RBS predicts decline in Australian dollar

Currency experts Royal Bank of Scotland Group recommends selling the Australian dollar against the U.S. currency above the level of 0.8000, given that the ongoing global economic slowdown will force the Central Bank to maintain interest rates at 49-year minimum. The bank believes that the currency of Australia is unlikely to rise above recent highs at 0.8200, and may fall to the levels range between 0.7450 and 0.7710. As stated in the bank, the world financial crisis will be a deterrent for some more years. Indicators of demand in most western countries, to put it mildly, not very encouraging. Recent reports and data indicate that the Australian dollar needed to work hard to continue strengthening observed in the past few months. The yield on the state. Australian bonds may stop growing when damping speculation that the Reserve Bank of Australia will raise interest rates. As a result, believe in the bank, the attractiveness of the state. Australian bonds may decline against the U.S. government. bonds, leading to a decline in demand for the Australian currency. Now a pair AUD / USD traded at 0.7920 cents, compared with 0.8060 last week.

Citigroup: a euro is likely to develop reducing

The inability of euro / dollar back above $ 1.40 last week was the wake-up call for the bulls, and, although the latter, taking advantage of the demand of about $ 1.3825/20, currently trying to develop a counter and test orders for the sale of about $ 1.3895, the latest developments in the pair showed the formation of Bear alignment. Currency strategists Citigroup note that the euro / dollar formed a head with the shoulders, which will receive a confirmation with the break of support at $ 1.3793/22 area, and they see the risk that in the coming weeks, downward movement will be further developed in the direction of $ 1.3350.

BBH: yen may gain from the reduction of commodity currencies

According to analysts Brown Brothers Harriman, the magnitude of reduction in freight rates, which also provide high yield currencies and is a favorite of Japanese private and institutional investors can now support the yen against the backdrop of cover positions. The key support in the pair AUD / USD is 0.7830/50 area in: Sure, if a breakthrough in those levels may further decline to 0.7500. A pair of U.S. / Canada has already Breaks 1.1500 resistance - at the close above this level in BBH consider possible further increase in couples, at least to the level of 1.1650. The pair dollar / Canada is now trading at 1.1530, pair AUD / USD is at around 0.7930.

Goldman Sachs: the dynamics of the risky asset is mixed

Over the past few days, risky assets have demonstrated mixed dynamics. Given the volatility of rates, have affected the mood Goldman Sachs with respect to pro-rate, the bank suspended the strategic recommendation to buy a pair AUD / JPY, despite the significant potential gains. The bank believed that after several months of positive price momentum in the market there is every reason to take a break. It is also possible that the market simply has proved difficult to digest the effect of higher returns.

Basic principles of Elliott Wave

Elliott wave theory is a collection of complex techniques. Approximately 60 percent of these methods is quite clear and easy to use. The other 40 percent is difficult to determine, especially for beginners. The practical and conservative approach is to use 60 percent of which are clear. When the analysis is not sufficiently clear, why not find another market that would be consistent with the model of Elliott waves, which is easier to identify. Over the many years of working with this approach, we developed the following practical approach to the Elliott Wave principles in trading. All of Elliott wave theory can be classified into two parts:

. Pulse model
. Correction model

Pulse model
Pulse model consists of five waves. These five waves can be in both directions, up or down. Below are some examples.

Pedigree impulsive motion

Descendancy impulsive motion

The first wave is usually a weak rally with a very small percentage of the involvement of market participants. Once Wave 1 is over, the traders make the sale at the Wave 2. Sales in the Wave 2 is very chaotic. Wave 2 finally ends, do not reach the new minimum, and the market begins to unfold for another rally.

Wave 2 does not reach the new minimum

The initial stage of the rally waves 3 are slow and the market finally reaches the top of the previous rally (Peak Wave 1). At this point above the top of Wave 1 added a lot of stop-orders. Traders do not believe in an upward trend and use this increase to add more short positions. To ensure that their assumption was correct, the market can not overcome the peak of the previous rally. Therefore, a lot of stop-orders placed above the top of Wave
1.

Wave 3 in the initial stage

Rally Wave 3 is gaining momentum and overcome the top of the waves 1. Once the maximum is exceeded 1 waves, triggered the deployment of stop-order. Depending on the number of stop orders that result from their operation GEPy may remain open.

GEPy is a good sign of development of Wave 3. After the operation stop orders, Wave 3 rally drew attention of traders.


After overcoming the top of the wave 1 start triggered stop-order, resulting in further movement can occur with GEPomSleduyuschaya sequence of events follows: traders, who initially took long positions from the base, finally, can breathe freely. They may even decide to add to positions. Traders who short positions were closed to stop the order (after painful reflection) conclude that the trend goes up and decide to buy at this rally. All this sudden interest sustains rally Waves 3. This is a time when most market participants agreed that the trend is upward.

After the closing of short positions on the stop order, the traders after some time join the rally

The decline in profits due to fixation in the Wave 4 is different from the chaotic sale in the Wave 2

Finally, the entire buying boom cooling. Wave 3 is nearing completion. Now begins fixing profit. Traders who held long positions from the base, they decided to close. They have a good deal and are beginning to record a profit. This leads to a rollback, which is called a wave 4. While the Wave 2 was a chaotic sale, Wave 4 is organized by a decline as a result of a fixed income. While fixation occurs profits, the majority of traders are still convinced that the trend is upward. They either joined the rally late, or so far remained outside the game. They believe that this decline due to fixation of return is an excellent opportunity to make a purchase. At the end of Wave 4 comes more buyers, and prices begin to rise again. Rally Waves 5 Waves 3 yields rally on enthusiasm and strength of the buyers. Increasing waves of 5 due to a small group of market participants. While the prices reaching a new peak above the top of Wave 3, the degree of force raise Waves 5 is very small compared with the increase in Waves 3. Finally, when the relatively small tail away interested buyers, the market reaches the peaks and enters a new phase.

Prices in the Wave 5 reach new peak, however, the strength of the rally are weaker compared to the rally Waves 3

Correction model
Corrections are very difficult to trade. Most traders, trading on the waves of Elliott, make money at the time of the pulse model, and then lose them at the time of corrective phase. Mismatch model (with the exception of the triangle) is composed of 3 waves, in contrast to the 5-wave impulse model. Pulse model is always accompanied by a correctional model.

Correction models can be grouped into two categories:
. simple correction
. complex correction

Simple correction
There is only one model in a simple correction. This model is called the "Zig-заг correction." Correction of Zig-заг - a model consisting of three waves, in which wave B does not restore more than 75% of Wave A. Wave C makes the new minimum below the end of Wave A. A wave of correction Zig-заг always has a 5-wave pattern. In two of the three types of complex correction (flat and irregular), Wave A has a model of three waves. Thus, if you can identify the model with five waves in the Wave A of any correction, you can then expect that a correction would be model-Sieg заг.


Waves A
Wave B is usually 50% of Wave A, but does not exceed 75% of Wave A.
Wave C is equal to the Wave A or 1.62 A or 2.62 waves

The group includes the correction of complex 3 models:
. flat
. incorrect
. triangle

Plane Correction
In a flat correction length of each wave is identical. After a 5-wave impulse model, the market declines of Wave A. Then the increase in the Wave B up to the previous maximum. Finally, the market is declining for the last time in Wave C to the previous minimum Waves A.


Incorrect correction
In this type of correction, Wave B makes a new maximum. The final Wave C may drop to top Waves A or even lower.


Fibonacci ratios in the wrong Wave
Wave B = 1.15 Wave A or 1.25 A Wave
Wave C = 1.62 Wave A or 2.62 A Wave

Triangular correction
In addition to the 3-wave corrective patterns, there is another complex mismatch model, which arises from time to time. This model is called "triangular model". The approach to the triangular model of Elliott wave theory is different from other kinds of triangles in the analysis. The five sub-waves of the triangle has been defined as A, B, C, D and E.


Triangles most commonly occur as a fourth wave. Sometimes you can see the triangle as the Wave B 3-wave correction. Triangles are very complex and complicated models. You must very carefully examine the model before taking it on the basis of any decision. Prices have a tendency to "fired" from the model triangle quick trigger.

When the triangles occur in the fourth wave, the market is "fired" from the triangle in the same direction as Wave 3. When the triangles occur in the Wave V, the market "fired" from the triangle in the same direction as wave A.


Rule of alternation
If Wave 2 is a simple correction, we should expect that wave 4 is a complex correction. If Wave 2 is a complex correction, then it is expected that Wave 4 will be a simple correction.

Forex Magazine
based on www.esignalcentral.com

A professional approach to trading on the FOREX market

Eyb Kofnas is president of an educational Web site for traders forex market - Learn4x.com. The Iraqi war has shown us the need to consider the methods used tempered trader, Paul Chiara, which are intended to protect the position with high variability.

Paul Chiara is a veteran with 17 years of experience in trade for the leading banks and a recognized expert in the development of trading models for foreign exchange markets. Successfully trading in the "Merrill Lynch" and "BNP New York" Paul Chiara came to "Credit Suisse New York". There, he developed a technical analysis and strategy for the financial department of the bank for positioning in the market of forex, metals and government securities for the bank and "Credis Fund of Switzerland".

In recent years, he has advised hedge funds, "Citigroup New York" and "Barclay's Bank New York" to model the currency markets. An area of specialization is the creation of trade models that reduce the risk below the generally accepted levels when trading currencies.

Currently, he creates a fund management business offering the same returns with managed risk, it provides for the institutions through their own methods. Paul Chiara is also a member of the technical market analysts.

Eyb Kofnas: What are the biggest misconceptions are novice traders on the forex market?

Paul Chnara: What they are able to determine intra-day direction and use the familiar stop-order, and that they must sell each day.

Kofnas: Why do not you agree with these views?

Chnara: Within-day line is actually a result of large forces, which require extensive analysis and a lot more than the observation of 15-minute charts. In terms of managing money, the attempt to reconcile the loss with a close intra-day stop order is unlikely to be successful. The market trades almost always a way to remove near stop-order and, unless there is movement, which is the result of a greater force, he always moves back and duplicate the movement to gather close to the stop-order.

Kofnas: What is this?

Chnara: Within-day movements are essentially the result of active market-makers. When the game has no greater force (technical or fundamental reasons for the large players to take a position and maintain market) dealers can create volatility - the impression direction, but actually it's not there and the market is duplicated ago. Therefore, the assumption that there are good opportunities to low-risk, all the time is counter-productive.

Kofnas: Which approach or tools, as you might think, in this case are the most effective, based on your years of experience and understanding the pitfalls of trade on the forex market?

Chnara: Tools that have not kept pace with market movements and give you sustained levels to accommodate the stop order. Trading on moving averages, if not aligned properly with the phases, never gives you a steady level to exit in case you find wrong. Oscillators are also bleak for the timing of exit from the market.

Kofnas: What is it then that works?

Chnara: Applicable properly recognize patterns, especially in the graphics "tic-tac-toe; regression analysis and Fibonacci, for example, gives you the levels of deployment of stop-orders, which are stable because they do not lag behind the market. This may seem simplistic, but today's sophisticated analysis based on fractal mathematics, shows the increasing effectiveness of less algorithmic approaches like this.

Kofnas: You could not demonstrate what you mean, on a real example?

Chnara: Okay, let's look at the situation with the war in Iraq. If we proceed from the big picture, watching the long-term Fibonacci levels, it is nothing really out of did not happen. However, due to the high variability in this period would be much harder to implement intra-day trade. Take a look at the following schedule, here we see the USDCHF, starting from 1995. We have a fan-Fibonacci lines, built from the rising trend since 1995 to the top of 1.83 in 2000. Using the regression of this trend in combination with the fan lines clearly shows where the trend is over, and how to use the subsequent descending trend.

Forex Magazine
based on www.futuresmag.com

The adoption of clear

Brett N. Stinberger - Doctor of Philosophy and Professor of Psychiatry at the Medical University in Syracuse, NY. New York. He is also an active trader and writes articles on market psychology. The author of the book "Psychology of Trade, 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.

Recently, an e-mail I received an excellent question, which has convinced me of my own work with the traders - Why do traders resist breakthroughs, trend movements, when they are so obvious? Again and again, I will see traders who refuse to enter the market, which breaks down, saying that the fact that "I do not want to sell at a minimum."

Worse, that traders will hold on to positions against the trend, because "the market should turn or manipulate the market."

Let's go back to basics:
The volume tells you when the traders and investors take the price at this time. If the market traded within a narrow range and then breaks up from the range at high volumes, this means that the market takes the price at higher levels. If you visited an art auction where they sold her painting, and a large number of applicants continued to offer higher prices for your picture, you would have concluded that the picture has not yet found its final selling price. You certainly would not have sold his picture as soon as the first group of applicants began offering its price!

The market operates on similar principles of the auction (see the excellent book by Jim Dalton "Mind over the market, which discusses the theory of auctions in the trade). Every day we see the auction for the "art" as the S & P, NASDAQ, shares of individual companies, etc. Dynamic interaction between buyers and sellers determine the price for these markets. That is, when we see that expanding a directional price movement, we realize that the market got out of balance. He will continue to move in his direction while he was not able to attract sufficient interest of buyers or sellers to establish a new equilibrium. Sometimes I ask the trader, who missed the movement of a breakthrough that occurred with the volume during this period? Very often the response I hear "I do not know." Trader was so busy focusing on price, and so busy focusing on their own reactions to the motion that the value of a breakthrough, based on the principle of the auction, has been lost.

I would argue that this is one of the irrefutable laws of commerce: when something important is happening in the market, traders focused on the good market and the significance of events. The bad traders focus on themselves and their problems on the fact that they missed the movement, as they were able to earn this money, etc. Incredible, but I saw how the whole trend traders missed days because they were busy that thwarted by the fact that the "missing movement" for the initial breakthrough.

However, there may be another reason to skip these obvious movements. Let me give you three different but related examples of "unwillingness to accept the obvious:

1) A woman complained about a lawyer in family problems.
Her husband was absent at night. He told her that worked late, but she could not catch him in the office. Once she has found some female thing in his car and asked him. He explained that she forgot that thing in the car when he dropped her home, went to the end of the day in the office. When counsel suggested that perhaps her husband's other woman, she blew up at a lawyer and insisted that she should just save your marriage. " A few weeks later, her husband left for another woman.

2) the patient suffering from cancer last, an incurable stage, and tests confirm the widespread dissemination of cancer. When the doctor raises the issue of placement in a foster home and possible ways to reduce pain in the final weeks of life, family members indignantly oppose him and insist that he applied a "more intensive treatment" so that he could return home and, ultimately, to return to work. In the meantime, the patient becomes worse and worse and he was clearly suffering from a very experienced pain.

3) The victim of violence as a child insists that her father cared about her, despite clear evidence that she was subjected to sexual harassment, physical abuse and frequent beatings. She insists that she must have done something wrong, that having him, and will not use the term "violence" to describe what she went through that. She is going through a period of depression, when, even now, she is drawn to him, only to be denied.

In all three cases, the difficulty in making the obvious is the result of the need to believe in something else. This happens not only because the person is blind in relation to reality, but also because of the desire to experience another reality. In most cases, when traders are not able to act on strong motion, or even worse, playing against them, a situation arises where the trader has to expect a different behavior of the market. As soon as it becomes part of their analysis, it becomes their opinion, and they become hostage to this view. In the language of traders, which means "to marry his or her opinion" or "the position to marry." I came to the conclusion that in order to avoid such a situation it may be useful for the formation of the market scenario, "that - if", which can then work out mentally. If the market range bound, then that would be if it will break above the range with an expanded volume? What if a small sector violated above their range, even if the overall market remained range? What if the market tests the upper limit of the range and scope of giving? Such a scenario "that - if you actively prevent the trader was not caught in the assumptions, which are opinions on which of the" married ". "Plan the trade and deal on the plan" - is the usual advice, but good traders always have a fallback plan.

Finally, let us consider the opposite scenario: the trader sees the market, which involves a range, and which persuades every move that is about to be a breakthrough. Once again there is a need to believe, but for another reason. Too seeking to act, and missing from the limited trade, the trader can not accept that the market find its equilibrium and remains there. Low volume also clearly said that, as the high only for those who wish to hear it. The market, which traded just a few hundred contracts in a minute, did not involve other parties and will be pushing back and forth only "local players". It is easy to exceed the mode of trade in these markets, expecting a breakthrough, rather than wait for evidence of their occurrence. Signal feature of this problem - it is part complaint traders that the market will not sell. " They are busy struggling with the fact that the market is doing, rather than follow what makes the market. Ian Rand was right - many of the problems boil down to avoid our needs, when the desire comes into conflict with reality.

Forex Magazine
based on www.brettsteenbarger.com

Yen is the leader in growth due to concerns about the situation in Iran

Concerns about the political situation in Iran led to an increase in the dollar and the yen against the euro at the Asian auctions on Monday, as investors decided to convert part of the funds assets in the security zone. Japanese Yen is the leader for growth, as it added to the price to 16 major currencies.

The implicit volatility of options in the one-euro / yen rose to 17.5%, indicating a high probability of risk of significant currency fluctuations. This destroys the effectiveness of carry trade, so many investors reduced their positions before the open of this strategy. Recall that the essence of carry trade is to get into debt in the country where the lowest borrowing costs (Japan) and received further funds to invest in assets more profitable states (eg New Zealand, Australia). Strong fluctuations in the exchange rate between the two States could destroy all the potential profits from this strategy.