000. The next major support level is around 1.1640, which was the low that was posted in November 2005. We believe that this continuation of the downtrend will open the way for some excellent trading opportunities in the Euro pairs over the coming weeks. While an eventual reversal is inevitable, at this point it does not appear that the downtrend will be ending any time soon.

Market Update 5-31-10

MPFA — Mon, 31 May 2010 17:35:38 +0000

The EUR/USD, while ending last week on a bearish tone, chopped up and down throughout the week not really exhibiting any clear direction. Likewise, the GBP/USD, while faring better than the EUR/USD, also was much choppier than normal this week. Substantial fear and uncertainty continue to be present in the market. It will interesting to see if the EUR/USD will break support this week at 1.21453, or if it will continue to consolidate. We will keep you posted. Have a great Memorial Day weekend!

Has the EUR/USD Made a Major Reversal?

MPFA — Sat, 22 May 2010 19:30:01 +0000

This week was a challenging one as the EUR/USD, on continued troubling economic news, pushed down to its lowest level since March 2006, only to reverse course in dramatic fashion, closing the week more than 400 pips higher than its weekly low of 1.2143. It is possible that the EUR/USD may have posted its lowest level for some time, and we may be headed for several weeks of reacement or possibly even a new uptrend. Such a reversal appears to be completely contrary to the fundamentals; however, this is what the technical picture looks like for the moment. Next week will be critical in determining the near term picture for the EUR/USD. If the 1.2143 level gives way, then we are likely to see a much more dramatic decline. We will keep you posted.

Forex Trading Weekly Recap 5-14-10

MPFA — Fri, 14 May 2010 21:30:57 +0000

This week once again was dominated by the debt crisis in Greece, and to a lesser extent Spain and Portugal, with traders focusing on the prospects of a one trillion dollar rescue package. The EUR/USD opened the week nearly 200 pips above last week’s close; however, as investors feared the impact of how several fiscal austerity measures designed to reduce debt might undermine prospects for near term economic growth, the EUR/USD sunk to 1.2357 by Friday – its lowest level since October 2008. If the EUR/USD takes out the 1.2300 level, it may target the 2005 low of 1.1640 over the next few months. The GBP/USD was very choppy the first half of the week, only to come under strong selling pressure as well by Thursday. The Cable closed the week at 1.4535. Our breakout trading model performed extremely well again this week as we were able to sift through the minefield of market apprehension and substantially higher than normal levels of volatility. Next week should be very interesting as all eyes will continue to be on the European Central Bank in its handling of the current crisis.