Tag Archives: John Forman

The new year is fully in swing now, and there are some interesting things brewing with the US dollar. As you can see on the daily chart below, the USD Index has been mainly consolidating for the last few weeks after falling out of an earlier range back near the start of December. The recent action, however, has seen the market push up through the top of that area. This comes as the relatively narrow Bollinger Bands have begun widening out once more. That is usually a good indication of a new directional move starting to develop.

There’s a fair bit of resistance overhead for the index to overcome, of course. Prior rally failures near 81.00, 81.40, and 81.50 all point to the potential for the bulls to struggle to generate serious momentum.

There’s a bit of a added factor supporting the greenback here, though. The first part of the year is generally a strong one for the dollar (see this forex seasonals research). That is something which could give the USD Index a nice tail wind in the days and weeks to come.

If the season factors do indeed help drive a new uptrend, the real test would be around  the 82.50 area. That’s a key price zone in the weekly timeframe. The reaction to testing it would tell us a lot about the longer-term prospects for the dollar moving forward as in that time frame we’re also seeing the sort of narrow Bollingers which often preceeds a new trend.

The financial markets don’t really like surprises, and forex traders certainly got one on Thursday when the ECB cut rates, seemingly out of nowhere. As the hourly chart below shows, that move cost the euro about $0.02 against the dollar in the immediate reaction.

It is worth noting, however, the EUR/USD had already been showing a bit of weakness even before the ECB came into the equation. The exchange rate was in the process of retracing from its most recent trend high near 1.38. Thursday’s action just extended that move. The question is how the market is going to processes the rate cut and its implications moving forward.

Had we seen EUR/USD steadily working lower bit by bit over the course of a few weeks we could have surmised that the market had anticipated a rate move from the central bank. The chart doesn’t really show that this time, however, so the move was definitely not priced in. That means we need to be on the lookout for whether traders think the situation has shifted.

Conveniently, we have a technical picture which may help us make that judgement in relatively short order. As the weekly chart below shows, EUR/USD has now retraced back to the 20-period moving average. It did the same back in September before turning back up to extend the trend. If nothing else, that is going to get traders looking at the 20-period MA as something akin to trend line support.

Perhaps more significantly, the market is now back in the 1.34 area where it stalled before that September dip low. We can now call that an area of support.

Thus, EUR/USD is doubly at a decision point here. A hold around 1.34 would very likely see at least an attempt to extend the running uptrend. A failure to hold, though, would likely mean that trend is done for the time being. There is further support down around 1.32, but a slip that low would have serious momentum implications.

It’s been an ugly spell for the AUD. After spending a long time ranging either side of about 1.05 in terms of AUD/USD since 2011, and even more narrowly around there since the second half of 2012, the market has made a sharp drop. In fact, the path toward 0.90 has been nearly a straight shot.

This kind of action often develops after the Bollinger Bands get very narrow and stay that way. Notice in the chart above how the Bands on the weekly time frame were at multi-year narrowness and stayed there for better than 6 months. It is thus no surprise that the move down after breaking below 1.00 has been so violent.

Now the question is how far the market is going.

The fact of the matter is we’re probably getting close to the end of the move, at least in terms of the initial surge. The market has reached into the area of the 2009-10 consolidation range, which will tend to act as an attraction zone. There remains some room to play through that range toward the lower end of the primary zone near 0.85. I’d start looking for consolidation to develop fairly soon.

Supporting this, the Bollinger Bands have moved out to a width that is near the largest since the latter part of2009. That means the volatility is probably going to back off. It’s highly unlikely that we’re going to revisit the 2008 level of volatility, after all.

Now, having said that, we may yet see further downside later on. There is very likely to be resistance from the 2012 lows just above 0.9500, to slow down any rebound rallies. Because of the violence of the decline, however, there is the potential for the market to snap back a bit more dramatically. That could see a push on toward 1.00. I’d expect serious resistance approaching parity, though.

Last week, Forex analyst John Forman hosted a live webinar about autotrading. John provided his perspective on what should raise some red flags for investors when they’re leveraging automated tools and strategies.

In a nutshell, John talked about the seven perils this type of service. While you can hear the entire webinar here, I wanted to give my thoughts on how relying on automated systems can affect your outlook as a trader and what you want to consider as a potential customer of one of these systems.

My interest lies in how these risks relate to currency investment programs such as the Trade Leaders™ Investment Program. The moves of the Trade Leaders, some of the top currency traders in the world, provide trade signals that appear in your portfolio. But, being prudent in your decision-making requires that you understand the process and why some methods can help you succeed, while others warrant more examination.

Briefly, the seven perils John shared were:

1.     Trading types (actual versus hypothetical)

2.     Knowing your skills and vetting traders/systems

3.     Managing risk

4.     Identifying fees and expenses

5.     Understanding presented performance and returns

6.     Accepting transparency and measurement

7.     Leveraging investor controls

In my opinion, the three most important of these are 2, 3 and 4. Ultimately, if you are comfortable in your abilities as an investor, are aware of the risks present in trades that might be executed automatically and can accurately understand how your returns and performance are measured, you’ll be well poised to take part in a system that offers you the benefits of autotrading. The biggest caution as you look to take advantage of an autotrading system is to know how the fees work. Are you paying on every roundturn? Is the “expert trader” getting paid on volume? Are you paying additional pips to add to the autotrading company’s bottom line? Buyer beware. Do your homework and know how much the service will cost you. Transparency is one of our key cornerstones of the Trade Leaders program. We made a conscious decision to keep our fee structure simple and straightforward and it’s clearly communicated in our marketing materials, on our website and by our team members who talk to new clients every day. You can see it for yourself here.

I welcome your thoughts on autotrading and the perils - or successes - you’ve experienced. What do you see as the most important consideration as you decide to try an autotrading system? I look forward to hearing from you.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

This week, my friend, John Forman and the IFR Markets team, won the prestigious FX Week Award for their agenda-setting coverage of the foreign exchange market through a year of great turmoil. IFR Markets is the real-time markets commentary service of Thomson Reuters and provides a variety of real-time news, commentary and market coverage across the globe.

IFR Markets Forex Watch won the Best Vendor for FX Research and Strategy, 2010 award, which is decided by votes from the foreign exchange industry and recognizes the expertise, commitment and flair of the editorial team. Here's what people have been saying about IFR Markets Forex Watch:

The team consistently provided incisive commentary and winning trade ideas through a stormy year for currency markets that included a yuan revaluation and Japanese intervention, a euro crisis, multiple dollar slides and a surge in emerging currencies. They faced stiff competition from players such as Informa Global Markets and 4Cast who value this accolade above all others.

Here at Currensee, we created our partnership with IFR Markets over a year ago, mostly because of the reasons they won this exciting award. Members of the Currensee social network can take advantage of the IFR Markets news, commentary and analysis for free on the platform and our members find this real-time insight extremely valuable. We also offer much of the Thomson Reuters IFR Markets Forex Watch information through our proprietary Squawk Box, Order Board and Trading Desk widgets. The Thomson Reuters folks have a solid reputation for providing first-class research and market analysis and we're excited to offer our members access to this offering.

Congrats to the IFR Markets team on a well-deserved award.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

1 Comment

Not everyone can be a Forex Fiend right from the get-go, or sometimes even after years of trading experience. While a lot of trader psychology analysis deals with how to boost your confidence (in Forex anyway) and become that fearless Forex trader you want to be, it is equally important – if not more realistic – to learn how to be a good loser in the Forex game (that covers the other 95% of us, right?).

  • Earlier this week, John and Tim both made some observations about wealthy traders' habits, one of them being that “they are patient with winners – and ridiculously impatient with losers”. The key takeaway here: patience is a virtue, but not in Forex. Best tip from Tim: Don’t coddle those losing trades.
  • Want to become an unsuccessful trader? Yeah, me neither. Elliott Wave International offers up a how-to guide in reverse – how to avoid the 7 most common mistakes made by experience traders. This reverse how-to guide has a little bit of everything – why market trends are not like billiard balls, a wag of the finger on patience, and a little Mark Twain to wrap it up.
  • Markets (and traders) go through a lot of mood swings. Some days you’re winning, other days it’s all downhill - down a really steep hill. Equally damaging can be those days in between, when you’re just plain bored. Lesson here is to stick to your plan before you get too trade-happy.
  • As if you need more material for your therapist, you’ve probably heard a lot of advice about how effort and passion will go a long way. What your mother likely forget to tell you was that even your best effort and intentions can cost you a lot of money the first days, weeks, months (close out that position already!) of trading. Perseverance is the greatest lesson you can learn.

Our intention is not to scare the crud out of you, forever intimidating you from investing in Forex. We just want to make sure everyone is aware of the uphill battle that may lie before them, and the significant risk of loss. Now that we’ve traumatized you, here’s some news to make you feel a little more upbeat and curious about Forex, the next mainstream asset class:

  • If you’re still being as a wallflower in Forex, the beginning of the Forex trading week is as good a time as any to get started. For the visual learners, Raghee Horner offers a video lesson on how to start your FX trading career on Sunday, and then survive the first 24 hours.
  • Oanda's take on being a market maker vs. a market gamer is speaking our language: “Transparency is the distinction between making a deal or a market, and gaming a deal or a market. A business that shows its customers how things work behind the scenes is able to prove its operations are honest. Transparency ultimately equates to fairness.”

Somalia's Three Wise Monkeys Coin

  • Now here’s some news to get pumped about: Forex trading volume is “up and to the right” (Michelle’s favorite expression) the world over. Check out these numbers, and tell us if you don’t tear up a little. FX trading is up 400% in two years in the Middle East (read that again, slowly…400%). Not nearly as impressive, but still brag-worthy, foreign exchange is up 31% in the UK, 15.8% in Japan, 43.1% in the US since April 2009. Up and to the right is right!

We want to know what's keeping YOU (yeah, you) from taking the plunge and joining Currensee. Tell us your biggest hurdle or reservation. Come on, we can take it.

Stay classy, traders.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

1 Comment

Tomorrow afternoon we're putting on a special free show, a Forex panel discussion webinar called Are you a Scalper, a Swinger, or a Holder? with John Forman, Shaun Downey and Mike Baghdady. Please join us as these experts help us explore the different timing approaches to Forex trading .  We've got some basic questions for the panel, but the main event will be opening up the lines to your questions, live!

Are you a scalper looking for the rush of that immediate and fleeting opportunity? Do you look for short-term misalignments in price and grab a few pips of profit in positions that frequently last only seconds? Are you a swinger with a more patient strategy to examine patterns over days, or weeks? Or are you a holder, keeping your positions safely stowed away until the broader and more fundamental plays can be made? If you are not any of these, you are probably someone who bets on a good night’s sleep.

Please join our expert panel tomorrow, Tuesday, April 27, at 1:30pm Eastern time:

  • Mike Baghdady, SpyGlass Trading: Baghdady is the world's foremost expert on Price Behavior and a 33-year veteran of the global financial markets, spending the tail-end of his professional career on the NYBOT trading floor until its merger with the InterContinental Exchange.
  • Shaun Downey, CQG and Currensee: As Chief Market Analyst at Currensee, Shaun brings his extensive knowledge of both the fundamental and technical Forex arena to provide commentary, insight and trading strategies to the Currensee trader network and the Forex industry at large.
  • John Forman, Thomson Reuters: Forman is a Senior Foreign Exchange Analyst for the IFR Markets group of Thomson Reuters and author of The Essentials of Trading. John is a 20+ year veteran of the financial markets. He holds an MBA from the University of Maryland and a BS from the University of Rhode Island, both concentrating in Finance.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

1 Comment

Currensee member, Thomson Reuters IFR Markets analyst and frequent Forex blogger John Forman has a nice post up today at Forex Magnates called "So You Want Free Forex Stuff?"  You can - and should - read the whole thing, but here are John's main points, well worth contemplating for any purchase, Forex or otherwise:

  • Think like a pro
  • Remember that your time is an expense
  • Know the value of what you're getting

What are your favorite - or least favorite - Forex purchases lately?  We think we have a pretty good lineup in the Currensee marketplace, but we'd love to hear from you about the stuff you buy or get for free that's been helpful in your trading.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

The team here at Currensee towers was pleased to see  John Forman from Thomson Reuters IFR Markets writing on DailyForex this morning about yesterday's Currensee blog post by Tim Mazanec.  Both wrote about volatility in the Forex market.  Tim was seeking a way to find a currency pair ready to break out of a narrow range, and he looked to the Community Historical Volatility widget for some clues.  John added some thoughts - and some charts - on using Bollinger Bands and Average True Range (ATR) to spot developing trades.

A look at the Historical Volatility widget for NZD/USD shows that the first support level (0.68918) and first resistance level (0.70118) are about 120 pips apart. That’s not quite so narrow as spread between the S3 and R3 levels Tim mentioned, but combined with the other volatility readings noted above, it definitely gives us something to think about.

Be sure to check out the full post over at DailyForex where you can also read a review of Currensee.  You can read more of John Forman's Forex posts here, and more from Tim Mazanec here.  John's blog is called The Essentials of Trading and Tim writes at HedgeForward.  Both Tim and John are members of Currensee.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

Our good buddy and Senior Forex Analyst John Forman is calling the bottom of the USD in a post over at Forex Crunch.  Forman cites several technical indicators to make his case, including shallow retracement, a Band Width Indicator plot, and low N-ATR (Normalized Average True Range) readings.  I'll tease you with one of his charts, but you should check out the whole post at Forex Crunch.

http://www.forexcrunch.com/the-case-for-the-usd-having-made-its-bottom/

What do you think?  Are the days of inverse USD-S&P relations over?  Will USD bears start looking like fools with their charts on the ground?  Is this a sign of hope in the US economy?  As usual, only time will tell.  And, if you want more John Forman, be sure to check out his blog, The Essentials of Trading, and his Currensee webinar on using our exclusive Thomson Reuters IFR Markets Widgets.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.