Let’s talk about how we use fundamental analysis for trading purposes and how it affects the market on a daily basis. Political, economical and social events and announcements are considered to be a part of the fundamental analysis. They play an important part in the strength or weakness of any said currency.

For example, in today’s economy with a recession still looming and many countries still suffering from the recession, we see a weakness in the USD. That weakness is due to a bad economy with no new job creation and Interest rates holding still while inflation rises. We see the USD value as a currency dropping against many of the other major currencies. However as the economy gets better, interest rates get higher to control inflation and as a result, the value of USD will begin to increase.

Basically this is what fundamental analysis is. As we continue writing this blog we will continue to reference this entry as a point of what we believe fundamental analysis to be.

Fundamentals:  We have a few announcements today which will affect the market.

Coming from United Kingdom we have the “Manufacturing PMI”. The previous announcement was 49.7 and the forecast for today is 50.3. (08:30  GMT).

Three  more announcement coming in from US “Unemployment Claims” which will be released at  12:30 GMT. The previous announcement was 530K and the forecast for today is 532K. we have the “ISM Manufacturing PMI”. The previous announcement was 52.9 and the forecast for today is 53.9. (14:00  GMT).At the same time we will have the “Pending Home Sales m/m” previous announcement was 3.2% and the forecast for today is 0.9%. Don’t miss the “Fed Chairman Bernanke Testifies” AT (13:00 GMT).

Today I would like to talk about something a little different. I have been browsing many Forex forums and talking with many traders and I am seeing a new trend or  one could argue a trading strategy. It is called the 10 minute trader. One amazing thing about this strategy is many claim to have made a lot of money and minimized the amount of risk associated with opening a large position. These are traders opening large lots in the minimum amount of $500,000 to $5 million. How they determine which way to trade is simple, they simply view a 10 minute chart and following the trend on the specific pair they are trading. Most 10 minute traders, trade with the majors, mostly a pair that has been trading in 20-30 pip range with low spread such as EUR/USD or USD/JPY. Those pairs can prove to be interesting in this trading strategy. Looking at a 10 minute chart on EUR/USD and we can clearly see the pip opportunity of a 10 pip move on a $1 Million position, that’s a $1000 profit just for following nothing but technical analysis on a 10 minute chart , please make sure to look on the overall trend of the pair you are trading with as well by taking a zoom out in the chart or changing your time scale to hourly or daily to ensure maximum knowledge on this pair and keeping on eye out on some of the fundamental news coming out.

USD/JPY

Yes,yes,yes I know it is one of the most interesting pairs to trade with, we talked yesterday how the JPY was in a nice clear trend and waiting with the position could lead to a nice profit. Now let’s take a look over the last few days, we will find a lovely trend showing the USD getting weaker while showing us traders believe in the JPY right now. From a technical point of view, we can take a look at the next support line for this pair, if this pairs gets there it is likely to break it and the trend will continue. For us this always an exciting pair to look at and trade with, also don’t forget to look for the announcements coming from the US and Japan today. Enjoy and happy trading.

Resistances-89.80– 90.12-90.40

Supports-89.34 – 89.12-88.68

Fundamentals:  We have a few announcements today which will affect the market.

Coming from Switzerland we have the “KOF Leading Indicators”. The previous announcement was -0.04 and the forecast for today is 0.5. (09:30 GMT).

Three more announcements coming in from United States, one of importance is the “ADP Employment Change” which will be released at 12:15 GMT. The previous announcement was -298k and the forecast for today is -200k. Also coming in from Canada “GDP m/m” which will be released at 12:30 GMT. The previous announcement was 0.1% and the forecast for today is 0.4%. Also coming in from Japan is the “Tankan” announcement which will be released at 23:50 GMT. The previous announcement was -48 and the forecast for today is -33.

Fundamentals:  We have a few announcements today which will likely affect the market.

Coming from Switzerland we have the “Producer and Import Prices, Producer Input Prices”. The previous announcement was 0.0% and the Forecast is 0.1%. (07:15 GMT).

One more announcement coming in from Europe. Industrial Production which will be released at 09:00 GMT, previously resulted at -0.6% and the forecast for today is -0.3%. Later on we will have the FOMC Member Lacker Speak at 16:30 and At 19:50 we will have the FOMC Member Yellen Speak (US)

one of the most obvious indicators of the dollar condition is certainly the INX  chart ,as shown on the chart below we had  a clear trend  with the USD, shown from a technical & fundamental  point of view .the current trend  clearly reflects the situation of the USD against most of the world’s currency, especially when we face such a recession in a global scale. We deal with the biggest question on daily basis which is, what is the next strongest currency ?

It appears like most of the world wants to look for a new primary currency.  We should not be too radical when we enter any transaction this week. Let’s go over what happened the last few days.

EUR/USD

What an amazing weekend, we had a few fascinating moves that only adds more money to our packets.  Checkout the latest move from this pair.  We can see that once we join the trends here we can make a good amount of money with this pair. We will need to see what’s going to happen this week, and with that data we can start working step by step.  We will start by looking over the EUR/USD, lets break it down and we will see how much money we can make dealing this pair.  we can finally see the EUR break the Resistance line, now we will need to start analyzing what will happen next.  The 1.4717 high from December 2008 is next if the EUR continues with this uptrend.

Resistances 1.4560 – 1.4630

Supports 1.4520 – 1.4460

Fundamentals:  We have a few announcements today which will affect the market.

Coming from Canada we have the “Canada Mortgage and Housing Corporation ”. The previous announcement was 134K and the forecast for today is 138K. (12:15  GMT).

one more announcement coming in from New Zealand is the  “Reserve Bank of New Zealand, Official Cash Rate ” which will be released at 21:00 GMT. The previous announcement was 2.50% and the forecast for today is 2.50%. At the same time we will have a Reserve Bank of New Zealand Conference which will issue a statement.

I want to start the day by explaining a little about some of the trading strategies in the Forex Market. In order to recognize some of the strategy’s available you need to determine what kind of a trader you are.

Frequently asked questions are, when is the right time to close or to open the position? Or how long should I keep the position open for? This questions is part of the trader’s strategy, let‘s look over the one that will fit your trading strategies and how this varies from one person to the other.

Long-term- usually prefer a daily or a weekly charts, the trader need lots of capital in order to keep the positions alive for a long period of time. The trader will usually close the position when he is pleased From total profit. You can make a lot of profit by joining the trend

Short-term- usually prefer an hourly chart and analyzes the market by combining technical and fundamental information and  can make a good profit from the changes in the range of the currency pair traded.

Intraday – usually prefer a minute’s chart to trade. It is also known as scalping. It is a trading strategy that allows the trader to open and close positions within a few minutes thus taking advantage of minute analysis and reviewing the performance of the currency with little regard to fundamental analysis.

All of the strategies I mentioned above allow you the opportunity to make money is the forex industry. The big question is which one will suits you trading style and goal.

NZD/USD

One of the most closely watched pairs over the last few days has been the Kiwi against the USD.

Last week we noted that this pair came to a point of 1.6991 on 09/01/08 almost exactly on its 1 year anniversary. Wow!! We will have to wait and see if the markets will react to this and go with the uptrend. This week we will look for the Kiwi to hit new levels and this uptrend is likely to continue.