Silver May Stall at Weekly Bollinger Band

A daily close above 41.20 dampens any bearish view when it comes to silver, but short opportunities may exist should price reach the Bollinger band on the weekly chart, which currently sits 43.20.  The weekly Bollinger remains closed suggesting stops can be kept reasonably tight.  Conservative traders may consider taking profit early on half or more of their units, leaving remaining units open after moving stoploss to break-even. 

Price of silver at time of posting is 41.741.

This is not a recommendation to buy or sell.  Trading foreign currencies carries considerable risk.  To learn more about how to trade see th e Start Here or Learn Forex section.  For specific buy and sell recommendations, seek the advice of a certified professional.  Click on the Trade Ideas section for some of the options available to you. 

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U.S. Dollar Falls Despite Strong U.S. Economic News. Why?

And more importantly, what's next for the buck? 

A slew of positive U.S. economic reports hit the morning newswires on March 3:

•U.S. initial jobless claims fell to their lowest level since 2008
•U.S. unemployment aid requests fell to a 3-year low
•U.S. productivity in Q4 2010 rose strongly, while labor costs fell
•U.S. stock futures pointed to a strong open -- and the DJIA shot up 150+ points right out of the gate

Oh, and crude oil fell on March 3, too -- not by much, not below $100, but hey...

So here's the question: If most investors had to forecast which way the U.S. dollar would move after news like that, you'd probably think, “Up!” -- right?

Right. Yet the USD declined on March 3. The losses started early in overnight trading, and at 8:30 AM -- just as the “good news” above was released -- the dollar took an especially hard beating. The EURUSD (the euro-dollar exchange rate and the most actively-traded forex pair) shot up from near $1.3750 on March 2 to $1.3970 on March 3, a 220-pip rally.

To be fair, there was one fly in the ointment of the day’s “good news”: European Central Bank President Trichet hinted that they may raise interest rates next month -- which, in “fundamental” theory, is bullish for the euro. But is a possible rate hike next month really worth that much more than the hard facts suggesting a U.S. economic recovery already under way? Why did forex traders choose to overlook the slew of real, current positive U.S. economic reports in favor of a future promise of “good news” from Europe? What colored their judgment to such a degree?

From an Elliott wave perspective, the answer is -- collective psychology. This reaction shows you how important the perception of news is for market participants; their perception is not rational, but emotional. When forex traders feel bullish, they buy regardless of “bad news.” When they have a bearish bias, as they clearly did against the U.S. dollar on March 3, they brush off any “good news" and sell. In other words, it's not the news that matters, it's the focus and interpretation.

So what does this stubborn bearishness imply for the USD from here?

Our intensive Currency Specialty Service monitors the EURUSD and a dozen other forex pairs in real time. In the latest intraday update (posted at 1:25 PM Eastern on March 3) Service editor Jim Martens says that for now, “the rally from 1.3833 appears incomplete.” He then gives subscribers a short-term upper price target to look for in EURUSD.

As for the longer term, Jim's daily forecast reminds subscribers that the EURUSD’s Elliott wave pattern suggests a major move of a different kind. Jim also quotes two market sentiment measures -- the Daily Sentiment Index and the Commitment of Traders data -- that show extremes similar to those we saw at the major turning points in November 2009 and 2010.

For complete details, see our latest daily and intraday forecasts inside Currency Specialty Service online right now.

Article Source:  http://www.elliottwave.com/freeupdates/archives/2011/03/03/U.S.-Dollar-Falls-Despite-Strong-U.S.-Economic-News.-Why.aspx

Correlations Between Forex and Risk

It is important to consider the correlations between risk and it's effect on currency pairs in the Forex market.  A recent report from forex.com highlights some of the strong correlations that are now developing.  Being aware of the correlations can be an important consideration when trading certain pairs.  The report can be accessed at forex.com.  The author of the report is Daniel Hwang. 

The report is the property of forex.com and so I cannot distribute it, but you can access it if you are a forex.com client or if you get on the mailing list.  They have a great online help service, and you can contact them to find out how to access the report called "The Correlations Corner:  FX/Risk Correlations Firming.

How to Pin Point Entries in a Trend Using Candlestick Formations

Being able to read candlestick formations is an important skill for trading successfully, and with a bit of practice you can spot profitable entry points.  Someone who is skilled at reading candles within a trend can win up to 75% of their trades, and even an unskilled one can win about 50% of them, which can still make an account grow considerably if risk is properly managed. 

First you want your charts to be set up properly and contain the information you want.  Often the charts available from your broker will  be blank when first downloaded, but those default settings can be changed.  You will want your candlestick chart to include both the 10 ema and 21 ema.  These are moving averages which change as price changes.  Once those are showing up on your chart, here are some things you will want to look for to get a great entry.

You want to see both moving averages pointing in a clear direction, either up or down.  This will give you confidence that the trend is strong.  Typically, I look at the daily and the 4 hour, but this will work for any time frame.  If the higher time frames are also pointing in the same direction, this will increase the probability that your trade will win.    If they are pointing sideways then that is a good indication that a clear trend is yet to develop.

You also want the 10 ema and 21 ema to be separated.  The closer they are can reduce the probability of the trade moving into profit. 

In a fast moving market, where price has taken off in a particular direction, price will tend to bounce off of the 10 ema, and in a slower moving market it tends to bounce off of the the 21 ema.  Once you have identified a pair with a clear trend, it is important to determine whether the market is a fast moving one or a slow moving one.  If the price goes past the moving averages too much, or the emas get close together and pointing sideways, that's when you should stay out of the market.

With the emas pointing clearly up or down and well separated, look for a spike in price against the overall trend.  In an uptrend, look for price to come down at or just below the 21 ema in a slow moving market, or at or just below the 10 ema in a fast-moving market.  In a downtrend you will look for price to move up to these levels.

Once that has occured, look at the formation of the most recent one or two candles.  You will want the candle formation to support the trend.  Look for pinbar or shooting star candles where the point of the pin or tail of the star is pointing down throught the appropriate ema in an uptrend, or point up in a downtrend.  Railroad, and bullish or bearish engulphing candles are formations that may also give evidence that a trade opportunity is developing.

If these conditions have been met upon candle close, you can enter the trade right away or hold out for a better price and wait for the price to come back 10 to 20 pips.  Your stop loss can be placed just past the last candle, so it's important to realize that on big runs you could be risking a lot of pips to get your stop to sit beyond the last candle.  In that case, it may be better to sit out of the trade or wait for a better price because the amount you must risk is too high. 

It is also important to move your stop to break even once price has started to move or has made another big run, or even reached a round number.  Otherwise, let your position run.  When you start to see indecision candles consider closing your position.  If you close too early you may be short changing yourself.

Using the emas and candlestick formations in this way can make for very profitable forex trading.  The key is to wait for these conditions to be met.  This can be a true test in patience, but remember that if you can stay out of trouble and losing trades in forex, you are half-way there. 

Practice this skill in your practice account, or get help trading using this technique from Dean, a guy who makes his living trading forex using this exact method.  Here is a video explanation again in his own words:
Access Video

Changes to "My Trading Journal"

I have had to make some changes on how I post information to my trading journal, and I think you will find that they are changes for the better.

Not only was it quite time-consuming to post the information in chart form like I had in the past, the information was difficult to read because the font was so small in order to squeeze in all the pertainent information.

From now on the Trade Journal will be more anecdotal. This will allow for much more information and commentary to be included. Each posting will contain a numbered list of the day's activities, observations and opportunities, as well as some information on the system, product or tool that I used to make that observation or identify the opportunity. Finally, I will add in any personal notes or comments.

As many of you are aware, I have been working towards having a live trading journal available. Unfortunately, none of the software that I could find is compatible with my current broker. I considered switching brokers for this reason, but it would adversely affect my brokerage fees and my level of leverage. It simply did not make financial sense.

I even considered opening up a small additional account with a different broker so that I could run the software from there, but that would require me to place trades in two different accounts. Some of the trades that I make are time-sensitive, and more-over, it becomes a bit of a logistical nightmare should I accidentally neglect to open or close a position in a particular account. It simply is not manageable.

Still, I love the transparancy that would come from having my account available to view so that my readers could see at any given time what positions I have open or have recently closed, and see the profit or loss right there in black and white. I will continue the search, but the prospect has been put on the back burner as, for now, I feel I have exhausted all avenues.

I do hope that you find the new format appealing as it does have the advantage of the commentary - an important aspect that would be lacking otherwise.

Thank you so much for your patience these last several weeks as I know there was a disruption in the frequency of postings.

Regular daily updates will now resume. Typically the journal will be updated until after 12 noon Eastern Time (Toronto, New York).

Forex Trading Coaches Extends their Discount Pricing

The great folks at Forex Trading Coaches (namely Steve Cook and Wade Scott) have extended their discount pricing for a membership to their training and coaching membership website until the end of this month.

Regularly priced at $229 per month (and worth every penny), it is now available for only $129 per month.  And unlike every cable and phone company out there, this is not a temporary low price set to switch to the regular price after 3 months; Wade and Scott are grandfathering you in at this promotion price for the entire life of your membership. 

Your membership will give you unlimited access to:

• Training Videos.  The training videos that Steve and Wade have compiled teach people at any experience level the basics of their MacD Forex Trading System. All the information you need is contained in the video course, and you can watch and review them as many times as you need to. 
• Fast-Track Mentorship Group Training Webinars.  These online training sessions are held twice a week and you can attend as many or as few of them as you'd like.  Attending these webinars is the fastest way to learn their system because they will teach their system directly as you scan the live forex market with them.   You will see what to look for and have all your questions answered all in real time. 
• Daily Live Trading Webinars.  Even once you have learned the system, Steve and Wade never leave you to your own devices.  They know from personal experience that trading forex, no matter how knowledgable, takes discipline.  Even experienced traders appreciate joining Steve and Wade for their 3 hour daily live trading webinars.  The sole purpose of this webinar is to point out trades that meet the conditions of their system in the live market, in real time, as they develop. 
• Forex Trading Coaches Pro Chart Enhancements.  You will be able to access and download the charts and chart enhancements that can be a great asset in using their trading system.  It is the best way to ensure that your charts contain all the information you need to use their system properly.
• Video Archives.  You will also have access to their library of training webinars previously recorded.  That way, if you miss a training webinar, you can always watch it at a later time that is convenient for you.

All of these features are included in your membership fee.  There are no unexpected costs or add-ons you need to worry about.

In addition to those free features, you can also purchase individual coaching sessions, where you will get access to Wade or Steve one-on-one to help you with whatever aspect of trading you are missing, or to take your trading to the next level. 

The Goal

You don't have to be a member of Forex Trading Coaches very long to know that Wade and Steve have a vested interest in your forex success.  Their primary goal is to get you making winning trades the first day you sign up for their membership.  This becomes clear with the support they provide, and the way they have set up their service to be so accessible to everyone no matter their experience level or walk of life; they are priced so that the average Joe can afford their service and make pips. 

While every trading day is different, their goal during the Live Trading Webinars is to bag 30 to 50 pips on average. You can be as quiet as you like in these webinars, but if you do post a question, make a comment, or even say hello, they will often answer back, thanking you by name for your comment or question.  They are the real deal.

Find out what your Forex trading has been missing:  Forex Trading Coaches

Remember, the discounted price of $129 per month is for a limited time only.  This great price is only available if you sign up before January 31, 2011.Sign Me Up Now.

Commodity Prices and the USD: The Big Picture

We experienced a huge drop in commodity prices today falling more than 2 percent.  The question is: What are the implications of this decline?  Here's what the research says:

First, it was the catalyst for drop in the commodity currencies, namely the Australian, New Zealand, and Canadian dollars.  All three of these currencies lost ground today.

Second, the severity of the drop in commodity prices have some questioning whether a top has formed in oil, gold and copper.  If US data continues to be positive, the US dollar has the potential to rise further and push commodities prices lower still. 

But many experts aren't ready to call it a top quite yet though.  There is no indication that the Federal Reserve plans to raise interest rates anytime soon, and it is even possible that they don't raise them for the remainder of the year.  This can keep the US dollar valued lower, and a lower dollar usually means higher commodity prices. 

A further decline in commodities cannot be ruled out, certainly if the US data continues to surprise to the upside, but over all, my research suggests that commodities remain bullish in the long term.

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Support and Resistance Areas This Week

After a nice break away from my trading desk I am ready to get back into the swing of things.  Keep in mind though, that today is a bank holiday, and most of the big traders will not return until tomorrow.  The remainder of this week may remain a bit tricky to trade as trends sort themselves out. 

I've done my research though, and here are some areas of interest that can be pulled from the 4 hour and daily charts for those longer term traders out there.

4 Hour and Daily Charts Support and Resistance

Outlined below are the support and resistance areas I have found for most of the currency pairs.  If these areas break, a pullback may provide an opportunity to open a position.  This information is for informational purposes only.

EUR/USD has resistance at 1.3462, and support at 1.3057.
GBP/USD has resistance at 1.5665/70, and support at 1.5344
USD/CHF has never been this low, at all-time low, moving averages in the 0.94/40 area may provide insight into opportunities to short.
USD/JPY  support is at 81.00, alternatively moving averages may provide some insight into decent entries to short.
AUD/USD is at an all time high, it has already broken 1.0181, so pullbacks to that area could provide a trading opportunity.
USD/CAD has already broken support at 0.99750, so a pull back to that area could provide a trading opportunity to short.
NZD/USD has already broken 77.00, so a pull back to that area could proved a trading opportunity to long.  Alternatively, wait for it to break resistance at 0.7835.
EUR/GBP has resistance sitting at 0.8650
EUR/JPY has resistance at 109.52 and support at 107.562
EUR/CAD has support at 1.3060, and resistance at 1.333
NZD/JPY has resistance at 63.46
GBP/CHF is at an all-time low, previous support, now resistance, sits at 1.44
AUD/CAD has resistance at 1.0195, which is a triple top.
AUD/NZD has resistance in the 1.3170 to 1.3207 area.

Let me know if you find this information useful, I can certainly post my findings of support and resistance zones as a regular feature to my blog if there is interest. 
Thanks, and happy trading!

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Supporting your Forex Success:

Would you benefit from daily emails and videos

that highlight key areas to consider entering a trade? 

 Click Here

Would you benefit from real-time webinars

that point out potential trades LIVE?  Yes, that's in real time.

Click here

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