2023-10-26 02:56

Forex speculation is the name of the game in trading. Every trader, at some point or another, has to click ‘buy’ or ‘sell’ and commit to a position based on their analysis even though there is no guarantee of success. Unfortunately for traders, the market can have a very different viewpoint of the market and this can bring about a moment of serious introspection. This article seeks to deal with some of those hard-hitting questions and explores the following: What is speculation in the foreign exchange market? What happens when it all goes wrong? Top 4 tips to speculate like a successful trader WHAT IS SPECULATION IN THE FOREX MARKET? Speculation in the foreign exchange market involves the buying and selling of currencies with the view of making a profit. It is called speculation because of the uncertainty involved as no one can say for sure whether the market will be going up or down. Traders assess the likelihood of either scenario before placing a trade. WHAT HAPPENS WHEN IT ALL GOES WRONG? After you’ve developed a trading strategy centered around forex speculation and learned the basics of the market – you have many of the tools that are needed to be successful. And when that success doesn’t come, numerous questions can swirl around inside your head. “Am I trading the right strategy?”, “Do I really know what I’m doing?” These questions/doubts are not unique. Most traders have these thoughts at some stage or another and have learned how to overcome them. Let’s address these questions directly: 1) Am I Trading the Right Strategy? Many traders don’t realize this early on – market conditions change over time. As a currency speculator, you can spend weeks analysing a specific market that suits your strategy at the time, but this is likely to change and when it does it will seem like nothing is working in your favour. A perfect example of this can be seen when comparing EUR/USD in 2017 to the same currency pair in the first half of 2019. In 2017, EUR/USD was is a strong uptrend for the majority of the year. Backtesting trend trading strategies would naturally yield attractive results and any reasonable trader would look to implement such a strategy. A very different picture can be seen below as EUR/USD trades sideways for the first six months of 2019, making things difficult for new trend traders. The red 200 day moving average helps make this point as it cuts through price many times and fails to provide a clear signal. Traders should dedicate some time to analyze whether or not market conditions have changed. It is very possible that the trading strategy is fine but the market no longer exhibits the characteristics that drew you to it in the first place. 2) Do I Really Know What I’m Doing? “FAIL: First Attempt in Learning” – Anonymous This is a difficult question to answer as this will depend on each trader’s knowledge and preparedness. Since this question cannot be answered, the next best thing to do is to look at what others have done wrong, learn from it, and avoid making the same trading mistakes. At DailyFX we researched over 30 million live IG trades to discover the number one mistake traders make in our Traits of Successful Traders report. Understanding where it all goes wrong and making the necessary adjustments is the first step to trading like the professionals. 4 TIPS TO SPECULATE LIKE A SUCCESSFUL TRADER AND GET BACK ON TRACK 1) Don’t Let Risk Change Your Behaviour The biggest psychological obstacle for traders is the perception of losses (and the concept of losing). For traders, the pain of closing a trade and realizing a loss outweighs the excitement of realizing a winning trade of equal magnitude. Top traders apply sound risk management first and foremost. Traders can win two-thirds of all their trades and still land up blowing up the account in the absence of using stops. A natural consequence of this is that traders allow losing positions to run, while taking profit as soon as a position turns positive. The losses outweigh the winners and this should never happen. One way to manage your emotions is to implement a trailing stop or manually move your existing stop when the market moves in your favor. This way, traders can relax knowing that they are breaking even and any further movement in your favor is purely profit. Before placing a trade, know what level of risk you are prepared to take on and ensure that the risk to reward ratio is at least 1:1. 2) Bring a Positive Mindset to the Charts Every Day Since you will inevitably be taking losses in this game of forex speculation, it’s important to deny those losses from altering your frame of mind. Traders will often experience the disappointment of being stopped out and this can be very discouraging. As a result of this they take shortcuts on their analysis or question their own approach. This never ends well. The key to keeping a positive mindset in trading is to look at losses in the same way that a business owner looks at expenses; simply as a cost of doing business. Because once you’ve learned to lose properly, and after you’ve learned to keep those losses in scope of the bigger picture – you’ve addressed biggest aspects of trading psychology. 3) Strike the delicate balance between fear and greed These two drives can have a large bearing in the way we live our lives; and not just in trading. When trading, both fear and greed can be massively detrimental, as they can cloud your judgment and lead to bad decisions. Most human beings will be greedy when they have a losing position; willing to hold on if only price can come back to their entry level. And when in a winning position, most human beings will begin to be fearful. Traders should look to reverse those drives and to be greedy when they’ve been proven right. If fearful, you can use the breakeven stop to help alleviate the concern that your initial risk is still exposed. 4) Don’t let confidence get the best of you After putting together a string of successes, it’s human nature to build up confidence around your dealings and this can be a good thing. But once a trader has gone into the territory of being ‘over-confident’, risky habits may sneak into their approach, none more damaging than the willingness to bend their own trading rules simply because they feel it will be successful. Therefore, traders should always look to strike that delicate balance between being scared or fearful, and over-confident. https://www.dailyfx.com/education/trading-discipline/psychology-of-speculation-in-forex.html

2023-10-26 02:53

Australian Dollar, AUD/NZD, EUR/AUD, Moving Averages, Range, Reversal -Talking Points The Australian Dollar remains in the range against EUR and NZD for now Although there are some similarities, each currency pair has unique properties Momentum, retracements and triangles could provide some markers EUR/AUD TECHNICAL ANALYSIS EUR/AUD has been contained between 1.6200 and 1.7100 for four months and might be in range trading mode for now. For more information about range trading, click on the banner below. The price has struggled this week to overcome the recent peaks just below 1.6900 when it topped out at 1.6845 on Monday. Those levels might offer resistance on another retest ahead of the 2-year high at 1.7065. The dip on Wednesday stopped short of the 100-day Simple Moving Averages (SMA) near 1.6550 and it may provide support on another sell-off. Further down, support could be at the previous lows at 1.6445 and 1.6320 ahead of a potential support zone in the 1.6235 and 1.6265. The clustering of the 10-, 21-, 34-, 55- and 100-day Simple Moving Averages (SMA) between 1.6550 and 1.6710 could support the range trading perspective. EUR/AUD DAILY CHART Chart created in TradingView EUR/AUD TECHNICAL ANALYSIS – WEEKLY Zooming out to the weekly chart, EUR/AUD remains in an ascending trend channel. The price has been trading above the 52-week SMA since September 2022, when the trend started to emerge. A cross below this SMA might indicate an exhaustion of the trend. EUR/AUD WEEKLY CHART Chart created in TradingView AUD/NZD TECHNICAL ANALYSIS AUD/NZD has a tendency for range trading, albeit sometimes quite wide ranges, and this is not surprising given the close proximity and similarities of the two economies. Similar to EUR/AUD above, the clustering of the 10-, 34-, 55- 100-, 200- and 260-day Simple Moving Averages (SMA) in AUD/NZD between 1.0777 and 1.0825 could back up the range trading perspective. The price action yesterday displays a Spinning Top Candlestick and it could suggest that a reversal might be in play. The peak seen yesterday at 1.0916 was just shy of the September high of 1.0918 and the July high of 1.0926. This area may offer resistance on a rally ahead of a potential resistance zone near 1.1050. Support may lie at the existing breakpoints or previous lows of 1.0732, 1.0725, 1.0718, 1.0610 and 1.0560. CTA BANNER HERE AUD/NZD DAILY CHART Chart created in TradingView AUD/NZD TECHNICAL ANALYSIS - WEEKLY The narrowing of ranges has seen AUD/NZD create a Symmetrical Triangle. It is currently trading above the upper edge of the triangle and if it closes above the descending trend line, it might signal a breakout and bullish momentum might emerge. If it does not close above the descending trend line, it could prove to be a false break and the triangle formation would be intact in that scenario, potentially signalling a reversal. AUD/NZD WEEKLY CHART Chart created in TradingView https://www.dailyfx.com/analysis/aud-nzd-and-eur-aud-might-have-similar-trade-set-ups-will-ranges-break-20231026.html

2023-10-24 03:26

EURO (EUR/USD, EUR/GBP) NEWS AND ANALYSIS Bundesbank hints that German economy likely shrunk in Q3 EUR/USD slide finds support despite a lack of clear bullish drivers EUR/GBP encounters resistance after bullish breakout BUNDESBANK HINTS THAT GERMAN ECONOMY LIKELY SHRUNK IN Q3 Germany’s Bundesbank produced a monthly report pointing towards the likelihood of another quarterly contraction as industrial production and weakening consumption plagues Europe’s largest economy. The report comes ahead of flash German and EU PMI data for October, which is expected to show very little progress, remaining at suppressed levels. The German manufacturing PMI data set – a sector that normally produces strong results - has led the rest of Europe lower. Should a contraction be confirmed, it would result in fourth straight non-positive quarter. Negative GDP growth during Q4 2022 and Q1 2023 placed Germany into a technical recession, followed by a flat GDP growth in Q2. German GDP Growth (QoQ) Source: tradingeconomics EUR/USD SLIDE FINDS SUPPORT DESPITE A LACK OF CLEAR BULLISH DRIVERS The weekly EUR/USD chart reveals four prior weeks of consolidation after the impressive selloff that preceded it. The US dollar, despite seeing an uptick in fundamental data, is struggling to reignite prior momentum. US GDP is likely to show a stellar 4.1% expansion according to markets and recent data has shown a tendency to surprise to the upside (FNP, CPI, US retail sales). In addition, US Treasury yields maintain elevated despite easing in recent sessions. This is in contrast with the EU where fundamental data continues to suffer. Nevertheless, EUR/USD appears to be experiencing a reprieve. The lack of clear bullish catalysts suggest that any advance may be short-lived, creating the potential for a return to range bound conditions, although, the range appears much tighter than before (1.0640 – 1.0520). EUR/USD Weekly Chart Source: TradingView, prepared by Richard Snow The daily EUR/USD chart shows the period of consolidation in more granular detail. Current resistance appears via the May low of 1.0635, followed by 1.0700. The pair also trades well beneath the 200 simple moving average but the MACD indicator favors the recent bullish momentum. EUR/USD Daily Chart Source: TradingView, prepared by Richard Snow EUR/GBP ENCOUNTERS RESISTANCE AFTER BULLISH BREAKOUT EUR/GBP has revealed a conclusive move higher, breaking above the prior long-term range between 0.8515 and 0.8660. The move above 0.8700 appears to be losing steam the last two days reveal extended upper wicks – often a sign of bullish fatigue. Prices may test the 200 SMA which is well within reach. UK unemployment data could help the pair resume the bullish advance as the data has been easing in recent months. UK unemployment is rising at a steady rate, something the Bank of England will be welcoming as UK wage growth accelerated at a slower rate over August. EUR/GBP Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/euro-latest-germany-likely-contracted-in-q3-pmi-and-ecb-meeting-next-20231023.html

2023-10-24 03:25

BITCOIN, CRYPTO KEY POINTS: Bitcoin Flies to 31k as Optimism Improves and Hopes for a Spot BTC Approval Rises. Coinbase is Looking to Make a Final Push on SEC Charges. Bulls Appear in Control of Bitcoin but the RSI Remains a Concern. BITCOIN RALLY GATHERS PACE AS ETF OPTIMISM BUILDS Bitcoin prices have continued their upward trajectory following a spike last week on the Blackrock Spot ETF application. The news turned out to be false but optimism continues to grow coupled with positive news for the cyrpto industry as a whole and the result is the current rally beyond the 30k mark. Source: TradingView As you can see from the crypto heatmap above and the majority of coins are higher today while crypto companies appear to be benefitting as well. Coinbase being an example and the reason I am using them lies in the pending court case between the SEC and Coinbase. The crypto platform is expected to make a final case on Tuesday for a judge to hopefully save it from the SEC and the charges of unregistered-securities. According to sources familiar with the matter the Company is expected to double-down on familiar arguments. The SEC has not shown that any actual contracts existed while violating the “major question doctrine” that says Federal Agencies have no business regulating novel areas that are awaiting congressional action. Coinbase has been making a steady move higher from the back end of last week. The recent rally has seen a shift in the Crypto fear and greed index which has improved from a 47 reading last week to 53 this week. This is just below the greed area and could be a good sign for both Bitcoin and Crypto markets as a whole. Source: FinancialJuice SPOT ETF APPROVAL COULD SEE HUGE INFLUX OF INSTITUTIONAL FUNDS The main catalyst for this quarter in my opinion is the spot Bitcoin ETF with the spike last week a sign of the possibilities. We have heard from the Blackrock CEO among others who have said they are fielding an unprecedented number of calls from clients who would like to diversify their portfolios in Crypto as well. I have spoken about this in length in my Q4 Bitcoin Outlook and it remains my assertion that a spot Bitcoin ETF could be game changer. Some analysts are predicting as much as 10-20% gains in Bitcoin on the immediate approval followed by a massive influx of institutional investors to the crypto market and predominantly Bitcoin of course. TECHNICAL OUTLOOK AND FINAL THOUGHTS From a technical standpoint BTCUSD is following the perfect breakout, retest and continuation model following a trendline break. We have no printed two golden cross patterns in quick succession as the 20-day MA has broken above the 50 and 100-day MAs. A daily candle close above the 30k psychological mark remains key today and loos set to materialize. Immediate resistance rests at around the 31.5K mark and could result in some pullback as the 14-day RSI remains uncomfortably close to highs and may give bulls something to consider moving forward. Key Levels to Keep an Eye On: Support levels: 30500 30000 28900 Resistance levels: 31500 32000 32520 BTCUSD Daily Chart, October 23, 2023. Source: TradingView, chart prepared by Zain Vawda https://www.dailyfx.com/news/bitcoin-breaks-psychological-30k-level-as-spot-etf-approval-hopes-grow-20231023.html

2023-10-24 03:24

DXY, GBP/USD PRICE, CHARTS AND ANALYSIS: GBP/USD Looks to Recover with a Trendline Break Pending and UK Labor Data Ahead Tomorrow. US Dollar Index Retreat a Welcome for Cable Bulls as Geopolitical Concerns Linger. IG Client Sentiment Shows Retail Traders are Net Long on Cable. As We Take a Contrarian View to Client Sentiment at DailyFX, Are We in for Further Downside? DOLLAR INDEX (DXY) The Dollar index has had an intriguing start to the week holding steady in early trade as long-term US Yields helped underpin the US Dollar. However, a significant retreat in US Yields since the start of the US session has seen the DXY make a significant move lower helping risk assets and all dollar denominated asset classes. Dollar Index (DXY) Daily Chart Source: TradingView, Chart Created by Zain Vawda The move in the DXY should not come as a complete surprise given that last week’s threats of escalation in the Middle East failed to inspire a break above the 107.00 mark. This could’ve been seen as a sign that DXY bulls may be growing restless, and a deeper retracement may be needed. The question now is whether this will remain sustainable moving forward? Looking at the rest of the week and it could prove to a tricky one for the DXY as we do have some high impact data events which could provide support for the Dollar. US Q3 GDP is expected to be positive and robust while US PCE Data (Feds preferred inflation gauge) is expected to remain hot. If this is the case, we could be in for a week of two halves, with DXY weakness till Wednesday before a notable recovery to end the week. Definitely worth paying attention to. GBPUSD EYEING A TRENDLINE BREAK WITH UK LABOR DATA AHEAD Cable has been on the backfoot for quite some time with a recent attempt at a rally met with fierce selling pressure on October 12. Now a lot of the pressure on GBPUSD in recent times has been Dollar based and with Dollar weakness today we are seeing a rally at the moment with GBPUSD up around 100-pips at the time of writing. Tomorrow does bring some UK labor data with positive numbers likely to help Cable continue posting gains. A weak print here could leave the GBP exposed, with a return of USD strength likely to wipe out gains pretty quickly. The USD still has a key role here as I am not yet convinced that a DXY retracement will last through the week with the US data already discussed. My other concern remains the Geopolitical situation in the Middle East which continues to change every couple of hours. The US have been vocal of military intervention and such a move could give the DXY renewed impetus on safe-haven demand. Please keep a close eye on the developments in the Middle East as it could result in quick changes in risk appetite. For all market-moving economic releases and events, see the DailyFX Calendar TECHNICAL OUTLOOK AND FINAL THOUGHTS GBPUSD is finally approaching the long-term trendline which has been in play since July 14 with Cable having decline about 1000 pips since. It appears the October 4 low may have been a bottom as we have since changed structure by printing a higher high and higher low with today's rally looking like the beginning of a new higher high leg from a price action standpoint. If Cable is able to break above the trendline there is the 1.2300 level which could prove sticky with the 50 and 200-day MAs resting just above at 1.2399 and 1.2443 respectively. A break above these two areas could see the long-awaited return to the 1.2500 psychological level. Alternatively, looking at the potential for a break to the downside and the first hurdle is the recent resistance turned support at the 1.2200 level before the recent higher low at the 1,2100 level becomes an area of interest ahead of the 1.2000 handle. Lots to unpack given the ever-changing market conditions, but opportunities may prove aplenty. Key Levels to Keep an Eye On: Support levels: 1.2200 1.2100 (Recent Swing Low) 1.2000 (Psychological Level) Resistance levels: 1.2300 1.2399 (50-day MA) 1.2500 GBP/USD Daily Chart, October 23, 2023 Source: TradingView, Created by Zain Vawda https://www.dailyfx.com/news/us-dollar-index-dxy-update-us-dollar-retreats-with-gbpusd-eyeing-a-trendline-break-20231023.html

2023-10-24 03:22

The Reserve Bank of Australia (RBA) is one of the world’s most important Central Banks and by its actions controls the path of the Australian Dollar. The Central Bank performs an important role in defining banking practices and works closely with other International Central Banks. So, let’s take a look at who runs the RBA and how they control monetary policy. The Reserve Bank of Australia can trace its origins back to the formation of the Commonwealth Bank of Australia in 1911. Over time it acquired more and more responsibilities of a central bank with its powers formalized at the end of the second world war through the Commonwealth Bank Act 1945 and the Banking Act 1945. As the organization’s central banking activities grew it reached a stage where it required the formation of a separate body, resulting in the Reserve Bank Act 1959. The Reserve Bank of Australia (RBA) was thus created and began operations on 14 January 1960. Source: RBA WHO OWNS THE RBA? The Central Bank is a body corporate wholly owned by the Commonwealth of Australia unlike many other Central Banks globally that still have private shareholdings such as the Bank of Japan, the South African Reserve Bank, and the Swiss National Bank. The US Federal Reserve on the other hand has been described as both a public and private institution. Federal Reserve Banks are set up like private corporations where member banks hold stock in the Federal Reserve Banks and earn dividends. WHO IS ON THE BOARD OF THE RESERVE BANK OF AUSTRALIA (RBA) AND HOW ARE THEY APPOINTED? The board of the RBA consists of nine members and includes the Governor, Deputy Governor, and the Secretary to the Treasury. There are six non-executive members who are then appointed by the Treasurer for terms up to five years with no restriction on the number of terms a member may serve. The Governor and Deputy Governor on the other hand are appointed for terms of up to seven years and are eligible for reappointment. The RBA Governor is required by the Reserve Bank Act 1959 to keep in contact with the Treasury Secretary on matters relating to the Treasury and the Reserve Bank. The Governor and other senior members of the RBA have appeared twice annually before the House of Representatives Standing Committee on Economics to explain the conduct of the bank, a process started in 1996. ROLES AND RESPONSIBILITIES OF THE RESERVE BANK OF AUSTRALIA? The RBA serves as the nation’s banknote issuing authority with its primary role being to ensure that monetary and banking policy is used to help the Australian people. The key mandates of the RBA are set out as follows: The stability of the currency of Australia. The maintenance offull employmentin Australia is considered to be between 5-6% unemployment. The economic prosperity and welfare of the people of Australia. There have been a lot of changes to the RBA since the 1980s with the overall mandate remaining constant. The bank adopted a policy of inflation targeting in the early 1990s with the aim of maintaining an annual inflation rate between 2-3% on average. The targeted inflation range was first set in 1993 and was then formalized in 1996 by then incoming Governor Ian Mcfarlane. Should inflation go above the 2-3% target the Reserve Bank of Australia may increase interest rates. The increase in interest rates should in theory result in an appreciation of the Australian Dollar as capital flows are likely to increase due to a higher yield. AUD/USD 15 Min Chart Indicating the Immediate Impact of a 25bps Interest Rate Hike Source: TradingView, Chart Created by Zain Vawda **Note: The chart above shows the immediate reaction of a 25bps hike on June 6, 2023. The pair has gained over 150 pips since in a week since the announcement. THE EFFECT OF INTEREST RATES AND MONETARY POLICY ON THE AUSTRALIAN DOLLAR The RBA uses monetary policy in the form of interest rate hikes or cuts to ensure the stability of the currency and target inflation. An increase in interest rates usually results in less currency in circulation which in turn will increase demand and thus lead to an appreciation of the currency, while an interest rate cut has the opposite effect. The lowering or ‘cutting’ of interest rates makes borrowing more attractive and results in more money in circulation. The increased supply leads to a depreciation of the currency while encouraging investment into the economy as citizens seek a better return than the low interest rate environment provides. It is important for traders to note that an increase or decrease in expectations may also have this effect. To give an example, if the RBA keeps interest rates unchanged but issues forward guidance (tells the market) that they expect more interest rate hikes in the future, the value of the Australian Dollar will appreciate. This is the general principle and norm, however, there are occasions and instances when markets react differently, and this is what makes and keeps the markets interesting for many of us. The table below displays the possible scenarios that come from a change in interest rate expectations. Traders can use this information to forecast if the currency is likely to appreciate or depreciate and how to trade it. TOP TAKEAWAYS FROM THE RBA The RBA was created and began operations on 14 January 1960. The RBA is wholly owned by the State with no private shareholders. The key mandates of the RBA are the stability of the currency of Australia, maintenance of full employment in Australia (considered to be between 5-6% unemployment), and the economic prosperity and welfare of the people of Australia. The main tools used by the RBA to achieve its mandates are changes to the interest rate as well as quantitative easing and tightening. https://www.dailyfx.com/education/forex-fundamental-analysis/the-reserve-bank-of-australia-a-trader-s-guide.html