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Tag Archives: forex technical analysis

No Major Change

Trump's inauguration looks to have kept traders distracted as markets experienced a relatively quiet Friday, despite some higher volume trading.The S&P experienced higher volume accumulation but was unable to get past 2,275. Monday is another day, but keep an eye on the MACD; a gain with a new 'buy' trigger well above the bullish zero line will attract technical traders on the long side. This in turn will encourage short covering.The Nasdaq turned a MACD trigger 'sell', but given its relative position well above the bullish zero line it would count as a weak 'sell' trigger. Other Technicals remain firmly positive, and the relative performance of the index against the S&P suggests it's well positioned to go higher.Meanwhile, the Russell 2000 is still struggling. It did make up some lost ground, but not enough to recover lost support and not enough to reverse technical weakness. Shorts will again be looking to attack unless there is a push above 1,376.Longer term charts had moved back in favour of bulls (in what was a slow-mo reversal). It would take a few months of consistent downside to return this to a bearish stance; in light of this, look for a move to broadening wedge resistance - i.e. further bullish action.Dow Theorists can continue to take comfort in the relative relationship between Transports and Dow Jones as the breakout from the two-and-a-half year decline resumes its upward advance (Transports leading).For tomorrow, watch for a breakout in the S&P and a continuation (with new highs) of a breakout in the Nasdaq. A weak start could see an acceleration down in the Russell 2000.You've now read my opinion, next read Douglas' blog. I trade a small account on eToro, and invest using Ameritrade. If you would like to join me on eToro, register through the banner link and search for "fallond". If you are new to spread betting, here is a guide on position size based on eToro's system. (function(document,script,id){var js,r=document.getElementsByTagName(script)[0],protocol=/^http:/.test(document.location)?'http':'https';if(!document.getElementById(id)){js=document.createElement(script);js.id=id;js.src=protocol+'://widgets.changetip.com/public/js/widgets.js';r.parentNode.insertBefore(js,r)}}(document,'script','changetip_w_0'));--- Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more. Follow Me on Twitter Dr. Declan Fallon is the Senior Market Technician for ChartDNA.com, and Product Development Manager for FirstDerivatives.com. I also trade on eToro and can be copied for free. Fallond Stock Picks

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Call Me When You Have A Real Insurance Company!

Photo Credit: eflon || The title of the article comes from a comment Greenberg supposedly made to Buffett when AIG was much bigger than Berkshire Hathaway — times change…============================The title of the article comes from a comment Greenberg supposedly made to Buffett when AIG was much bigger than Berkshire Hathaway [BRK] — times change…It’s come to this: AIG has sought out reinsurance from BRK to cap the amount of losses they will pay for prior business written.  It’s quite a statement when you are willing to pay $10 billion in order to have BRK pay 80% of claims over $25 billion, up to $20 billion in total.  At $50 Billion in claims AIG is on its own again.So what business was covered?  A lot.  This is the one of the biggest deals of its type, ever:The agreement covers 80% of substantially all of AIG’s U.S. Commercial long-tail exposures for accident years 2015 and prior, which includes the largest part of AIG’s U.S. casualty exposures during that period. AIG will retain sole authority to handle and resolve claims, and NICO has various access, association and consultation rights.Or as was said in the Wall Street Journal article:The pact covers such product lines as workers’ compensation, directors’ and officers’ liability, professional indemnity, medical malpractice, commercial automobile and some other liability policies.Now, AIG is not among the better P&C insurance companies for reserving out there.  2.5 years ago, they made the Aleph Blog Hall of Shame for P&C reserving.  Now if you would have looked on the last 10-K on page 296 for item 8, note 12, you would note that AIG’s reserving remained weak for 2014 and 2015 as losses and loss adjustment expenses incurred for the business of prior years continued positive.For AIG, this puts a lot of its troubles behind it, after the upcoming writeoff (from the WSJ article):AIG, one of the biggest sellers of insurance by volume to businesses around the globe, also said it expects a material fourth-quarter charge to boost its claims reserves. AIG declined to comment on the possible size. Its fourth-quarter earnings will be released next month.For BRK, this is an opportunity to make money investing the $10 billion as claims on the long-tail business get paid out slowly.  It’s called float, which isn’t magic, but Buffett has done better than most at investing the float, and choosing insurance business to write and reinsure that doesn’t result in large losses for BRK.I expect BRK to make an underwriting profit on this, but let’s assume the worst, that BRK pays out the full $20 billion.  Say the claims come at a rate of $5 billion/year.  The average payout period would be 7.5 years, and BRK would have to earn 9.2% on the float to break even.  At $3.75B/yr, the figures would be 10 years and 6.9%.  At $2.5B/yr, 15 years and 4.6%.This doesn’t seem so bad to me — now I don’t know how bad reserve development will be for AIG, but BRK is usually pretty careful about underwriting this sort of thing. That said BRK has a lot of excess cash sitting around already, and desirable targets for large investments are few.  This had better make an underwriting profit, or a small loss, or maybe Buffett is ready for the market to fall apart, and thus the rate he can earn goes up.All that said, it is an interesting chapter in the relationship between the two companies.  If BRK wasn’t the dominant insurance company of the US after the 2008 financial crisis, it definitely is now.Full disclosure: long BRK/B for myself and clients

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EUR/USD – Euro Steady as ECB Stands Pat

EUR/USD has recorded slight losses in the Friday session. Currently, the pair is trading at 1.0630. In economic news, today’s highlight is the Inauguration of Donald Trump as president. In the Eurozone, German PPI edged up to 0.4%, matching the forecast. In the US, the sole event is a speech from FOMC member from Patrick Harker. It’s Inauguration Day in the United States, as the eyes of the world are on Donald Trump, who will be sworn in as the 45th president. Trump’s stunning victory in November has triggered strong gains for the US dollar and the stock market, and there is no arguing that the US economy is robust. Nonetheless, there is a feeling of unease in the air, as confidence and hope are starting to give way to confusion and uncertainty, as Trump has failed to outline any specifics on his economic policies, while continuing to tangle with the media and fire off controversial Twitter messages. How will the dollar react when Trump rolls up his sleeves and begins work on Monday morning? Earlier on Friday, Oanda’s Stephen Innes provided this assessment: the downside risk for the USD remains elevated more so from Trump’s inauguration if he fails to underscore economic policy. On the other hand, if Donald comes out firing on all fiscal stimulus cylinders, bond yield will surge, and the greenback would catch an enormous updraft… the President–elect takes centre stage as we begin a new chapter in American politics and global financial markets. Buckle up; we are likely in for a wild ride in the coming 100 days [see the link below for the full article] We begin a new chapter for the US Dollar It was more of the same from the ECB, which held its first policy meeting of 2017 on Thursday. The bank maintained its ultra-easy monetary policy, keeping interest rates at 0.00%, where they have been pegged since March 2016. The ECB made no changes to its asset-purchase program (QE), which is scheduled to continue until December 2017, at a pace of EUR 60 billion/mth. ECB President Mario Draghi acknowledged that the Eurozone was experiencing an improvement in growth and stronger inflation, but insisted that there were still risks ahead. Draghi urged patience on the part of Germany, which wants to see the ECB tighten monetary policy. With Germany holding elections later this year, German politicians and policymakers could become more vocal in their criticism of the ECB. On the inflation front, the picture continues to improve, as indicators pointed upwards in December. German PPI edged up to 0.4% and Eurozone Final CPI jumped 1.1%, its strongest showing in over three years. Inflation levels are currently about halfway to the ECB’s target of 2 percent. If the trend continues, we could see the ECB tighten monetary policy by raising rates or tapering its QE scheme. EUR/USD Fundamentals Friday (January 20) 2:00 German PPI. Estimate 0.4%. Actual 0.4% 9:00 US FOMC Member Patrick Harker Speech Tentative – President Trump Inauguration Speech *All release times are EST *Key events are in bold EUR/USD for Friday, January 20, 2017 EUR/USD January 20 at 6:10 EST Open: 1.0628 High: 1.0670 Low: 1.0627 Close: 1.0631 EUR/USD Technical S1 S2 S1 R1 R2 R3 1.0414 1.0506 1.0616 1.0708 1.0873 1.0985 EUR/USD posted slight gains in the Asian session but has retracted in European trade 1.0616 is providing support 1.0708 is the next resistance line Further levels in both directions: Below: 1.0616, 1.0506 and 1.0414 Above: 1.0708, 1.0873 and 1.0985 Current range: 1.0616 to 1.0708 OANDA’s Open Positions Ratio EUR/USD ratio has showed minimal movement this week. Currently, short and long positions are almost an even split, indicative of a lack of trader bias as to what direction EUR/USD will take next. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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Erdogan Moves Closer to Tightening Grip on Power

Turkey edged closer to adopting a constitutional bill extending President Tayyip Erdogan’s powers overnight, with parliament approving four more articles of a reform which opponents see as a step towards an authoritarian state. Erdogan, who could rule the European Union candidate country until 2029 if the legislation is passed, says it will provide stability at a time of turmoil and prevent a return to the fragile coalitions of the past. During the evening debate an independent lawmaker, Aylin Nazliaka, handcuffed herself to the podium in protest against the stronger presidency, triggering a scuffle between MPs of the ruling AK Party and opposition parties. Reuters GBP/USD – Pound Pushes Above 1.23, British Retail Sales Next Race For French Left Candidate Heats Up

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China Has Growth at 6.7% for Last 3 Quarters

China’s pace of economic growth is on a remarkably steady run. For the past three quarters, the world’s second largest economy has grown at exactly the same rate — 6.7%. Economists polled by CNNMoney expect China to make it four in a row when it reports fourth quarter data on Friday. The stability of the numbers has been “uncanny,” analysts at Capital Economics wrote in a research note this month. Doubts about the accuracy of Chinese economic statistics have been around for years and were compounded this week when the governor of a major industrial province admitted officials there had been falsely inflating data for years. China’s growth for the whole year is, naturally, forecast to hit 6.7% as well. The figure happens to fall right in the middle of the 6.5% to 7% range China set for itself at the start of 2016. It’ll be the slowest pace at which China’s economy has grown in more than 25 years, slightly below the 6.9% it clocked in 2015. But it’s a lot stronger than some doom-mongers had predicted at the start of last year, when fears of a sudden collapse in Chinese growth sent global markets into a tailspin. via CNN

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Morning Charts 01/19/2017 SPX /es

Today is HIS last day - Good lord please let us make it through these last 24 hours without any major incident. Amen. Like this even matters anymore - they've blown past QE being relative - the real strings are puled from behind the curtain now. ECB Leaves Rates Unchanged, Keeps QE At €60BN But May Revise It Higher Or Lower and then this EUR Plunges After Draghi Highlights "Downside Risks", Downplays Inflation. On to the lie -SPX Daily - Again - big black wedge (BREXIT rally) - then failure - red wedge (Trump rally) to backtest busted support (at unprecedented heights) and that's now cracking support all with severe LT negative divergences on all time frames. Does not get any better than this - This is sooooo stupid and we're all gonna pay for it in the end. Freedom watch -If you care - Here's How Google Tracks You (And What You Can Do About It)and since they're being so accommodating about their spying this morning - CIA Unveils New Rules For "Collecting, Analyzing And Storing" Information On American CitizensConspiracy fact - get used to it. More to come below.Have a good day.GL and GB!

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Yuan falls as USD recovers

The pound and euro both weakened in overnight trading amid the dollar’s strength. They recovered slightly on Thursday morning — the pound rose by 22 cents or 0.17 per cent to US$1.2283, while euro inching higher 0.08 per cent to US$1.0638. Yellen’s speech was accompanied by the latest inflation data released by the US Labour Department, which shows the Consumer Price Index for December rose 2.1 per cent year on year, the biggest rise since June 2014. Investors reacted actively to Yellen’s comments, viewing them as hawkish, after Donald Trump’s remarks had dragged down the US dollar earlier in the week, analysts at Aetos Capital said in a report, adding that the next threshold will be 101.7. Trump said in an interview with the Wall Street Journal that the US dollar was “too strong” to compete with its counterpart in China. “The broader dollar picture dominated trade overnight. US Treasury yields rallied overnight, underpinned by Hawkish Fed speak,” said Stephen Innes, a senior trader at Oanda. The question now is whether Yellen supports the idea that there will be three interest rate rises this year alone, Innes said, adding that dealers will now be looking for more clarity during the Fed’s next meeting in March. South China Morning Post

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Minor Day for Markets

No need to say much for today as very little happened in the market. The Russell 2000 attempted to undo yesterday's breakdown, but hadn't recovered enough by end of day to negate it.The only index to make any kind of move today was the Semiconductor Index. It recovered all of yesterday's losses as it looks to return a challenge of 944 highs. This index has been the star performer for 2016, but can it maintain this form into 2017?For tomorrow, look for the same breakout opportunities in Large Caps as were on offer yesterday. Shorts may use today's small gain back to former support - turned resistance - in the Russell 2000 as a chance to enter a position. Stops go on a move above 1,377.You've now read my opinion, next read Douglas' blog. I trade a small account on eToro, and invest using Ameritrade. If you would like to join me on eToro, register through the banner link and search for "fallond". If you are new to spread betting, here is a guide on position size based on eToro's system. (function(document,script,id){var js,r=document.getElementsByTagName(script)[0],protocol=/^http:/.test(document.location)?'http':'https';if(!document.getElementById(id)){js=document.createElement(script);js.id=id;js.src=protocol+'://widgets.changetip.com/public/js/widgets.js';r.parentNode.insertBefore(js,r)}}(document,'script','changetip_w_0'));--- Accepting KIVA gift certificates to help support the work on this blog. All certificates gifted are converted into loans for those who need the help more. Follow Me on Twitter Dr. Declan Fallon is the Senior Market Technician for ChartDNA.com, and Product Development Manager for FirstDerivatives.com. I also trade on eToro and can be copied for free. Fallond Stock Picks

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Greek PM Says Second Bailout Review Without Need of

Greece will conclude the second review of its bailout progress without legislating new austerity measures beyond 2018, when the aid program ends, the country’s prime minister said on Wednesday. “The exit from the program in mid-2018 is visible,” Alexis Tsipras told parliament. “The bailout review will be concluded, and it will be concluded without legislating additional measures for beyond the end of the program.” Athens wants a fast conclusion of the review to be included in the European Central Bank’s bond buying program, which would pave the way for its return to bond markets. But the review has stalled due to differences among its official creditors – European Union institutions and the International Monetary Fund – over the country’s ability to meet fiscal targets beyond 2018. via Reuters

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Larry Summers Says Trump Comments are Unusual and Confusing

President-elect Donald Trump’s stunning remark Tuesday that the U.S. dollar is too strong was “unusual” and “leaves the market confused,” former Clinton Treasury Secretary Larry Summers told CNBC on Wednesday. Summers said Trump is pursuing policies — such as a proposed border tax for companies and other fiscal policy changes — that would boost the currency. “The rise of the dollar is a predictable consequence,” Summers told at the World Economic Forum in Davos, Switzerland. The argument for weakening the dollar is that a strong greenback runs against plans to rescue American’s manufacturing base; a strong dollar makes U.S. exports more expensive for folks overseas to buy. A better way to prevent the “artificial overvaluation” of the dollar that threatens U.S. manufacturing is to “back off the border tax and protectionism and the demonization of Mexico,” Summers said in an interview on “Squawk Box.” Summers that presidential administrations taking a shot at the dollar is uncommon and has been “regretted in the past.” One well-known example: In 1993, then-Treasury Secretary Lloyd Bentsen jolted the market when he called for a strong yen, sending the dollar crashing. via CNBC

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